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The CPM Platinum Group Metals Yearbook 2017

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CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 CPM GROUP

Copyright © 2017 by CPM Group. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of CPM Group. Requests to CPM Group for permission should be addressed to Jeffrey Christian, CPM Group, 168 Seventh St., Suite 310. Brooklyn, NY 11215, (212) 785-8320, fax (212) 785-8325, or email [email protected]. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or com-pleteness of the contents of this book and specifically disclaim any implied warranties of merchantabil-ity or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services or for technical support, please contact Jeffrey Christian visit our website at www.cpmgroup.com. Printed in the United States of America. ISBN-978-0-9983478-2-0

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CPM GROUP CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

CPM Group’s Platinum Group Metals Yearbook 2017 June 2017 Volume 31, Number 1 CPM Group 168 Seventh Street Suite 310 Brooklyn, NY 11215 USA Telephone: 212-785-8320 Telefax: 212-785-8325 E-mail: [email protected] Website: www.cpmgroup.com Jeffrey M. Christian, Managing Partner Doug Sherrod, Managing Director, Investment Banking Carlos Sanchez, Director of Commodities and Asset Management Catherine Virga, Director, Investment Banking Elliot Kalson, Chief Operating Officer Rohit Savant, Director of Research Mu Li, Senior Precious Metals Analyst Yvonne Li, Research Analyst Bhargava Vaidya, Consultant

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CPM Group provides research and consulting services related to precious, industrial, and specialty metals, in addition to undertaking research and analysis across all commodities markets. These range from research studies on individual markets and market segments to materials management services. In addition to publishing metals and commodities research, CPM Group produces special reports on metals which have piqued investor interests, such as molybdenum, manganese, vanadium, chromium, cobalt, and other specialty metals. The core of CPM Group's product is its consulting services tailored to the special needs of individual producers, refiners, fabricators, institutional investors, financial institutions, gov-ernments, central banks, and others. CPM Group provides advisory services related to hedg-ing production and raw materials requirements, and manages positions for producers, con-sumers, and accredited investors. CPM Group's financial engineering includes impartial ad-vice, structuring, placements, and management of hedging and investment positions. CPM Group also provides corporate finance advisory services to companies producing and developing commodities. Annual Research Reports The CPM Gold Yearbook The CPM Silver Yearbook The CPM Platinum Group Metals Yearbook The CPM Gold Long-Term Outlook: Ten Year Projections The CPM Silver Long-Term Outlook: Ten Year Projections The CPM Platinum Group Metals Long-Term Outlook: Ten Year Projections Monthly Research Reports Precious Metals Advisory Base Metals Advisory Specialized Reports The Molybdenum Market Outlook The Tungsten Market Outlook The Vanadium Industry Outlook The Chromium Market Outlook The Manganese Market Outlook

Visit www.cpmgroup.com for additional information.

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Preface

After having fallen from the middle of 2014 through all of 2015, price trends of platinum and palladium diverged over the course of 2016. Platinum and palladium both rose in the first half of 2016, as a more positive sentiment toward commodities raised prices for the entire sector. Platinum, however, faced some headwinds during the second half of the year as the metal’s weak fundamentals overshadowed any broader trend in the market. In contrast, palladium prices rose throughout 2016, albeit in a very volatile fashion, supported primarily by its healthy fundamentals. Rhodium prices, meanwhile, which have been in a declining trend for nearly five consecutive years, showed signs of bottoming out in 2016 and moving with a somewhat upward bias during the last several months of the year. CPM Group’s surplus/deficit statistics for platinum and to a lesser extent palladium and rhodium are in variance with those published by others. CPM Group’s statistics show surpluses in the platinum market, in contrast to the deficits cited by others. Some market participants continue to discuss the incongruity of long-term deficits and prices falling to half of what they were a few years ago, almost in the same breath as they speak of how supply “has to decline sharply in order to come back in line with demand” before prices will rise, suggesting they are well aware that there are no deficits in the real platinum market, only in marketing material. CPM’s platinum surpluses fit nicely into a model that explains why platinum prices have declined so sharply over the past several years. CPM Group’s statistics show a deficit and near deficit for the rhodium and palladium markets, respectively, which is constructive for the prices of these markets. This already has been evidenced during the first half of 2017. Inventory holders of these metals are not expected to liquidate their positions easily, especially for rhodium, which is only this year beginning to see a revival in prices. Platinum meanwhile has the weakest fundamentals and its price has now sunk close to parity with palladium. The 2017 CPM Platinum Group Metals Yearbook discusses in detail the various supply and demand fundamentals that have shaped the course of PGM prices over the past year and a half and the outlook for prices and these fundamentals during the remainder of 2017. As always this year’s report would not be possible if it were not for our sponsors, to whom we are extremely grateful. This year they are: CME Group, Commodities Now, The Institute of Scrap Recycling Industries, Inc., Kitco Metals Inc., Monex Precious Metals, NOAH Capital Markets, Sabin Metal Group of Companies, Umicore, China Gold Association, China National Gold Group Corporation, and Jingyi Gold Co Ltd.

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The Following Organizations Assisted in the Preparation of the 2017 Platinum Group Metals Yearbook

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China Gold Association As a nationwide, non-profit, and self-regulatory organization, China Gold Associa-tion (hereinafter referred to as CGA) was officially approved and registered by the Ministry of Civil Affairs of the People’s Republic of China and the former State Economic and Trade Commission in November 2001 in accordance with the Pro-posal for Reforming the State Gold Management System defined by the State Coun-cil. It is the only national-level industrial association in Chinese gold industry. It is now governed by the State-owned Assets Supervision and Administration Commis-sion of the State Council. CGA is comprised of enterprises involving gold exploration, manufacture, circula-tion, and investment, scientific research institutes, and gold-related public institu-tions and organizations according to the law and based on the principle of free will. At present, CGA has gathered influential and powerful backbone enterprises and well-known enterprises in the upstream and downstream sectors of the gold indus-try. CGA owns over 500 member units which include not only gold-related enter-prises involving exploration, mining, smelting, refining, trade, design, processing, sale, and investment, but also colleges, scientific research institutes, commercial banks, construction and installation enterprises, mechanical equipment enterprises, and administrative departments and organizations of the gold industry. CGA covers over 90% of gold production, 85% of gold processing amount, and 80% of gold re-tail sales around the country. In recent years, by taking the “serving the government, serving the industry, serving enterprises, and serving the society” as its tenet, CGA is giving full play to its role as a bridge and bond, and is strengthening the overall planning and coordination as well as the self-discipline in the industry. CGA is striving to solve critical and stra-tegic problems, having done large amount of fruitful jobs in such aspects as lifting the industry status, accelerating the formulation and implementation of Chinese gold strategy, striving for policy support, establishing self-disciplinary mechanisms, driving resources integration, building green mining industry, advancing the “revitalization of the gold industry through science and technology”, standardizing gold markets, promoting gold consumption, harnessing international exchanges, fulfilling social responsibilities, etc. CGA has become an advisor of the government in making decisions, a defender of interests of the industry, and a pusher of develop-ment of related enterprises, recognized and praised by all the member units and re-lated central ministries and commissions. Contact Details: Telephone: +86-10-84117162 Fax: +86-10-84123780 website: http://www.cngold.org.cn/

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China National Gold Group Corporation (hereinafter referred to as China Gold) is the only central state-owned enterprise in China’s gold industry and chairman member of China Gold association. It upholds the strategy of centering on gold while developing multiple metals. China Gold is specialized in precious metals such as gold and silver, non-ferrous metals such as copper and molybdenum prospection and designing, resources development, production and sales and engineering procurement construction. Its businesses cover the whole gold production chain in 26 provinces and overseas regions. It has two public listed companies: Zhongjin Gold (A Stock), China Gold International (in Toronto and Hong Kong), and seven major business sectors: Zhongjin Gold, China Gold International, Zhong-jin Jewelry, Zhongjin Construction, Zhongjin Resources, Zhongjin Irradiation and Zhongjin Trade. Since 2007, China Gold has been performing its political, economic, social and party build-ing duties as a central state-owned enterprise and striving to become a world leading mining company. It has doubled its major indices including reserve base, total asset, sales revenue and profits in 4 years. China Gold is developing in a leaping way which suits its own par-ticular situation. This way characterizes rapid growth, consistent growth momentum and high qualities. In 2010 and 2011, China Gold was accredited as an A level enterprise for 2 consecutive years in the central state-owned enterprise performance evaluation by Central State-owned Assets Supervision and Administration Commission of the State Council (SASAC). In 2013, it won the “Excellent Performing Enterprise Award” in the 2010-2012 term evaluation by SASAC, with the AAA level of comprehensive corporate credit which is the highest rating grated to an enterprise in the gold industry for the first time. Under new circumstances when China is deepening reforms, China Gold, as the only central state-owned enterprise in China’s gold industry, bears in mind its responsibilities and obliga-tions. It works hard to bolster RMB as a world currency and secure China’s economy and finance with gold. It makes efforts to fulfill its political, economic, social and party building duties as a central state-owned enterprise. China Gold constantly optimizes its development strategies in line with principles in mining industry and accelerates marketization and inter-nationalization. It strengthens its growth foundation, integrates development advantages and improves comprehensive competiveness, so as to build a world leading mining company. China Gold relies on science and technology for growth and dedicates itself to transforming economic development mode on the strategic level. It realizes enormous corporate growth both qualitatively and quantitatively through measures including management improvement, structural adjustment, scientific and technological innovation, environmental protection, energy saving and emission reduction, and cost cutting and efficiency promoting. It recognizes innovatory mine management and improves its core competitiveness by opti-mizing the 5 rates including mining loss rate, ores dilution rate, recovery rate, equipment utility and productivity. China Gold has 7 major business sectors: Zhongjin Gold, China Gold International, Zhongjin Jewelry, Zhongjin Construction, Zhongjin Resources, Zhongjin Irradiation and Zhongjin Trade. Non-mining sectors and mining sectors draw each other’s strength and unite to work for the foal of becoming the world leading mining company.

Contact Details: Telephone: +86-10-56353677 Fax: +86-10-56353508 website: http://www.chinagoldgroup.com/

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CME Group

Contact Details: CME Group 20 S. Wacker Drive Chicago, IL 60606 312-930-1000 – Telephone 312-446-4410 – Fax [email protected] www.cmegroup.com

As the world’s leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group ex-changes offer the widest range of global benchmark products across all major asset classes, including futures and options on metals including COMEX Gold and Silver. Around the world, CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its exchanges based in Chicago, New York and London. CME Group also operates one of the world’s leading central counter-party clearing providers through CME Clearing and CME Clearing Europe, which offers clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives. CME Group’s products and services ensure that busi-nesses around the world can effectively manage risk and achieve growth.

mailto:[email protected]

http://www.cmegroup.com

http://www.cmegroup.com

http://www.cmegroup.com/globex/index.html




http://www.cmegroup.com/clearing/index.html

http://www.cmegroup.com/europe/clearing-europe/

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Commodities Now Commodities Now is the online service specializing in the traded commodity complex… in power and energy, industrial and precious metals, agriculture and softs, together with renewable energy and emission markets, logistics, legal, regulatory policy, and specialist technology. Since 1997 we have been developing our expertise and market connections to provide commodity professionals and the wider investment community with dedicated research and intelligence on the commodity markets. Contact Details: Guy Isherwood [email protected] www.commodities-now.com

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The Institute of Scrap Recycling Industries, Inc. The Institute of Scrap Recycling Industries, Inc. (ISRI) is the “Voice of the Recycling Industry.” ISRI represents nearly 1,600 companies in 21 chapters nationwide that process, broker, and consume scrap commodities, including metals, paper, plastics, glass, rubber, electronics, and textiles. With headquarters in Washington, D.C., the Institute provides education, advocacy, and compliance training, and promotes public awareness of the vital role recycling plays in the U.S. economy, global trade and environment. For more information about ISRI, please visit www.ISRI.org. Contact Details: Joseph C. Pickard Chief Economist and Director of Commodities [email protected] www.isri.org

http://www.ISRI.org


http://www.isri.org

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Jingyi Gold Co Ltd. JingYi gold Co. Ltd. is a comprehensive platform that includes physical gold, in-vestment, trade, research and training, which is established by J&Y Holdings Group that integrated Beijing Diamond Jewelry Manufacturing Co. Ltd., Italy New Euro Jewelry Company, Shanghai JingYi Trade Development Co. Ltd., Shenzhen JingYi Gold Co. Ltd. and other multi-directional resources. JingYi gold Co. Ltd. is a Gen-eral Member of Shanghai gold exchange (SGE). J&Y Holdings Group is Vice-chairman Unit of China Gold Association (CGA). JingYi gold Co. Ltd. has first-class management and trading talents, who have formal professional training and rich practical experience, and be placed in the leading domestic level in re-search of investment in precious metals. The research results are given highly praised and fully affirmed by the people's Bank of China (PBoC), Shanghai gold exchange (SGE), Shanghai futures exchange (SHFE), China Gold Association (CGA), the World Gold Council (WGC), a number of large domestic commercial banks, mining enterprises and other domestic companies of the same industry. Contact Details: Telephone: +86-10-68343377 website: http://www.jy-gold.com/

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Kitco Metals Inc. A Canadian corporation founded in 1977, Kitco Metals Inc. is an international company that has its headquarters in Montreal and offices in New York and Hong Kong. Kitco is one of the largest retailers of precious metals in the world and a specialized supplier of refining services. Being one of few authorized resellers of products made by some of the most prestigious government mints, the company provides a vast array of gold, silver, platinum, palladium and rhodium products to tens of thousands of customers. Considered to be the leading precious metals reference, Kitco’s website (www.kitco.com) is visited daily by close to a million people around the world. Kitco has earned a solid reputation for itself as a leading innovator in the industry, being the first precious metals company to carry out its activities online and to create real-time market information applications for smart phones. Contact Details: Peter Hug Global Trading Director 514 670-1372 [email protected] www.kitco.com

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Monex Precious Metals For 50 years, Monex has been America's trusted name in gold and other precious metals. With customer transactions now totaling over $55 billion, Monex Deposit Company, established in 1987, is today America's premier precious metals bullion dealer because of our dedication to customer service and satisfaction. Our success and our reputation have been built from long and fruitful relationships with our customers. As a result of our customers' trust in Monex, 80% of our business is from customers doing repeat precious metals business, and about one-quarter of our new customers are referred to us by existing customers. Located in Newport Beach, California, Monex Precious Metals is home to a large and dedicated staff of hard asset professionals committed to serving your precious metals investment needs and being America's best dealer with a convenient market and competitive precious metals prices. Contact Details: Monex Precious Metals 4910 Birch Street Newport Beach, CA 92660 Tel: 800-949-4653 www.monex.com

http://www.monex.com/

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NOAH Capital Markets NOAH Capital Markets is a majority black owned and managed South African institutional equity stock brokerage that provides a unique service to the institutional investment community. Services offered include tailored execution and differentiated research. Our experienced team of investment professionals provides unique services to both South African and International institutional clients with whom we look to develop sustainable and mutually beneficial, long term relationships. Contact Details: Rubin Renecke Head of Research Sales [email protected]


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Sabin Metal Group of Companies

The Sabin Metal Group of companies recovers and refines PGMs (platinum, palladium, ruthenium, rhodium), rhenium, gold and silver from a wide variety of materials, specializing in spent hydrocarbon and petroleum processing catalysts with soluble and insoluble alumina, silica alumina, zeolite, and carbon supports.

The Sabin Metal Group is the largest domestically owned, independent precious metals refining organization in North America. The company's recovery/refining facilities and sales/service offices are located in strategic countries around the world. The group is composed of four independent organizations:

Sabin Metal Corporation located in Scottsville, New York, is a sophisticated facility for safely processing precious metal bearing materials. The Scottsville facility houses the fine metal refinery, which produces market grade precious metals from the output of all three plants, as well as the corporate settlement assay laboratory.

Sabin Metal West a specially equipped facility for sampling large lots of precious metal bearing spent catalysts. This refinery employs electric arc furnace (EAF) technology, which helps maximize recovery of precious metals, and also incorporates a unique "low dust" sampling system for accurate sample derivation and total environmental safety and compliance.

Sabin International Logistics Corp. (SILC) a licensed hazardous waste, hazardous materials, and general commodities transporter providing global transportation and logistics for spent precious metal bearing catalysts and other materials. The company operates its own fleet of trucks, and is also a Permitted and Licensed Freight Broker.

SMC (Canada) Ltd. at the McAlpine Mill in Cobalt, Ontario, Canada, offers capabilities and processing technologies to extract highest possible metal values from residual materials generated in refining, smelting and milling operations.

Sabin's gold, silver, platinum and palladium are accepted on NYMEX/COMEX (Chicago Mercantile Exchange); Sabin's platinum and palladium are also accepted for delivery on the London/Zurich market by the London Platinum and Palladium market (LPPM). Contact Details: www.sabinmetal.com Brad Cook Vice President Sales and Marketing [email protected]

http://www.sabinmetal.com

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Umicore Umicore is a global materials technology and recycling group. It focuses on applica-tion areas where its expertise in materials science, chemistry and metallurgy makes a real difference. Its activities are centered on three business areas: Catalysis, En-ergy and Surface Materials and Recycling. Each business area is divided into mar-ket-focused business units offering materials and solutions that are at the cutting edge of new technological developments and essential to everyday life. Umicore generates the majority of its revenues and dedicates most of its R&D ef-forts to clean technologies, such as emission control catalysts, materials for re-chargeable batteries and recycling. Umicore’s overriding goal of sustainable value creation is based on an ambition to develop, produce and recycle materials in a way that fulfills its mission: materials for a better life. The Umicore Group has industrial operations on all continents and our more than 10.000 employees serve a global customer base. Contact Details: Dr. Bernhard Fuchs Senior Vice President Precious Metals Management Umicore AG & Co. KG Rodenbacher Chaussee 4 63457 Hanau-Wolfgang Germany Tel: +49 6181 59-4610 Fax: +49 6181 59-4719 [email protected] www.umicore.de


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Table of Contents

I. Platinum Review and Outlook Chart: The Price of Platinum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Chart: Platinum Surplus/Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Table: Platinum Statistical Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-7 Chart: Platinum Supply and Demand.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Supply Chart: Annual Platinum Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Chart: Source of Platinum Mine Supply 2016…….. . . . . . . . . . . . . . . . . 11 Chart: South African Mine Production of Platinum... . . . . . . . . . . . . . . . 12

Table: South African Platinum Mine Production…………….. . . . . . . . . 13 Chart: Russian Production and Exports………………….... . . . . . . . . . . 15

Table: Russian Platinum Production and Exports . . . . . . . . . . . . . . . . . . 16 Chart: Platinum Mine Production in Zimbabwe . . . . . . . . . . . . . . . . . . . .17 Chart: Projected PGM Mine Production Capacity. . . . . . . . . . . . . . . . . . 18 Chart: PGM Producers’ C1 Cash Costs in 2016 . . . . . . . . . . . . . . . . . . .19

Chart: Production Weighted Average PGM C1 Cash Cost and Basket Price …………………………………….……... . . . . . . . . . . . . . 21

Chart: South African PGM C1 Cash Costs... . . . . . . . . . . . . . . ……... . . 21 Chart: Production-Weighted Average Profit Margin of PGM Mining. . . 22 Chart: Typical PGM Mining Cash Cost Breakdown . . . . . . . . . . . . . . . . 22 Chart: Production Weighted PGM Basket Prices……. . . . . . . ……... . . 23 Table: Platinum Production by Country . . . . . . . . . . . . . . . . . . . . . . . 24-25 Chart: PGM Secondary Supply in 1995 and 2016 . . . . . . . . . . . . . . . . . . 26 Chart: Available Platinum Scrap and Actual Refined Scrap Supply. . . . .27 Chart: Platinum Available for Recovery from Spent Auto Catalysts. . . . 27 Table: Platinum Secondary Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-29

Fabrication Demand Chart: Annual Platinum Fabrication Demand . . . . . . . . . . . . . . . . . . . . . 30

Chart: Automotive Platinum Demand by Region . . . . . . ……... . . . . . . 31 Table: Annual Platinum Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-33

Chart: Year-To-Date Commercial Vehicle Sales Growth by Region..…..34 Chart: Monthly Commercial Vehicle Sales…………….... . . . . . . . . . . . 35 Chart: Commercial Vehicle Sales in Major Developed Auto Markets . . 36 Chart: Commercial Vehicle Sales in Major Developing Auto Markets . 36 Chart: Average Engine Size-Europe……………………………………...37 Chart: Diesel Market Share of Major Passenger Car Markets…………… 38 Chart: Hybrid Vehicle, Electric Vehicles and Global Light Duty Vehicle

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Sales……………………………………………………………………..41 Chart: Projections of Future Platinum Use in Fuel Cells……………… 45

Chart: Global Auto Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..47 Chart: Vehicle Sales in Brazil, Russia, India, and China . . . . . . . . . . . . . 48

Chart: Vehicle Sales in North America, Europe, and Japan . . . . . . . . . . 48 Chart: Platinum Jewelry Demand and Prices . . . . . . . . . . . . . . . . . . . . . . 49 Chart: Platinum Demand in Japan, China, and the United States. . . . . . . 50 Chart: Platinum Electronics Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Table: China Platinum Supply and Demand . . . . . . . . . . . . . . . . . . . .52-53 Table: Historical U.S. Platinum Demand . . . . . . . . . . . . . . . . . . . . . . 54-55 Chart: U.S. Projected 2015 Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Table: Japanese Platinum Demand . . . . . . . . . . . . . . .. . . . . . . . . . . . . . 57 Table: Annual European Platinum Use . . . . . . . . . . . . . . . . . . . . . . . . 58-59

Investment Demand Chart: Platinum Market Surplus/Deficit and Prices . . . . . . . . . . . . . . . . . 60 Table: Reported Platinum Investment Demand by Region. . . . . . . . . . . . 62

Chart: Daily Changes in Combined ETP Holdings by Year . . . . . . . . . . 63 Chart: Year-End Changes to Global Platinum ETP Holdings. . . . . . . . . .64

Chart: Annual Platinum Coin Fabrication . . . . . . . . . . . . . . . . . . . . . . . . 65 Table: Annual Net Additions to Platinum ETP Holdings . . . . . . . . . . . . 67 Chart: Market Value of Precious Metals Coin Sales . . .. . . . . . . .. . . 68 Chart: Market Value of Precious Metals Coin Sales . . .. . . . . . . .. . . 68 Chart: Historical Annual Sales of Perth Mint Platinum Coin Programs .. 69 Chart: Historical Annual Sales of Royal Canadian Mint Platinum Coin Programs . .. . . . . . . .. . . . .. . . . . . . .. . .. .. . . . . . . .. . .. .. . . . . . .69 Chart: Historical Annual Sales of PBOC Mint Platinum Coin Programs. 70 Chart: U.S. Eagle Platinum Bullion Coin Sales . . . . . . . . . . . . . . . . . . . . 70 Chart: Annual Net Additions to Platinum ETP Holdings . . . . . . . . . . . . 71 Chart: Prices, ETP Holdings and Non-commercial Long Positions . . . . .71 Table: Exchange Traded Products’ Physical Platinum Holdings. . . .. 72-73 Chart: Large Non-Commercial Nymex Platinum Positions . . . . . . . . . . 74 Chart: Disaggregated Gross Positions of Non-Commercials . . . . . . . . . 74 Chart: Investment Platinum Product Trading Volume. . . . . . . . . . . . . . . .75 Chart: Investment Product Trading Volume as a % of Total Platinum Products Trading Volume. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75

Markets & Inventories Chart: Combined Platinum Trading Volumes at Nymex, Tocom, and SGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Table: Turnover in the Precious Metals Market in 2016 . . . . . . . . . . . . . 77 Chart: Trading Volume in the Futures Market . . . . . . . . . . . . . . . . . . . . . 78 Chart: Open Interest in the Futures Market . . . . . . . . . . . . . . . . . . . . . . . 79 Chart: Nymex Platinum Trading Volume . . . . . . . . . . . . . . . . . . . . . . . . 80

Chart: Nymex Platinum Open Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

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Chart: Tocom Platinum Trading Volume . . . . . . . . . . . . . . . . . . . . . . . . 81 Chart: Tocom Platinum Open Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Chart: Shanghai Gold Exchange Monthly Platinum Trading Volume . . 82 Table: Shanghai Gold Exchange Monthly Platinum Trading Volume . . 82 Table: Nymex Platinum Trading Volume . . . . . . . . . . . . . . . . . . . . . . 83-84

Table: Nymex Platinum Open Interest . . . . . . . . . . . . . . . . . . . . . . . . 85-86 Table: Nymex Platinum Options Trading Volume . . . . . . . . . . . . . . . . . .87 Table: Nymex Platinum Options Open Interest . . . . . . . . . . . . . . . . . . . . 88

Table: Tocom Platinum Open Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Table: Tocom Platinum Trading Volume . . . . . . . . . . . . . . . . . . . . . . . . 90 Chart: Exchange Stocks of Platinum . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Chart: Platinum Prices, Total Open Interest, and Nymex Inventories . . .91 Chart: Total Reported Market Inventories . . . . . . . . . . . . . . . . . . . . . . . . 92 Chart: Nymex Platinum Options Trading Volume . . . . . . . . . . . . . . . . . 92 Table: Reported Market Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . 93-94 Prices Chart: Real and Nominal Platinum Prices . . . . . . . . . . . . . . . . . . . . . . . . 95 Chart: Daily High, Low, and Settlement Prices . . . . . . . . . . . . . . . . . . . . 96 Chart: Monthly Platinum Price Volatility . . . . . . . . . . . . . . . . . . . . . . . . 97 Chart: Monthly Platinum Price Seasonality . . . . . . . . . . . . . . . . . . . . . . . 98 Chart: Monthly Platinum and Gold Prices . . . . . . . . . . . . . . . . . . . . . . . . 99 Chart: Platinum-Gold Differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Chart: Platinum/Gold Price Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Chart: Quarterly Real & Nominal Interest Rates and Platinum Price . . .100

Chart: Platinum Contango and Backwardation . . . . . . . . . . . . . . . . . . . 100 Chart: Platinum and U.S. Inflation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101 Table: New York Dealer Platinum Prices . . . . . . . . . . . . . . . . . . . . 102-103 II. Palladium Review and Outlook Chart: The Price of Palladium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Chart: Annual Palladium Fabrication Demand.. . . . . . . . . . . . . . . . . . .. 107 Chart: Palladium Supply and Demand Balance. . . . . . . . . . . . . . . . . . .. 108 Chart: Palladium Surplus/Deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .109 ` Chart: Annual Palladium Supply…………………….. . . . . . . . . . . . . . 110 Table: Palladium Statistical Position . . . . . . . . . . . . . . . . . . . . . . . .112-113 Supply Chart: Annual Palladium Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

Table: South African Palladium Mine Production . . . . . . . . . . . . . . . . . 116 Chart: Russian Production and Exports . . . . . . . . . . . . . . . . . . . . . . . . 117 Table: Russian Palladium Production and Exports . . . . . . . . . . . . . . . . 118

Chart: Palladium Mine Production in Canada . . . . . . . . . . . . . . . . . …..119

xxiv


Chart: Palladium Mine Production in United States . . . . . . . . . . . . . . . .120 Chart: Palladium Mine Production in Zimbabwe . . . . . . . . . . . . . . . . . .121 Chart: Palladium Secondary Supply in 1995 and 2016. . . . . . . . . . . . . .122 Chart: Available Palladium Scrap and Actual Refined Scrap Supply . . 123 Table: Palladium Production by Country . . . . . . . . . . . . . . . . . . . . 124-125 Table: Palladium Secondary Supply . . . . . . . . . . . . . . . . . . . . . . . . 126-127

Fabrication Demand Chart: Annual Palladium Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 Chart: Automotive Palladium Demand by Region . . . . . . . . . . . . . . . . 129 Chart: U.S. Light-Duty Vehicle Sales . . . . . . . . . . . . . . . . . . . . . . . . . . 130

Chart: Ratio of U.S. Car to Light Truck Sales . . . . . . . . . . . . . . . . . . . . 130 Table: Annual Palladium Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131-132 Chart: Chinese Passenger Car Sales………… . . . . . . . . . . . . . . . . . . . . 133 Chart: Electronics Palladium Demand by Region . . . . . . . . . . . . . . . . . 136

Chart: Palladium Dental Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .137 Chart: U.S. Demand by Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 Table: Historical U.S. Palladium Demand . . . . . . . . . . . . . . . . . . . 138-139 Table: Japanese Palladium Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140

Investment Demand Chart: Palladium Market Surplus/Deficit ………….. . . . . . . . . . . . . . . 141 Chart: Exchange Traded Products’ Physical Palladium Holdings . . . . . 142

Chart: Annual Net Changes to Palladium ETPs . . . . . . . . . . . . . . . . . .143 Chart: Monthly Net Changes to Palladium ETPs. . . . . ………………..143 Table: Palladium ETF Holdings…………………. . . . . . . . . . . . . . . . . .146 Table: Palladium ETF Holdings, as of April 2017 . . . . . . . . . . . . . . . . .147

Table: Palladium ETF Holdings, as of December 2016 . . . . . . . . . . . . .147 Chart: Large Non-Commercial Nymex Palladium Positions . . . . . . . . . 148 Chart: Large Non-Commercial Nymex Palladium Positions, January 2013 Through April 2017 . . . . . . . . . . . . . . . .. . . . .. . . . . . . . . . . . . 148 Chart: Disaggregated Gross Positions of Non-Commercials . . . . . . . . .149

Markets & Inventories Chart: Trading Volume in the Futures Markets . . . . . . . . . . . . . . . . . . . 150 Chart: Open Interest in the Futures Market . . . . . . . . . . . . . . . . . . . . . . 151

Chart: Reported Palladium Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 152 Chart: Nymex Palladium Trading Volume . . . . . . . . . . . . . . . . . . . . . . 153 Chart: Nymex Palladium Open Interest . . . . . . . . . . . . . . . . . . . . . . . . . 153 Chart: Tocom Palladium Trading Volume . . . . . . . . . . . . . . . . . . . . . . . 154 Chart: Tocom Palladium Open Interest . . . . . . . . . . . . . . . . . . . . . . . . 154

Table: Nymex Palladium Open Interest . . . . . . . . . . . . . . . . . . . . . 155-156 Table: Nymex Palladium Trading Volume . . . . . . . . . . . . . . . . . . 157-158 Table: Nymex Palladium Options Trading Volume . . . . . . . . . . . . . . . 159

