First, let’s cut M1 a bit of slack. He is an admitted fairly novice investor who has said he has only been at it for a few years. Therefore, he is bound to get things wrong, just like anyone.

What M1 apparently does not know is that Mbendi, the only source he cites for his chrome analysis, is a known instrument of African marketing/propaganda, and its positive African marketing bias is pervasive throughout the site. M1 should have consulted other sources to balance his research, to help him better understand that global chrome supply is tight.

Where M1 appears to also have made a mistake is in his interpretation of the following from the Mbendi site:

"Samancor's total chromite resources exceed 1,8 billion tons and are expected to support current mining activity for well over 200 years at current rates of extraction. While some ore is exported, more than 80% is converted into three grades of ferrochrome (charge chrome, intermediate-carbon ferrochrome, and low-carbon ferrochrome)."

M1 took this to mean that "With 1.8 + Billion tonnes of chromium in S.A, supply is endless given current demand." However, there are a few issues with this statement.

First, the number Mbendi cites is wrong. If you go to Samancor's own website (http://www.samancorcr.com/content.as... it states:

"Our mining operations’ total combined ore resources exceed 450 million tons, calculated to a depth of 300 metres, with an annual production capacity of between five and ten million tons.

The company’s total chromite resources exceed 650 million tons and are expected to support current mining activity for well over 200 years at the current rate of extraction. Some ores and concentrates are exported, but main allotments are destined for conversion into ferrochrome at the alloy plants."

Second, this a resource reported by a company whose parent corporation is registered in the British Virgin Islands. This should cause anyone to ask: "Is the reported resource accurate, and are there any operational and mining considerations that would make any portion of this resource uneconomic, or not mineable?"

Third, it should be made clear that they 200 year figure is effectively a mining life figure based on current rates of extraction. That does not mean the chrome supply is endless, and that supply is not tight. It just means that, theoretically, Samancor (based on the company's claims) continue mining their claimed 650mt resource for 200 years at current rates of production.

To say that the chrome supply is not tight in light of this, would be analogous to saying that world supply is not tight because the total oil reserves for Alberta, including oil not recoverable using current technology, are estimated at 1,700 - 2,500 billion barrels, when demand is only 85 million barrels/day. However, as anyone who has had to fill up their gas tank recently can attest, it appears that the world does not have an “endless” supply of oil, and more importantly, its refining capacity is limited, resulting in a tight supply and high prices.

Furthermore, the argument M1 makes that “many PGM mines have chromite as a by-product” does not hold water. One can also say the same about molybdenum at copper mines, but global moly supply is still very tight as there are few large economic deposits worldwide, and usually only a 1 week global supply is available in metal warehouses at any given time. As a result, molybdenum prices remain quite high given the tight supply and strong demand. The point is, one cannot conclude from the fact that chromite is a byproduct at many PGM mines, that its available supply is not limited.

So, although M1 claims to be pretty good at business, I think his chrome supply and demand analysis is flawed. Everyone knows that supply and demand are what drive markets, and I suggest to him that he take a more detailed analysis of the chrome supply vs. demand equation more befitting his business acumen. Maybe he is right that supply is abundant (I doubt it), but his analysis reasoning/analysis leaves much to be desired... I will be interested to know what he finds.

However, I do agree or side with him in hoping chrome DOES NOT become the main story at the RoF, and I do not believe it will. I also agree that today’s news is not as significant as news about Eagle 3 and other Cu-Ni-PGM discoveries might/will be.

Regards,

B.