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Gold was the resource story of 2009. It's climbed nearly 27% over the past 12 months – and moved from an obscure yellow metal for cranks and contrarians to the investment on everyone's lips.

Some of my September Diggers and Drillers gold stock tips have made steady gains in the wake of this rise and should continue to perform well if the gold price continues to rise (I believe it will).

But debate continues about whether gold's surge is boom or bubble.

Today I want to ignore that.

You see, there's possibly an even bigger metals story unfolding in 2010... and if you get on the right side of it – soon – you could make a lot of money.

In this Diggers and Drillers special report I'll show you why this metal has the potential to strip gold as the commodity to watch in 2010. I'll also tell you about a the small ASX-listed company set to benefit most from this upsurge.

I'll tell you in a moment. First, here's why I'm so excited about it...

After a steady climb from US$421 on November 8th 2001 to US$2,263 on March 6th 2008 – a 437.5% gain – the price of this metal took a beating, as a lot of things did at this time. By October 27th 2008 it had dropped 65.4% to US$782.

Since then, this precious metal has gone from strength to strength. In fact, on April 7th 2010, its price was back up to US$1,720 – a 120% climb from its 2008 low point.

But this doesn't mean you've missed the action. This is a commodity in such high demand that supply has little hope of keeping up.

Resource investors are so eager right now that they're dumping money into anything even remotely related to this ultra-rare precious metal. Sometimes these "blind buys" even work – but that's not what this special Diggers and Drillers report is all about. In this letter I'll reveal details of a specific, targeted investment to make now in order to squeeze the biggest profits possible out of this ultra-rare resource.

So how rare is this metal that has companies and investors jostling for their piece of the action?

Well, it makes up just three parts per trillion of the Earth's crust. If you took all the metal mined worldwide in 2009, it would barely fill a Holden Barina. This is a tiny supply. And 75% of it comes from one place – an area about six hundred kilometres across, in the Bushveld complex of South Africa.

In 2009, 42% of its supply was used by the jewellery industry – the metal is pleasing to the eye, very tough, and has been used as a decorative item by the Egyptians since the seventh century BC. In the last decade though, its US market has grown steadily.

28% of its 2009 supply went into autocatalysts – which are fitted to more than 85% of new vehicles worldwide. The world's biggest auto market, China, has just made autocatalysts a mandatory fitment on every new car. So you can see how tight supply is going to get in the coming months.

This amazing metal is also used in hard disks and data storage devices like computers, iPods and smart-phones. Investment in bullion bars, coins and Exchange Traded Funds (ETFs) accounted for the remaining 10% of the metal's 2009 supply.

All these industries are still on the rise and I believe we're on the cusp of a major buying frenzy in the early part of 2010 – not least from investors looking to pile into mining stocks, buoyed by the rise of other metals, such as gold. In fact, the precious metals branch of The Bank of Nova Scotiapredicts this metal could increase by as much as 36% on its January 2010 price and hit US$1900 this year. And the climb has well and truly began!

Time to let the cat out of the bag...

When I pick stocks for the Diggers and Drillers portfolio, I search for signs of quick, sustainablegrowth. And this one has five qualities that make it, in my opinion, a "five-star" stock. It's a small Australian company with the largest underdeveloped deposit of its kind in South Africa (the country that has dominated platinum production for years).

Let me show you the five reasons why this is a good bet for investment right now:

1. Its deposit is located in a stable country with adequate infrastructure, a good legal system and plentiful power, water and security
2. It has a strong balance sheet – and zero debt
3. Its management is excellent
4. It's on the cusp of a joint venture with one of the world's biggest international miners – a highly experienced, highly competent, cashed-up company that has been eager to expand its activity in platinum for some time – more on this in a moment
5. Its recently released initial bankable feasibility study has shown encouraging results

The last dot point is a major milestone in the development of any mine – a huge step towards knowing that the mine will be financially feasible, thereby removing a lot of the risk from the project.

Although the partnering company – desperate to gain a foothold in this burgeoning market – would acquire a 50% stake in the project, it will also stump up the US$1.5 billion needed to develop the mine... plus provide its considerable mining expertise and connections.

At time of writing this joint venture has not been announced. I expect it to be before the end of June. And that should have a hugely positive effect on the share price of this roughly 62 cents stock. But the upside doesn't begin and end with this joint venture.

This share is so closely linked to the price of the underlying asset, if platinum continues to rise in 2010 as I expect it to, this stock should follow suit. I'll tell you what that means for your investment in a moment.

There's every reason to expect this joint venture will go ahead as planned. I spoke to the Executive Director recently and he is confident there will be no surprises. But even in the unlikely event that this doesn't come to fruition...

China will be selling fifty-seven million cars annually by 2030 – a four-fold increase over twenty-one years – according to consultancy group McKinsey and Company. That's a lot of autocatalysts... and an awful lot of platinum.

This is the one commodity China needs a lot of that they haven't been able to stockpile to date. According to the Executive Director of this small Aussie firm, they've been fending off much interest from Chinese firms, eager to secure supplies.