Table: Nymex Palladium Options Open Interest . . . . . . . . . . . . . . . . . . 160

xxv


Table: Tocom Palladium Open Interest . . . . . . . . . . . . . . . . . . . . . . . . 161 Table: Tocom Palladium Trading Volume . . . . . . . . . . . . . . . . . . . . . . . 162 Table: Reported Market Inventories . . . . . . . . . . . . . . . . . . . . . . . . 163-166 Prices Chart: Daily High, Low, and Settlement Prices . . . . . . . . . . . . . . . . . . . 167 Chart: Monthly Palladium Price Volatility. . . . . . . . . . . . . . . . . . . . . . . 169 Chart: Palladium Price Seasonality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Chart: Monthly Palladium and Platinum Prices . . . . . . . . . . . . . . . . . . . 170 Chart: Platinum - Palladium Price Differential . . . . . . . . . . . . . . . . . . . 170 Chart: Platinum/Palladium Price Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 170 Chart: Quarterly Real and Nominal Palladium Prices . . . . . . . . . . . . . . 171 Chart: Palladium and U.S. Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172

Table: New York Dealer Palladium Prices . . . . . . . . . . . . . . . . . . .172-173 III. Rhodium Review and Outlook Chart: The Price of Rhodium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 Table: Selected Rhodium Statistics. . . . . . . . . . . . . . . . . . . . . . . . . 178-179 Chart: Rhodium Exchange Traded Product Holdings . . . . . . . . . . . . . . 180 Chart: Rhodium Surplus/Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181 Supply Chart: Annual Rhodium Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 Chart: South African PGM Production Indexed to 100 . . . . . . . . . . . . . 182 Chart: Russian Rhodium Production and Exports . . . . . . . . . . . . . . . . . 184

Table: South African Rhodium Mine Production . . . . . . . . . . . . . . . . . 186 Table: Russian Production and Exports . . . . . . . . . . . . . . . . . . . . . . . . . 187

Chart: Rhodium Mine Production in Zimbabwe . . . . . . . . . . . . . . . . . . 188 Chart: Available Rhodium Scrap and Actual Refined Scrap Supply. . . 189 Table: Rhodium Secondary Supply . . . . . . . . . . . . . . . ……. . . . . . . . . .190

Fabrication Demand Chart: Annual Rhodium Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191 Chart: European Diesel Passenger Vehicles Emissions Standards……...192 Chart: NOx Emissions Reduction from Previous Standard . . . . . . . . . . 193 Table: Emissions Standards……………………………… . . . . . . . . . . 195

Chart: Projected U.S. Demand by Sector in 2016. . . . . . . . . . . . . . . . . . 195 Table: Annual Rhodium Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196-197 Table: Historical U.S. Rhodium Demand . . . . . . . . . . . . . . . . . . . . 198-199 Chart: Annual U.S. Rhodium Demand . . . . . . . . . . . . . . . . . . . . . . . . . 200 Table: Japanese Rhodium Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 Chart: Annual Japanese Automotive Demand . . . . . . . . . . . . . . . . . . . . 202 Chart: Automotive Use as a Percent of Total Japanese Demand . . . . . . 202

xxvi


V. Minor PGMs Chart: The Price of Iridium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 Chart: The Price of Ruthenium. . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 206 Chart: The Price of Osmium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207

1

PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Platinum

2

CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

3


Review and Outlook On an annual average basis platinum prices declined for the fifth consecutive year in 2016. The platinum price, basis the nearby active Nymex futures contract, fell to average $991.75 last year, down 5.9% from $1,053.83 averaged in 2015. Platinum prices made lower lows and lower highs in 2016, compared to 2015. Relatively softer fabrication demand coupled with more than sufficient newly refined supply to meet this demand, resulted in a supply/fabrication demand balance surplus of 197,000 ounces in the platinum market. Some market participants continue to discuss the incongruity of long-term deficits and prices half of what they were a few years ago, almost in the same breath they speak of how supply “has to come back in line with demand” for prices to rise, suggesting they are well aware that there are no deficits. Total supply declined and fabrication demand rose during 2016. The level of

fabrication demand remained less than total supply during the year, however. Total supply stood at 7.2 million ounces in 2016, down 1.6% from 2015, while total fabrication use of platinum rose to 7.05 million ounces, up 0.5% from 2015. Platinum fabrication demand has been hard pressed to rise in a robust fashion in recent years as changing trends in the auto and jewelry sector pose headwinds to demand growth. The declining market share of diesel vehicles in Europe and India, technological changes including the popularity of Selective Catalytic Reduction (SCR), and the substitution of platinum with palladium in diesel catalysts all reduce fabrication demand for platinum from the auto sector. Demand from jewelry, the second largest source of platinum demand, has also been hurting, with demand from China, the largest consumer of the metal in jewelry form, waning in recent years. Producers ultimately will need to adjust

02004006008001,0001,2001,4001,6001,8002,0002,200

0200400600800

1,0001,2001,4001,6001,8002,0002,200

60 64 68 72 76 80 84 88 92 96 00 04 08 12 16

$/Ounce$/OunceMonthly Average Metals Week New York Dealer Prices, Through May 2017Platinum Price 1960-Present

4


their production levels sharply lower to reflect the new reality of lower fabrication demand, but such adjustments may lie beyond the coming year. Investment demand, and inventory purchases and sales by producers and users of these metals are expected to play crucial roles in determining the course of prices, as they have over the past several years. The platinum market has been running surpluses of newly refined metal relative to fabrication demand for most of the time since 2001. In the early years of this period investors were readily willing to mop up such surpluses, in part because PGM prices were low and fabrication demand, including platinum use in automobiles, was rising at healthy rates. All of that changed after the Global Financial Crisis and Great Recession. By 2011 the PGM markets still were running surpluses of new supply over fabrication

demand, but investors were increasingly reluctant to add to their holdings. Some began selling, from 2012 through the first half of 2014. In this way the surpluses of metal, and investors’ willingness – or not – to absorb those surpluses were key to platinum prices. Total inventories of refined bullion rose by 197,000 ounces in 2016, although a substantial portion of that metal appears to have been taken up by refiners, fabricators, and market-making dealers. If investors had been the larger buyers of this surplus metal, platinum prices most likely would not have fallen last year, but rather would have been more likely to have risen. Falling prices during a surplus year suggests that investors were not willing buyers of surplus metal at prevailing prices, waiting for lower prices or some other variable to stimulate their buying interest, and leaving the surpluses to be taken up by producers and market makers.

-1,600-1,400-1,200-1,000-800-600-400-20002004006008001,0001,2001,4001,600

-1,600-1,400-1,200-1,000

-800-600-400-200

0200400600800

1,0001,2001,4001,600

76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Platinum Surplus/DeficitAnnual, Projected Through 2017Thousand Ounces Thousand Ounces

Deficit/Net Reduction in Inventories

Surplus/ Net Additions to Inventories

5


Going forward, surpluses are projected to remain in the platinum market over the next few years. If investors are reluctant to buy large volumes of platinum, this metal’s price may remain weak for several years, before rising later as the long period of low prices takes its toll on South African production and encourages increased use of this metal. Supply Newly refined platinum supply fell in 2016 to 7.2 million ounces, a 1.6% decrease over the previous year, as South African platinum mine supply declined following a significantly strong year in 2015. Mine production in South Africa accounted for 70.5% of total platinum mine supply for the year. In 2016 South African platinum miners churned out 5.2% less platinum than they did in the previous year, however. This more than offset the increases in platinum mine production in Zimbabwe, Canada, and the United States. Total platinum mine supply fell 1.9% from 2015 to 6.0 million ounces in 2016. Secondary supply of platinum, on the other hand, was largely flat in 2016 from the previous year. A small increase in auto catalyst scrap supply was largely balanced out by a decline in jewelry scrap supply. Secondary supply of platinum accounts for roughly 17% of total newly refined metal supplies annually. The decline in refined metal production in 2016 did not lead to an increase in platinum prices over the course of the year, however, partly due to continued liquidation of platinum inventories during the year which helped make up for the small drop in refined platinum supply. In 2017 platinum mine supply growth is expected to be muted. A sharp pullback in

exploration and expansion spending in the past few years has limited growth in mine supply, although these cutbacks allowed mining companies to continue ongoing operations without going out of business. A relatively lower price environment in the platinum market has also deterred new projects from coming online as scheduled. Total platinum mine supply is expected to be largely flat at 6.0 million ounces in 2017 from the level seen in 2016. Secondary supply of platinum is expected to decline 0.4% to 1.2 million ounces in 2017 as continued softness in platinum prices may discourage additional recovery of the metal from scrap materials. Total refined platinum supply is expected to remain flat at 7.2 million ounces in 2017 from the previous year. The global PGMs industry experienced a wave of ownership reshuffling last year; while ownership changes should not lead to any swings in future global mine supply, it will be interesting to watch this development going forward. Fabrication Demand Global platinum fabrication demand rose marginally to 7.05 million ounces in 2016, up 0.5% from 2015. Evolving demand trends in both the auto market and jewelry market over the past several years has hurt demand for the metal. A decline in demand for diesel vehicles in Europe and India, substitution of platinum with palladium in European diesel vehicles, and reduced platinum jewelry purchases in China have been the primary changes in demand trends in these two markets that have negatively affected platinum fabrication demand. In spite of these developments, demand has managed to grow, albeit at a sluggish rate. This increase has been primarily driven by strength in the commercial vehicle market. Going forward, as early as this year, certain

6


Platinum Statistical PositionThousand Troy Ounces

1977 1979 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Mine Production South Africa 1,829 1,775 1,950 2,044 2,080 1,626 1,655 2,010 2,300 2,260 2,475 2,475 2,760 2,725 2,785 3,000 3,200 3,260 3,348 3,415 3,691 3,732 3,915 3,808 4,154 4,138 Russia* 693 263 375 334 345 334 302 234 209 317 457 418 500 750 950 750 775 800 1,000 1,000 750 600 300 600 1,030 720

0 0 0 0 2 2 2 1 1 1 1 1 1 1 1 0 0 0 0 10 11 36 46 16 16 73 Canada 198 147 84 174 163 97 71 150 144 153 140 170 180 180 190 175 140 129 179 184 149 181 180 188 230 258 United States 1 1 2 1 1 1 2 3 2 1 25 40 46 58 56 59 68 64 51 59 84 104 103 109 130 146 Other 32 38 29 31 30 34 36 33 38 44 52 62 79 103 97 97 91 93 94 94 95 54 70 71 86 106_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ Total 2,754 2,225 2,440 2,583 2,621 2,095 2,068 2,430 2,694 2,775 3,150 3,166 3,566 3,816 4,078 4,081 4,274 4,347 4,672 4,763 4,780 4,707 4,614 4,792 5,645 5,440 % Change Year Ago - 18.7% -23.3% 5.9% 1.5% -20.1% -1.3% 17.5% 10.8% 3.0% 13.5% 0.5% 12.6% 7.0% 6.9% 0.1% 4.7% 1.7% 7.5% 1.9% 0.3% -1.5% -2.0% 3.8% 17.8% -3.6%

Secondary Supply Total 84 110 109 223 273 273 188 206 204 288 347 334 358 301 348 350 365 383 400 515 666 750 811 915 900 1040 % Change Year Ago - 31.0% -0.9% 104.6% 22.4% 0.0% -31.1% 9.6% -1.0% 41.2% 20.5% -3.7% 7.2% -15.9% 15.6% 0.6% 4.3% 4.9% 4.4% 28.8% 29.3% 12.6% 8.1% 12.8% -1.6% 15.6%_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____Total Supply 2,838 2,335 2,549 2,806 2,894 2,368 2,256 2,636 2,898 3,063 3,497 3,500 3,924 4,117 4,426 4,431 4,639 4,730 5,072 5,278 5,446 5,457 5,425 5,707 6,545 6,480 % Change Year Ago - 31.0% -0.9% 10.1% 3.1% -18.2% -4.7% 16.9% 9.9% 5.7% 14.1% 0.1% 12.1% 4.9% 7.5% 0.1% 4.7% 2.0% 7.2% 4.1% 3.2% 0.2% -0.6% 5.2% 14.7% -1.0%

Fabrication Demand Auto 435 727 1,022 740 653 666 699 931 1,033 1,108 1,162 1,185 1,245 1,297 1,390 1,511 1,591 1,796 1,930 2,051 2,011 2,140 2,290 2,460 2,690 2,875 Jewelry 856 856 637 506 663 663 584 664 727 731 900 1,028 1,105 1,198 1,347 1,387 1,481 1,635 1,757 1,823 1,934 1,790 1,656 2,388 2,159 2,157 Other 1,045 1,354 1,230 1,378 1,208 885 841 1,009 1,182 818 842 946 994 1,065 1,008 1,210 1,241 1,256 1,320 1,406 1,461 1,425 1,411 1,578 1,667 1,619_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____Total Demand 2,336 2,937 2,889 2,624 2,524 2,214 2,125 2,604 2,942 2,656 2,905 3,159 3,344 3,560 3,746 4,109 4,314 4,687 5,007 5,280 5,406 5,355 5,357 6,426 6,515 6,651 % Change Year Ago - 25.7% -1.6% -9.2% -3.8% -12.3% -4.0% 22.6% 13.0% -9.7% 9.4% 8.7% 5.9% 6.4% 5.2% 9.7% 5.0% 8.7% 6.8% 5.5% 2.4% -0.9% 0.0% 20.0% 1.4% 2.1%

Net Surplus or Deficit 502 -602 -339 182 370 154 131 32 -45 407 592 341 580 558 681 323 325 43 66 -2 40 102 68 -719 30 -170

Coin Fabrication - - - - - - 35 75 105 100 72 430 50 70 150 175 150 85 95 105 135 210 120 60 50 50

Surplus/Deficit Less Coin Fabrication 502 -602 -339 182 370 154 96 -43 -150 307 520 -89 530 488 531 148 175 -42 -29 -107 -95 -108 -52 -779 -20 -220

Changes in Market Inventories** -98 -68 -64 187 -57 150 -162 199 -68 108 0 77 -148 -9 -585 617 -165 0 -167 66 -287 22 -35 4 -22 -9

Price Per Ounce High 186.40 384.90 716.00 1,040.10 593.50 389.70 498.70 414.00 356.60 677.70 648.70 628.00 566.20 534.40 418.60 392.00 424.70 430.30 478.50 436.90 473.80 432.00 435.00 630.50 641.00 609.90 Low 145.00 185.00 342.40 482.60 369.60 243.60 377.10 286.10 237.40 341.30 475.30 445.50 469.80 388.50 333.10 330.75 338.20 380.40 397.00 369.10 339.50 332.00 341.00 388.10 401.00 448.20 Average 159.14 261.16 442.35 682.34 445.92 327.42 425.95 358.94 292.94 465.69 558.98 531.40 512.04 471.45 375.95 359.88 375.29 406.89 424.89 400.54 394.40 372.79 372.92 534.80 528.26 538.44 % Change Year Ago - 64.1% 69.4% 54.3% -34.6% -26.6% 30.1% -15.7% -18.4% 59.0% 20.0% -4.9% -3.6% -7.9% -20.3% -4.3% 4.3% 8.4% 4.4% -5.7% -1.5% -5.5% 0.0% 43.4% -1.2% 1.9%

Notes: Excludes transitional economies, except as noted. * Prior to 2003 Russian supply represented platinum exports. Russian supply represents mine production since 2003 . Secondary production statistics exclude toll-refined material.Prices are settlement prices for the active nearby contract on the New York Mercantile ExchangeChanges in market inventories are year-end. **Changes in 1997 market inventories exclude U.S. Industry stocks since the U.S. Bureau of Mines ceased publication of U.S. Industry stock level data in the third quarter of 1997. As of 2007 Inventories includes changes in ETF holdings. There may be discrepancies due to rounding.NA -- not available. e -- estimates. p -- projections.Sources: U.S. Bureau of Mines, Statistics Canada, trade sources, CPM Group.May 15, 2017

7


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

Mine Production4,472 4,532 5,000 5,369 5,039 4,778 4,537 4,670 4,680 4,132 4,436 3,091 4,465 4,234 4,242 South Africa1,050 990 980 965 935 800 804 837 857 773 757 786 739 739 742 Russia

139 220 160 167 171 181 229 283 342 342 406 403 406 489 460 Zimbabwe149 251 242 223 206 235 144 96 247 215 222 300 265 289 309 Canada139 135 131 143 128 119 126 113 122 121 122 120 121 128 131 United States116 137 150 165 193 188 174 164 163 166 147 151 127 128 129 Other_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

6,065 6,266 6,663 7,031 6,672 6,301 6,014 6,163 6,410 5,748 6,090 4,851 6,122 6,007 6,012 Total11.5% 3.3% 6.3% 5.5% -5.1% -5.6% -4.6% 2.5% 4.0% -10.3% 5.9% -20.3% 26.2% -1.9% 0.1% % Change Year Ago

Secondary Supply1130 1180 1230 1280 1315 1,376 1,220 1,525 1,460 1,330 1,322 1,250 1,240 1,237 1,233 Total8.7% 4.4% 4.2% 4.1% 2.7% 4.6% -11.3% 25.0% -4.3% -8.9% -0.6% -5.4% -0.8% -0.2% -0.4% % Change Year Ago_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____7,195 7,446 7,893 8,311 7,987 7,677 7,234 7,688 7,870 7,078 7,412 6,101 7,362 7,244 7,245 Total Supply

11.0% 3.5% 6.0% 5.3% -3.9% -3.9% -5.8% 6.3% 2.4% -10.1% 4.7% -17.7% 20.7% -1.6% 0.0% % Change Year Ago

Fabrication Demand3,235 3,690 4,053 4,210 4,195 3,785 2,740 3,081 3,173 3,153 3,234 3,123 3,173 3,236 3,265 Auto2,006 1,819 1,675 1,690 1,772 1,698 2,283 2,126 2,331 2,502 2,443 2,401 2,346 2,328 2,301 Jewelry1,601 1,687 1,680 1,822 1,756 1,502 1,394 1,545 1,556 1,522 1,542 1,482 1,491 1,483 1,489 Other_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____6,842 7,196 7,408 7,721 7,723 6,985 6,417 6,751 7,060 7,177 7,219 7,007 7,010 7,047 7,055 Total Demand2.9% 5.2% 2.9% 4.2% 0.0% -9.6% -8.1% 5.2% 4.6% 1.7% 0.6% -2.9% 0.0% 0.5% 0.1% % Change Year Ago

Net Surplus353 250 486 590 264 692 816 937 809 -99 193 -906 353 197 191 or Deficit

40 35 30 23 20 45 42 13 37 74 45 56 50 20 20 Coin Fabrication

Surplus/Deficit Less 313 215 456 567 244 647 774 923 773 -174 148 -962 303 177 171 Coin Fabrication

Changes in 3 12 2 3 171 116 488 444 335 188 915 198 -230 70 Market Inventories**

Price Per Ounce839.80 935.50 1,018.10 1,321.50 1,549.30 2,276.10 1,506.30 1,809.60 1,905.70 1,725.10 1,736.50 1,517.00 1,286.60 1,183.10 1,038.90 High594.10 763.40 840.70 981.80 1,112.00 787.20 922.20 1,460.00 1,363.40 1,386.40 1,303.70 1,182.10 832.40 819.20 900.90 Low687.66 845.87 899.96 1,146.94 1,314.46 1,579.31 1,214.50 1,614.22 1,722.39 1,554.30 1,486.59 1,389.01 1,053.83 991.84 967.19 Average27.7% 23.0% 6.4% 27.4% 14.6% 20.1% -23.1% 32.9% 6.7% -9.8% -4.4% -6.6% -24.1% -5.9% 0.6% % Change Year Ago

8


technological developments are expected to drive demand for platinum higher from the electronics sector as well. Platinum demand from the auto sector is estimated to have reached 3.24 million ounces in 2016, up 2.0% from 2015. Demand from this sector is forecast to rise during 2017, albeit at a sluggish pace, to 3.26 million ounces, up 0.9% from 2016. Meanwhile, platinum demand from the electronics sector is forecast to rise to 202,000 ounces in 2017, up from 192,000 ounces in 2016. Platinum demand from the jewelry sector continued to decline for the fourth consecutive year during 2016, slipping to 2.32 million ounces during the year. This was the lowest level of demand from the jewelry sector since 2010. Reduced demand from China is an important factor that has been weighing on demand. China is the largest platinum jewelry market in the world, accounting for approximately 78% of global platinum jewelry demand. That said, demand for platinum from the jewelry

sector has been on a decline in the past few years. Relatively slower income growth in recent years as a result of a relatively slower economic growth has weighed on demand for luxury items like platinum jewelry. This is already beginning to show. Investment Demand For the most part investor interest in platinum remained lackluster during 2016, which was reflected in the price of the metal. As of the end of 2016 investors were estimated to hold about 7.6 million ounces of platinum bullion and coins. Roughly 68% of this metal, or 5.2 million ounces, are estimated to be held in unreported bullion inventories. While there was continued stale-bull liquidation of platinum inventories during 2016, other investors have started to buy platinum, which provided some support for platinum prices. On a net basis investors sold 1,434 ounces of platinum from their exchange traded products (ETP) holdings in 2016. This was the second consecutive year in which

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Million Ounces Million Ounces

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Fabrication Demand

Platinum Supply and Demand Balance

9


investors were net sellers of platinum, although the volume of net sales was considerably lower than the 250,770 ounces sold in 2015. Platinum coin sales are estimated to have totaled around 105,000 ounces in 2016, up from around 61,300 ounces in 2015. Investors remained interested in platinum coins during 2016, which was helped by increased offerings and marketing of platinum coins by mints and dealers. The platinum investment market is extremely small, which benefits some investors, but hurt demand for the metal when the South African Reserve Bank rejected the idea of producing a platinum coin on the basis of such a coin being commercially and financially unviable due to the small size of the platinum coin market. Markets The platinum market, in ounces terms, expanded last year, but in dollar terms contracted due to the lower annual average price in 2016 compared to 2015. The total platinum market, newly refined physical supply entering the market plus exchange futures and options trading, was 255.6 million ounces in 2016, up from 249.3 million ounces in 2015. The paper market accounted for 248.4 million ounces of the total platinum market in 2016. In dollar terms, however, the platinum market actually shrank last year to $254 billion, down from $263 billion in 2015. Trading volumes of platinum futures on the Nymex have not risen back to the levels of just three to four years ago.

10


Supply Newly refined platinum supply fell in 2016 to 7.2 million ounces, a 1.6% de-crease over the previous year, as South African platinum mine supply declined following a significantly strong year in 2015. Mine production in South Africa ac-counted for 70.5% of total platinum mine supply for the year. In 2016 South African platinum miners churned out 5.2% less platinum than they did in the previous year, however. This more than offset the increases in platinum mine production in Zimbabwe, Canada, and the United States. Total platinum mine supply fell 1.9% from 2015 to 6.0 mil-lion ounces in 2016. Secondary supply of platinum, on the other hand, was largely flat in 2016 from the previous year. A small in-crease in auto catalyst scrap supply was

largely balanced out by a decline in jewelry scrap supply. Secondary supply of platinum accounts for roughly 17% of total newly refined metal supplies annually. This decline in refined metal production last year was expected after it recovered significantly in 2015 from the strike-beaten 2014. Limited growth in mine capacity in South Africa, due largely to a lack of new projects coming online, safety stoppages and operational re-structuring issues, also were contribut-ing factors. The decline in refined metal production in 2016 did not lead to an increase in platinum prices over the course of the year, however, partly due to continued liquidation of platinum inventories dur-ing the year which helped make up for the small drop in refined platinum sup-ply.

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Annual Platinum SupplyProjected Through 2017

South African Mine Production

Other Mine Production

Secondary Supply

Russian Supply

11


In 2017 platinum mine supply growth is expected to be muted. A sharp pullback in exploration and expansion spending in the past few years has limited growth in mine supply, although these cutbacks allowed mining companies to continue ongoing operations without going out of business. A relatively lower price envi-ronment in the platinum market has also deterred new projects from coming online as scheduled. Total platinum mine supply is expected to be largely flat at 6.0 million ounces in 2017 from the level seen in 2016. Secondary sup-ply of platinum is expected to decline 0.4% to 1.2 million ounces in 2017 as continued softness in platinum prices may discourage additional recovery of the metal from scrap materials. Total refined platinum supply is expected to remain flat at 7.2 million ounces in 2017 from the previous year.

The global PGMs industry experienced a wave of ownership reshuffling last year; while ownership changes should not lead to any swings in future global mine supply, it will be interesting to watch this development going forward. Anglo American Platinum, the world’s largest PGMs producer, continued its restructuring strategy over the course of 2016. The Pandora mine, which was a joint venture between Lonmin and An-glo American Platinum, is now 92.5% owned by the former after it was an-nounced in November 2016 that Lon-min had agreed to purchase Amplats’ 42.5% stake in the mine. Also in November 2016 Amplats sold its Rustenburg group of mines to Si-banye, which was in line with the for-mer’s restructuring strategy. Sibanye also took over Amplats’ Union mine in February, although Amplats will con-

South Africa, 70.5%

Russia, 12.3% Canada, 4.8%

United States, 2.1%

Zimbabwe, 8.1%

Other, 2.1%

Source of Platinum Mine Supply 2016Total Mine Supply = 6.0 million ounces

12


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South African Mine Production of PlatinumAnnual, Projected Through 2017Thousand Ounces Thousand Ounces

tinue to refine the mine’s PGMs output, initially under a concentrate purchase agreement and thereafter on toll treat-ment terms. Sibanye Gold, a primary gold producer, announced in December 2016 that it would buy the U.S.-based Stillwater Mining Company for $2.2 billion. The transaction was completed in early May 2017.

Mine Production by Major Country and Company South Africa Most platinum is mined in South Africa. After a strong rebound in mine produc-tion in 2015 from the months-long labor strike in 2014, platinum mine output in the country fell 5.2% to 4.2 million ounces last year, accounting for 70.5% of total new mine supply that year.

