2 Mining Stocks To Buy As Rhodium Prices Surge

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The price of rhodium, one of the six platinum group metals, surged to a record high of $29,800 per troy ounce on March 23 on the back of higher demand from the automotive sector, which is seeking to meet stricter emission norms implemented worldwide, as well as on supply tightness. The price of the precious metal has appreciated as much as forty-fold since August 2016, when it stood at $625/oz.

As a key element in the production of catalytic converters for automobiles, rhodium has seen massive demand from the major markets of Europe, China, and the United States because they are all committed to tightening their emission standards as a part of the Paris agreement on global warming. Because COVID-19 pandemic-induced disruptions and months’-long strikes in South Africa affected rhodium production significantly, the element’s price rise is expected to continue.

As such, we believe now is the perfect time to buy rhodium mining stocks Impala Platinum Holdings Limited (IMPUY - Get Rating) and Sibanye Stillwater Limited (SBSW - Get Rating). These companies have strong balance sheets and solid business models. We think they are well-positioned to deliver higher sales volumes and take full advantage of the robust rhodium price rise.

Impala Platinum Holdings Limited (IMPUY - Get Rating)

Based in Illovo, South Africa, IMPUY is involved in mining, processing, refining, and marketing platinum group metals and in the production of platinum, palladium, rhodium, chrome, and nickel ores. It has operations on Bushveld Complex, located in South Africa, and Lac des Iles Mine located northwest of Thunder Bay, Canada.

In February, IMPUY received an “A” performance score for its 2020 CDP Water Disclosure Project, for the second consecutive year. This rate places the company in the top 15% of companies amongst a select group of companies in terms of disclosure.

IMPUY’s revenue has increased 107% year-over-year to R58.12 billion for the six months ended December 31, 2020. The company’s gross profit was R22.4 billion, representing an increase of 263%, from the same period last year. Its EBITDA rose 231% from its year-ago value to R25.1 billion, while its earnings grew 328% year-over-year to R14.4 billion. IMPUY generated a free cash flow of R20.1 billion over this period.

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