The smart money, though, is still on the proposed joint venture deal with the major international miner. If the planned partnership goes ahead, mining permits are expected to be approved shortly thereafter – and the mine's development could begin as soon as this year. The ore is at a grade of 5.1 grams per tonne, with a current resource value of 69.8 million ounces – and a further rise expected.

I think this is a little gem of a firm. If you've got all the exposure to gold you want right now, and you're looking for another hedge against further market volatility, this 62-cents stock could be the investment of the year.

The firm has two mines. The first project is expected to start producing in the last quarter of 2011. It will produce 500,000 ounces of platinum group metals (PGM) each year for more than fifty years.

The other half of the project is eighteen months behind the first. Both mines should be in production by mid-2013, and by then should have an output of 1,000,000 ounces of PGM each year, once steady state production is achieved by 2016.

As means of comparison, a larger-cap Aussie miner in South Africa is expected to produce around 100,000 ounces of PGMs in the last quarter of 2011 (just one fifth of the company I'm tipping), and around 180,000 ounces of PGMs in mid-2013 (less than one fifth of my tip).

This operation will be 'vertically integrated'. The project is to include smelting and refining facilities, unlike all the other Aussie miners in South Africa. In fact, only four other platinum companies in the sector have smelting operations. Being vertically integrated allows the company to maximise profits by selling the finished product of platinum metal straight to the market.

The board and senior management form a strong team and are highly qualified and experienced. Most have relevant experience in major South African mining operations. Several of them, including the Managing Director, were previously with the world's largest platinum mining company. The Executive Director is a heavyweight in the industry and sits on a number of boards of ASX-listed African resource companies. Now that is a solid foundation.

The stock, as I mentioned earlier, is also highly leveraged to the price of platinum. When compared to the major platinum miners, this company is by far the most sensitive to the ultra-rare metal's market value – which I expect to keep rising in 2010.

This tells me we're talking about a potentially great investment. The firm carries no debt and has a deal with a massive, reputable firm for the capital costs of getting the mine up and running.

Yes, it's a small-cap share – which makes it risky by definition – but this is one of the most exciting metals plays I've seen in a long time, and definitely worth a punt if you can handle the risk.

This company is still under the radar of most investors. But its lack of visibility probably won't last – it's primed to start turning the largest undeveloped platinum resource in South Africa into a large productive starting mid-2010.

Of course, the project isn't without its risks.

The company's Executive Director told me the main risk is that progress doesn't follow the expected timetable. This is a point worth noting. Investors can be impatient with delays. That can send the share-price down. There is also a small risk that the South African authorities decline the application for a mining permit. Unlikely, but I have to mention it.

An additional risk is that the price of the platinum group metals fall. Platinum can be particularly volatile. The market is not very deeply traded at the moment. Also, the ETFs I mentioned earlier are actually increasing price volatility. But despite volatility, I believe a surge in demand – largely from China – will force the price of the asset up, not down.

Look, I'm not suggesting you pile your life savings into this stock. You should never do that with any kind of investment. But I do recommend you gain some exposure to what I believe will be the precious metal investment story of 2010.

If you're interested in finding out more, I've prepared a full investment briefing on the firm I believe stands the best chance of riding the platinum boom for maximum profits. It's a small stock on the ASX in a niche sector that's on the rise, with sound financials, excellent management, a big business deal in the works and massive plans to mine a very rich patch of land.

And here's the kicker: the joint venture deal that will launch this company's platinum minecould be announced before the end of April – so the best time to hop on board is right now – especially while the share is hovering around 62 cents.

This time last year it was trading at 18 cents. This is a stock on the move. The question is where you jump on board.

Where's it headed? Here's what I reckon...

With a production target of 650,000 ounces a year – based on the current platinum price – I can see this firm adding $2.16 of value to each of its shares. That's based on a discounted cash flow analysis of the potential resource, the annual production rate, and – joint venture deal permitting – its 50% share of the project.

That's pretty good for a company currently trading for around 62 cents. And that's notwithstanding the other project in the pipeline that could double this valuation (revealed in my full research). Based on a pretty conservative valuation I think this stock could hand you a 400% gain within two years.

Of course, this is not a given and there's still plenty of work to be done. Production isn't due to start for another three years. But with the supply of platinum so tight, and with a joint venture on the cards with a global mining giant, the upside for this stock is enormous.

2009 was definitely gold's year. I believe platinum will be the precious metals story of 2010 – and right now you have a unique opportunity to secure your stake in the coming boom before this five-star stock hits the radar screens of institutional investors and the mainstream media.

If you want to find out more about what I believe is one of the best buys for 2010, I've compiled a full briefing on this company – including more detail on the risks, potential and all important action to take – in the latest issue of Diggers and Drillers.

You can get my full research on this stock right now, plus instant access to the rest of the Diggers and Drillers portfolio, by agreeing to take a 30-day no-obligation risk free trial of my service.

To download the rest of my research on the best precious metals investment of 2010, and claim your 30-day risk free trial of Diggers and Drillers, just click here.

Best Regards,



Dr Alex Cowie
Editor, Diggers and Drillers