Despite experiencing a choppy two-year period between 2014 and 2015, platinum mine production in South Africa has been trending lower since reaching a peak of 5.4 million ounces in 2006. Platinum mine output in 2016 in the country was 21.1% lower than the 2006 peak. The downward trajectory in South Afri-can mine production over the past dec-ade reflects a range of issues that has plagued the platinum mining industry in the country, including wage-related la-bor strikes, mine safety, weak infra-structure, and a lack of electricity gen-eration capacity and water. These issues cannot be easily resolved; they can lead to unexpected disruptions to mine and refined metal production for a short term or for an extended pe-riod of time. Meanwhile reduced capi-tal expenditures against a backdrop of

13


South African Platinum Mine ProductionThousand Troy Ounces

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

Anglo Platinum 2,467 2,315 2,166 2,250 2,184 2,019 2,066 1,630 2,123 1,958 1,650% of Total 49.0% 48.5% 47.7% 48.2% 46.7% 48.9% 46.6% 52.7% 47.5% 46.3% 38.9%% Change -11.9% -6.2% -6.5% 3.9% -2.9% -7.5% 2.3% -21.1% 30.2% -7.7% -15.7%

Impala Platinum 1,197 1,105 1,008 1,084 1,071 776 893 434 816 794 762% of Total 23.7% 23.1% 22.2% 23.2% 22.9% 18.8% 20.1% 14.0% 18.3% 18.8% 18.0%% Change 4.4% -7.7% -8.7% 7.5% -1.2% -27.6% 15.1% -51.4% 88.1% -2.7% -4.0%

Lonmin 753 678 635 579 717 672 769 375 790 704 665% of Total 14.9% 14.2% 14.0% 12.4% 15.3% 16.3% 17.3% 12.1% 17.7% 16.6% 15.7%% Change -8.2% -9.9% -6.3% -8.9% 23.9% -6.4% 14.4% -51.2% 111% -11% -6%

Sibanye 295 247 202 234 209 153 138 125 146 141 470% of Total 5.8% 5.2% 4.4% 5.0% 4.5% 3.7% 3.1% 4.0% 3.3% 3.3% 11.1%% Change 2.0% -16.0% -18.4% 16.1% -10.7% -27.0% -9.9% -9.4% 16.9% -3.5% 233.7%

Northam Platinum 199 189 189 161 171 182 207 180 241 271 271% of Total 4.0% 3.9% 4.2% 3.4% 3.7% 4.4% 4.7% 5.8% 5.4% 6.4% 6.4%% Change -10.8% -5.4% 0.4% -15.3% 6.8% 6.1% 13.6% -13.0% 34.2% 12.3% 0.0%

African Rainbow Minerals 58 66 138 145 148 155 168 154 163 167 157% of Total 1.1% 1.4% 3.1% 3.1% 3.2% 3.8% 3.8% 5.0% 3.7% 3.9% 3.7%% Change N/M N/M N/M 5.0% 2.0% 4.8% 8.0% -8.3% 6.1% 2.4% -6.3%

Norilsk 5 6 5 7 9 12 19 19 20 15 13% of Total 0.1% 0.1% 0.1% 0.2% 0.2% 0.3% 0.4% 0.6% 0.4% 0.4% 0.3%% Change -37.5% 28.6% -25.0% 46.6% 27.2% 34.0% 60.0% -1.5% 5.3% -25.0% -13.3%

Sylvania Resources 14 14 19 27 24 25 31 32 39 32% of Total 0.3% 0.3% 0.4% 0.6% 0.6% 0.6% 1.0% 0.7% 0.9% 0.8%% Change -1.4% 37.9% 43.9% -12.4% 5.6% 22.0% 3.6% 20.0% -15.8%

Sedibelo Platinum Mines 17 37 38 63 90 93 106 99 98% of Total 0.4% 0.8% 0.8% 1.5% 2.0% 3.0% 2.4% 2.3% 2.3%% Change 112.0% 4.3% 65.7% 41.3% 3.5% 14.0% -6.0% -1.3%

Pan African Resources 0.26 3.47 6.48 7.20 6.02 5.35 5.35% of Total 0.01% 0.08% 0.1% 0.2% 0.1% 0.1% 0.1%% Change N/M 86.5% 11.2% -16.5% -11.0% 0.0%

Platinum Group Metals Ltd 39 117% of Total 2.8%% Change 204.5%

Wesizwe Platinum% of Total% Change

Other 2.0 2.0 3.0 2.0 2.0 1.0 1.0 1.0 1.0 1.0 1.0% Change -86.7% N/M 50.0% -33.3% 0.0% -50.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Total South African Mine Production 5,039 4,778 4,537 4,670 4,680 4,132 4,436 3,091 4,465 4,234 4,242% Change -6.1% -5.2% -5.1% 2.9% 0.2% -11.7% 7.4% -30.3% 44.4% -5.2% 0.2%

Note: Production is based on calendar year. Production refers to metal output attributable to company ownership. Exceptions to this include Bafokeng - and 33% Ango Platinum) and Mototolo (50:50 JV between Anglo Platinum and Gelncore). Production at these mines has been fully attributed in Anglo Platinum.Rasimone Platinum Mine (owned 67% Royal Bafokeng Platinum Ltd. Aquarius was taken over by S ibanye in 2016. Anglo Platinum's Rustenberg mines have been included in S ibanye starting 2017. Figures may not equal sum due to rounding. Source: Company Documents, Industry Sources, RMG, and CPM GroupMay 2017

14


persistent weaker metal prices are ex-pected to limit growth in new mine ca-pacity coming online in the coming years. While a three-year wage deal, reached in October 2016 between three major platinum producers and the AMCU, will help prevent labor related supply dis-ruptions in the next three years, labor discontent will remain in the backdrop. This issue is particularly pertinent these days considering that major mining companies are actively deploying cost-control measures which include reduc-tions in employee headcounts. This could potentially cause short term op-erational disruptions, even when large scale strikes may seem contained. Other problems such as safety stop-pages and community disruptions also could lead to temporary supply disrup-tions. Platinum production at the Bok-oni mine, Amplats and Atlatsa’s joint venture, fell 21% last year due largely to fatality-related section 54 stoppages in May 2016. Implats’ Marula mine produced 47.0% less platinum in con-centrate in the first quarter of 2017 from the same period a year ago because op-erations were severely disrupted by community protest action. Pending any unexpected disruptions, major mining companies expect their platinum mine production to be in line their guidance in 2017. Platinum mine supply in South Africa is expected to be largely flat at 4.2 million ounces this year from the previous year. While short-term supply disruptions are possi-ble, a buildup of pipeline stocks at ma-jor platinum mining companies can help

cushion supplies. As of December 2016 Anglo American Platinum (Amplats) held 440,000 ounces of platinum pipe-line inventories, flat from the level as of December 2015 and December 2014. Amplats also held around 130,000 ounces of refined metal inventories at the end of 2016, compared to 200,000 ounces at the end of 2015 and 212,000 ounces at the end of 2014. Anglo American Platinum is the larg-est platinum producer in the world. It produced a total of 2.1 million ounces of platinum in 2016, down 7.2% from 2.3 million ounces in 2016. Platinum production at its managed mines rose year-on-year, helped by output in-creases at Mogalakwena mine, Amandebult mine and Unki mine. The Twickenham project remained on care and maintenance during 2016 as Am-plats has delayed all expansionary pro-ject decisions until after 2017. The company expects platinum production from its managed operations to be simi-lar this year compared to that in 2016. Platinum production for Amplats’ joint venture and associate mines rose mar-ginally in 2016 from a year ago, mainly due to section 54 stoppages post fatali-ties. The company expects its joint ven-ture and associate mines to produce similar amount of platinum in 2017 as in the previous year. In the first quarter of 2017 platinum production at Amplats was up 1% from a year earlier as strong performance at Mogalakwena offset output declines at Amandelbult, which was due primarily to unusually heavy rainfalls. Amplats kept its 2017 production guidance un-

15


changed at 2.35-2.40 million ounces. Over the course of 2016 Amplats con-tinued to implement its restructuring plan. In November 2016 Amplats final-ized the sale of its Rustenburg mine to Sibanye, in line with the former’s strat-egy of repositioning its portfolios. Am-plats is also in the process of the sale of its interest in the Bokoni joint venture. Impala Platinum (Implats) produced 889,500 ounces of platinum at its South African mining operations in 2016. This was 1.7% lower than the 905,100 ounces produced in 2015. Implats’ out-put level in 2016 remained below its 2013 production of around 977,110 ounces. Implats’ platinum production at its South African mine operations is expected to decline slightly to 848,000 ounces in 2017. The company expects its Rustenburg operation to produce 700,000 – 710,000 ounces of platinum in the fiscal year that ends on 30 June

2017, with a medium-term target of 830,000 ounces of platinum by the fis-cal year that ends on 30 June 2020. Lonmin produced 704,487 ounces of platinum in 2016, down 10.8% from 790,225 ounces in 2015. Platinum pro-duction from Lonmin is expected to decline over the next few years. The company lowered its sales guidance to 650,000-680,000 ounces in the fiscal year ended 30 September 2017. Sales are projected to fall to 650,000 ounces in the 2018 fiscal year. Russia Russia is the second largest platinum producing country in the world, ac-counting for 12.3% of global mine sup-ply in 2016. The country produced 739,000 ounces of platinum in 2016, flat from a year ago. This reflected the flat rate in platinum mine production

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Russian Production and ExportsAnnual, Projected Through 2017Thousand Ounces Thousand Ounces

Production

Residual

Exports

Indicates stockpile withdrawal

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Russian Platinum Production and ExportsThousand Troy Ounces

Production Exports ResidualPercent of

Exports Production1970 675 * - - -

1975 739 * - - -

1980 900 * 334 37% 5661981 900 345 38% 5551982 900 334 37% 5661983 900 * 302 34% 5981984 932 * 234 25% 698

1985 965 * 209 22% 7561986 965 317 33% 6481987 973 459 47% 5141988 981 418 43% 5631989 986 500 51% 486

1990 990 750 76% 2401991 1,050 950 90% 1001992 1,000 750 75% 2501993 900 775 86% 1251994 850 800 94% 50

1995 850 1,000 118% -1501996 893 1,000 112% -1081997 985 750 76% 2351998 1,060 600 57% 4601999 1,079 300 28% 779

2000 1,187 600 51% 5872001 1,200 1,030 86% 1702002 1,000 720 72% 2802003 1,050 1,050 100% 02004 990 990 100% 0

2005 980 980 100% 02006 965 930 96% 352007 935 900 96% 352008 800 775 97% 252009 804 790 98% 14

2010 837 801 96% 362011 857 790 92% 672012 773 755 98% 182013 757 720 95% 372014 786 750 95% 362015 739 720 97% 192016 739 680 92% 592017p 742 680 92% 62

Notes: Asterisks denote data released by the Bank for Foreign Trade in January 1988, published in the Schweizer Handels Zeitung.Sources: Bank of Foreign Trade, U.S . Bureau of Mines, CentralIntelligence Agency, CPM Group.May 2017

17


growth at the nickel mining operations of Norilsk Nickel, which produces the bulk of the metal for the country. Norisk Nickel produced 610,000 ounces of platinum last year, above the 542,000-586,000 ounce production target it set earlier. The increase of mine output above the production target was attrib-uted to the processing of work-in-progress material released after the shutdown of nickel plant. The company expects to produce 581,000-645,000 ounces of platinum from its Russian feedstock in 2017. Zimbabwe Zimbabwe, the world’s third-largest platinum producing country, accounted for 8.1% of total mine supply in 2016. The country produced a record amount of platinum last year, up 20.5% year-on-year to 489,000 ounces.

A sharp increase in platinum mine pro-duction at Zimplats was largely respon-sible for the 20.5% year-on-year gain in the country’s platinum mine production last year. Zimplats, the largest platinum operation in the country, produced 296,000 ounces in 2016, up 36.1% from a year earlier. After the safety closure of the company’s Bimha mine in the second half of 2014, the redevelopment of this mine remains on schedule and it is expected to reach full production in April 2018. Zimplats also is finalizing plans to de-velop a new shaft, Portal 6. Develop-ment of this new mine is expected to cost around $148 million over the next five years, with first production due in 2021. It will replace output from Zim-plats’ oldest mines, which will be ap-proaching depletion. The Mimosa mine, which is jointly owned by Implats and Acquarius, pro-

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Platinum Mine Production in ZimbabweAnnual, Projected Through 2017Ounces Ounces

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duced 120,600 ounces, an increase of 1.9% from a year earlier. Anglo Plati-num’s Unki mine produced 717,000 ounces o platinum, up 3.3% year-on-year. In 2017 platinum mine production from Zimbabwe is expected to reach 460,000 ounces, a decrease of 6.0% from a record year in 2016. Canada Canadian platinum mine production totaled 289,000 ounces in 2016, up 9.1% from the previous year. Increases in mine production at Vale’s Sudbury and Glencore’s Sudbury and Raglan operations more than offset a small de-cline in mine production at North American Palladium’s Lac des Illes. Vale’s Sudbury produced 166,000 ounces of platinum last year, while the Sudbury & Raglan operations owned by Glencore produced 18.4% more plati-

num than they did in 2015. The Lac des Iles mine produced 10,230 ounces of platinum last year, down 16.8% from the previous year. United States The United States produced 127,850 ounces of platinum in 2016, up 6.0% from 120,650 ounces in the previous year. Stillwater Mining is the main PGM producer in the United States, op-erating two mines in Montana. The Stillwater Mining mine produced 76,500 ounces of platinum and the East Boulder mine produced 48,600 ounces of platinum last year. Near Term Mine Capacity Outlook There has been a sharp retreat from ex-ploration and expansion spending among mining companies since the

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Existing Capacity

2014 2015 2016 2017 2018 Post 2018

Post 2018 2018

2017 2016

Projected PGM Mine Production Capacity


Capacity at Old Mines

Capacity Additions by Year:

Sources: Raw Materials Group, Metals Economics Group, CPM Group

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global financial crisis in 2008, which will result in future supply constraints, although such cutbacks have allowed mining companies to continue ongoing operations without going out of busi-ness. Against suck a backdrop, net ad-ditions to global PGMs mining capacity are expected to be muted in the next year or two. There was only one new project that was brought online in 2016 – Platinum Group Metals Ltd’s Maseve mine, which has a designed PGMs production capacity of 275,000 ounces. It pro-duced its first concentrate in February 2016 although underground develop-ment and mining rates have fallen be-hind schedule. Apart from a lack of new projects com-ing online, there are a range of other factors that could disrupt PGMs produc-

tion levels, including safety stoppages, labor disputes, and declining ore grades.

The Cost of Mining PGMs Declined The concept of cash costs is a non-GAAP accounting measure that is used extensively to analyze production costs, both internally by company manage-ment and externally by those who fol-low a particular company or mining sector. The costs included are those as-sociated with mining and processing of the ore. They exclude non-cash items such as depreciation, amortization costs, and general corporate overhead. The cash cost is used as a performance indi-cator and is typically compared with the price of the metal being mined, in es-sence showing a measure of per-unit gross margin. In the case of this report we use a platinum group metals (PGMs) basket price. In order to better encom-

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PGM Producers' C1 Cash Costs in 2016$/Ounce $/Ounce

Cumulative Percent of Production

Annual Average PGM Basket Price - $798.75

Notes: The PGM basket price and average cash costs are weighted by production. Production-weighted PGM C1 Cash Cost curve accounts for 85.7% of world PGM mine production in 2016. Sources: World Mine Cost Data Exchange, company reports, CPM Group

Production-Weighted PGM C1 Cash Cost = $607.45

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pass the PGM mining sector, this report has included all PGM mining compa-nies’ cash costs where PGMs account for more than 15% of the mine’s or company’s revenues. The cash cost for each mine is weighted by the proportion of its production to total global PGM production. The production-weighted global plati-num group metals cash cost per ounce of platinum group metals mined stood at $607.45 in 2016, down from $663.17 in 2015. This figure reflects costs at 22 mining operations that produce PGMs, with total output accounting for 85.7% of global PGMs mine output during the year. South Africa and the rest of the world continued to diverge in terms of cash cost during 2016. PGMs producing mines in Russia and North America re-ported the lowest cash costs while most of South African PGMs mines fell in or under the 60th percentile of the cash cost curve. The striking difference is mainly due to the fact that most of the PGMs that are mined in non-South Africa re-gion are byproducts of nickel, resulting in significantly lower cash cost. Other factors that tend to exert upward pressure on PGMs cash costs in South Africa are not easily resolved. One im-portant component in the making of PGMs is electricity, which has exposed South Africa to power outages before. Memories are still fresh when the coun-try experienced serious energy con-straints in 2008 and again in 2015, and South Africa’s economic growth was greatly affected by the energy crisis. Eskom, which accounts for 95% of the country’s electricity supply, has contin-

ued implementing tariffs over the past few years to fund its capacity expansion programs (despite that these programs have experienced significant delays), although the pace of tariff increase was slower than those between 2008 and 2011. Eskom’s annual tariff rate in-creases averaged 10.8% from 2012 to 2016, much lower than the annual aver-age of 27% from 2008 to 2011. Water also is essential for both mining and processing of ore. Platinum proc-essing uses a significant amount of wa-ter. Mining companies have to pay for the water that they use. The Department of Water Affairs of South Africa issues mining companies licenses for using water. Precious metals mines are placed under category A mines, which classi-fies them as those mining operations that will have the most significant im-pact on water resources due to mining activity. Operating a mine without a license can result in stop orders on min-ing activity and fines from the Depart-ment of Water Affairs of South Africa. That said, water accounts for a rela-tively small proportion of the total util-ity cost to PGM mines, with the major-ity of the utilities component comprised of electricity costs. Labor costs are the single largest com-ponent of South African PGM mining cash costs, accounting for approxi-mately 50% of total operating cash costs. In October 2016, South Africa’s three largest platinum producers – An-glo American Platinum, Impala Plati-num, and Lonmin – reached an agree-ment with the Association of Mine-workers and Construction Union (AMCU) to raise mining workers’ basic salaries by an average 7.3% per annum

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Cash CostPGM Basket Price

Production-Weighted Average PGM C1 Cash Cost and Basket Price

Sources: World Mine Cost Data Exchange, CPM Group.

$/Troy Ounce

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South African PGM C1 Cash Costs

$/Troy Ounce $/Troy Ounce

Notes: Average cash cost and basket price is weighted by production. Sources: World Mine Cost Data Exchange, CPM Group

South African PGM Basket Price

CAGR, 2000 - 2016: 9.3%

22


Labor 52%

Utilities 10%

Parts & Supplies

12%

Fuel 9%

5%Other 12%

Explosives, Reagents

Typical PGMs Mining Cash Cost BreakdownTypical Cash Cost Breakdown

Component Range Typical

Labor 40% - 60% 52%Utilities 8% - 11% 10%Parts & Supplies 10% - 15% 12%Fuel 8% - 10% 9%Explosives, Reagents 4% - 8% 5%Other 7% - 11% 12%Total 100%

Notes: Labor costs include permanent labor and contract labor. Fuel is most diesel, but also includes petrol/gasoline, natural gas, and propane. Utilities include electricity and water. Parts and Supplies refers to parts and supplies, structural and rebar steel. Some of the other costs in-cluded in the 'Other' category are transpor-tation cost, exploration costs, royalties, camp food, and supplies and metal move-ment costs.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

World South Africa Other Countries

Production-Weighted Average Profit Margin of PGM Mining Industry

Note: Profit margin is calculated as (PGM Basket Price - PGM C1 Cash Cost)/PGM Basket Price. Profit margin is the percentage of gross profit earned for every ounce of PGMs sold. Industry average PGM basket prices and cash costs are weighted by production. Sources: World Mine Cost Data Exchange, CPM Group.

23


over the next three years. This three-year wage deal set the tone for future wage increases, at least in the couple of years after it expires, that wage inflation will be contained, although one cannot say for certain that labor disputes will not arise in the near and medium term. Still, in 2016 South African miners were able to continue to bring down cash costs through ongoing mine con-solidation and restructuring initiatives, improved operating efficiencies, and a decrease in fuel prices. The South African rand exchange rate plays an important part in influencing cost fluctuations. South African min-ers’ costs are primarily incurred in rand while revenues are received in U.S. dol-lars, as commodities are dollar-denominated in international markets. This makes the relationship between

these two currencies extremely impor-tant to the margins of South African PGM producers. The relative strength in the South African rand, which strengthened 12.6% against the dollar over the course of 2016, helped bring down cash costs in dollar terms for South African miners. Going forward PGMs cash costs are likely to face continued upward pres-sure, although sharp increases in cash costs seem unlikely. Wage increases are likely to be contained in the next few of years given the three-year wage deal between the South African miners and the labor union. South African miners also will be careful with laying off workers in the future as they do not want to see a repeat of the massive pro-duction loss that occurred during the months-long labor strike in 2014.

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2000 2002 2004 2006 2008 2010 2012 2014 2016

World

Russia

United States

Canada

South Africa

Production-Weighted PGM Basket Prices

$/Troy Ounce $/Troy Ounce

24


Platinum Production by CountryTroy Ounces

South Africa Russia Zimbabwe CanadaUnited States Australia Colombia

1976 1,675,000 -- NA 600,000 1,000 3,158 16,7791977 1,829,000 -- NA 693,000 1,297 3,697 17,3151978 1,775,000 -- NA 263,000 1,258 12,958 13,9391979 1,950,000 -- NA 375,000 2,036 2,765 12,9331980 2,044,000 -- NA 334,000 663 2,500 14,3451981 2,080,000 -- 2,300 345,000 1,240 2,093 14,8041982 1,626,000 -- 1,704 334,000 1,381 2,388 12,0001983 1,655,000 -- 1,695 302,000 2,029 1,900 10,3031984 2,010,000 -- 772 234,000 2,583 2,122 10,1061985 2,300,000 -- 611 209,000 1,624 3,054 11,6501986 2,260,000 -- 836 317,000 613 3,697 14,3711987 2,475,000 -- 579 457,000 25,078 4,180 20,5121988 2,475,000 418,000 900 170,000 39,867 3,376 26,2031989 2,760,000 500,000 804 180,000 45,976 3,215 31,2831990 2,725,000 750,000 675 180,000 58,193 3,215 42,4391991 2,785,000 950,000 611 190,000 55,621 3,215 51,4411992 3,000,000 750,000 289 175,000 59,157 3,215 63,0161993 3,200,000 775,000 129 140,000 68,000 3,215 55,2991994 3,260,000 800,000 322 129,000 64,302 3,215 57,8711995 3,348,000 1,000,000 322 178,613 53,000 3,215 57,8711996 3,415,000 1,000,000 10,322 184,285 61,000 3,215 57,8711997 3,690,540 750,000 11,077 149,288 84,000 3,215 58,0001998 3,732,164 600,000 36,116 180,835 112,500 3,215 13,2141999 3,915,358 300,000 46,139 180,244 103,030 3,215 14,4042000 3,807,810 600,000 16,080 187,804 108,820 3,215 10,8992001 4,153,500 1,030,000 16,080 229,610 130,210 3,215 11,2532002 4,137,544 720,000 72,822 258,200 146,000 8,000 30,0002003 4,471,558 1,050,000 139,000 149,440 139,000 8,000 30,0002004 4,532,198 990,000 220,300 251,000 135,000 6,000 35,0002005 5,000,381 980,000 159,842 241,603 131,000 3,569 34,7872006 5,368,655 965,000 167,132 222,659 143,000 4,000 46,3202007 5,039,317 935,000 170,640 206,442 128,000 4,565 49,0602008 4,778,367 800,000 181,365 234,711 118,500 3,860 44,0102009 4,536,679 804,000 229,316 143,875 125,751 4,180 29,8702010 4,669,883 837,310 282,641 95,500 113,420 4,180 32,1502011 4,679,669 856,570 341,857 246,743 121,590 4,180 39,5802012 4,132,349 772,530 341,621 214,400 120,590 3,220 39,3452013 4,436,379 756,600 405,887 221,737 122,400 3,220 19,2902014 3,090,963 785,600 403,120 300,032 120,200 3,220 22,6852015 4,464,851 738,600 405,580 265,370 120,650 3,220 22,6852016 4,233,530 738,600 488,900 289,420 127,850 3,220 22,6852017p 4,242,140 741,600 459,600 308,854 130,978 3,220 22,685

Notes: *These figures represent Japanese refined recovery of mine output from other countries,including Australia, Canada, Papua New Guinea, Indonesia, and the Philippines. These figuresappear to include some production listed for Canada.Source: U.S . Bureau of Mines; CPM Group.May 2017e -- estimates. p-- projections.

25


Serbia & Montenegro China Poland Finland Ethiopia Botswana Japan* Total

NA -- -- 600 145 -- 8,706 2,305,388 1976739 -- -- 640 100 -- 9,737 2,555,525 1977417 -- -- 640 123 -- 10,176 2,077,511 1978675 -- -- 720 108 -- 12,142 2,356,379 1979640 -- -- 700 113 -- 12,366 2,409,327 1980482 -- -- 1,608 125 -- 10,521 2,458,173 1981418 -- -- 4,147 125 -- 15,411 1,997,574 1982193 -- -- 2,186 125 -- 21,460 1,996,891 1983200 -- -- 1,061 125 -- 19,523 2,280,492 1984250 -- -- 1,125 150 -- 22,216 2,549,680 1985

1,061 -- -- 3,440 64 -- 21,316 2,622,398 1986772 -- -- 2,218 32 -- 24,209 3,009,580 1987739 9,002 -- 1,736 32 -- 20,802 3,165,657 1988739 8,581 -- 2,154 64 -- 33,147 3,565,964 1989675 7,904 -- 2,315 64 -- 45,976 3,816,456 1990707 8,130 -- 1,897 32 -- 31,765 4,078,419 1991610 8,130 -- 1,736 32 -- 20,223 4,081,408 1992321 8,807 -- 1,640 32 -- 21,252 4,273,695 1993225 8,456 -- 1,190 32 -- 22,506 4,347,118 1994192 9,099 -- 1,190 30 -- 22,506 4,674,038 1995321 8,552 -- 1,993 30 -- 22,506 4,765,095 1996350 9,002 675 1,252 30 -- 22,506 4,779,935 1997322 8,788 675 5,000 30 -- 22,506 4,715,365 1998161 14,468 675 14,178 30 -- 22,506 4,614,408 1999161 19,505 675 14,178 30 -- 22,506 4,791,683 2000161 24,113 675 16,397 30 12,000 17,683 5,644,927 2001

-- 21,863 643 16,333 30 12,000 17,000 5,440,434 2002-- 32,151 643 16,236 30 12,000 17,000 6,065,058 2003

100 41,796 643 16,075 30 15,000 22,500 6,265,642 200496 51,441 643 25,721 129 9,645 24,435 6,663,291 200564 54,013 643 25,721 161 9,645 24,435 7,031,448 200664 64,837 804 25,721 322 22,506 24,756 6,672,034 200764 69,054 804 25,721 322 19,290 24,756 6,300,824 200864 68,635 804 25,721 257 19,290 25,078 6,013,591 200964 67,796 804 16,080 257 18,000 25,078 6,178,342 201064 68,481 804 12,860 257 11,900 25,078 6,424,602 201164 69,218 804 13,820 257 14,150 25,078 5,718,213 201264 69,887 804 13,820 257 14,150 25,078 6,089,572 201364 70,553 804 13,820 257 14,150 25,078 4,850,546 201464 47,137 804 13,820 257 14,150 25,078 6,122,266 201564 48,251 804 13,820 257 14,150 25,078 6,006,628 201664 49,248 804 13,820 257 14,150 25,078 6,012,497 2017p

26


While Eskom has in recent years slowed down its annual tariff increases on min-ers, near-or medium-term energy con-straints cannot be ruled out. It is be-cause more than 85% of Eskom’s elec-tricity output comes from coal-fired plants, and South Africa has yet been able to successfully diversify its energy mix. The cost of fuel is expected to rebound slightly this year alongside an improvement in crude oil prices. The recovery is expected to be mild, how-ever, and will do little in terms of add-ing to costs on a year-on-year basis in the coming years.

Platinum Secondary Supply Secondary supply of platinum fell mar-ginally to 1.237 million ounces in 2016 from 1.240 million ounces estimated in 2015. A moderate increase in auto cata-

lyst scrap was offset by a decline in jewelry scrap last year. Softer steel and platinum prices saw fewer automobiles entering the scrap yard in the first half of 2016, which led to low availability of spent catalytic converters especially in Europe and the United States. As steel prices re-bounded in the second half of the year, the volumes of catalyst scrap improved; increasing amount of platinum-rich die-sel catalyst scrap in Europe also helped pull up the total amount of platinum scrap last year. Persistently lower plati-num prices hurt jewelry scrap last year, which fell 3.2% to 110,200 ounces. Secondary supply of platinum is ex-pected to fall slightly to 1.233 million ounces in 2017.

Auto Catalyst31.8%

Jewelry3.9%

64.3%

PGM Secondary Supply in 1995Total = 1.71 million ounces

Electronics

Auto Catalyst85.1%

Jewelry3.4%

12.4%

PGM Secondary Supply in 2016Total = 3.9 million ounces

Electronics

27


0

200

400

600

800

1,000

1,200

1,400

1,600

1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 2017p

China

Europe

Japan

United States

Platinum Available for Recovery from Spent Auto CatalystsAnnual, Projected Through 2017Thousand Troy Ounces

0

200

400

600

800

1,000

1,200

1,400

1,600

0

200

400

600

800

1,000

1,200

1,400

1,600

1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015

Electronic Scrap

Jewelry Scrap

AutoCatalyst Scrap (adjusted for refining loss)

Available Platinum Scrap Feedstock and Actual Refined Secondary Platinum SupplyAnnual, Projected Through 2017

Thousand Troy Ounces

Total Secondary Supply


Note: Bars represent the PGM content of material theoretically available for recycling. Line represents the outturn from refiners. The spread between PGM content in scrap material and refined metal accounts for refining losses and inventory drawndown patterns, which are driven by price trends , disposable income trends, and price

28


Platinum Secondary SupplyThousand Troy Ounces

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Platinum Contained in Hypothetically Available Scrap Material

Spent Auto CatalystsUnited States 359.4 424.6 550.7 630.4 605.1 608.4 609.7 708.5 697.4 679.6Western Europe 2.6 4.9 9.5 17.2 27.8 42.1 59.5 78.3 106.9 142.2Japan 81.5 98.1 114.6 144.1 169.2 195.9 228.6 264.3 294.1 332.0China N/A N/A N/A N/A N/A N/A N/A N/A N/A N/ASubtotal 443.6 527.6 674.8 791.8 802.0 846.3 897.9 1,051.1 1,098.4 1,153.9% Change 19.0% 27.9% 17.3% 1.3% 5.5% 6.1% 17.1% 4.5% 5.1%

% of Total 88.2% 89.9% 91.5% 91.7% 90.9% 84.0% 90.8% 91.0% 89.3% 89.3%

Old Jewelry 59.2 59.3 62.9 72.0 80.0 161.5 88.1 98.4 123.7 125.0% Change 0.1% 6.2% 14.4% 11.0% ###### -45.4% 11.6% 25.7% 1.1%

% of Total 11.8% 10.1% 8.5% 8.3% 9.1% 16.0% 8.9% 8.5% 10.0% 9.7%

EOL Electronics 3.0 5.8 8.4 13.7% Change N/M 45.9% 62.2%

% of Total 0.3% 0.5% 0.7% 1.1%

Total 502.8 586.9 737.7 863.8 882.0 1,007.8 988.9 1,155.2 1,230.5 1,292.5% Change 16.7% 25.7% 17.1% 2.1% 14.3% -1.9% 16.8% 6.5% 5.0%

Total Refined Platinum from Secondary Sources 455.0 515.0 666.0 750.0 811.0 915.0 900.0 1,040.0 1,130.0 1,180.0

% Change 13.2% 29.3% 12.6% 8.1% 12.8% -1.6% 15.6% 8.7% 4.4%

Notes: Differences in the volume of platinum contained in hypothetically available scrap material and actual refined secondary supply of platinum are due to factors that influence the hoarding and/or release of scrap inventories by collectors. These factors relate mostly to price and economic trends. Additionally, refined supply accounts for refining losses. N/M - Not MeaningfulSource: CPM GroupMay 2017

29


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

705.2 680.6 678.5 638.2 589.4 539.9 489.3 430.0 373.4 321.4 327.9 332.1 325.5183.8 233.1 300.1 378.7 528.0 573.4 606.3 625.2 631.1 631.9 646.4 652.8 662.6329.1 318.6 301.7 298.9 274.2 249.0 223.0 196.9 171.1 148.8 132.4 122.2 116.0

0.1 0.1 0.2 0.2 0.3 0.6 0.8 1.1 1.4 2.1 3.1 4.3 5.91,218.2 1,232.4 1,280.4 1,316.0 1,391.9 1,362.9 1,319.5 1,253.2 1,177.0 1,104.1 1,109.7 1,111.4 1,110.0

5.6% 1.2% 3.9% 2.8% 5.8% -2.1% -3.2% -5.0% -6.1% -6.2% 0.5% 0.2% -0.1%90.0% 88.4% 88.8% 88.4% 90.5% 86.5% 87.4% 87.4% 86.6% 86.4% 87.2% 87.2% 87.5%

116.3 138.6 134.4 139.9 111.3 175.2 149.8 138.6 137.1 126.8 113.9 114.9 105.0-6.9% 19.2% -3.1% 4.1% -20.4% 57.4% -14.5% -7.5% -1.1% -7.5% -10.2% 0.9% -8.6%

8.6% 9.9% 9.3% 9.4% 7.2% 11.1% 9.9% 9.7% 10.1% 9.9% 8.9% 9.0% 8.3%

18.6 23.2 27.6 32.0 34.1 37.4 39.7 42.2 45.0 47.5 49.7 49.0 53.136.2% 24.5% 19.3% 15.8% 6.5% 9.8% 6.1% 6.2% 6.7% 5.6% 4.6% -1.4% 8.4%

1.4% 1.7% 1.9% 2.2% 2.2% 2.4% 2.6% 2.9% 3.3% 3.7% 3.9% 3.8% 4.2%

1,353.1 1,394.2 1,442.4 1,487.9 1,537.3 1,575.5 1,509.0 1,434.0 1,359.0 1,278.4 1,273.3 1,275.3 1,268.14.7% 3.0% 3.5% 3.2% 3.3% 2.5% -4.2% -5.0% -5.2% -5.9% -0.4% 0.2% -0.6%

1,230.0 1,280.0 1,315.0 1,376.0 1,220.0 1,525.0 1,460.0 1,330.0 1,322.0 1,250.4 1,262.9 1,275.6 1,232.94.2% 4.1% 2.7% 4.6% -11.3% 25.0% -4.3% -8.9% -0.6% -5.4% 1.0% 1.0% -3.3%

30


Fabrication Demand Global platinum fabrication demand rose slightly during 2016 to 7.05 million ounces, up 0.5% from 2015. Platinum fabrication demand has struggled to rise strongly in recent years as changing demand trends for vehicles and jewelry around the world have hurt demand. Diesel passenger vehicles, which use platinum intensive catalysts, have fallen out of favor in Europe which was the largest market for such vehicles. At the same time, India which was a growing market for diesel cars also saw a shift in demand to gasoline vehicles when the Indian government took away the subsidies on diesel fuel. To make matters worse, there has been an ongoing substitution of platinum with palladium in diesel auto catalysts. Jewelry demand has been in a declining

trend as the Chinese, who account for around 78% of global platinum jewelry demand, have reduced their purchases. While these factors have been the major drags on platinum fabrication demand, there have been pockets of strength in the market as well. Much of this strength has been centered around demand for commercial vehicles. The generally healthy state of the global economy, especially in 2016, helped to drive higher demand for commercial vehicles. These vehicles are primarily powered by diesel and therefore have p l a t i n u m i n t e n s i v e c a t a l y s t . Furthermore, the larger engine size of these vehicles demands a larger catalyst. Both of these factors have been supportive of platinum fabrication demand and have to a large extent been able to offset the weakness in demand from the diesel passenger vehicle and jewelry market.

