Platinum Sector Update
Pt schizophrenia: Precious or industrial metal? Worst
of underperformance likely over; u/g AQP to N, d/g
LON to UW
Gold & Precious Metals
Steve ShepherdAC
(27-11) 507-0386
steve.a.shepherd@jpmorgan.com
Allan CookeAC
(27-11) 507-0384
allan.j.cooke@jpmorgan.com
Abhishek Tiwari
(27-11) 507-0363
abhishek.x.tiwari@jpmorgan.com
J.P. Morgan Equities Ltd.
Summary Ratings and Estimates
Company Price Rating Price Target PT End Date Metric Current FYE Next FYE
Anglo American Platinum Corporation Ltd (c) 42,000 UW (c) 35,900 Sep-09 Adj. EPS (c) -1,360.00 (c) -290.00
prior (c) 36,900 Jul-09 (c) -1,490.00 (c) -50.00
Aquarius Platinum Limited (p) 160 N (p) 148 Sep-09 Adj. EPS ($) (0.28) ($) 0.02
prior UW (p) 117 Jul-09 ($) (0.33) ($) 0.03
Eastern Platinum Ltd. (c) 319 OW (c) 490 Sep-09 Adj. EPS ($) 0.06 ($) 0.02
prior (c) 520 Jul-09 ($) 0.01
Impala Platinum Holdings Ltd (c) 12,854 OW (c) 13,400 Sep-09 Adj. EPS (c) 1,110.00 (c) 513.00
prior (c) 14,100 Jul-09 (c) 877.00 (c) 371.00
Lonmin plc (p) 1,051 UW (p) 800 Sep-09 Adj. EPS ($) (0.05) ($) (0.90)
prior N (p) 790 Jul-09 ($) (1.13) ($) (0.72)
Northam Platinum Ltd (c) 2,250 N (c) 2,160 Sep-09 Adj. EPS (c) 183.00 (c) 39.00
prior (c) 2,040 Jul-09 (c) 147.00 (c) -4.00
Source: Company data, Reuters, J.P. Morgan estimates. All prices as at 09 Mar 05.
See page 53 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a
conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment
decision.
Earnings revisions
EPS changes (SA cents)
Old New % ch
AMS 2008A 5,610
2009E -1,490 -1,360 NM
2010E -50 -290 NM
2011E 5,540 4,580 -17%
AQP 2008A 664
2009E -285 -257 NM
2010E 28 20 -29%
2011E 294 206 -30%
EPS 2008E 49
2009E 12 23 92%
2010E 23 23 0%
2011E 67 57 -15%
IMP 2008A 2,910
2009E 877 1,110 27%
2010E 371 513 38%
2011E 1,272 1,105 -13%
LON 2008A 2,162
2009E -1,063 -53 NM
2010E -698 -874 NM
2011E 1,256 571 -55%
NHM 2008A 627
2009E 147 183 24%
2010E -4 39 NM
2011E 169 145 -14%
Source: J.P. Morgan estimates.
• The platinum industry moved from boom to hard times in the second
half of 2008. In modern history there’s never been as profound and rapid a
change. Stock prices declined 75-90+% as the PGM basket price slid by
c60%. Fundamental demand drivers for the metals have slumped (car sales,
consumer electronic product and ex-China, jewellery demand) as consumers
have been hit by the global economic crisis. But platinum is a
schizophrenic metal and in bad times, history shows that fundamentals can
move to the background as the white metal moves in lock-step with gold.
We see this happening now. We’re calling “Worst Over” for the rand
PGM basket price. We expect the fundamentals to remain weak for
some time, but we believe the rand PGM basket price has bottomed and
may move sideways to upwards, led by gold. We remain unequivocally
positive on gold.
• We expect the next year to be the platinum mining sector’s EPS nadir,
after which we anticipate a gradual recovery. Consequently we believe the
sector’s underperformance may be at an end. We believe a weak rand and
the influence of gold will be marginally positive, so we recommend that
underweight investors look for dips to upweight platinum. We prefer the
gold sector, but believe platinum should hold its own.
• We would suggest investors do not throw caution to the wind here. We
see no immediate prospect for an improvement in the “hard” fundamental
demand drivers for platinum. This means that our call is an early one. With
this in mind we will stick to the counters with the best management, the
strongest balance sheets and cash flow. Thus we continue to prefer Implats
as our major exposure and Eastplats as our junior exposure. We’d
continue to avoid AngloPlat on this basis. We upgrade Aquarius to
Neutral and downgrade Lonmin to UW on performance and valuation
grounds. In the note we refresh our PGM markets analysis, upgrade slightly
our short-term metal price and exchange rate assumptions, and update our
EPS forecasts and valuations.

Table of Contents
Investment conclusions – top stock picks IMP and EPS......5
Platinum – where are we?........................................................7
Fundamentally it’s a tough old world out there and it doesn’t look like it wants to get
better soon................................................................................................................... 7
February 2009 autos data not complete, but... ............................................................ 7
Ask yourself the questions…...................................................................................... 8
Platinum as an investment, then…? ............................................................................ 8
Is platinum forsaking its “hard” fundamentals in favour of “soft” precious metals
ones? ......................................................................................................................... 10
Conclusions............................................................................................................... 13
Forecasts, valuations, sensitivity analysis & price targets
update......................................................................................14
Currency and metal price assumptions ..................................................................... 14
EPS forecasts summary............................................................................................. 14
DCF- based valuations and price targets................................................................... 15
Sensitivity analysis ................................................................................................... 16
AngloPlat.................................................................................18
Description................................................................................................................ 18
Key model changes................................................................................................... 18
Investment arguments and risks................................................................................ 20
Key catalysts for rerating .......................................................................................... 20
Constituents of our DCF valuation ........................................................................... 20
Investment conclusion .............................................................................................. 21
Aquarius..................................................................................23
Description................................................................................................................ 23
Key model changes................................................................................................... 23
Investment arguments and risks................................................................................ 25
Key catalysts for rerating .......................................................................................... 25
Constituents of our DCF valuation ........................................................................... 25
Investment conclusion .............................................................................................. 26
Eastplats .................................................................................28
Description................................................................................................................ 28
Key model changes................................................................................................... 28
Investment arguments and risks................................................................................ 28
Key catalysts for rerating .......................................................................................... 29
Constituents of our DCF valuation ........................................................................... 29
Investment conclusion .............................................................................................. 30
Implats.....................................................................................32
Description................................................................................................................ 32
Key model changes................................................................................................... 32
Investment arguments and risks................................................................................ 33
Key catalysts for rerating .......................................................................................... 34

Constituents of our DCF valuation ........................................................................... 34
Investment conclusion .............................................................................................. 35
Lonmin ....................................................................................37
Description................................................................................................................ 37
Key model changes................................................................................................... 37
Investment arguments and risks................................................................................ 38
Key catalysts for rerating .......................................................................................... 39
Constituents of our DCF valuation ........................................................................... 40
Investment conclusion .............................................................................................. 40
Northam...................................................................................42
Description................................................................................................................ 42
Key model changes................................................................................................... 42
Investment arguments and risks................................................................................ 43
Key catalysts for rerating .......................................................................................... 45
Constituents of our DCF valuation ........................................................................... 45
Investment conclusion .............................................................................................. 45