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How to make counter-cyclical bets

Kitco News

Sibanye-Stillwater (NYSE:SBSW) timed its entry into the platinum group metals space perfectly by picking up discounted platinum assets in the mid-2010s. Sibanye-Stillwater, which was spun out of South Africa's Gold Fields in 2013, picked up Anglo American’s Rustenburg for $95 million in 2015. It also purchased South African platinum miner Aquarius for $294 million 2016.

Palladium and rhodium were some of the top-performing metals of the past decade due to tighter automotive emission standards.

In 2016, palladium traded as low as $550 oz. It ended the decade well over $2,000 oz.

CEO Neal Froneman, who spoke to Kitco last month, said Sibanye-Stillwater will record a production hit in Q2 due to South Africa's COVID-19 restrictions. Froneman said mining activity was reduced from the beginning of the second quarter and into the month of May.

"Fortunately, Stillwater operations in Montana in the U.S. were declared a strategic and an essential service, because the platinum they produce is for medical purposes," said Froneman.

Sibanye added Stillwater mine in 2016 for $2.2B.

Froneman is proud of Sibanye-Stillwater's bets by entering areas of the market that are "counter-cyclical."

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.