0

1

2

3

4

5

6

7

8

9

0

1

2

3

4

5

6

7

8

9

76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Other Countries Other Uses

Dental Petrochemical

Electronics


Jewelry

Automotive

Annual Platinum Fabrication DemandThrough 2017

31


Platinum demand from the electronics sector also is expected to benefit going forward as a greater amount of platinum is used in place of ruthenium for coating hard disks. The strength in demand from these two sectors is expected to help prevent platinum fabrication demand from declining in 2017. Platinum Automotive Platinum demand from the auto sector is estimated to have reached 3.24 million ounces in 2016, up 2.0% from 2015. Healthy demand for commercial vehicles was the primary driver of this increase in platinum fabrication demand during the year. Platinum demand from the auto sector rose in North America, Europe, and the ‘other’ category, but declined in Japan. The most important auto market for the platinum sector is Europe, where demand for commercial vehicles got a

strong bounce during 2016. Passenger vehicle sales also rose in Europe, however, market share for diesel vehicles, which are more important to platinum demand, declined during the year. Platinum fabrication demand in Europe reached 1.2 million ounces in 2016, up 8% from 2015. North America is the second largest source of platinum fabrication demand for the auto sector. The North American commercial vehicle market is the largest in world, however, around 95% of its passenger vehicles are powered by gasoline, making this part of the vehicle market less relevant to platinum fabrication demand. North American platinum fabrication demand rose to 750,000 ounces in 2016, up 1% from 2015. The decline in demand for commercial vehicles in Japan during 2016 was the primary factor reducing platinum demand from the auto sector, with Japanese demand

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

Automotive Platinum Demand By RegionProjected Through 2017

Other Japan Europe United States

Thousand Ounces Thousand Ounces

32


Annual Platinum UseThousand Troy Ounces

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999Auto United States 517 447 478 508 722 811 789 700 675 690 620 579 630 731 880 1,000 1,100 1,050 1,100 1,175 Japan 209 193 170 167 167 174 248 295 325 340 355 400 306 240 246 235 219 225 218 225 Europe 14 13 18 24 42 48 71 167 185 215 322 411 475 500 540 560 582 581 622 640 China Other Countries -- -- -- -- -- -- -- -- -- -- -- -- 100 120 130 135 150 155 200 250____ ____ ____ ____ ____ ____ ____ ____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ Subtotal 740 653 666 699 931 1,033 1,108 1,162 1,185 1,245 1,297 1,390 1,511 1,591 1,796 1,930 2,051 2,011 2,140 2,290 % of Total 28.7% 25.9% 30.1% 32.9% 35.8% 35.1% 41.7% 40.0% 37.5% 37.2% 36.4% 37.1% 36.8% 36.9% 37.5% 37.4% 37.1% 34.6% 35.7% 37.1% % Change Year Ago - -11.8% 2.0% 5.0% 33.2% 11.0% 7.3% 4.9% 2.0% 5.1% 4.2% 7.2% 8.7% 5.3% 12.9% 7.5% 6.3% -2.0% 6.4% 7.0%

Jewelry Japan 440 624 630 553 624 675 691 868 987 1,061 1,150 1,290 1,318 1,400 1,547 1,641 1,700 1,775 1,590 1,431 United States 51 28 16 10 9 16 12 6 12 13 14 17 19 31 34 63 70 100 140 150 Germany 7 3 10 17 26 31 24 23 24 26 29 35 45 45 49 48 48 48 48 55 United Kingdom 5 5 4 2 2 2 1 1 2 2 2 2 2 2 2 2 2 6 6 10 France 3 3 3 2 3 3 3 3 3 3 3 3 3 3 3 3 3 5 6 10 China Other 103 160 251 407 643 823____ ____ ____ ____ ____ ____ ____ ____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ Subtotal 506 663 663 584 664 727 731 900 1,028 1,105 1,198 1,347 1,387 1,481 1,738 1,917 2,074 2,341 2,433 2,479 % of Total 19.6% 26.3% 30.0% 27.5% 25.5% 24.7% 27.5% 31.0% 32.5% 33.0% 33.7% 36.0% 33.8% 34.3% 36.3% 37.1% 37.5% 40.3% 40.6% 40.1% % Change Year Ago - 30.9% 0.1% -11.9% 13.7% 9.4% 0.5% 23.2% 14.2% 7.5% 8.4% 12.5% 3.0% 6.7% 17.4% 10.3% 8.2% 12.9% 3.9% 1.9%

Electronics United States 150 112 90 75 99 116 104 108 112 125 126 127 126 129 139 145 146 159 167 175 Japan 16 16 19 16 29 39 42 42 48 50 50 52 43 55 57 53 53 55 57 95 Germany 16 20 7 6 9 6 6 14 16 18 18 26 29 26 28 32 26 22 22 25 United Kingdom 18 16 10 9 10 9 10 12 12 12 12 12 11 11 12 12 12 14 14 14 France 1 1 1 1 1 1 1 * * * * * * * * * * * * * China Other - - - - - - - - - - - - - - - - - - - -____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Subtotal 201 165 127 107 148 170 162 176 188 205 206 217 209 221 236 242 237 250 260 309 % of Total 7.8% 6.5% 5.7% 5.0% 5.7% 5.8% 6.1% 6.1% 6.0% 6.1% 5.8% 5.8% 5.1% 5.1% 4.9% 4.7% 4.3% 4.3% 4.3% 5.0% % Change Year Ago - -18.1% -22.8% -16.1% 38.5% 15.3% -4.8% 8.6% 6.9% 9.0% 0.2% 5.5% -3.7% 5.8% 6.8% 2.5% -2.1% 5.5% 4.0% 18.8%

Chemical/PetroleumRefining U.S. Petroleum 144 88 22 38 28 29 31 24 34 92 105 127 105 100 106 110 113 109 109 113 U.S. Chemical 119 78 64 75 80 95 97 81 122 97 86 48 75 81 63 75 88 92 94 96 Japanese Petroleum 0 - - - - - - - - - - - - - - - - - - - Japanese Chemical 10 10 10 10 16 16 16 16 19 20 20 20 15 20 22 20 32 38 37 38 China Petroleum China Chemical ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Subtotal 273 176 95 123 124 140 144 121 175 209 211 195 195 201 191 205 233 239 240 247 % of Total 10.6% 7.0% 4.3% 5.8% 4.8% 4.8% 5.4% 4.2% 5.6% 6.2% 5.9% 5.2% 4.7% 4.7% 4.0% 4.0% 4.2% 4.1% 4.0% 4.0% % Change Year Ago - -35.4% -46.1% 29.3% 0.8% 12.7% 2.7% -15.9% 45.3% 19.1% 1.1% -7.7% 0.0% 3.1% -5.0% 7.3% 13.7% 2.6% 0.4% 2.9%

Dental/Medical United States 26 19 23 17 19 25 23 15 19 20 22 20 21 24 25 25 25 27 29 30 Germany 62 66 48 28 30 27 22 21 29 16 17 20 19 23 24 24 23 22 20 20 United Kingdom 3 3 2 2 2 2 2 1 1 1 1 - - - - - - - - - France 2 2 2 1 1 1 1 1 1 1 1 - - - - - - - - -___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ Subtotal 93 90 75 48 52 55 48 38 50 38 41 40 40 47 49 49 48 49 49 50 % of Total 3.6% 3.6% 3.4% 2.2% 2.0% 1.9% 1.8% 1.3% 1.6% 1.1% 1.2% 1.1% 1.0% 1.1% 1.0% 0.9% 0.9% 0.8% 0.8% 0.8% % Change Year Ago - -3.3% -16.6% -36.2% 8.2% 5.6% -12.6% -19.4% 29.4% -22.9% 7.2% -3.9% 0.2% 17.5% 5.4% 0.0% -2.0% 2.1% 0.0% 2.0%

Other Uses United States 111 101 88 90 94 146 126 74 118 171 174 129 142 113 108 127 132 147 157 164 Japan 257 345 245 210 345 406 61 135 98 50 100 100 90 105 107 105 151 160 168 100 Western Europe 295 241 167 179 164 178 192 203 216 220 223 228 235 231 235 257 270 281 281 291 China ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Subtotal 663 687 500 479 603 730 379 412 432 442 497 457 467 449 450 489 553 588 606 555 % of Total 25.7% 27.2% 22.6% 22.5% 23.2% 24.8% 14.3% 14.2% 13.7% 13.2% 14.0% 12.2% 11.4% 10.4% 9.4% 9.5% 10.0% 10.1% 10.1% 9.0% % Change Year Ago - 3.7% -27.2% -4.3% 26.0% 21.0% -48.0% 8.7% 4.9% 2.2% 12.5% -8.0% 2.1% -3.8% 0.2% 8.6% 13.2% 6.3% 3.1% -8.4%

Other Countries 100 90 87 85 82 88 85 95 100 100 110 100 300 324 330 335 335 335 270 250 % of Total 3.9% 3.6% 3.9% 4.0% 3.1% 3.0% 3.2% 3.3% 3.2% 3.0% 3.1% 2.7% 7.3% 7.5% 6.9% 6.5% 6.1% 5.8% 4.5% 4.0% % Change Year Ago - -10.0% -3.3% -2.3% -3.5% 7.3% -3.4% 11.8% 5.3% 0.0% 10.0% -9.1% 200.0% 8.0% 1.9% 1.5% 0.0% 0.0% -19.4% -7.4%____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____Total 2,576 2,524 2,214 2,125 2,604 2,942 2,656 2,905 3,159 3,344 3,560 3,746 4,109 4,314 4,790 5,166 5,531 5,813 5,998 6,180% Change Year Ago - -2.0% -12.3% -4.0% 22.6% 13.0% -9.7% 9.4% 8.7% 5.9% 6.4% 5.2% 9.7% 5.0% 11.1% 7.9% 7.1% 5.1% 3.2% 3.0%

Notes: The subtotals for individual uses presented here are the sums of the countries for which data are available; other countries mayconsume relatively small amounts of platinum for these uses, but estimates are not available. Other uses in Western Europe includes consumption by major end-using industries in European countries, as well and smaller using industries throughout Western Europe.Japanese petroleum industry demand is included in chemical industry statistics beginning in 1981. Totals may not equal the sums ofcategories due to rounding. * -- less than 500 ounces. p - projections.Chinese demand is broken out beginning 2000Source: CPM Group.May 3, 2017

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017pAuto

1,200 1,100 1,000 975 1,000 1,010 920 850 620 420 475 546 590 637 675 743 750 754 United States290 340 430 510 615 618 625 595 590 470 555 499 574 580 615 587 578 584 Japan670 900 1,045 1,300 1,600 1,925 2,125 2,150 1,950 1,100 1,166 1,189 1,023 1,002 1,073 1,158 1,216 1,228 Europe32 40 53 74 107 90 123 162 186 256 359 367 369 408 388 363 386 375 China

268 310 347 376 368 410 417 438 439 494 526 571 597 607 373 321 306 324 Other Countries_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____2,460 2,690 2,875 3,235 3,690 4,053 4,210 4,195 3,785 2,740 3,081 3,173 3,153 3,234 3,123 3,173 3,236 3,265 Subtotal38.3% 41.9% 43.9% 48.0% 52.0% 54.7% 54.5% 54.3% 54.2% 43% 46% 45% 44% 45% 45% 45% 46% 46% % of Total7.4% 9.3% 6.9% 12.5% 14.1% 9.8% 3.9% -0.4% -9.8% -27.6% 12.4% 3.0% -0.6% 2.6% -3.4% 1.6% 2.0% 0.9% % Change Year Ago

Jewelry1,060 750 780 665 560 510 500 490 450 350 310 290 292 280 269 279 283 274 Japan

200 120 130 120 100 80 75 62 59 60 65 60 62 60 61 68 72 72 United States52 50 48 45 40 38 35 30 27 30 30 27 26 22 22 22 23 23 Germany36 39 40 37 33 32 30 25 22 23 22 21 22 17 17 17 17 17 United Kingdom11 10 10 8 7 6 5 3 2 3 3 3 2 2 2 2 2 2 France

949 1,105 1,059 1,031 964 889 935 1,062 1,058 1,752 1,616 1,840 1,988 1,940 1,901 1,825 1,780 1,762 China80 85 90 100 115 120 110 100 80 65 80 90 110 122 130 133 152 150 Other_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

2,388 2,159 2,157 2,006 1,819 1,675 1,690 1,772 1,698 2,283 2,126 2,331 2,502 2,443 2,401 2,346 2,328 2,301 Subtotal37.2% 33.6% 32.9% 29.8% 25.6% 22.6% 21.9% 22.9% 24.3% 35.6% 31.5% 33.0% 34.9% 33.8% 34.3% 33.5% 33.0% 32.6% % of Total-3.7% -9.6% -0.1% -7.0% -9.3% -7.9% 0.9% 4.9% -4.2% 34.5% -6.9% 9.7% 7.3% -2.3% -1.7% -2.3% -0.8% -1.2% % Change Year Ago

Electronics140 108 95 90 85 85 85 80 60 45 35 36 37 36 35 35 34 36 United States87 80 55 60 50 64 75 65 58 40 38 20 21 19 19 20 22 25 Japan24 18 14 12 12 12 12 11 10 9 9 8 8 8 8 9 9 9 Germany14 10 7 6 6 6 6 5 4 6 4 5 3 2 2 2 2 4 United Kingdom* * * * * * * * * * * * * * * * * * France

48 51 53 55 56 56 58 61 65 64 64 64 62 63 63 63 63 63 China- - - - 16 19 22 29 20 40 50 65 60 62 62 63 63 65 Other____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____313 267 224 223 225 242 258 251 217 204 200 198 191 189 189 192 192 202 Subtotal

4.9% 4.2% 3.4% 3.3% 3.2% 3.3% 3.3% 3.3% 3.1% 3.2% 3.0% 2.8% 2.7% 2.6% 2.7% 2.7% 2.7% 2.9% % of Total1.3% -14.8% -16.0% -0.6% 1.0% 7.6% 6.6% -2.7% -13.5% -6.0% -2.0% -0.7% -3.5% -1.1% -0.2% 1.8% 0.1% 5.0% % Change Year Ago

Chemical/PetroleumRefining

117 115 120 122 125 130 132 135 150 135 140 145 147 147 149 145 138 138 U.S. Petroleum100 80 100 103 107 110 112 115 125 112 130 135 136 136 138 140 135 135 U.S. Chemical

0 0 5 5 5 5 5 10 16 14 15 12 15 14 14 13 12 11 Japanese Petroleum39 25 30 40 40 50 50 55 55 52 53 46 52 51 51 52 50 49 Japanese Chemical79 81 83 88 89 92 100 107 113 131 144 152 157 161 165 170 170 171 China Petroleum46 49 50 52 54 58 66 73 83 76 98 102 109 115 125 128 129 130 China Chemical____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

381 350 388 409 421 445 465 496 542 520 579 592 616 624 642 647 634 635 Subtotal5.9% 5.5% 5.9% 6.1% 5.9% 6.0% 6.0% 6.4% 7.8% 8.1% 8.6% 8.4% 8.6% 8.6% 9.2% 9.2% 9.0% 9.0% % of Total

54.2% -8.1% 10.8% 5.6% 2.8% 5.7% 4.6% 6.6% 9.3% -4.1% 11.4% 2.2% 4.0% 1.4% 2.9% 0.7% -2.0% 0.1% % Change Year Ago

Dental/Medical31 32 32 32 33 33 34 35 36 32 31 28 25 25 24 24 23 23 United States21 20 20 20 21 22 25 25 23 22 22 18 18 15 14 13 13 13 Germany

- - - - - - - - - - - - - - - - - - United Kingdom- - - - - - - - - - - - - - - - - - France___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___

52 52 52 52 54 55 59 60 59 54 53 46 43 40 38 37 36 36 Subtotal0.8% 0.8% 0.8% 0.8% 0.8% 0.7% 0.8% 0.8% 0.8% 0.8% 0.8% 0.7% 0.6% 0.6% 0.5% 0.5% 0.5% 0.5% % of Total4.0% 0.0% 0.0% 0.0% 3.8% 1.9% 7.3% 1.7% -2.1% -8.1% -1.9% -13.2% -6.5% -7.0% -5.0% -3.9% -2.1% 0.7% % Change Year Ago

Other Uses175 155 155 153 162 175 173 154 156 148 154 160 161 160 159 159 160 157 United States100 125 115 105 130 135 140 100 105 95 100 93 98 90 88 89 89 88 Japan300 298 310 315 319 337 335 302 290 265 266 240 225 208 206 205 206 208 Western Europe25 30 36 40 45 51 58 62 72 70 78 82 79 81 83 85 87 89 China____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

600 608 616 613 656 698 706 617 623 578 598 575 563 539 536 538 541 541 Subtotal9.3% 9.5% 9.4% 9.1% 9.2% 9.4% 9.1% 8.0% 8.9% 9.0% 8.9% 8.1% 7.8% 7.5% 7.6% 7.7% 7.7% 7.7% % of Total8.1% 1.3% 1.3% -0.5% 7.1% 6.5% 1.1% -12.6% 1.0% -7.3% 3.5% -3.9% -2.0% -4.3% -0.6% 0.4% 0.7% 0.1% % Change Year Ago

232 290 239 204 232 240 333 332 61 38 115 145 109 149 77 77 79 75 Other Countries3.6% 4.5% 3.6% 3.0% 3.3% 3.2% 4.3% 4.3% 0.9% 0.6% 1.7% 2.1% 1.5% 2.1% 1.1% 1.1% 1.1% 1.1% % of Total

-7.0% 24.8% -17.7% -14.5% 13.4% 3.6% 39.0% -0.4% -81.5% -37.2% 198.8% 26.1% -24.8% 36.7% -48.3% 0.0% 2.6% -5.1% % Change Year Ago____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____6,426 6,415 6,551 6,742 7,096 7,408 7,721 7,723 6,985 6,417 6,751 7,060 7,177 7,219 7,007 7,010 7,047 7,055 Total4.0% -0.2% 2.1% 2.9% 5.3% 4.4% 4.2% 0.0% -9.6% -8.1% 5.2% 4.6% 1.7% 0.6% -2.9% 0.0% 0.5% 0.1% % Change Year Ago

]

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coming in at an estimated 578,000 ounces, down 1.5% from 2016. Demand was a mixed bag in the ‘other’ category. China, which is the largest of these markets, showed an increase in demand, as did India. However, weakness in vehicle demand from most other countries in this category, weighed on platinum demand from the auto sector. Demand for platinum from this sector is forecast to continue rising, however, the pace of growth is expected to slow significantly. Platinum demand from the auto sector is forecast at 3.26 million ounces in 2017, up 0.9% from 2016. After years of accommodative monetary policies by most central banks around the world, the major countries and regions of the global economy have for once shown signs of improving in unison, unlike the pattern of rolling recessions since the global financial

crisis. Europe, a laggard in the economic recovery post the Great Recession, is showing signs of economic strength. The United States on many economic fronts is at or above levels seen prior to the recession, China is showing signs of stability, and India too has been able to eke out healthy growth despite some domestic challenges. Japan’s gross domestic product (GDP) grew for all four quarters of 2016, which was the first time this has happened since 2005. This group of countries accounts for around 72% of global GDP. This improvement in economic growth bodes well for commercial vehic le demand as business investment in these vehicles is closely tied with an improvement in sentiment driven by real economic growth. Growth for commercial

0%

2%

4%

6%

8%

0%

2%

4%

6%

8%

U.S. Europe Japan India Brazil

YTD Commercial Vehicle Sales Growth by RegionData for February 2017

Note: Commercial vehicle sales growth in China was excluded from 2017 YTD calculation. The strength in data skewed the chart. Commercial vehicle sales grew 27.7% during the first two months of 2017.

35


vehicles has been growing over the past several years, which has overall been a positive for platinum fabrication demand. Commercial vehicles, which are primarily diesel engines, have p l a t i n u m i n t e n s i v e c a t a l y s t s . Furthermore these catalysts are significantly larger than those fitted on passenger vehicles which help boost platinum demand further. Cumulative commercial vehicle sales in the U.S., China, Europe, Japan, India, and Brazil stood at 18.7 million in 2016, up from 17.6 million in 2015 and 16.3 million in 2013. This group of countries accounts for around 75% of global commercial vehicle demand. While it is CPM Group’s expectation that economic growth will continue globally during 2017, there is a heightened possibility that a political disaster in some corner of the world could disrupt growth. If this were to occur and global economic growth was to slow, it could adversely affect

demand for commercial vehicles, weighing on demand for platinum. Among the passenger vehicle markets, the most important one for platinum fabrication demand is Europe. This is due to the large diesel passenger car market in this region. That said, diesel’s market share in Europe has been on the decline since 2011 when it peaked at 55.7% of new passenger car sales in Western Europe. In 2016, diesel accounted for 49.5% of total passenger vehicle sales. Diesel has been not only losing market share to gasoline but also to the increase in demand for hybrid, electric, and alternative fuels such as LPG and natural gas vehicles. In 2016, gasoline accounted for 45.8% of market share, meanwhile, the remaining 4.8% was taken up by alternative fuels and newer technologies. The recovery in European economic growth during 2016 helped boost passenger vehicle sales to 15.1 million

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

J F M A M J J A S O N D

2013 2014 2015 2016 2017

Monthly Commercial Vehicle Sales

Thous Units

Notes: Countries/regions included in this data series are China, US, Europe, Japan, India, and Brazil. These countries/regions account for 75% of global annual sales. Sources: national auto associations, OICA, Bloomberg

36


-60%

-40%

-20%

0%

20%

40%

60%

-60%

-40%

-20%

0%

20%

40%

60%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

China Brazil India

Y-o-Y % Chg. Y-o-Y % Chg.

Commercial Vehicle Sales in Major Developing Auto Markets

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

USA Europe Japan

Y-o-Y % Chg. Y-o-Y % Chg.

Commercial Vehicle Sales in Major Developed Auto Markets

37


1,500

1,550

1,600

1,650

1,700

1,750

1,500

1,550

1,600

1,650

1,700

1,750

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Engine Size (CC) Engine Size (CC)

Source: ACEA. CPM Group

Average Engine Size - Europe

during the year, up from 14.1 million in 2015. The recovery, as mentioned above, is expected to continue into 2017 and has been reflected in the healthy sales during the first two months of the year. Total vehicle sales, passenger vehicles as well as commercial vehicle sales, during this period reached 2.6 million, up from 2.45 million vehicles during the corresponding period in 2016. Economic growth could slow in the latter half of the year as there are several risks to not only European economic growth but to global growth as well. A relatively new development that is hurting the use of PGMs in catalysts is the growing popularity of Selective Catalytic Reduction (SCR) systems that are being fitted to a variety of vehicles but primarily to platinum intensive large commercial vehicles. These catalysts, using urea, have been used in stationery site catalysts since the 1980s. Meeting tightening emissions standards

in developed countries is becoming increasingly difficult with traditional catalysts. The SCR catalyst system is more efficient at reducing toxins. It is a more expensive catalyst system, however, which has made it more popular in large commercial vehicles such as trucks and buses and high end cars. The SCR catalyst itself does not contain any PGMs, with PGMs used only in the downstream catalysts to ensure that emissions remain low even when exhaust temperatures drop. The impact of SCR catalysts is an overall reduction in the use of PGMs per vehicle. Europe Engine Sizes: Getting Smaller The average engine size of cars being sold in Western Europe began declining at a rapid rate after 2007. The average cubic capacity of a new registered car went from 1,740 cm3 in 2007 to 1,625

38


0%

10%

20%

30%

40%

50%

60%

1990 1993 1996 1999 2002 2005 2008 2011 2014

Western EuropeIndiaUnited StatesJapan

Diesel's Market Share of Major Passenger Car Markets

Note: Japanese data is diesels as a percent of cars in use. U.S. data is estimated for 1990 through 2001. Sources: Historical data-JAMA, ACEA, CAAM,news articles. Projections & estimated data-CPM Group

cm3 in 2009. There was a brief period during which average engine capacity increased again to 1,647 cm3. The average engine size resumed its downward trend in 2013 and in 2016 the average engine size was down to 1,600 cm3 the lowest it has been since 1990. The decline in engine size is not expected to reverse over the next ten years, at least not in any meaningful way. The move toward more fuel efficient cars in developed economies is expected to be an ongoing shift in demand. Furthermore, and more importantly, Europe has generally tended to favor smaller cars, especially relative to the North American market. Holdings all factors that influence PGM loadings in auto catalyst constant, smaller vehicles typically require smaller catalyst and

have a smaller surface area to coat with PGMs. Evolving Trends In Diesel - Gasoline Engine Market Share Among the major auto markets of the world, Europe has been the largest source of demand for diesel passenger vehicles. The 1990s and 2000s saw a growth in positive consumer sentiment toward diesel vehicles as a solution to the problem of global warming. Diesel vehicles emit lower levels of greenhouse gasses and also were seen as being more fuel efficient than their gasoline counterparts. This positive sentiment toward diesel was further supported by European governments that reduced taxes on diesel fuel, making it cheaper for consumers relative to gasoline. This resulted in diesel’s share of Western Europe’s passenger car market rising from around

39


14% in 1990 to a peak of 55.7% in 2011. This positive European attitude toward diesel has been reversing since 2011. Instead, negative sentiment and attitudes toward diesel have been growing in Europe. It has become apparent to the public that while there are benefits to diesel over gasoline in emitting relatively lower green house gases these benefits were beginning to be outweighed by problems such as an increase in the level of nitrogen oxide emissions and particulate matter. The decline in diesels’ market share in the passenger vehicle market has been gradual to date, however, 2016 marked the first year when diesel vehicles accounted for less than the majority of passenger cars sold in Europe. In 2016 new diesel car registrations accounted for 49.5% of total passenger vehicle registrations, the lowest level since 2005. A large part of the reason why the decline has been gradual may be that diesel fuel still is cheaper than gasoline, which incentivizes buyers to still opt for diesel passenger cars. The trend of declining diesel vehicle market share is expected to continue in Europe in the years ahead. There is some push back from governments with regards to the sales of diesel passenger vehicles in large cities like London and Paris. Furthermore, the Volkswagen diesel vehicle emissions violations revealed in September 2015 fortified the negative sentiment toward diesel passenger vehicles in Europe. If negative consumer sentiment in Europe toward diesel is met with further

reductions in the tax subsidies for diesel fuel sold in the region it would dramatically reduce the amount of diesel passenger cars sold in Europe. It is important to note that diesel vehicle popularity in Europe is a relatively recent construct, since the 1990s, and was the result of government subsidies and pro-diesel programs. The preference for diesel vehicles was not deeply ingrained in European consumer psyches, was heavily influenced by government subsidies, and even at their peak market penetration in 2011 only accounted for 55.7% of the European small vehicle market. Nearly half of the passenger vehicles in Europe remained petrol based. The decision to completely remove the diesel tax subsidy is a tough decision for governments to make, however, given the amount of i n v e s t m e n t s E u r o p e a n a u t o manufactures and petroleum refiners already have made into building diesel technology and the large diesel distillation capacity built in Europe. The possibility that these subsidies do not go that easily or are only phased out over time may help to make the decline in diesel’s market share in Europe more gradual. This reduction in diesel market share is expected to weigh on platinum fabrication demand from the European auto market over the long term. There are several factors including fuel costs and fuel efficiency that presently favor diesel passenger vehicles over gasoline vehicles in Europe. Despite these demand-

40


supportive factors, demand for diesel passenger vehicles in Europe has been declining since 2012 and is likely to decline further in the future. The Bottom Line For Europe In Europe where the cost of diesel fuel is meaningfully lower than gasoline, demand for diesel powered cars is forecast to persis t for years . Additionally these cars are more fuel efficient than gasoline vehicles, which increases the benefit of owning diesel powered vehicles in Europe. Despite these existing benefits, however, demand for these vehicles in Europe has declined in recent years. This reflects a combination of negative sentiment toward diesel cars, increasing fuel efficiency in gasoline vehicles, and an alternative to reducing emissions by opting for electric or hybrid electric vehicles. Electric and hybrid electric vehicles are still a very small market. However, both auto makers as well as governments are trying to push for increased usage of these vehicles. It could be years before electric or hybrid vehicles meaningfully reduce demand for internal combustion engines. Nonetheless, the ball has started rolling.

India Changing Market Share Of Gasoline And Diesel Engines India was a major auto market with significant potential to grow into a larger consumer of diesel passenger vehicles. In late 2014, however, the government removed diesel subsidies, allowing the price of diesel to be determined by market forces. This shrank the spread between diesel and gasoline and reduced the level of demand for diesel passenger cars, which often are more expensive than their gasoline counterparts. Added to this the government increased the tax on diesel vehicles (infrastructure cess or levy) more than on gasoline vehicles in the 2016-17 fiscal year, which is expected to further deter demand for diesel vehicles going forward. At its peak, diesel is estimated to have accounted for around 45%-47% of total new car registrations. Following the removal of the subsidy the demand for these vehicles almost immediately has declined to around 35% of new car registrations. In the future there could be periods when the spreads between gasoline and diesel widen, in favor of diesel. There is no guarantee that such an increase in spreads will drive demand for diesel vehicles higher, however, as the consumer may remain wary of a shrinking in the spread now that the fuel price is driven by market forces.

41


0

10

20

30

40

50

60

70

80

09 10 11 12 13 14 15 16 17p

All Other Light Duty Vehicles Hybrid Vehicles Battery Electric Vehicles

Million Units

Hybrid Vehicles, Electric Vehicles and Global Light Duty Vehicle SalesAnnual, Projected Through 2017

This reduction in market share will have a longer term negative impact on fabrication demand for platinum, the primary metal used in auto catalysts. Alternate Power Technologies: HEV, PHEV, EV/BEV Var ious al ternate power t ra in technologies are now a commercial reality. That said, these technologies account for a very small percentage of the global auto market and that is likely to be the case at least in the medium term. One of the common factors that has been weighing on demand for these vehicles in recent years has been the softness in gasoline prices. The cost of fuel is one of the key incentives for consumers to opt for alternate technologies, to save on the cost of gas

and to shelter themselves from the ongoing possibility of a run up in prices. That said, consumers tend to make the purchases of their vehicles with a shorter term view. As a result, the weakness in gas prices has reduced the urgency on the part of some of these buyers to make the switch just as many consumers, especially in the U.S., have purchased light duty trucks in favor of cars in the low gas price environment. Hybrid Vehicles Hybrid vehicles fall broadly into two categories, hybrid electric vehicles (HEV) and plug-in hybrid electric (PHEV). HEV are powered by both an internal combustions engine and an electric motor which uses power stored

42


in a battery. The primary source of power for these cars is the internal combustion engine with the battery acting more as a backup. The battery is charged from regenerative braking (captures energy lost during braking) and the internal combustion engine. The battery cannot be charged by an off-board source. PHEV are primarily powered by their batteries with the internal combustion engine acting more as a backup. The batteries on these vehicles can be charged using electricity from the grid as well as by regenerative braking and the internal combustion engine. Also the batteries on these vehicles are larger than in the HEVs. In both these variants of hybrid vehicles, the extra power provided by the electric motor (powered by the battery) allows for a smaller internal combustion engine. As mentioned above, holding all else equal, smaller engines typically require lower PGM loadings in their auto catalysts. However, because HEV and PHEVs do not have a continuously working combustion engine the engine temperatures are lower in these vehicles. The engine’s operating temperature is an important variable in the catalytic process. PGMs loaded in the auto catalyst can convert harmful emissions into less harmful gases more effectively at higher temperatures. To compensate for some of the lost efficiency occurring due to lower temperatures a greater amount of PGM may be used. In this way, the total amount of PGMs loaded in the auto catalyst of a hybrid electric vehicle

car will be around the same amount as an internal combustion engine. This is even truer in the case of diesel hybrids because diesel engines typically have lower exhaust gas temperatures, but it is also true in the case of gasoline e n g i n e s . D e p e n d i n g o n t h e configuration of different hybrids, the PGM loadings in auto catalysts can be higher or lower than the typical case stated above. Electric Vehicles There has been a significant push both from industry and governments around the world to produce mass market electric vehicles or battery electric vehicles (EVs/BEVs). Pure electric vehicles do not and will not require auto catalysts. This is because they do not themselves produce any kind of emissions. Demand for these vehicles has been small so far but is expected to increase going forward as some of the concerns that have held consumers back are resolved. Furthermore there seems to be a strong push among some governments to incentivize consumers to purchase electric vehicles, especially in Europe. Risks To Electric Vehicle Demand There are numerous challenges facing mass adoption of electric vehicle technology, which should take several years to be overcome. There are serious efforts being made by governments, auto makers, and entrepreneurs to overcome these challenges.

43


Vehicle Cost One of the biggest impediments to demand for electric vehicles has been and continues to be the cost of owning these vehicles. A compact car powered by an internal combustion engine typically costs between $18,000 to $20,0000 in the United States. An electric vehicle in the same class (Tesla Model 3, Nissan Leaf) would cost between $30,000 and $35,000. These prices are without government incentives, however, which in the United States are $7,500 at the Federal level and then there are other incentives p ro v i d ed by ind iv id u a l s t a t e governments. These incentives help narrow the gap between the cost of a pure electric and a comparable internal combustion engine. Similar incentives are being offered by governments all around the world. Governments will play a critical role in driving demand for these vehicles, at least initially, until the time that sufficient vehicles are produced to drive costs down. The largest cost component of electric vehicles is the battery costs. While still high, they have declined substantially in the past few years and are expected to continue declining going forward. In 2010 batteries were costing around $600 per kwh. These costs are now down to between $145 to $200 per kwh. Fuel Costs While many consumers are interested in purchasing an electric vehicle for all of its environmental benefits they are also interested in saving money at the

pump. The sharp decline in gas prices since the middle of 2014 has reduced incentive among buyers who are looking to save money on gas to buy these cars, especially as they are sold at a premium to internal combustion cars in the same class. Driving Range One concern many drivers have had and that has prevented them from adopting the electric vehicle technology is the limited driving range on a full change. For a majority of the compact electric vehicle presently available in the market the typical driving range on a full charge is around 80 miles. Even though most drivers do not drive beyond the average range available to electric vehicles at present, there is an anxiety associated with this limitation. Consumers driving cars powered by internal combustion engines at present know that they have no limitations on range as long as they have fuel in their tanks. Refueling only takes a few minutes. In contrast, recharging EVs' batteries takes several hours. Two developments are expected to take care of this concern going forward. The first is an increase in energy density of batteries, which has been growing over the past several years but is expected to grow at an exponential pace going forward. Each battery will essentially pack more power than batteries presently available in the market. Additionally there is an increase in the number of fast charging ports being installed. At a fast charging station a 20 minute charge can get you a 50 mile to 70 mile range. This contrasts with a level 2 charging station which gets you

44


20 miles for an hour of charging and a level 1 charger which gets you 5 miles for an hour of charging. Infrastructure The most important component of the infrastructure is the charging stations or electric vehicle supply equipment (EVSE). This infrastructure is important to get more consumers to adopt the electric vehicle technology as it would boost their confidence to drive long distances without worrying about running out of charge. Like with other aspects of the electric vehicle market there has been a strong amount of growth in this sector as well but there is still ways to go. Not only in there a need to introduce more charging stations but also charging stations that charge fast. This is expected to happen in due course of time. One area of focus in rechargeable batteries even for other electronics like phones is to get them to charge at a faster pace. With regard to volume of charging stations, this has grown from around 48,000 (2,000 fast charging stations) at the end of 2012 to 110,000 (15,000 stations) at the end of 2015. Setting up the required infrastructure and meeting electricity demand could be a bigger challenge in developing countries. This is an important factor as many of these markets are expected to be the growth engines of the global auto market going forward.

Environmental Benefit Many consumers, especially in developed countries, may demand this vehicle because it is emission free. The electricity used to power these vehicles will largely be produced by burning coal, however. Therefore the use of electric vehicles (if using coal as the primary source of electricity production, which is the case in most parts of the world) is to a large part diverting the negative environmental impact of burning fossil fuels from being burnt by a car to being burnt by an electricity generating facility. The more apparent this fact becomes, the lesser will be the demand from consumers purchasing these cars to reduce emissions. That said, while electric cars are not technically emissions free they still produce significantly less emissions than a car powered by gasoline. An electric vehicle produces around 5,000 pounds of CO2 equivalent emissions compared with around 12,000 pounds by a gasoline car. This is a significant difference. Adoption Of New Technology Consumers are generally slow to adopt new technology, especially when there are known alternatives that exist in the market to meet the same purposes (in this case internal combustion cars). Hybrid vehicles are an good example, where after several years of being in the market they still account for only a minuscule portion of the auto market. If new technology meets a need that was not being met by existing technology there is a chance of faster adoption, for

45


0

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1988

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Troy Ounces Troy Ounces

Projections of Future Platinum Use in Fuel Cells -- Always Optimistic

1995

19952003Projections have been overly optimistic for decades

The year in which each projection was made is shown above each bar

1980

1991

Actual use... mostly in research models

example a cell phone. This technology quickly gained traction as it filled a void. Landlines had limitations which were met by cell phones. The primary purpose of an electric car, which is to aid in transport, is essentially being met by internal combustion vehicles, which will make it harder for consumers to move toward this technology. ALTERNATE DEMAND SOURCES Fuel cells Fuel cells have been commercialized. That said, they are a long way from competing with some of the new technologies like hybrids and electric vehicles that have hit the markets in recent years and significantly behind, as are all of these new technologies, diesel and gasoline engines.

Furthermore, the biggest effort made by research related to fuel cells is the need to reduce the platinum use, if not eliminate it. The amount of platinum used per unit of energy output today is perhaps less than 5% of what was required in the 1960s – 1980s, with a further sharp reduction over the next couple of years. Some commercialization of fuel cells for stationary and vehicular use of fuel cells has occurred. Most of the platinum used in commercial application is in fork lift trucks and buses. Fuel cells also are starting to appear in commercial and residential properties, often as backup power sources. The reliability of such power sources remains uncertain, as some of the early innovators who installed fuel cell back-up systems found they failed to work when they

46


were needed. Despite the technical and economic lack of viability, the growth in stationary fuel cells is rising, albeit slowly. Only a couple of thousand of ounces have been used in such systems over the past few years. Fuel Cell Passenger Vehicles There also are some fuel cell passenger cars and small trucks in operation. Some auto makers are discussing having as many as 30,000 fuel cell cars sold per year over the next five years while others are estimating 70,000 such vehicles being sold per year at the end of the next ten years. That said, many auto industry executives consider these projections overly optimistic. One of the basis for these projections is that there will be a greater number of offerings in the market over the next several years. The auto companies planning to produce these limited numbers of fuel cell vehicles have directed their suppliers that they only will move forward if the platinum loadings are reduced by at least another 50% from current levels. As of 2016, on average, fuel cells in passenger cars were using 1.1 ounces of platinum. This demand to further reduce the amount of platinum per vehicle, while not an unusual expectation, is not a very positive factor for platinum demand from this sector. It is common to see a great deal of effort taken to reduce the per unit usage of precious metal in various fabricated uses, often the total demand for precious metals grows from the high volume (demand) of the final product. Based on present projections

for fuel cells vehicles, demand for platinum is not only expected to be reduced on a per unit basis but is also unlikely to gain much from sales volumes of vehicles either. Fuel cells have some benefits over those of BEV at this time, in that they can be refueled quickly and have longer driving ranges, two important concerns for BEV as they stand right now. One of the biggest hurdles for fuel cell technology in vehicles is the setting up of refueling infrastructure. Not only are there very few hydrogen refueling stations, but these also are very expensive to set up at around two to three million dollars each. It is estimated that there are around 100 hydrogen refueling stations globally versus tens of thousands of electric charging stations for BEV and PHEV. It should also be noted that the primary source of hydrogen fuel at this time is from fossil fuels, reducing the green appeal of these vehicles.

47


Note: Figures include both passenger vehicles and commercial vehicles

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Global Auto SalesAnnual, Projected Through 2017Million Vehicles Million Vehicles

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Vehicle Sales North America, Europe, and JapanAnnual, Projected Through 2017

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49


Jewelry Platinum demand from the jewelry sector continued to decline for the fourth consecutive year during 2016, slipping to 2.32 million ounces during the year. This was the lowest level of demand from the jewelry sector since 2010. Platinum jewelry demand, like other jewelry demand, is greatly influenced by the price level and price volatility of the metal, the incomes of populations purchasing this jewelry and the level of advertising dollars spent. Even as the price of platinum has declined over the past several years, it has had a limited positive impact on the demand for platinum jewelry. This is because there are various other factors that are working against demand. For one, while the price of platinum has declined the making charges of platinum jewelry are very high due to

the difficulty associated with working with platinum. There is also a very high content of platinum used in making platinum jewelry unlike in the case of gold jewelry were the gold content in jewelry can range from around 58% to 93% in the case of platinum jewelry the platinum content is typically 95%. The difficulty of working with platinum coupled with the required high content of platinum offset to a degree the benefit of lower platinum prices. Reduced demand from China is another factor that has been weighing on demand. China is the largest platinum jewelry market in the world, accounting for approximately 78% of global platinum jewelry demand. That said, demand for platinum from the jewelry sector has been on the decline in the past few years. Relatively slower income growth in recent years as a

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Platinum Jewelry Demand and PricesAnnual Data, Projected through 2017

50


result of a relatively slower economic growth has weighed on demand for luxury items like platinum jewelry. This is already beginning to show. Demand for platinum jewelry is gaining popularity in the urban parts of India. There has been a move away from heavy gold jewelry among younger generations in favor of either lighter karat gold jewelry or platinum jewelry. There is a significant push by the Platinum Guild to promote the use of platinum in jewelry by advertising it as desirable. This sort of advertising is important to build a market for jewelry given its non essential purpose. Demand is further supported by Indian jewelers that continue to promote the use of platinum jewelry. This is especially true since 2015 when the price of platinum declined below that of gold and still jewelers were able to and continue to

sell platinum jewelry to customers at a premium to gold jewelry. Demand for platinum jewelry in India has been growing at an aggressive pace over the past few years. The strong growth rate is based on both a shift away from gold among the youth and the fact that total demand is still fairly low in India, therefore the growth rate is much higher. Platinum jewelry demand in India was estimated at around 32,000 ounces in 2016. Demand was hurt to some extent, as was the case with gold jewelry as well, due to the demonetization of currency during the last quarter of 2016. Demand is expected to rise in 2017 to around 35,300 ounces.

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55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 00 03 06 09 12 15

Japan United States

China Europe

Thou Ounces Thou Ounces

Platinum Jewelry Demand in Japan, China, The United States, and EuropeAnnual Data, Projected Through 2017

51


Electronics Platinum's role in electronics largely is restricted to the metal being used to coat hard disks. The use of platinum on hard disks helps improve the disk’s capacity to store information. Technological developments in the works over the past few years are expected to be commercialized in 2017. The new technology for coating medias (the components coated with the two metals) in hard drives is expected to increase the amount of platinum being used at the cost of ruthenium. This increased use of platinum in favor of ruthenium in hard drives is expected push up platinum demand from this sector for the first time in several years. Platinum demand from the electronics sector is forecast to rise to 202,000 ounces in 2017, up from 192,000 ounces in 2016. The phase-in period is expected to be three or four years. During this period

the demand for platinum should rise rapidly. Chemical and Petroleum Catalysts Platinum use in chemical and petroleum refining catalysts declined during 2016. Weaker oil prices coupled with a ratcheting down in Chinese economic growth weighed on the addition of new capacity in this space. Platinum demand from the sector slipped to 634,000 ounces in 2016, down 2% from 2015. That said, despite the decline this was the third highest level of platinum demand from this source. Demand is forecast to rise marginally to 635,000 ounces in 2017.

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Platinum Electronics Demand

52


China Platinum S upply And DemandThousand Troy Ounces

2000 2001 2002 2003 2004 2005 2006 2007 2008S upply

Mine Production 20 24 22 32 42 51 54 65 69 % Change Year Ago 23.6% -9.3% 47.1% 30.0% 23.1% 5.0% 20.0% 6.5%

S econdary S upply 47 49 50 51 52 56 60 68 73 % Change Year Ago 4.9% 1.4% 2.0% 3.5% 7.5% 6.9% 12.7% 8.3%______ ______ ______ ______ ______ ______ ______ ______ ______

Total S upply 66 73 71 83 94 108 114 133 142 % Change Year Ago 10.4% -2.1% 15.8% 13.8% 14.4% 6.0% 16.2% 7.4%

DemandJewelry 949 1,105 1,059 1,031 964 889 935 1,062 1,058Automotive 32 40 53 74 107 90 123 162 186Petroleum 79 81 83 88 89 92 100 107 113Chemical 46 49 50 52 54 58 66 73 83Glass 25 30 36 40 45 51 58 62 72Electronics 48 51 53 55 56 56 58 61 65______ ______ ______ ______ ______ ______ ______ ______ ______

Total Fabrication Demand 1,179 1,355 1,334 1,339 1,315 1,236 1,340 1,527 1,577 % Change Year Ago 14.9% -1.6% 0.4% -1.8% -6.0% 8.4% 14.0% 3.3%

Apparent S upply and Demand Balance -1,112.8 -1,282.0 -1,262.2 -1,255.9 -1,220.8 -1,128.2 -1,225.8 -1,394.3 -1,434.3

S ources: Chinese Industry S ources, CPM GroupMay 13, 2017

53


2009 2010 2011 2012 2013 2014 2015 2016 2017pS upply

69 68 68 69 70 71 71 72 72 Mine Production-0.6% -1.2% 1.0% 1.1% 1.0% 1.0% 0.9% 0.9% 0.6% % Change Year Ago

73 84 90 91 95 100 104 107 110 S econdary S upply0.1% 14.6% 7.0% 1.0% 4.9% 4.3% 4.2% 3.5% 2.6% % Change Year Ago______ ______ ______ ______ ______ ______ ______ ______ ______

142 152 159 160 165 170 175 179 182 Total S upply-0.3% 6.9% 4.3% 1.0% 3.2% 2.9% 2.8% 2.5% 1.8% % Change Year Ago

Demand1,752 1,616 1,840 1,988 1,940 1,901 1,825 1,780 1,762 Jewelry

256 359 367 369 408 388 363 386 375 Automotive131 144 152 157 161 165 170 170 171 Petroleum

76 98 102 109 115 125 128 129 130 Chemical70 78 82 79 81 83 85 87 89 Glass64 64 64 62 63 63 63 63 63 Electronics______ ______ ______ ______ ______ ______ ______ ______ ______

2,349 2,358 2,608 2,764 2,768 2,725 2,634 2,614 2,591 Total Fabrication Demand49.0% 0.4% 10.6% 6.0% 0.1% -1.5% -3.4% -0.7% -0.9% % Change Year Ago

-2,207.3 -2,205.9 -2,449.1 -2,604.0 -2,602.5 -2,555.0 -2,458.7 -2,434.9 -2,408.2Apparent S upply and Demand Balance

54

CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM Historical U.S. Platinum DemandTroy Ounces

Year Automotive Petroleum Chemical Electronics Glass

1955 - - 348,088 48,683 -1956 - - 320,476 53,872 -1957 - - 243,226 52,574 -1958 - - 148,276 53,553 -1959 - 44,327 80,107 84,837 82,997

1960 - 35,645 71,253 106,903 59,3901961 - 37,742 72,016 87,419 35,2341962 - 13,160 87,822 100,569 45,5301963 - 40,721 156,427 110,576 57,9191964 - 41,071 137,248 103,584 49,680

1965 - 82,138 131,599 106,808 19,8461966 - 235,098 191,429 117,156 90,5561967 - 122,511 159,384 99,686 45,1501968 - 89,629 157,677 117,256 47,9351969 - 62,438 175,436 112,589 63,350

1970 - 144,657 148,289 103,318 46,6871971 - 137,396 135,112 51,940 40,7031972 - 98,847 225,895 92,381 26,9701973 - 123,649 238,974 117,352 72,5431974 350,000 139,519 215,663 98,608 74,398

1975 273,000 107,988 148,813 73,624 33,8131976 480,965 59,103 83,560 89,319 41,6831977 354,338 74,772 84,414 90,217 59,9951978 597,538 108,365 149,696 106,422 98,0941979 803,229 170,013 98,600 115,775 88,594

1980 517,143 144,039 118,956 150,060 52,8971981 446,677 88,314 78,134 111,697 29,2721982 525,000 21,576 63,601 89,994 20,5951983 600,000 38,030 75,000 74,716 14,9031984 822,000 28,045 80,000 98,925 12,184

1985 911,000 28,771 95,000 115,840 20,6511986 890,000 30,566 97,000 103,506 15,7931987 800,000 23,773 81,000 108,000 9,1571988 775,000 34,466 122,000 112,335 21,8951989 790,000 91,919 97,000 125,195 36,330

1990 720,000 105,261 86,000 125,613 13,8571991 700,000 126,931 48,000 126,931 4,1151992 730,000 105,000 75,000 126,000 11,5741993 830,000 100,000 81,000 129,000 7,5001994 880,000 106,000 63,000 139,000 8,000

1995 1,000,000 110,000 75,000 145,000 17,0001996 1,100,000 113,000 88,000 146,000 17,0001997 1,050,000 109,000 92,000 159,000 17,0001998 1,100,000 109,000 94,000 167,000 17,0001999 1,175,000 113,000 96,000 175,000 19,000

2000 1,200,000 117,000 100,000 140,000 20,0002001 1,100,000 115,000 80,000 108,000 30,0002002 1,000,000 120,000 100,000 95,000 20,0002003 975,000 122,000 103,000 90,000 18,0002004 1,000,000 125,000 107,000 85,000 20,000

2005 1,010,000 130,000 110,000 85,000 20,0002006 920,000 132,000 112,000 85,000 23,0002007 850,000 135,000 115,000 80,000 23,5002008 620,000 150,000 125,000 60,000 24,0002009 420,000 135,000 112,000 45,000 20,0002010 475,000 140,000 130,000 35,000 23,0002011 546,250 145,000 135,000 36,000 25,0002012 589,950 147,000 136,000 37,000 26,0002013 637,146 147,000 136,000 35,500 25,0002014 675,375 149,000 138,000 35,000 25,0002015 742,912 145,000 140,000 35,000 24,0002016 750,341 140,000 135,000 34,000 24,5002017p 754,093 138,000 135,000 36,000 24,000

Notes: Petroleum and glass industry demand was included in chemical industry figures prior to 1959. Estimates for 1985 and subsequent years for the automotive and some other industries areCPM Group estimates based on Bureau of Mines statistics prior to revisions made in 1987.

55


Dental Jewelry Percent and and Change Medical Decorative Miscellaneous Total in Total Year

12,304 12,860 5,297 427,232 195512,436 16,075 5,115 407,974 -4.5% 195611,514 22,505 6,567 336,386 -17.5% 195714,414 41,796 5,727 263,766 -21.6% 195815,379 54,656 5,747 368,050 39.5% 1959

15,898 57,871 2,828 349,788 -5.0% 196016,487 64,301 4,003 317,202 -9.3% 196122,601 77,162 6,017 352,861 11.2% 196218,894 115,743 6,844 507,124 43.7% 196319,376 90,022 3,195 444,176 -12.4% 1964

26,511 83,592 10,084 460,578 3.7% 196524,296 86,807 24,846 770,188 67.2% 196624,630 115,743 26,112 593,216 -23.0% 196724,903 102,882 31,150 571,432 -3.7% 196822,266 138,248 47,174 621,501 8.8% 1969

18,302 199,334 18,555 679,142 9.3% 197023,097 398,669 19,859 806,776 18.8% 197130,462 729,821 50,089 1,254,465 55.5% 197227,887 897,005 55,695 1,533,105 22.2% 197325,513 839,133 17,020 1,759,854 14.8% 1974

17,097 1,060,973 21,318 1,736,626 -1.3% 197526,858 836,000 46,246 1,663,734 -4.2% 197627,083 794,000 64,350 1,549,169 -6.9% 197744,139 804,000 66,336 1,974,590 27.5% 197827,053 592,000 77,949 1,973,213 -0.1% 1979

25,831 440,000 58,307 1,507,233 -23.6% 198018,739 624,000 72,202 1,469,035 -2.5% 198122,806 630,000 67,805 1,441,377 -1.9% 198216,744 553,000 75,000 1,447,393 0.4% 198318,644 624,000 82,000 1,765,798 22.0% 1984

24,514 675,000 125,000 1,995,776 13.0% 198522,619 691,000 110,000 1,960,484 -1.8% 198615,387 868,000 65,000 1,970,317 0.5% 198718,680 987,000 96,000 2,167,376 10.0% 198820,319 1,061,000 135,000 2,356,763 8.7% 1989

22,087 1,150,000 160,000 2,382,818 1.1% 199019,500 1,290,000 125,000 2,440,477 2.4% 199120,576 1,318,000 130,000 2,516,150 3.1% 199224,000 1,400,000 105,000 2,676,500 6.4% 199325,000 1,547,000 100,000 2,868,000 7.2% 1994

25,000 63,000 110,000 1,545,000 -46.1% 199525,000 70,000 115,000 1,674,000 8.3% 199627,000 100,000 130,000 1,684,000 0.6% 199729,000 140,000 140,000 1,796,000 6.7% 199830,000 150,000 145,000 1,903,000 6.0% 1999

31,000 200,000 155,000 1,963,000 3.2% 200032,000 120,000 125,000 1,710,000 -12.9% 200132,000 130,000 135,000 1,632,000 -4.6% 200232,000 120,000 135,000 1,595,000 -2.3% 200333,000 100,000 142,000 1,612,000 1.1% 2004

33,000 80,000 155,000 1,623,000 0.7% 200534,000 75,000 150,000 1,531,000 -5.7% 200635,000 62,000 130,000 1,430,500 -6.6% 200735,750 59,000 132,000 1,205,750 -15.7% 200832,000 60,000 128,000 952,000 -21.0% 200931,000 65,000 131,000 1,030,000 8.2% 201028,000 60,000 135,000 1,110,250 7.8% 201125,000 62,000 135,000 1,157,950 4.3% 201225,000 60,000 135,000 1,200,646 3.7% 201324,000 60,600 134,000 1,240,975 3.4% 201423,500 67,872 135,000 1,313,284 5.8% 201523,000 71,605 135,000 1,313,446 0.0% 201623,000 72,321 133,000 1,315,414 0.1% 2017p

Sources: U.S . Bureau of Mines, CPM Group.May 1, 2017

56


Automotive, 53.1%Petrochemical, 23.6%

Other, 15.4%

Electrical, 2.9%

2016 U.S. Demand: 1,313,446 ounces

Jewelry, 5.0%

57


Japanese Platinum DemandThousand Troy Ounces

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986

Electronic 45 39 39 13 16 16 19 16 29 39 42Automotive 68 68 112 199 209 193 170 167 167 174 248Jewelry 836 794 804 592 440 624 630 553 624 675 691Petroleum 35 32 48 45 48 -- -- -- -- -- --Chemical 112 112 65 10 10 10 10 10 16 16 16Other 52 61 129 74 257 345 245 210 345 406 61____ ____ ____ ___ ___ ____ ____ ___ ____ ____ ____Total 1,148 1,106 1,197 932 980 1,188 1,074 956 1,181 1,309 1,058% Change Year Ago -- -3.7% 8.2% -22.1% 5.1% 21.2% -9.6% -11.0% 23.6% 10.8% -19.2%

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Electronics 42 48 50 50 52 43 55 57 53 53 55Automotive 295 325 340 366 400 306 240 246 235 219 225Jewelry 868 987 1,061 1,180 1,270 1,300 1,400 1,547 1,641 1,700 1,775Chemical 16 19 20 20 20 15 20 22 20 32 38Other 135 98 50 100 100 85 105 107 105 151 160____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____Total 1,356 1,477 1,521 1,716 1,842 1,749 1,820 1,979 2,054 2,155 2,253% Change Year Ago 28.1% 25.0% 3.0% 12.8% 7.3% -5.0% 4.1% 8.7% 3.8% 4.9% 4.5%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Electronics 57 95 87 80 55 60 50 64 75 65 58Automotive 218 225 290 340 430 510 615 618 625 595 590Jewelry 643 823 949 1,105 1,059 1,031 964 889 935 1,062 1,058Chemical 37 38 39 25 30 40 40 50 50 55 55Petroleum -- -- -- -- 5 5 5 5 5 10 16Other 168 100 100 125 115 105 130 135 140 100 105

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____Total 1,123 1,281 1,465 1,675 1,694 1,751 1,804 1,761 1,830 1,887 1,882% Change Year Ago -50.2% 14.1% 14.4% 14.3% 1.2% 3.3% 3.0% -2.4% 3.9% 3.1% -0.3%

2009 2010 2011 2012 2013 2014 2015 2016 2017p

Electronics 40 38 20 21 19 19 20 22 25Automotive 470 555 499 574 580 615 587 584 572Jewelry 1,752 1,616 290 292 280 269 279 283 274Chemical 52 53 46 52 51 51 52 50 49Petroleum 14 15 12 15 14 14 13 12 11Other 95 100 93 98 90 88 89 89 88____ ____ ____ ____ ____ ____ ____ ____ ____Total 2,423 2,376 960 1,052 1,034 1,056 1,039 1,040 1,019% Change Year Ago 28.8% -1.9% -59.6% 9.6% -1.7% 2.1% -1.5% 0.0% -2.0%

Notes: Totals may not equal the sums of the individual categories due to rounding. Beginning with 1981, sales to petroleum refiners are included in the chemical sector.Sources: Japanese trade sources, CPM Group.May 1, 2017

58


Annual European Platinum UseThousand Troy Ounces

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

Auto 14 13 17 20 14 13 18 24 42 48 71 167 185 215 322 411 475 500

Jewelry Germany 10 16 15 10 7 3 10 17 26 31 24 23 24 26 29 35 45 45 United Kingdom 6 6 6 4 5 5 4 2 2 2 1 1 2 2 2 2 2 2 France 4 5 5 3 3 3 3 2 3 3 3 3 3 3 3 3 3 3

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Total 20 27 26 17 15 11 17 21 31 36 28 27 29 31 34 40 50 50

Electronics Germany 15 19 14 17 16 20 7 6 9 6 6 14 16 18 18 26 29 26 United Kingdom 18 18 17 18 18 16 10 9 10 9 10 12 12 12 12 12 11 11 France 2 2 1 1 1 1 1 1 1 1 1 * * * * * * *

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Total 35 39 33 36 35 38 18 16 20 17 17 27 29 30 30 38 40 37

Dental Germany 39 50 59 69 62 66 48 28 30 27 22 21 29 16 17 20 19 23 United Kingdom 3 1 1 3 3 3 2 2 2 2 2 1 1 1 1 - - - France 5 5 3 3 2 2 2 1 1 1 1 1 1 1 1 - - -

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Total 48 56 63 75 68 71 53 31 33 30 25 23 31 18 19 20 19 23

Other Uses 220 161 238 227 230 180 117 131 118 120 134 135 142 143 143 145 156 152

Subtotal 337 296 377 375 362 313 223 219 244 251 275 379 416 437 548 654 740 762

Other Countries 48 44 57 60 65 55 50 50 48 57 58 67 73 77 80 83 79 79

Total Europe 385 340 434 435 427 368 273 269 292 308 333 446 489 514 628 737 819 841

% Change Year Ag - -11.7% 27.6% 0.2% -1.8% -13.8% -25.8% -1.5% 8.6% 5.5% 8.0% 34.1% 9.6% 5.1% 22.2% 17.4% 11.2% 2.6%

Notes: The subtotals for individual uses presented here are the sums of the countries forwhich data are available; other countries may consume relatively small amounts of platinumfor these uses, but estimates are not available. Other uses in Western Europe includesconsumption by major end-using industries in some European countries, as well aschemical/petroleum refining use and smaller using industries throughout Western Europe.There may be discrepancies due to rounding. * - less than 500 ounces. p - projections.Source: European trade sources, CPM Group.May 13, 2017

59


1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

540 560 582 581 622 640 670 900 1,045 1,300 1,600 1,925 2,125 2,150 1,950 1,100 1,166 1,189 1,023 1,002 1,073 1,158 1,216 1,228

49 48 48 48 48 55 52 50 48 45 40 38 35 30 27 30 30 27 26 22 22 22 23 232 2 2 6 6 10 36 39 40 37 33 32 30 25 22 23 22 21 22 17 17 17 17 173 3 3 5 6 10 11 10 10 8 7 6 5 3 2 3 3 3 2 2 2 2 2 2

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __54 53 53 59 60 75 99 99 98 90 80 76 70 58 51 56 55 51 50 41 40 42 42 42

28 32 26 22 22 25 24 18 14 12 12 12 12 11 10 9 9 8 8 8 8 9 9 412 12 12 14 14 14 14 10 7 6 6 6 6 5 4 6 4 5 3 2 2 2 2 4* * * * * * * * * * * * * * * * * * * * * * * *

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __40 44 38 36 36 39 38 28 21 18 18 18 18 16 14 15 13 13 11 10 10 11 11 8

24 24 23 22 20 20 21 20 20 20 21 22 25 25 23 22 22 18 18 15 14 13 13 130 - - - - - - - - - - - - - - - - - - - - - - -0 - - - - - - - - - - - - - - - - - - - - - - -

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __24 24 23 22 20 20 21 20 20 20 21 22 25 25 23 22 22 18 18 15 14 13 13 13

155 157 155 158 158 161 165 168 175 180 182 200 200 170 165 155 155 140 135 128 128 127 128 129

813 838 851 856 896 935 993 1,215 1,359 1,608 1,901 2,241 2,438 2,419 2,203 1,348 1,411 1,411 1,237 1,196 1,265 1,351 1,410 1,420

80 100 115 123 123 130 135 130 135 135 137 137 135 132 125 110 111 100 90 80 78 78 78 79

893 938 966 979 1,019 1,065 1,128 1,345 1,494 1,743 2,038 2,378 2,573 2,551 2,328 1,458 1,522 1,511 1,327 1,276 1,343 1,429 1,488 1,499

6.2% 5.0% 3.0% 1.3% 4.1% 4.5% 5.9% 19.2% 11.1% 16.7% 16.9% 16.7% 8.2% -0.9% -8.7% -37.4% 4.4% -0.7% -12.2% -3.8% 5.2% 6.4% 4.1% 0.8%

60

CPM GROUP PLATINUM GROUP METLAS YEARBOOK 2017 PLATINUM

Platinum Investment Demand Investors have an enormous influence on the price level and direction of platinum, as they do with other precious metals. One of the key factor in the platinum market since 2012 has been investor disinterest and disenchantment after eight years of strong interest. An important factor that sets platinum apart from gold and silver is that there is a very small physical and exchange-traded products market for this metal. The volume of physical platinum available for investor buying and selling, as well as the extent and diversity of investment product offers from exchanges and market-makers are limited compared to gold and silver. Platinum physical exchange-traded products are only around 20% the size of the silver ETP market and 3% the

size of the gold ETP market, according to the latest data as of April 2017. The size of platinum coin market is even smaller compared to the markets for gold and silver coins. In 2016 it accounted for 0.6% of the combined market value of gold, silver, and platinum coins, despite a greater offering of platinum coin products to investors than before. In addition to this relatively small market size of investment products, platinum is also less marketed to investors compared to gold or silver. This very illiquidity of the platinum investment market is contrasted with the enormous sum of investor capital that could be deployed in platinum at any given period. In such a market environment, investors can make discretionary decisions to allocate more or less capital into platinum, in ways

$120$240$360$480$600$720$840$960$1,080$1,200$1,320$1,440$1,560$1,680$1,800

-1,600-1,400-1,200-1,000

-800-600-400-200

0200400600800

1,0001,200

1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

Platinum Market Surplus/Deficit and PricesProjected Through 2017

$/OunceThousand Ounces

Net Additions to Inventories (left scale)

PriceNet Reductions to Inventories (left scale)

61


that distinguishes themselves from other i ndus t r i a l commerc i a l ma rke t participants such as producers, refiners, manufacturers, and trading companies. Oftentimes such investment decisions are detached from the near-term fundamentals of the platinum market, and are swayed by broader economic, political, and financial market factors. Historically, investors purchased large amounts of platinum in two bouts, from 1985 to 1992 and then from 2001 until around 2011. Starting in 2012 those investors who had bought platinum much earlier began liquidating their positions, and there were significant outflows of platinum bullion from such stale-bull investors during that year, and then in periods between 2013 and 2015. During 2014, when mine supplies sharply contracted in South Africa due to labor disruptions, there were notable stale-bull investor selling activities. Sales of platinum from investor inventories had continued into 2015, which more than cushioned the market supplies of platinum and resulted in subpar platinum price performance. However, after platinum prices fell sharply in the third quarter of 2014, as the South African strike settled, investors shifted their strategies from selling physical metal to hedging their remaining inventories with short futures positions. Physical sales declined as short interest on the Nymex platinum futures contract increased sharply. Those very macroeconomic, political, and financial market factors that affect gold and silver are also likely to affect platinum during a given period. Over

the course of 2016 investor concerns over the influences of major events including the Fed’s interest rate schedule, the Brexit, the U.S. election, the Italian referendum, and a host of other international political events were also factored into platinum prices. These global economic and political events generated a reversal of investment sentiment toward platinum from the previous period between 2012 and 2015. The bearish sentiment that presented itself during the prior period was no longer dominant among investors. There were nascent signs of a recovery of investor appetite for platinum as an investment. Some of this shift in sentiment was linked to investors allocating more capital to investment products devoted to the precious metals baskets that included platinum. However there are also factors that are unique to platinum, which set it apart from other precious metals. It is important to note that the very lack of liquidity and investment product availability in platinum enabled it to have an investor community of a different profile, as well as the ways in which these investors participate in this market. There are currently millions of active and prospective platinum investors, compared to a few hundred commercial enterprises engaged in this market. Those larger investment institutions that tend to trade gold and/or silver often find the platinum market size overly restrictive for their target capital allocation and may opt to trade an index or a basket of commodity investment products that offer them small exposures to the metal.

62


This means that the investment community in the platinum investment market at any given time is potentially more diverse when compared to the investment markets of gold and silver. Another interesting characteristic of the platinum investment market is that South Africa-based investors have been particularly active and influential in this market, perhaps more so than they are in gold and silver. The two South African exchange-traded fund as of April 2017 accounted for 37% of the total platinum ETP holdings. These investors in platinum have historically been paying a lot of attention on the economy and currency fluctuations of this country, which is the

largest producer of platinum. Many of these South African investors are institutional investors that need to have exposures to platinum due to the importance of South Africa’s platinum industry in the Johannesburg Stock Exchange. These institutions have been able to shift away from holding South African platinum mining shares to holding physical platinum via ETPs in the past decade, and they have. In this way they have a long-term, strategic interest in platinum which differentiates them from the day-to-day, momentum-driven investment style of many investors who participate in the platinum market. The availability of platinum ETP products denominated in South African

Reported Platinum Investment Demand by RegionTroy Ounces

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016ETPs

Asia Pacific 3,974 4,100 15,921 -1,115 -2,771 3,413 71,407 19,490S outh Africa 909,500 306,016 -143,834 -154,308Europe 194,404 102,264 380,119 110,037 57,788 103,372 -78,179 -32,777 -100,628 76,320North America 441,929 14,928 141,624 40,911 -36,912 -77,714 57,063

Total 194,404 102,264 384,093 556,066 88,637 243,882 869,461 239,740 -250,770 -1,434

CoinsAsia Pacific 965 418 607 317 13,764 30,000 20,000 20,000 7,169 6,218S outh AfricaEuropeNorth America 9,937 10,689 41,110 10,100 19,983 44,228 25,306 19,062 37,672 63,499

Total 10,902 11,107 41,717 10,417 33,747 74,228 45,306 39,062 44,841 69,717

S ubtotalsAsia Pacific 965 418 4,581 4,417 29,685 28,885 17,229 23,413 78,576 25,708S outh Africa 909,500 306,016 -143,834 -154,308Europe 194,404 102,264 380,119 110,037 57,788 103,372 -78,179 -32,777 -100,628 76,320North America 9,937 10,689 41,110 452,029 34,911 185,852 66,217 -17,850 -40,042 120,562

Total 205,306 113,371 425,810 566,483 122,384 318,110 914,767 278,802 -205,928 68,283

Notes: Figures are only from publicly available sources.S ource: ETP issuer and Mint websites, Bloomberg, CPM Group

63


Rand in their domestic market also provides them a way to hedge their exposure to the currency, which depreciated 11% in 2014 and 33% in 2015 against the U.S. dollar. While in 2016 the currency appeared to have steadied itself against the U.S. dollar, there are continuing investor concerns about the future growth potential of the South African economy. Many South African investors also remain attuned to the supply and demand fundamentals of platinum, which convinced them to buy the metal rather than mining shares during 2014, a year marked by a record level of mine disruptions in the country. As major platinum mines were able to restore production levels back to pre-strike levels in 2015 and 2016, these investors were again selling platinum. The South Africa-based Absa Capital’s

NewPlat ETF, the largest platinum ETF in the market, was a net buyer of platinum in 2014, having bought around 195,016 ounces of platinum. In the following two years it sold platinum back to the market, having liquidated 150,834 ounces of platinum in 2015 and another 172,308 ounces in 2016. In many ways investors in platinum look for a set of characteristics that are similar to gold and silver – portfolio diversification, currency and risk hedge, etc. Perhaps to the disappointment of South African platinum mining companies, the metal does not yet enjoy the similar level of recognition as a store of wealth as gold and silver. In some of the major emerging economies, such as China and India, where gold and silver bullion and coins were, quite literally, stashed “under the mattress”

Note: Underlying data is data contained in “Platinum Exchange Traded Product Holdings” table.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

07 08 09 10 11 12 13 14 15 16 17

PHPT LSE

ZKB Platinum

PPLT NYSE

NewPlat JSE

Platinum Exchange Traded Product HoldingsDaily, through 30 April 2017

Moz Moz

64


by a broad array of individual and institutional investors, investments in platinum bullion and coins remained confined to a very small group of largely wealthy investors. This is mainly because of the illiquidity of platinum, as well as restricted availability of the metal for circulation in such economies. Gold and silver have millennia of use as money and financial stores of wealth; platinum does not. If platinum availability in such emerging economies increases over the longer term, in addition to increased level of marketing, investor recognition of platinum as a wealth preservation product could gradually improve in these emerging economies. As of the end of 2016 investors were estimated to hold about 7.6 million ounces of platinum bullion and coins.

Roughly 68% of this metal, or 5.2 million ounces, are estimated to be held in unreported bullion inventories. While there were continued stale-bull liquidations of platinum inventories during 2016, other investors have started to buy platinum, which provided some support for platinum prices. Total inventories of refined bullion showed a modest gain in 2016, although a substantial portion of that metal appears to have been taken up by refiners, fabricators, and market-making dealers. If investors had been the larger buyers of this surplus metal, platinum prices most likely would not have fallen last year, but more likely would have risen. Falling prices during a surplus year suggests that investors were not willing to buy the surplus metal at prevailing prices, waiting for lower prices or some other variable to

-400,000

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

-400,000

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Year-End Changes to Global Platinum ETP Holdings


Gross Purchases

Gross Sales

Net Change

65


stimulate their buying interest, and leaving the surpluses to be taken up by producers and market makers. Exchange Traded Products On a net basis, investors sold 1,434 ounces of platinum from their exchange traded products (ETP) holdings in 2016. This was the second consecutive year in which investors were net sellers of platinum, although the volume of net sales was considerably lower than the 250,770 ounces sold in 2015. South Africa-listed NewPlat ETP, which is the largest platinum ETP, saw a net outflow of 172,308 ounces of platinum in 2016. This followed and was larger than net disposals of 150,834 ounces from the fund in 2015. In the meantime other ETPs experienced net inflows of investor platinum holdings. Excluding the net reductions to holdings at the NewPlat ETP, investors added

around 170,873 ounces of platinum to their portfolios last year. At the beginning of 2017 investor net selling of platinum holdings at NewPlat ETP slowed considerably. This combined with increases in buying at other ETPs enabled the overall ETP sector to record net inflows of investor capital. During the first four months of 2017 investors platinum holdings were up by 61,323 ounces as of the end of April from the end of 2016.

Coin Demand Platinum coin sales are estimated to have totaled around 105,000 ounces in 2016, up from around 61,300 ounces in 2015. Investors remained interested in platinum coins during 2016, which was helped by increased offerings and marketing of platinum coins by mints and dealers.

0

50

100

150

200

250

300

350

400

450

0

50

100

150

200

250

300

350

400

450

83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15


Annual Platinum Coin FabricationThrough 2016

66


The U.S. Mint sold around 20,000 ounces of Platinum American Eagle Bullion coins during 2016. In 2017 it so far has allocated the same amount of Platinum American Eagle Bullion coins, all 20,000 ounces of which were sold out in January. The Royal Canadian Mint was able to sell roughly 53,300 ounces of Platinum Maple Leaf Bullion coins in 2016, a rise from 44,700 ounces of sales in 2015. During the first quarter of 2017 it sold 11,500 ounces of these platinum bullion coins, compared with 20,000 ounces of sales during the same period last year. During 2016 the Austrian Mint launched its first platinum bullion coin program with its Vienna Philharmonic design and sold 35,257 ounces of coins for the year. During the first four months of this year it additionally sold roughly 5,200 ounces of platinum coins. Futures and Options During the first seven months of 2016 market sentiment toward platinum improved, as institutional investors liquidated their previously held shorts and built fresh longs on Nymex platinum. From the end of 2015 to 9 August 2016 noncommercial gross longs in Nymex platinum rose more than 40% to 3.28 million ounces, while noncommercial gross shorts were reduced by around 63% to 435,800 ounces. By 9 August 2016 investor net long positions in Nymex platinum rose to 2.83 million ounces, a historical record high, from about 1.18 million ounces at the end of 2015.

As platinum prices strengthened through the beginning of August, however, investors started to book profits. For the remainder of the year, investors liquidated some of the gross longs built during the prior months, tripping these positions down to around 2.08 million ounces by the end of the year. Meanwhile they also rebuilt some gross shorts in October and November of the year. Such short-building was far less aggressive compared to periods in 2015. By the end of the year investors had again liquidated some shorts built in the prior couple of months. Non-commercial gross shorts stood at 860,400 ounces at the end of 2016, down 26% from the end of 2015. Net long positions in Nymex platinum held by institutional investors totaled 1.22 million ounces by the end of 2016. This was up 3.7% from 1.18 million ounces at the end of 2015. During the first four months of 2017 investors have largely maintained their net long exposures to platinum. As of 25 April 2017 non-commercial gross long positions has risen 4.2% from the end of 2016 to 2.17 million ounces. During this period non-commercial gross shorts declined about 5.5% to 813,300 ounces. By 25 April investors held around 1.35 million ounces of net long positions in platinum, up by around 11% from the end of last year.

67


Ann

ual N

et A

ddit

ions

to P

lati

num

ET

P H

oldi

ngs

Troy

Oun

ces

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

PHPT

ET

FS13

9,90

630

,835

260,

155

(19,

804)

(35,

789)

96,7

90(1

33,9

44)

13,4

80(4

5,86

1)60

,356

Plat

inum

ZK

B54

,499

71,4

2911

9,96

481

,621

39,4

68(1

3,12

4)(3

1,29

9)(4

5,26

2)(1

7,26

6)14

,199

Plat

inum

MS

L--

--3,

974

(1,0

44)

4,50

7(2

,330

)(2

,096

)(1

56)

00

PPLT

ET

F S

ecur

itie

s--

----

427,

629

12,1

8461

,250

36,0

52(2

2,64

4)(5

1,37

4)59

,579

SPL

T iS

hare

s--

----

--3,

291

(13)

1,23

33,

594

162

1,10

7

SPP

T S

ourc

e--

----

--5,

348

9,32

910

7,03

1(2

1,45

4)(1

9,01

4)(2

,632

)

Plat

inum

Jul

ius

Bae

r--

----

48,2

2045

,470

10,3

90(2

1,20

0)16

,865

(18,

650)

3,29

0

GLT

R -

ETFS

----

--7,

318

1,35

7(6

3)6,

871

(725

)(2

,784

)5,

103

WIT

E-ET

FS--

----

6,98

21,

387

(1,0

50)

(465

)(5

58)

(589

)(5

,708

)

Japa

n M

itsu

bish

i--

----

5,14

411

,414

(675

)(6

75)

3,56

971

,407

21,3

80

SPP

P81

,486

(1,5

47)

(12,

985)

(22,

967)

(1,9

10)

HK

ET

FS1,

890

00

0(1

,890

)

New

Plat

JS

E90

9,50

019

5,01

6(1

50,8

34)

(172

,308

)

Afr

icaP

lati

num

111,

000

7,00

018

,000

Tot

al N

et A

ddit

ions

194,

404

102,

264

384,

093

556,

066

88,6

3724

3,88

286

9,46

123

9,74

0-2

50,7

70-1

,434

Tot

al y

ear-

end

Hol

ding

s19

4,40

429

6,66

868

0,76

11,

236,

827

1,32

5,46

31,

569,

345

2,43

8,80

72,

678,

547

2,42

7,77

72,

426,

343

% C

hang

e52

.6%

129.

5%81

.7%

7.2%

18.4

%55

.4%

9.8%

-9.4

%-0

.1%

Gro

ss A

ddit

ions

194,

404

102,

264

384,

093

576,

914

124,

426

261,

135

1,06

0,68

723

2,52

459

,919

183,

014

Gro

ss W

ithd

raw

als

-20,

848

-35,

789

-17,

253

-191

,226

-103

,784

-310

,688

-184

,448

Net

Cha

nge

in H

oldi

ngs

194,

404

102,

264

384,

093

556,

066

88,6

3724

3,88

286

9,46

112

8,74

0-2

50,7

70-1

,434

68


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

Market Value of Precious Metals Coin SalesAs Percentage of Total Coin Market Value

Gold Silver Platinum

$0

$2

$4

$6

$8

$10

$12

$14

$16

$0

$2

$4

$6

$8

$10

$12

$14

$16

87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

Market Value of Precious Metals Coin Sales

Gold Silver Platinum

US$ Billion US$ Billion

69


0

20

40

60

80

100

120

140

0

20

40

60

80

100

120

140

88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Historical Annual Sales of Perth Mint Platinum Coin ProgramsThousand OuncesThousand Ounces

1988 - Platinum Koala Coins Introduced 2011 - Platinum Platypus Coins Introduced

0

10

20

30

40

50

60

70

80

0

10

20

30

40

50

60

70

80

88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Historical Annual Sales of Royal Canadian Mint Platinum Coin ProgramsThousand Ounces Thousand Ounces

2009 - 79-year-old Queen Version Introduced1988 - Maple Leaf Introduced

70


0

5,000

10,000

15,000

20,000

25,000

30,000

0

5,000

10,000

15,000

20,000

25,000

30,000

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

U.S. Eagle Platinum Bullion Coin SalesMonthly, Through April 2017

Troy Troy Oz.

-

1

2

3

4

5

6

-

1

2

3

4

5

6

87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

Historical Annual Sales of PBOC Mint Platinum Coin Programs

Thousand OuncesThousand Ounces

1987 - Platinum Panda Coins Introduced

1994 - Kirin Coins Introduced

2002 - Platinum Panda Program Resumed

71


-200,000

0

200,000

400,000

600,000

800,000

1,000,000

-400,000

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017


Net Additions to Platinum ETP HoldingsAnnual, Through 30 April 2017

-

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

0.0

1.0

2.0

3.0

4.0

5.0

6.0

08 09 10 11 12 13 14 15 16 17

$/OzMillion Ounces

Net Long Non-Commercial Positions on Nymex

ETP Holdings

Price

Platinum Prices, ETP Holdings, and Non-Commercial Long PositionsWeekly As of 25 April 2017

72


Note: PHPT is ETF Securities' platinum ETP traded on the LSE. ZKB Platinum is Zurich Cantonal Bank's platinum ETP traded on the SIX Swiss Exchange. MSL ASX refers to ETF Securities' platinum ETP traded on the ASX. PPLT is ETF Securities' platinum ETP traded on the NYSE. Julius Baer's platinum ETP is traded on the SIX Swiss Exchange. Tokyo Mitsubishi refers to Mitsubishi's platinum ETP traded on the Tokyo Stock Exchange. GLTR and WITE are ETF Securities' precious metals basket ETPs traded on the NYSE. SPLT is iShares' platinum ETP traded on the LSE. SPPT is Source's platinum ETP traded on the LSE. HK refers to ETFS Hong Kong's platinum ETF traded on the Hong Kong Stock Exchange. SPPP is Sprott's ETP traded on NYSE and TSX. NewPlat is the platinum ETP traded on the Johannesburg Stock Exchange. Source: Company websites, Bloomberg, CPM Group. May 2017

Platinum Exchange Traded Product Holdings Troy Ounces

Month Monthly Net

Additions Total

PHPT LSE (London+Zu

rich)ZKB

Platinum MSL ASXPPLT -

NYSE ETFSJulius Baer

Platinum12/31/2007 35,299 194,404 139,906 54,499 - - - 12/31/2008 56,784 296,668 170,740 125,928 - - - 12/31/2009 20,015 680,761 430,895 245,892 3,974 - - 12/31/2010 113,155 1,236,827 411,091 327,513 2,930 427,629 48,220 1/31/2011 58,439 1,295,265 424,043 346,305 2,930 437,310 59,850 2/28/2011 64,634 1,359,900 453,627 361,130 2,930 452,052 65,820 3/31/2011 28,837 1,388,736 477,828 365,715 2,930 441,913 73,940 4/30/2011 46,055 1,434,791 484,238 367,300 2,930 441,584 89,190 5/31/2011 (38,721) 1,396,070 451,916 364,004 2,930 431,557 94,690 6/30/2011 13,245 1,409,315 451,462 363,844 2,930 431,311 95,690 7/31/2011 36,298 1,445,613 471,871 363,689 2,930 436,063 100,690 8/31/2011 50,071 1,495,684 478,818 359,127 4,520 480,285 102,240 9/30/2011 (61,935) 1,433,749 478,573 356,610 4,520 440,527 87,540

10/31/2011 (35,705) 1,398,044 443,025 369,010 5,584 430,416 98,490 11/30/2011 (10,796) 1,387,248 424,078 368,856 7,437 445,001 96,390 12/31/2011 (61,784) 1,325,463 375,302 366,981 7,437 439,813 93,690 1/31/2012 35,384 1,360,847 381,094 366,975 7,437 459,348 104,140 2/29/2012 71,608 1,432,455 400,963 365,252 7,437 508,534 109,690 3/31/2012 (1,977) 1,430,478 415,858 356,478 6,992 493,450 108,540 4/30/2012 (31,382) 1,399,096 407,207 353,179 6,672 478,455 104,590 5/31/2012 (45,052) 1,354,044 376,937 353,019 5,099 468,360 102,390 6/30/2012 20,794 1,374,838 380,693 352,874 7,001 482,893 102,140 7/31/2012 (2,932) 1,371,905 385,679 352,729 4,972 482,646 95,790 8/31/2012 105,797 1,477,702 421,858 352,874 4,972 541,451 104,240 9/30/2012 65,429 1,543,131 502,186 356,816 4,972 521,489 105,170

10/31/2012 (25,258) 1,517,873 507,382 353,556 4,972 496,639 105,920 11/30/2012 7,783 1,525,656 518,384 353,395 5,108 491,581 105,670 12/31/2012 43,690 1,569,345 472,092 353,858 5,108 501,063 104,080 1/31/2013 19,891 1,589,236 476,512 353,697 4,972 515,557 104,080 2/28/2013 (15,096) 1,574,140 458,606 351,970 4,972 525,112 99,580 3/31/2013 28,215 1,602,355 456,931 352,401 4,972 559,191 93,180 4/30/2013 114,712 1,717,067 458,424 352,273 4,972 549,048 91,455 5/31/2013 243,529 1,960,596 394,208 351,363 3,012 573,329 88,685 6/30/2013 110,065 2,070,662 393,408 345,714 3,012 621,925 92,615 7/31/2013 53,634 2,124,295 350,075 341,653 3,012 607,047 88,645 8/31/2013 17,932 2,142,227 348,126 336,818 3,012 562,675 90,960 9/30/2013 56,057 2,198,285 341,639 333,882 3,012 552,611 83,160

10/31/2013 109,661 2,307,946 339,506 328,420 3,012 552,356 84,160 11/30/2013 92,214 2,400,160 346,418 325,176 3,012 542,180 82,330 12/31/2013 38,646 2,438,807 338,148 322,559 3,012 537,115 82,880 1/31/2014 (24,347) 2,414,460 343,838 318,074 3,012 522,216 89,960 2/28/2014 6,067 2,420,527 354,346 317,945 2,856 526,793 91,200 3/31/2014 70,729 2,491,256 373,756 317,817 2,856 516,773 86,530 4/30/2014 124,801 2,616,057 397,970 317,688 2,856 526,184 86,130 5/30/2014 101,050 2,717,107 376,293 317,560 2,856 526,041 86,600 6/30/2014 67,620 2,784,728 373,232 314,328 2,856 525,783 87,060 7/31/2014 3,185 2,787,912 374,880 309,551 2,856 530,349 87,510 8/31/2014 (111,187) 2,676,725 350,338 303,844 2,856 530,121 86,385 9/30/2014 (14,863) 2,661,862 345,649 298,758 2,856 534,646 86,235

10/31/2014 3,601 2,665,464 319,520 284,404 2,856 534,440 84,755 11/30/2014 23,353 2,688,817 354,337 282,781 2,856 534,129 86,615 12/31/2014 (10,270) 2,678,547 351,628 277,297 2,856 514,471 99,745 1/30/2015 6,494 2,685,041 375,058 275,677 2,856 494,798 103,565 2/27/2015 (73,697) 2,611,344 376,942 271,064 2,856 499,418 86,645 3/31/2015 17,910 2,629,255 346,859 269,443 2,856 503,983 90,505 4/30/2015 2,103 2,631,358 343,891 269,319 2,856 494,102 92,525 5/29/2015 2,892 2,634,250 344,680 269,195 2,856 493,776 96,195 6/30/2015 12,083 2,646,332 333,718 268,174 2,856 512,914 93,925 7/31/2015 132,596 2,778,929 332,309 269,540 2,856 502,954 87,705 8/31/2015 63,325 2,842,253 336,106 263,745 2,856 502,709 87,145 9/30/2015 (70,058) 2,772,196 322,663 263,652 2,856 473,497 85,245

10/30/2015 (179,103) 2,593,093 314,661 260,249 2,856 458,787 82,095 11/30/2015 (155,062) 2,438,030 313,872 260,156 2,856 458,492 81,395 12/31/2015 (10,253) 2,427,777 305,767 260,031 2,856 463,097 81,095 1/31/2016 (37,440) 2,390,337 304,771 268,690 2,856 453,205 80,225 2/29/2016 (36,934) 2,353,402 310,176 265,517 2,856 467,471 80,615 3/31/2016 46,906 2,400,308 307,417 265,421 2,856 486,457 80,615 4/30/2016 55,233 2,455,541 353,798 265,935 2,856 486,310 81,855 5/31/2016 (17,801) 2,437,740 363,511 265,839 2,856 490,842 81,705 6/30/2016 (47,105) 2,390,635 365,593 268,777 2,856 500,142 80,445 7/31/2016 (40,637) 2,349,998 318,938 270,214 2,856 500,013 84,545 8/31/2016 (29,111) 2,320,887 283,840 270,086 2,856 509,325 84,745 9/30/2016 (12,112) 2,308,775 291,902 273,021 2,856 494,682 84,215

10/31/2016 105,850 2,414,625 340,417 274,423 2,856 523,178 85,375 11/30/2016 18,470 2,433,095 371,343 274,326 2,856 522,961 81,065 12/31/2016 (6,752) 2,426,343 366,123 274,230 2,856 522,676 84,385 1/31/2017 18,996 2,445,339 390,293 274,134 2,856 517,605 85,585 2/28/2017 28,013 2,473,351 377,979 274,005 2,856 550,924 97,005 3/31/2017 15,842 2,489,193 373,164 273,909 2,856 550,635 98,265 4/30/2017 (1,528) 2,487,665 366,296 271,025 2,856 555,140 101,635

73


Tokyo Mitsubishi

GLTR-NYSE ETFS

WITE-NYSE ETFS

SPLT-LSE iShares

SPPT - LSE Source

HK Platinum -

ETFS

SPPP-NYSE

(Sprott) NewPlat - JSE AfricaPlatinum - - - - - - - - - - - - - - - - - - - - - - - -

5,144 7,318 6,982 - - - - - 5,144 7,927 11,756 - - - - - 6,076 8,835 9,430 - - - - - 6,076 9,362 10,971 - - - - - 6,076 10,286 12,421 2,849 17,917 - - - 6,076 9,551 9,430 3,298 22,617 - - - 6,076 9,947 9,710 3,297 35,047 - - - 8,423 10,080 10,874 3,296 37,697 - - -

11,349 9,494 10,359 3,295 36,197 - - - 11,349 10,332 10,833 3,294 30,171 - - - 15,014 9,914 9,450 3,293 13,848 - - - 15,014 9,914 9,418 3,292 7,848 - - - 16,558 8,675 8,369 3,291 5,348 - - - 16,558 8,289 8,369 3,289 5,348 - - - 16,558 8,117 7,939 3,288 4,677 - - - 14,950 8,307 7,939 3,287 14,677 - - - 14,950 8,307 7,772 3,286 14,677 - - - 14,950 8,008 7,319 3,285 14,677 - - - 15,947 8,008 7,319 3,284 14,677 - - - 16,911 7,899 7,319 3,283 14,677 - - - 19,130 7,899 7,319 3,282 14,677 - - - 19,130 8,092 7,319 3,281 14,677 - - - 15,882 8,246 7,319 3,280 14,677 - - - 15,882 8,471 7,319 3,279 14,677 1,890 - - 15,882 8,612 7,319 3,278 14,677 1,890 81,486 - 15,882 8,863 8,343 3,276 14,677 1,890 81,486 - 15,079 9,149 8,343 3,275 14,677 1,890 81,486 - 15,754 9,559 8,343 3,274 14,677 1,890 82,183 - 16,558 9,982 8,343 3,273 14,677 1,890 82,183 123,989 - 16,558 9,831 6,855 3,621 65,202 1,890 82,183 363,860 - 16,558 9,982 6,855 3,620 65,202 1,890 82,183 427,699 - 16,558 10,140 6,855 3,619 65,202 1,890 82,183 547,417 - 16,558 10,140 6,855 3,618 100,202 1,890 82,183 579,192 - 15,272 10,607 6,855 3,617 104,702 1,890 82,183 658,856 - 15,272 10,350 6,855 4,015 109,529 1,890 82,183 770,399 - 15,272 10,207 6,855 4,012 122,960 1,890 81,905 857,944 - 15,207 15,483 6,855 4,511 121,708 1,890 79,939 909,500 - 15,207 15,463 6,855 4,509 125,822 1,890 74,375 893,240 - 15,207 9,748 6,855 4,508 125,822 1,890 74,379 888,979 - 15,207 10,556 6,855 5,937 126,222 1,890 74,379 952,479 - 15,207 10,178 6,855 6,838 138,650 1,890 73,779 1,023,832 8,000 15,207 10,143 6,855 6,838 144,042 1,890 73,779 1,135,004 14,000 16,525 10,143 6,755 6,834 159,127 1,890 73,779 1,182,417 24,000 16,525 9,938 6,297 6,834 159,127 1,890 73,779 1,182,378 26,000 16,525 9,938 6,297 6,834 108,156 1,890 73,779 1,153,763 26,000 15,561 9,745 6,297 6,827 100,263 1,890 73,779 1,153,357 26,000 18,069 9,353 6,297 6,825 100,263 1,890 73,779 1,145,013 78,000 18,776 8,892 6,297 7,606 100,263 1,890 70,485 1,108,891 105,000 18,776 14,758 6,297 8,105 100,254 1,890 66,954 1,104,516 111,000 19,548 15,401 6,297 8,103 100,051 1,890 66,562 1,104,237 111,000 21,863 10,131 6,297 8,606 102,121 1,890 64,258 1,044,254 115,000 30,029 9,736 6,297 8,606 102,121 1,890 64,258 1,071,671 121,000 30,029 9,138 6,297 9,102 102,121 1,890 60,833 1,079,254 130,000 30,961 9,330 6,297 9,099 102,124 1,890 58,937 1,078,911 130,000 37,874 9,484 6,297 8,579 58,501 1,890 58,937 1,118,183 135,000 48,933 9,065 6,297 7,441 82,812 1,890 58,937 1,185,188 183,000 53,209 9,693 5,832 7,439 82,812 1,890 53,629 1,252,188 183,000 54,206 9,693 5,708 7,436 78,691 1,890 51,730 1,231,929 183,000 57,711 9,693 5,708 7,714 81,307 1,890 48,344 1,078,078 184,000 74,429 10,239 5,708 7,990 80,238 1,890 43,987 975,778 121,000 90,183 11,974 5,708 8,267 81,240 1,890 43,987 953,682 118,000 94,202 11,395 5,708 8,265 80,357 1,890 43,987 916,786 118,000 94,202 10,640 5,264 9,112 79,532 1,890 42,075 866,053 118,000 94,202 10,640 4,171 9,109 80,141 1,890 42,077 903,314 112,000 97,385 10,832 3,120 9,400 79,107 1,890 42,077 906,978 114,000 97,385 11,408 3,120 9,396 74,707 1,890 42,077 879,005 114,000 97,224 12,153 - 9,393 78,292 1,890 42,077 794,794 137,000 97,224 13,910 - 9,390 78,292 - 42,077 794,541 138,000 97,224 15,004 - 9,387 74,092 - 42,077 794,253 138,000 97,224 15,962 - 9,384 75,352 - 42,077 786,101 136,000

123,330 15,794 - 9,381 75,962 - 42,077 785,833 136,000 116,000 16,117 - 9,377 78,342 - 42,077 781,632 137,000 111,563 17,077 - 9,374 78,608 - 42,077 781,374 136,000 111,563 17,895 - 10,514 78,058 - 39,737 781,100 136,000 108,670 18,272 - 11,844 80,138 - 39,740 776,921 135,000 106,162 18,430 - 12,426 80,938 - 39,740 780,671 152,000 106,162 19,235 - 12,422 84,738 - 39,740 776,417 152,000

74


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Gross Long and Short Positions of Nymex Disaggregated Non-Commercial Positions Nymex Platinum Futures and Options. Weekly Data, Through 25 April 2017

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Gross Long and Short Positions of Non-Commercial Positions Nymex Platinum Futures & Options. Weekly Data, Through 25 April 2017

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Investment Product Trading Volume as a % of Total Platinum Products Trading VolumeAnnual; Platinum Futures, Coins, and ETPs

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Markets The platinum market is the second smallest market in dollar terms and in the physical ounces traded in the precious metals complex. Platinum is traded on the New York Mercantile Exchange (Nymex), part of the CME Group, and on the Tokyo Commodities Exchange (Tocom). These are the two major exchanges where activity occurs. Platinum also is traded in much smaller volumes at exchanges in Shanghai, Mumbai, Moscow, and South Africa. The over-the-counter market for platinum and other PGMs in London provide daily benchmark prices. Many market par t ic ipan ts use these benchmarks to transact in the physical market. Others use prices published by refiners. The over-the-counter markets and exchanges provide the liquidity for many consumers and producers to hedge their metals exposures.

In 2016 there was a total of 7.2 million ounces of newly refined physical platinum produced. The trading volume in the futures and options market on exchanges was 34 time the size of this newly refined physical supply in 2016 in both ounce and dollar terms. Compared to gold, both the physical and exchange futures and options markets for platinum were 1.5% of the size of the gold market in dollar terms. The total platinum market, newly refined physical supply entering the market plus exchange futures and options trading, was 255.6 million ounces in 2016, up from 249.3 million ounces in 2015. The paper market accounted for 248.4 million ounces of the total platinum market in 2016. In dollar terms the platinum market actually shrank last year to $254 billion, down from $263 billion in 2015. This

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Combined Annual Platinum Trading Volumes at Nymex, Tocom, and SGEAnnual Data, Through 2016

Mln Oz Mln Oz

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SGE

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contraction in the dollar value of the platinum market was due to the lower platinum price last year Nymex Futures and Options Annual trading volume of platinum futures on the Nymex reached a record level in 2016, 196.9 million ounces, up from the previous record in 2015 when trading volume was 174.1 million ounces. Last year was the second consecutive year of rising futures trading volumes on an annual basis. That said, annual trading volumes have really been rising almost consecutively since 2006, only breaking this trading trend in 2014. That year futures trading volume was basically flat, falling to 161.8 million ounces from 162.7 million ounces totaled in 2013 before continuing to rise in 2015. Year-to-date through April 2017 Nymex futures trading volume was 71.4 million ounces. On an annualized basis volume

is on pace to set another record level this year. Much of this volume may be contributed to the increase in algorithmic trading, computer based quantitative trading. Combined open interest set a record high in 2016 as well, on a month end basis. This record high was reached in July at 3.94 million ounces. While this level was a record high it was not as large an increase as in trading volumes. This suggests that while market activity has picked up in terms of trading volume, market participants have not been holding on to their long or short positions for an extended amount of time. Combined open interest has ranged mostly between 3 and 4 million ounces since 2013. At the end last year combined open interest was 3.15 million ounces, down slightly from 3.33 million ounces at the end of 2015. As of end of April 2017 combined open interest was 3.38 million ounces.

Turnover in the Precious Metals Markets in 2016Million Ounces

Gold Silver Platinum Palladium

Physical Supply 127 988 7.2 9.3

Futures and Options 8,456 142,974 248 149

Total 8,582 143,962 255.6 158.6Value ($bil) $10,735 $2,472 $254 $110

London Interbank Market 4,951 43,605 NA NA

Total 13,534 187,567 Value ($bil) $16,928 $3,221

S ources: CPM GroupMay 8, 2017

Notes: Value calculated at average prices for 2016: $1,250.81 for gold, $17.17 for silver, $991.84 for platinum, and $615.49 for palladium.

78


Trading volumes of platinum options on the Nymex were 2.66 million ounces last year, down from 2.91 million ounces in 2015. Trading volume of exchange traded options has fallen sharply compared to 2013 and 2014, when volumes were 9.19 million ounces and 7.22 million ounces, respectively. Open interest meanwhile also has declined over the past couple of years compared to the levels of 2013 and 2014. Month end open interest of platinum options on the Nymex was 387,000 ounces at the end of 2016, up from 113,700 ounces at the end of 2015. Since the middle of 2015 month end open interest has been between 100,000 ounces and 400,000 ounces. Tocom Futures In 2016 platinum futures trading volumes at Tocom totaled 48.0 million ounces. This was down sharply from

63.9 million ounces in 2015. Last year’s trading volume was the lowest level since 1989, the sixth year that the Tocom traded platinum futures. Last year’s trading volume also was the second consecutive year that trading volume declined since recently peaking at 76.5 million ounces in 2014. Year-to-date through April trading volume was 16.1 million ounces, which is on pace to be the lower than last year’s level. The Tocom trades two types of platinum contracts. The standard platinum contract is for 500 grams (approximately 16.1 troy ounces) and the mini is for 100 grams (approximately 3.2 troy ounces). Total open interest in Tocom futures was 1.1 million ounces at the end of 2016, up from 1.0 million ounces at the end of 2015. Month end open interest in April this year was 948,320 ounces. A

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Trading Volume in the Platinum Futures MarketsMonthly Totals, Through April 2017

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relatively stable level of open interest and declining trading volumes suggest investors and short-term market participants have continued to retreat from the Tocom platinum futures market. SGE Spot Contract Trading volume of platinum spot contracts at the Shanghai Gold Exchange declined for the third consecutive year in 2016, to 847,076 ounces. Volume is off sharply after having peaked in 2013 at 1.5 million ounces in 2013. Year-to-date through April this year trading volume totaled 207,694 ounces, on pace to match last year’s level. Inventories Total reported platinum inventories are made up of inventories held at the

Nymex, Tocom, and SGE registered depositories, and other vaults in the case of exchange traded products (ETPs). There used to be some reported inventories from dealers, users, and producers in past years in the United States, which are noted in this report at the table in the end of this section. This data in the table is all publicly available. Total reported platinum inventories were 2.73 million ounces at the end of 2016, up slightly from 2.67 million ounces at the end of 2015. As of end of March 2016 total inventories were 2.76 million ounces. Combined ETP platinum holdings owned by investors by far represent the bulk of the reported inventories at 2.43 million ounces at the end of last year. Nymex and Tocom inventory holdings meanwhile are looked at as industry inventories, although investors do sometimes hold metal in these markets as well.

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Open Interest in the Platinum Futures MarketsMonth End, Through April 2017Million Ounces Million Ounces

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New York Mercantile Exchange Activity - Trading VolumeMonthly Total, Through April 2017Million Ounces Million Ounces

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New York Mercantile Exchange Activity - Open InterestMonth-end, Through April 2017


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Toyko Commodity Exchange Activity - Trading VolumeMonthly Total, Through April 2017Million Ounces Million Ounces

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Shanghai Gold Exchange Monthly Platinum Trading VolumeData Through April 2017


S hanghai Gold Exchange Platinum Trading ActivityTroy Ounces

Trading Volum e2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

January 94,041 83,881 103,365 70,474 59,865 64,334 119,151 63,594 139,052 38,967Fe bruary 21,219 79,219 53,209 69,124 62,501 56,907 89,090 52,631 41,185 47,680March 50,927 88,157 63,498 116,546 102,915 121,948 116,868 94,587 74,750 66,713Apri l 58,675 108,637 65,813 84,524 116,482 166,123 79,027 65,491 73,207 54,335May 38,517 77,323 106,933 76,680 117,189 137,412 50,477 79,766 94,234Jun e 28,646 79,766 82,756 99,635 71,600 170,495 70,185 104,361 55,139Ju ly 83,238 78,769 66,166 47,680 77,998 102,143 71,117 80,055 42,439Au gust 63,433 79,316 80,184 99,957 77,515 98,574 109,377 84,846 52,920Se pte m be r 86,260 91,533 66,777 136,126 99,699 173,614 117,415 126,160 64,912O ctobe r 106,644 57,968 68,449 97,513 100,021 102,625 75,651 41,024 48,773Nove m be r 42,793 45,590 75,683 81,502 80,763 147,636 68,031 117,350 71,407De ce m be r 62,405 61,794 79,927 88,125 83,946 156,478 78,962 71,632 89,058_______ _______ _______ _______ _______ _______ _______ _______ _______ _______Total 736,799 931,954 912,760 1,067,887 1,050,493 1,498,289 1,045,349 981,498 847,076 207,694% C hange 20.5% 26.5% -2.1% 17.0% -1.6% 42.6% -30.2% -6.1% -13.7% -36.7%Sou rce : SGE, Bloom be rgNote : Trading volum e s are coun te d single -side d, adjuste d from S GE reported data, which counts both buy and sell sidetransactions. The total and % change in 2017 i s on a YTD basis .

83


Nymex Platinum Trading VolumeTroy Ounces, Monthly Total

1975 1976 1977 1978 1979 1980 1981 1982January 735,300 290,800 521,800 1,415,400 2,192,100 1,759,000 1,823,150 1,624,900February 358,950 147,300 373,250 1,792,950 2,272,250 1,424,200 1,484,000 1,472,600March 276,050 217,100 770,950 2,444,200 2,171,750 2,082,900 2,806,200 2,422,150April 475,700 948,900 402,600 1,359,150 2,106,950 1,072,200 1,834,800 2,119,800May 331,050 592,800 295,700 1,922,500 2,258,200 1,330,650 1,541,800 1,657,250June 239,900 973,200 362,500 1,694,000 2,539,650 1,877,850 2,232,700 2,330,650July 481,800 1,049,950 270,550 1,298,150 2,382,050 2,037,700 1,896,250 2,791,050August 420,100 697,450 248,850 1,725,300 2,799,750 1,333,100 1,954,550 3,844,750S eptember 345,650 590,600 458,650 1,402,950 2,420,500 2,986,850 3,193,100 4,240,300October 313,850 539,600 729,550 1,949,150 1,750,750 2,048,300 1,771,500 3,541,500November 173,700 341,900 845,450 1,656,500 1,909,500 1,738,100 1,658,200 3,501,600December 264,450 383,950 733,550 1,622,650 2,002,750 1,794,550 2,328,400 3,904,650

_________ _________ _________ _________ _________ _________ _________ _________Annual Total 4,416,500 6,773,550 6,013,400 20,282,900 26,806,200 21,485,400 24,524,650 33,451,200

1983 1984 1985 1986 1987 1988 1989 1990January 6,302,400 2,234,250 2,052,300 5,113,550 5,859,600 4,140,700 5,178,750 4,282,850February 5,852,300 2,184,050 1,310,050 5,735,600 4,286,550 3,878,700 4,827,550 4,045,400March 5,395,600 3,444,100 2,672,700 6,990,100 6,705,200 5,961,500 7,423,800 4,063,500April 3,594,450 2,722,800 2,439,100 5,014,700 7,464,800 3,715,400 5,366,050 2,763,250May 5,311,600 2,246,150 2,153,900 3,851,000 5,535,100 6,163,150 5,581,950 3,259,400June 5,769,550 2,688,050 2,109,600 6,110,900 5,826,750 9,112,200 6,342,500 3,506,850July 3,796,000 2,760,000 2,017,450 3,768,450 4,355,550 5,724,500 3,489,550 2,636,150August 3,849,100 1,917,600 4,905,800 9,491,150 6,659,950 5,291,500 4,341,250 3,690,800S eptember 3,961,700 2,611,350 4,133,400 14,469,200 6,133,850 6,252,600 4,257,400 3,860,250October 3,075,350 1,795,400 3,431,700 8,241,350 6,361,300 5,730,350 2,821,150 3,398,850November 2,861,950 1,915,200 3,237,900 6,832,250 4,431,150 8,240,700 4,992,200 2,504,750December 2,894,100 2,037,400 4,198,900 5,663,500 4,457,500 8,961,450 4,404,300 3,034,650

_________ _________ _________ _________ _________ _________ _________ _________Annual Total 52,664,100 28,556,350 34,662,800 81,281,750 68,077,300 73,172,750 59,026,450 41,046,700


_________ _________ _________ _________ _________ _________ _________ _________Annual Total 30,232,300 28,862,650 32,803,750 44,790,250 42,334,650 39,123,400 34,929,850 26,413,450

84


Nymex Platinum Trading VolumeTroy Ounces, Monthly Total

1999 2000 2001 2002 2003 2004 2005 2006January 1,885,000 1,661,300 963,900 642,400 777,250 816,850 770,500 1,030,200February 2,684,900 1,567,600 644,250 690,350 757,850 778,700 1,012,650 1,378,600March 3,417,500 1,750,650 1,580,850 1,221,700 1,908,500 2,112,450 2,064,850 2,140,200April 1,845,000 1,402,850 748,050 553,300 673,600 1,461,400 813,350 860,750May 1,325,350 1,137,050 785,700 614,700 948,400 656,250 1,006,750 1,734,200June 3,772,200 2,359,850 1,162,250 1,358,800 1,548,050 1,424,750 2,779,400 2,299,250July 1,376,800 826,350 725,200 709,900 542,600 779,900 1,256,600 811,000August 1,805,750 736,950 623,850 929,150 593,900 909,000 1,330,200 1,071,400S eptember 5,109,800 1,832,150 852,000 1,488,100 1,884,300 1,703,700 2,626,750 2,200,000October 1,531,850 606,100 497,850 591,700 963,750 1,219,550 1,091,350 1,059,100November 1,608,800 633,100 570,050 493,900 702,000 930,300 1,522,350 2,337,700December 2,000,450 1,532,250 1,144,500 1,694,550 2,115,050 1,991,700 2,534,100 1,733,550

_________ _________ _________ _________ _________ _________ _________ _________Annual Total 28,363,400 16,046,200 10,298,450 10,988,550 13,415,250 14,784,550 18,808,850 18,655,950


_________ _________ _________ _________ _________ _________ _________ _________Annual Total 25,073,650 33,777,150 40,910,100 74,449,050 106,442,400 131,085,200 162,676,800 161,796,950

2015 2016 2017January 12,150,850 11,454,650 17,280,950February 10,010,200 13,143,650 14,344,650March 20,426,400 20,654,100 25,779,650April 10,859,650 12,437,900 14,028,750May 10,585,500 12,493,050June 21,718,700 21,750,900July 12,087,150 13,984,450August 13,419,550 13,912,300S eptember 22,192,500 22,804,600October 12,551,750 15,131,050November 11,086,300 18,022,850December 16,998,800 21,158,600

_________ _________ _________Annual Total 174,087,350 196,948,100 71,434,000

Note: Annual trading volume for 2016 through March.S ource: New York Mercantile Exchange.May 12, 2017

85


Nymex Platinum Open InterestTroy Ounces

1975 1976 1977 1978 1979 1980 1981 1982

January 272,250 208,050 268,150 370,400 437,750 410,000 470,500 313,900February 266,950 210,450 301,300 435,150 493,300 420,450 447,300 376,200March 272,850 208,100 330,250 342,800 465,100 310,450 472,050 434,300April 197,800 319,500 303,000 347,050 454,400 271,700 385,450 415,100May 220,250 296,550 287,500 514,450 443,050 318,450 406,500 516,300June 232,250 414,750 277,500 387,400 484,150 397,150 394,550 466,850July 288,250 324,950 262,550 406,000 543,250 389,850 276,000 556,850August 296,500 293,750 258,750 413,900 492,500 414,300 322,300 642,650S eptember 249,150 309,000 292,950 423,300 428,150 711,950 421,050 707,050October 210,350 279,000 291,550 418,650 376,250 607,000 352,750 650,100November 212,950 300,150 260,750 440,800 379,750 601,300 430,050 777,350December 252,700 272,850 303,250 461,500 446,300 595,550 391,950 781,000

1983 1984 1985 1986 1987 1988 1989 1990

January 996,350 634,600 760,500 908,150 824,500 1,006,750 926,350 938,850February 1,175,300 695,600 706,550 1,024,500 837,050 961,850 957,200 775,150March 759,850 690,250 662,800 996,900 988,550 876,700 951,450 851,450April 793,900 762,200 604,800 788,400 984,950 767,650 980,800 820,750May 918,750 792,600 583,400 829,100 899,050 1,153,100 1,037,250 791,250June 795,900 862,700 568,550 937,400 868,100 1,055,100 914,750 823,200July 846,700 788,750 583,850 937,450 1,047,350 919,800 895,700 850,250August 783,550 788,300 824,600 1,296,950 1,114,000 886,850 1,009,550 821,000S eptember 770,650 861,400 657,450 1,168,200 1,311,650 1,066,650 874,200 987,600October 622,500 741,300 653,400 957,600 1,109,400 905,300 913,100 857,000November 661,350 737,650 898,450 910,200 1,007,050 1,251,500 1,052,800 779,950December 669,200 776,250 742,650 885,350 888,200 995,950 938,350 804,450

1991 1992 1993 1994 1995 1996 1997 1998

January 789,250 777,550 658,600 859,100 1,107,150 1,016,550 1,359,950 517,850February 827,750 689,250 704,850 991,200 1,171,100 1,134,400 1,249,750 535,950March 757,650 664,500 654,700 1,279,800 1,096,450 1,313,450 872,300 678,550April 782,000 806,200 906,800 1,096,500 1,098,350 1,271,400 850,350 675,450May 883,150 916,600 1,009,650 1,107,850 1,002,050 1,381,850 1,013,600 560,900June 868,500 965,450 857,350 1,116,700 1,007,550 1,344,900 789,100 558,450July 956,900 930,400 1,132,900 1,446,550 1,217,700 1,237,300 772,350 489,050August 986,200 905,750 902,300 1,279,550 1,202,150 1,317,650 653,350 538,850S eptember 908,100 786,200 821,550 1,129,950 1,104,850 1,416,950 696,950 710,550October 665,500 631,550 840,750 1,240,850 1,199,800 1,399,700 650,650 833,350November 669,300 666,800 827,950 1,369,700 1,074,650 1,374,350 647,500 729,100December 761,900 589,800 1,018,900 1,188,400 1,154,500 1,299,500 549,150 577,150

86


Nymex Platinum Open InterestTroy Ounces

1999 2000 2001 2002 2003 2004 2005 2006

January 675,200 577,950 388,400 308,300 438,400 354,500 396,650 584,300February 866,150 133,950 366,300 319,250 406,500 414,850 369,400 428,800March 699,600 491,500 322,950 343,700 321,400 421,750 399,250 453,950April 628,000 398,000 336,850 355,350 308,750 303,700 432,450 492,450May 565,350 565,850 372,400 322,400 450,400 269,050 397,300 475,000June 666,100 473,650 275,900 323,550 330,700 389,750 559,000 366,900July 783,750 501,750 310,550 256,850 395,650 263,450 486,700 434,100August 628,700 505,050 305,100 387,100 460,200 322,750 570,100 487,000S eptember 792,000 431,000 274,900 349,150 422,350 338,600 661,550 391,600October 677,850 379,900 285,450 347,900 443,550 298,900 665,250 382,400November 590,350 415,350 310,250 384,700 479,400 418,700 663,500 419,700December 597,650 434,350 318,150 412,750 407,700 318,900 485,250 394,650

2007 2008 2009 2010 2011 2012 2013 2014

January 504,550 884,200 937,000 1,725,450 2,073,000 2,251,500 3,437,800 2,990,600February 626,350 763,850 1,022,000 1,742,400 1,981,950 2,258,900 3,290,800 3,250,750March 578,300 593,200 1,005,050 1,898,850 1,668,150 2,044,450 3,178,500 3,342,250April 719,950 683,400 991,750 1,869,800 1,923,150 2,065,650 3,134,600 3,177,700May 715,950 788,000 1,145,450 1,508,250 1,756,050 2,456,600 3,130,650 3,571,450June 723,600 754,700 1,149,800 1,470,300 1,577,250 2,460,700 3,070,950 3,347,150July 738,700 664,200 1,113,400 1,513,000 1,754,250 2,611,000 3,155,150 3,466,650August 522,600 626,200 1,344,500 1,550,500 1,958,100 2,733,750 3,313,650 3,163,250S eptember 729,750 733,950 1,432,600 1,890,400 1,858,100 2,995,450 2,992,900 2,959,600October 783,050 765,950 1,540,700 1,893,350 1,890,050 3,057,900 2,842,100 3,019,000November 660,150 862,950 1,773,750 1,725,050 2,038,750 3,075,050 3,041,450 3,210,700December 918,200 910,850 1,627,650 1,954,650 2,097,750 2,979,650 3,101,850 3,205,950

2015 2016 2017

January 3,216,100 3,315,200 3,227,600February 3,442,350 3,279,700 3,560,000March 3,442,400 2,889,000 3,183,300April 3,539,550 3,178,350 3,379,000May 3,731,100 3,089,750June 3,883,500 3,053,850July 3,927,050 3,938,000August 3,504,050 3,931,050S eptember 3,777,700 3,401,950October 3,504,950 3,541,400November 3,824,850 3,439,100December 3,326,700 3,147,200

Note: Month-end data.S ource: New York Mercantile Exchange.May 14, 2017

87


Nymex Platinum Options Trading VolumeTroy Ounces, Monthly Total

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

January - 61,200 156,200 110,150 273,600 146,900 243,500 153,150 70,850 120,000February - 65,400 148,150 393,050 327,500 135,100 175,150 270,750 37,950 115,500March - 126,650 132,550 230,150 436,850 190,950 179,900 141,650 67,250 34,300April - 51,200 104,850 307,550 388,450 196,700 193,250 65,650 50,250 11,300May - 135,350 163,950 378,000 361,200 293,000 200,150 147,200 68,650 23,550June - 106,050 163,100 309,000 261,100 103,650 135,800 166,300 83,750 30,450July - 127,350 232,000 275,250 488,150 160,000 88,100 89,400 70,150 43,100August - 206,200 212,750 235,600 460,000 281,200 138,200 162,550 42,200 19,250S eptember - 115,900 170,650 235,650 622,350 228,950 117,400 109,100 41,250 56,650October 58,350 143,300 113,350 238,650 425,800 175,000 85,000 97,700 72,200 35,600November 64,050 110,850 125,250 212,950 306,350 180,050 100,100 75,700 71,950 44,600December 65,050 150,000 250,100 207,050 176,450 88,550 152,200 77,800 32,700 23,000________ ________ ________ ________ ________ ________ ________ ________ ________ ________Annual Total 187,450 1,399,450 1,972,900 3,133,050 4,527,800 2,180,050 1,808,750 1,556,950 709,150 557,300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

January 38,750 8,950 2,150 650 6,150 550 500 10,000 0 0February 109,200 45,400 250 3,900 2,400 550 150 0 0 0March 35,350 7,450 2,550 6,050 4,650 2,000 250 5,000 0 1,000April 28,600 3,700 2,950 450 8,650 6,400 150 0 0 0May 57,900 1,450 1,400 1,150 1,300 6,950 10,000 0 0 0June 19,950 6,050 2,000 2,650 1,200 800 0 0 0 0July 21,200 2,150 2,350 2,850 1,550 1,000 0 0 0 0August 13,550 6,300 1,850 600 1,450 400 0 0 0 0S eptember 3,150 2,650 1,400 2,450 2,450 600 0 0 0 0October 8,350 1,950 1,500 5,250 200 50 0 0 0 0November 2,200 2,250 2,850 2,450 950 100 5,000 0 0 0December 15,050 2,350 1,550 3,200 900 800 0 0 0 0________ ________ ________ ________ ________ ________ ________ ________ ________ ________Annual Total 353,250 90,650 22,800 31,650 31,850 20,200 16,050 15,000 0 1,000

2010 2011 2012 2013 2014 2015 2016 2017

January 0 18,500 268,850 1,759,000 721,950 310,150 302,150 4,428February 500 101,900 457,100 1,396,950 315,450 369,550 239,050 2,118March 56,750 224,950 190,800 813,350 805,250 169,550 165,200April 0 384,100 165,150 1,100,200 566,200 642,000 210,500May 0 561,950 385,350 489,300 1,570,650 179,050 281,900June 0 767,500 215,100 570,750 683,000 208,550 52,600July 0 917,950 58,400 1,058,300 570,350 194,850 132,850August 2,500 541,150 524,150 514,400 473,100 46,300 340,150S eptember 42,400 286,600 936,200 192,550 566,850 216,800 288,750October 238,000 227,350 790,800 660,650 369,500 232,800 185,000November 83,000 177,200 615,050 351,400 399,350 206,800 180,400December 109,000 37,200 310,600 285,550 176,850 137,350 282,500________ ________ ________ ________ ________ ________ ________ ________Annual Total 532,150 4,246,350 4,917,550 9,192,400 7,218,500 2,913,750 2,661,050 6,546

Note: Annual trading volume for 2017 through April.S ource: New York Mercantile ExchangeMay 12, 2017

88


Nymex Platinum Options Open InterestTroy Ounces, Monthly-End

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

January - 77,650 141,950 184,650 157,750 200,250 168,650 231,750 66,250 120,350February - 110,300 168,050 278,050 226,550 245,250 182,000 290,300 69,500 133,200March - 72,900 122,350 159,400 174,500 105,050 75,900 106,200 30,500 19,250April - 82,200 129,800 194,800 299,500 150,050 141,050 132,750 58,500 24,900May - 121,600 155,050 254,850 353,500 266,750 209,700 150,250 86,100 32,750June - 96,850 115,200 140,250 224,150 130,050 161,500 107,250 72,000 28,850July - 136,700 191,950 180,450 266,700 201,250 189,850 136,200 85,400 61,850August - 220,250 205,900 229,350 351,650 299,300 238,200 194,100 76,500 68,100S eptember - 127,950 160,300 134,050 240,500 172,850 96,250 102,200 32,600 23,550October 40,950 140,300 160,250 157,250 336,650 193,250 145,850 159,050 71,650 0November 72,650 147,400 193,650 180,400 346,900 260,950 189,450 208,700 81,500 61,300December 56,900 74,950 124,750 124,750 147,100 117,250 163,800 57,050 20,650 16,300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

January 42,250 22,400 1,650 950 5,150 1,050 250 10,000 0 0February 77,550 23,800 650 3,900 6,200 1,600 300 10,000 0 0March 32,850 5,600 1,750 4,650 3,200 2,450 50 0 0 0April 48,750 8,350 2,750 4,650 3,200 7,850 50 0 0 0May 62,050 8,850 3,600 5,300 4,550 14,600 0 10,050 0 0June 6,750 4,650 1,650 1,850 1,750 700 0 0 0 0July 22,600 6,350 4,600 2,250 2,100 1,700 0 0 0 0August 20,700 10,000 3,200 2,550 3,200 2,000 0 0 0 0S eptember 3,950 4,250 600 1,200 1,100 550 0 0 0 0October 10,950 5,100 1,650 5,500 1,300 650 0 0 0 0November 7,850 6,650 1,650 6,200 1,950 750 5,000 0 0 0December 15,250 150 750 1,650 500 400 0 0 0 0

2010 2011 2012 2013 2014 2015 2016 2017

January 0 180,900 810,400 1,546,000 713,950 502,050 199,000 334,700February 0 278,800 1,165,900 1,819,200 792,000 793,450 205,950 383,050March 0 274,850 513,000 1,294,400 784,100 327,000 234,700April 0 572,450 446,900 1,648,700 1,063,450 685,050 295,100May 0 885,400 725,800 1,458,450 1,817,400 787,600 396,150June 0 1,147,400 373,150 578,000 1,143,500 185,650 171,850July 56,250 1,399,300 409,400 1,019,000 1,345,650 256,100 216,350August 56,250 1,448,600 728,300 916,000 1,331,350 228,450 302,100S eptember 56,250 1,230,400 788,250 669,400 898,700 260,600 270,850October 202,500 1,247,350 951,000 1,027,600 818,950 265,100 291,650November 207,500 1,239,050 863,350 992,450 1,054,500 174,100 340,700December 232,500 631,100 470,750 229,950 448,550 113,700 387,000

Note: Open Interest for 2017 through April. Month-End.S ource: New York Mercantile ExchangeMay 12, 2017

89


Tocom Platinum Trading VolumeTroy Ounces, Monthly Total

1984 1985 1986 1987 1988 1989 1990 1991 1992

January 25,406 402,306 1,586,051 2,923,859 4,172,937 3,998,630 4,072,304 5,696,192 7,986,443February 73,437 350,287 2,019,761 2,101,174 4,161,375 3,182,907 5,151,732 5,971,494 8,558,195March 58,467 573,702 1,669,876 2,192,604 6,147,931 4,900,541 4,218,573 5,949,166 7,920,727April 70,913 710,382 2,002,555 3,858,332 6,281,105 4,529,479 4,475,506 4,937,351 4,869,979May 58,483 711,331 1,683,801 3,027,526 9,739,897 3,600,135 3,524,428 5,603,401 4,542,251June 67,021 446,558 1,638,118 2,449,000 10,456,406 2,990,526 2,925,811 6,263,358 5,325,812July 101,497 562,880 1,355,496 3,918,037 6,236,274 2,189,855 4,116,148 6,748,448 6,114,356August 79,532 1,636,703 5,150,376 7,861,271 4,154,493 2,319,974 4,653,729 13,809,706 7,981,058S eptember 134,316 1,337,904 7,046,915 2,554,758 5,020,755 1,699,383 5,111,159 6,417,714 5,313,434October 184,920 1,106,658 3,821,862 4,994,705 3,487,543 2,712,471 6,741,726 6,680,498 5,572,022November 240,541 1,037,996 4,205,563 5,843,102 5,451,152 11,108,691 5,553,720 5,452,775 4,449,609December 346,267 938,895 2,603,030 4,364,836 6,573,842 5,397,702 4,245,629 10,119,401 4,756,407________ ________ _________ _________ _________ _________ _________ _________ _________Annual Total 1,440,800 9,815,602 34,783,404 46,089,204 71,883,710 48,630,294 54,790,464 83,649,503 73,390,290

1993 1994 1995 1996 1997 1998 1999 2000 2001

January 2,519,522 8,988,516 2,594,417 16,363,838 7,901,533 12,192,928 15,658,500 24,671,643 27,172,437February 6,464,380 8,263,534 3,215,713 19,114,909 16,210,560 8,500,693 24,819,328 39,100,395 17,330,963March 6,706,588 9,270,301 6,845,527 10,751,339 14,084,820 19,407,031 24,251,578 16,285,567 15,274,396April 4,742,373 9,243,969 9,237,314 9,350,243 12,207,782 21,598,390 17,124,685 12,607,367 18,583,667May 6,895,232 5,406,815 5,960,708 8,585,089 16,048,054 13,434,331 13,738,460 18,442,365 16,193,600June 9,241,767 5,995,270 5,472,467 6,931,096 15,395,491 14,209,532 14,307,946 16,573,413 15,815,460July 7,537,314 5,594,640 8,283,998 7,156,264 14,978,657 30,851,731 13,513,823 21,654,750 17,158,266August 8,130,012 4,919,732 12,228,197 5,051,341 14,178,314 27,431,958 13,460,148 16,230,091 47,132,171S eptember 7,825,127 3,520,534 17,914,724 3,841,076 12,770,885 32,477,126 18,258,608 14,723,092 18,072,117October 6,188,447 3,861,765 10,410,782 7,722,244 21,225,764 39,199,709 20,093,094 6,456,375 24,604,947November 6,168,980 4,462,131 8,441,922 7,020,250 12,351,688 28,536,784 22,556,449 9,165,891 18,024,406December 7,707,519 3,638,238 5,466,503 8,959,307 16,896,447 24,546,031 15,650,495 22,347,309 25,774,927_________ _________ _________ _________ _________ _________ _________ _________ _________Annual Total 80,127,261 73,165,444 96,072,272 110,846,997 174,249,994 272,386,244 213,433,113 218,258,258 261,137,357

2002 2003 2004 2005 2006 2007 2008 2009 2010

January 21,423,876 16,609,245 20,494,801 9,711,280 14,059,276 8,637,125 12,543,242 4,200,158 7,867,244February 19,142,559 21,255,406 19,939,832 11,748,750 15,040,258 10,111,074 15,853,687 3,926,266 5,335,573March 21,055,429 18,817,837 27,569,547 11,184,055 14,629,678 12,370,078 7,492,592 4,728,050 6,393,324April 19,907,263 17,452,686 22,570,081 8,619,812 15,258,095 12,486,737 9,274,143 8,903,468 7,864,765May 15,782,377 23,407,799 16,907,185 7,922,286 18,054,017 14,367,424 9,171,277 4,275,770 8,639,269June 18,724,632 20,195,269 17,719,633 10,138,659 15,090,333 15,029,906 9,930,660 6,443,267 6,215,373July 22,996,190 20,925,701 17,540,088 7,654,053 15,938,034 10,892,947 10,915,902 4,865,565 5,607,593August 15,065,995 19,758,663 17,777,424 12,260,444 12,766,352 15,190,740 8,731,632 5,000,402 4,960,937S eptember 16,670,717 18,158,297 16,092,454 9,480,968 16,039,261 8,888,800 8,913,010 4,170,145 4,665,690October 23,754,722 16,002,529 15,180,114 10,931,881 13,092,006 15,133,334 8,150,701 4,225,493 5,364,627November 20,268,750 14,162,946 17,335,031 19,621,894 15,584,232 13,311,370 6,041,631 4,994,862 6,377,249December 17,273,735 21,713,666 14,165,245 18,544,926 11,567,774 10,507,395 5,319,131 5,084,620 4,417,207_________ _________ _________ _________ _________ _________ _________ _________ _________Annual Total 232,066,244 228,460,045 223,291,434 137,819,007 177,119,315 146,926,931 112,337,607 60,818,065 73,708,852

2011 2012 2013 2014 2015 2016 2017

January 5,016,268 4,083,766 7,897,231 6,022,357 5,630,356 4,993,354 4,848,030February 4,481,943 5,044,622 8,867,366 5,282,868 4,802,112 3,782,884 3,740,859March 6,982,762 5,590,476 6,026,179 6,276,154 5,471,007 3,790,207 4,397,711April 4,375,157 4,087,473 7,057,072 5,583,455 5,000,807 3,772,087 3,081,140May 3,846,265 4,155,726 5,638,239 5,813,043 3,519,550 3,258,084June 4,739,412 4,267,443 6,715,908 6,550,110 5,123,648 4,125,282July 3,457,309 3,884,361 5,581,889 6,874,498 7,114,207 4,723,690August 4,929,609 4,628,248 5,297,538 5,236,468 6,712,372 3,809,012S eptember 4,608,372 5,983,956 4,560,876 6,492,525 5,543,604 3,506,510October 6,206,908 6,166,009 5,100,062 9,171,151 5,303,985 3,633,309November 4,489,521 5,631,247 4,522,012 6,037,381 4,780,719 4,349,903December 4,262,832 4,602,357 4,217,686 7,189,925 4,920,176 4,224,904_________ _________ _________ _________ _________ _________ _________Annual Total 57,396,359 58,125,681 71,482,060 76,529,935 63,922,543 47,969,227 16,067,740

Notes: Annual trading volume for 2017 through April.S ource: Tokyo Commodity Exchange.May 12, 2017

90


Tocom Platinum Open Interest Troy Ounces

1984 1985 1986 1987 1988 1989 1990 1991 1992

January 19,473 263,406 676,872 1,769,733 3,075,718 3,684,780 4,045,764 3,824,821 5,743,899February 41,068 313,769 738,635 1,737,090 3,110,547 3,410,118 3,879,705 4,485,007 5,697,458March 50,346 368,795 823,135 1,667,560 3,632,183 3,692,901 3,687,942 5,655,340 5,750,603April 56,505 426,876 847,754 1,745,516 4,004,579 3,306,000 3,398,393 5,539,550 6,425,285May 60,815 498,593 884,368 1,909,018 4,323,751 3,576,867 3,163,624 5,561,187 4,178,787June 64,593 536,348 938,091 1,916,479 4,521,278 3,237,049 3,067,319 5,957,669 4,291,138July 70,302 546,029 1,009,245 1,867,596 4,399,247 3,308,846 2,972,235 6,165,041 4,513,267August 89,984 495,377 1,340,992 2,330,040 3,911,315 3,258,644 2,912,935 6,546,268 4,025,396S eptember 130,232 512,872 1,692,082 2,375,852 3,353,629 3,142,112 2,698,960 6,660,886 5,743,899October 181,575 545,160 1,663,782 2,649,550 3,246,214 2,901,347 3,005,318 6,485,455 4,104,005November 229,027 606,023 1,763,703 2,847,752 3,678,911 3,757,944 3,590,962 6,404,757 4,161,571December 226,133 640,338 1,764,844 2,991,137 3,538,661 3,804,480 3,734,448 5,818,666 3,823,924

1993 1994 1995 1996 1997 1998 1999 2000 2001

January 3,675,179 3,988,423 2,353,238 5,260,851 4,853,759 5,186,824 6,949,229 6,397,121 4,882,791February 3,300,993 4,012,729 2,297,955 5,386,094 5,123,198 4,908,897 7,114,307 5,090,051 4,643,799March 3,424,066 4,178,819 2,324,190 5,388,152 5,715,108 5,268,391 7,306,439 4,300,333 4,613,063April 3,257,139 3,981,896 3,031,007 5,069,860 5,607,629 5,897,740 6,688,390 4,128,745 4,656,418May 3,852,168 3,783,944 3,898,931 5,038,384 5,872,647 5,563,357 6,330,135 3,822,525 4,590,445June 3,857,762 3,565,304 3,306,153 4,890,234 6,003,147 5,343,816 5,930,904 3,883,531 4,337,724July 3,924,572 3,422,297 3,838,167 4,909,637 5,666,625 6,840,415 5,459,896 3,564,420 3,810,742August 3,884,753 3,225,149 4,093,508 4,465,941 5,407,282 7,000,381 5,031,359 3,209,090 4,766,100S eptember 4,089,617 3,192,147 4,970,337 4,466,616 5,630,150 7,260,030 5,322,854 3,344,412 4,217,288October 3,983,086 2,934,169 5,369,842 4,648,621 5,685,353 7,182,804 6,482,208 3,061,824 4,402,878November 4,205,006 2,978,569 5,153,709 4,848,631 6,034,108 7,442,324 6,959,437 3,004,226 3,997,232December 3,820,596 2,435,962 4,801,787 4,916,839 5,348,655 7,287,149 6,686,944 4,213,831 4,135,866

2002 2003 2004 2005 2006 2007 2008 2009 2010

January 4,164,818 3,633,335 3,482,033 2,580,271 2,099,151 1,476,023 1,209,059 571,488 765,630February 3,749,190 3,363,494 3,079,716 2,469,109 1,949,715 1,618,531 963,171 530,564 730,390March 3,575,753 3,034,865 3,318,708 2,458,869 1,952,528 1,250,357 760,766 600,074 761,708April 3,393,313 2,968,104 2,653,060 2,301,845 2,044,785 1,576,510 794,299 600,868 887,925May 3,603,740 3,380,228 2,862,923 2,133,199 1,762,968 1,891,988 927,773 636,507 840,439June 3,251,529 3,469,237 2,774,155 2,077,064 1,524,667 1,760,058 1,152,828 579,828 916,642July 3,141,590 3,989,291 2,787,643 2,088,927 1,630,024 1,798,944 1,106,981 583,876 857,488August 3,105,693 4,250,146 2,947,174 1,950,503 1,543,507 1,387,769 790,409 580,510 880,071S eptember 3,322,550 3,799,554 2,944,667 1,976,545 1,289,854 1,430,111 699,985 555,567 834,070October 3,647,336 3,614,671 3,045,813 2,106,884 1,311,154 1,428,890 583,873 635,536 856,032November 3,736,265 3,604,736 2,941,034 2,431,734 1,571,944 1,412,284 593,798 687,630 917,931December 3,512,191 3,395,982 2,723,004 1,859,420 1,484,462 1,490,523 578,780 696,841 934,460

2011 2012 2013 2014 2015 2016 2017

January 898,300 683,003 1,064,256 1,009,256 1,017,769 989,988 736,598February 996,566 691,665 1,174,070 960,567 1,147,799 917,276 711,759March 685,238 755,095 1,145,417 952,982 1,104,904 884,276 891,439April 638,082 757,429 800,614 1,135,624 1,158,856 787,300 948,320May 783,963 767,309 919,430 1,144,751 1,083,652 865,835June 1,017,239 778,809 838,751 1,178,204 1,393,199 837,558July 1,030,391 811,854 798,251 1,331,409 1,295,641 698,982August 768,238 832,784 777,809 1,573,124 1,159,705 717,752S eptember 738,550 898,345 803,469 1,607,493 1,172,928 916,035October 701,480 929,969 795,990 1,405,561 1,148,182 1,039,718November 748,967 1,003,182 951,288 1,280,437 1,122,101 995,151December 764,209 1,007,076 932,579 1,119,963 998,784 1,013,323

Notes: Month-end data.S ource: Tokyo Commodity Exchange.May 12, 2017

91


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Open Interest

Nymex Stocks

Prices (Left scale)

Platinum Prices, Total Open Interest, and Nymex InventoriesDaily, Through 4 May 2017

$ / Oz Mln Ozs

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1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

NymexTocom


Exchange Stocks of PlatinumMonth-end, Through April 2017

92


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1,000,000

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90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

New York Mercantile Exchange Activity - Options Trading VolumeMonthly Total, Through April 2017Ounces Ounces

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1980 1984 1988 1992 1996 2000 2004 2008 2012 2016


U.S. Industry

Nymex Tocom

ETPs

Total Reported Market InventoriesQuarterly, Through First Quarter 2017

93


Reported Market InventoriesTroy Ounces

Exchanges U.S . Industry Nymex Tocom Exchange Traded Products Total

Ounces % of Total Ounces % of Total Ounces % of Total Ounces % of Total Ounces

1985 I 311,618 57.7 228,850 42.3 - - - - 540,468II 258,950 50.7 230,500 45.1 21,123 4.1 - - 510,573III 259,513 47.8 251,150 46.3 31,877 5.9 - - 542,540IV 258,961 46.6 270,500 48.7 25,672 4.6 - - 555,133

1986 I 336,375 53.2 269,550 42.7 25,769 4.1 - - 631,694II 380,775 56.2 271,050 40.0 25,817 3.8 - - 677,642III 395,738 59.1 251,800 37.6 21,702 3.2 - - 669,240IV 365,012 55.0 277,800 41.9 20,769 3.1 - - 663,581

1987 I 349,619 56.8 240,250 39.0 25,817 4.2 - - 615,686II 332,306 53.3 223,750 35.9 67,147 10.8 - - 623,203III 322,704 49.3 267,500 40.9 64,430 9.8 - - 654,634IV 290,986 43.8 291,000 43.8 81,984 12.3 - - 663,970

1988 I 289,952 45.7 231,450 36.5 113,508 17.9 - - 634,910II 316,651 43.3 199,050 27.2 216,037 29.5 - - 731,738III 278,385 42.4 179,050 27.3 198,450 30.3 - - 655,885IV 411,945 55.6 180,850 24.4 148,279 20.0 - - 741,074

1989 I 295,252 50.4 138,300 23.6 152,410 26.0 - - 585,963II 259,553 48.7 140,209 26.3 133,699 25.1 - - 533,461III 267,441 50.0 163,250 30.5 104,321 19.5 - - 535,012IV 309,891 52.2 165,650 27.9 117,897 19.9 - - 593,438

1990 I 271,586 50.4 153,350 28.5 113,428 21.1 - - 538,364II 272,871 50.7 150,650 28.0 114,392 21.3 - - 537,913III 268,295 49.0 137,800 25.2 141,745 25.9 - - 547,840IV 279,516 47.8 137,350 23.5 167,923 28.7 - - 584,789

1991 I 217,655 43.7 115,100 23.1 164,923 33.1 - - 497,678II 224,508 41.2 110,950 20.4 209,606 38.5 - - 545,064III 223,994 40.7 110,373 20.1 215,458 39.2 - - 549,825IV 238,977 41.5 93,751 16.3 243,252 42.2 - - 575,980

1992 I 184,885 37.4 92,350 18.7 217,403 44.0 - - 494,638II 277,628 48.0 86,350 14.9 214,043 37.0 - - 578,021III 274,746 50.7 75,600 13.9 191,779 35.4 - - 542,125IV 376,972 61.1 79,150 12.8 160,850 26.1 - - 616,972

1993 I 265,000 54.5 78,200 16.1 143,071 29.4 - - 486,271 II 252,000 52.6 72,450 15.1 155,063 32.3 - - 479,513

III 193,519 44.3 116,500 26.7 126,995 29.1 - - 437,014IV 217,178 48.1 113,300 25.1 121,369 26.9 - - 451,847

1994 I 205,861 46.8 109,150 24.8 124,873 28.4 - - 439,884II 205,973 46.5 120,550 27.2 116,450 26.3 - - 442,973III 205,393 47.0 118,750 27.2 113,138 25.9 - - 437,281IV 207,180 45.9 124,100 27.5 120,147 26.6 - - 451,427

- -1995 I 200,000 49.8 103,750 25.8 97,835 24.4 - - 401,585

II 202,000 54.0 79,850 21.3 92,240 24.7 - - 374,090III 185,000 57.5 61,950 19.3 74,750 23.2 - - 321,700IV 183,000 64.4 38,200 13.4 62,951 22.2 - - 284,151

1996 I 180,000 68.2 31,100 11.8 52,952 20.1 - - 264,052II 180,000 66.8 40,100 14.9 49,512 18.4 - - 269,612III 186,000 57.8 70,600 21.9 65,234 20.3 - - 321,834IV 186,000 53.2 91,450 26.1 72,275 20.7 - - 349,725

1997 I 190,000 60.4 77,300 24.6 47,519 15.1 - - 314,819II 180,000 64.5 54,700 19.6 44,239 15.9 - - 278,939III - - 43,000 63.3 24,949 36.7 - - 67,949IV - - 41,900 66.5 21,123 33.5 - - 63,023

1998 I - - 36,550 66.6 18,310 33.4 - - 54,860II - - 41,450 69.8 17,940 30.2 - - 59,390III - - 61,350 78.5 16,783 21.5 - - 78,133IV - - 57,050 67.3 27,666 32.7 - - 84,716

1999 I - - 69,500 71.9 27,151 28.1 - - 96,651II - - 70,950 74.5 24,258 25.5 - - 95,208III - - 67,850 70.2 28,775 29.8 - - 96,625IV - - 32,700 65.6 17,185 34.4 - - 49,885

2000 I - - 18,750 60.6 12,185 39.4 - - 30,935II - - 13,200 46.6 15,143 53.4 - - 28,343III - - 22,400 59.7 15,111 40.3 - - 37,511IV - - 33,500 62.6 19,998 37.4 - - 53,498

2001 I - - 28,350 59.5 19,290 40.5 - - 47,640II - - 19,850 53.5 17,249 46.5 - - 37,099III - - 19,450 54.7 16,075 45.3 - - 35,525IV - - 12,300 38.5 19,676 61.5 - - 31,976

94


Reported Market InventoriesTroy Ounces

Exchanges U.S . Industry Nymex Tocom Exchange Traded Products Total

Ounces % of Total Ounces % of Total Ounces % of Total Ounces % of Total Ounces

2002 I - - 28,600 55.7 22,763 44.3 - - 51,363II - - 25,600 61.7 15,915 38.3 - - 41,515III - - 10,600 39.4 16,333 60.6 - - 26,933IV - - 6,800 29.4 16,333 70.6 - - 23,133

2003 I - - 7,950 32.7 16,333 67.3 - - 24,283II - - 5,600 26.0 15,915 74.0 - - 21,515III - - 31,550 66.7 15,738 33.3 - - 47,288IV - - 9,100 34.8 17,040 65.2 - - 26,140

2004 I - - 12,000 40.7 17,506 59.3 - - 29,506II - - 9,150 38.7 14,500 61.3 - - 23,650III - - 20,950 61.7 12,989 38.3 - - 33,939IV - - 19,000 50.3 18,760 49.7 - - 37,760

2005 I - - 18,500 55.9 14,580 44.1 - - 33,080II - - 17,000 54.5 14,195 45.5 - - 31,195III - - 25,450 64.2 14,195 35.8 - - 39,645IV - - 23,500 59.3 16,140 40.7 - - 39,640

2006 I - - 23,050 60.2 15,207 39.8 - - 38,257II - - 22,500 58.4 15,995 41.6 - - 38,495III - - 35,350 68.8 15,995 31.2 - - 51,345IV - - 31,900 74.8 10,754 25.2 - - 42,654

2007 I - - 33,200 86.2 5,321 13.8 - - 38,521II - - 32,800 59.2 5,763 10.4 16,858 30.4 55,421III - - 39,400 38.5 4,863 4.7 58,129 56.8 102,392IV - - 48,450 22.7 6,285 2.9 159,105 74.4 213,840

2008 I - - 53,400 12.6 15,014 3.5 356,022 83.9 424,436II - - 53,400 10.6 20,898 4.1 430,998 85.3 505,296III - - 52,900 15.1 10,979 3.1 286,040 81.7 349,919IV - - 78,100 23.7 12,137 3.7 239,884 72.7 330,121

2009 I - - 128,950 24.6 12,973 2.5 382,135 72.9 524,058II - - 126,150 20.8 20,335 3.4 460,456 75.9 606,941III - - 146,750 21.4 19,821 2.9 517,970 75.7 684,541IV - - 139,500 17.1 17,715 2.2 660,746 80.8 817,961

2010 I - - 134,100 12.4 19,403 1.8 928,734 85.8 1,082,237II - - 132,900 11.1 19,098 1.6 1,044,799 87.3 1,196,797III - - 128,550 11.0 22,216 1.9 1,019,044 87.1 1,169,811IV - - 108,100 8.6 30,447 2.4 1,123,671 89.0 1,262,218

2011 I - - 125,650 8.3 23,004 1.5 1,359,900 90.1 1,508,554II - - 122,600 7.9 23,615 1.5 1,396,070 90.5 1,542,285III - - 166,650 9.9 24,804 1.5 1,495,684 88.7 1,687,138IV - - 180,500 11.3 29,804 1.9 1,387,248 86.8 1,597,552

2012 I - - 198,100 12.0 22,907 1.4 1,432,455 86.6 1,653,463II - - 192,600 12.1 39,706 2.5 1,354,044 85.4 1,586,350III - - 210,850 12.2 40,092 2.3 1,477,702 85.5 1,728,644IV - - 207,450 11.6 52,743 3.0 1,525,656 85.4 1,785,849

2013 I - - 234,157 12.8 25,447 1.4 1,574,140 85.8 1,833,745II - - 230,560 10.4 36,025 1.6 1,960,596 88.0 2,227,181III - - 286,776 11.7 29,161 1.2 2,142,227 87.1 2,458,164IV - - 250,669 9.3 49,850 1.8 2,400,160 88.9 2,700,679

2014 I - - 248,117 9.2 37,198 1.4 2,420,527 89.5 2,705,842II - - 243,441 8.1 42,246 1.4 2,717,107 90.5 3,002,794III - - 146,491 5.1 70,603 2.4 2,676,725 92.5 2,893,820IV - - 135,207 4.7 74,799 2.6 2,688,817 92.8 2,898,823

2015 I - - 131,153 4.7 70,812 2.5 2,611,344 92.8 2,813,309II - - 128,444 4.5 67,742 2.4 2,646,332 93.1 2,842,518III - - 123,887 4.2 61,006 2.1 2,772,196 93.7 2,957,089IV - - 154,544 5.8 86,164 3.2 2,427,777 91.0 2,668,485

2016 I - - 192,119 7.2 71,970 2.7 2,400,308 90.1 2,664,397II - - 187,063 7.1 70,217 2.7 2,390,635 90.3 2,647,916III - - 242,180 9.2 70,217 2.7 2,308,775 88.1 2,621,172IV - - 238,070 8.7 70,217 2.6 2,426,343 88.7 2,734,630

2017 I 226,723 8.2 40,880 1.5 2,489,193 90.3 2,756,796

Notes: First through third quarters, end of quarter stock levels; fourth quarter reflects annual reporting. U.S . industry stocks include dealers,importers and refiners. In the third quarter of 1997, U.S . Bureau of Mines ceased publication of U.S . Industry stock level data. NA -- not available. S ources: U.S . Bureau of Mines, Tokyo Commodity Exchange, New York Mercantile Exchange Inc. ETP issuer websites, Bloomberg, CPM GroupMay 12, 2017

95


Prices Platinum prices, basis the nearby active Nymex futures contract, fell on an an-nual average basis in 2016 to $991.75. This was down 5.9% from $1,053.83 averaged in 2015, making last year the fifth consecutive year of declining an-nual average prices. Through the first four months of this year platinum prices averaged $978.33, up 4.1% from $939.49 averaged during the same time in 2016. On an intraday basis platinum traded in a narrower range in 2016 compared to 2015: Prices traded in a $388.10 band between $811.40 and $1,119.50. In 2015 platinum moved between $825 and $1,290.30, a $465.30 range. Last year, on an intraday basis, platinum prices bottomed out at $811.40 on 21 January and topped out at $1,199.50 on 10 August.

Price trends in 2016 During the first half of 2016 platinum prices trended higher, peaking on 10 August at an intraday high of $1,199.50. Following this peak prices then trend lower. Prices began 2016 at $884.50 and end the year at $901.60. This was a small increase of 1.9% even as prices had moved in that $388.10 range over the course of the year. Platinum traded between $811 and $900 in January 2016, breaking above $900 in early February. Prices eventually ral-lied in early March, topping $1,000, but only briefly as they settled at $1,002 on 7 March. Prices declined into early April before move back firmly above $1,000 in the second half of that month. In May prices reached an intraday high of $1,092.30 before backing of for most of the remainder of the month. By the

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Real and Nominal Platinum PricesQuarterly, Through First Quarter 2017

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96


end of May prices had fallen back to $980.40. Platinum then moved sideways in June until rallying once more in July. Prices broke above $1,100 in July, near-ing the $1,200 resistance level in early August, but supply concerns over South Africa eventually eased and many prices sold off. By October platinum was firmly trading between $900 and $1,000 once more. It was only briefly that prices jumped above $1,000 in early November, but by the end of December platinum was trad-ing on either side of $900. Prices In Early 2017 During the first four months of this year platinum prices appeared to be follow-ing a similar pattern compared to last year. Platinum traded mostly between $900 and $1,000 in January, moving

above $1,000 in February but then drop-ping back below this level in March. By April prices were moving mainly side-ways, but began a downward descent in early May, as platinum settled at $907.70 on 4 May. The price seasonal-ity chart later in this section of the re-port shows that there is a strong sea-sonal price pattern with which 2017 is in line. Volatility Annual platinum price volatility was 24.3% in 2016, up from 20.5% in 2015. Volatility is calculated as the standard deviation of the daily logarithmic price changes based on the nearby active Ny-mex contract settlement price. Platinum price volatility was prevalent in 2016. Monthly volatility was mainly above 20% with the exception of July and Oc-tober, when volatility measured 19.6%

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$ / Oz$ / OzThrough 4 May 2016

Daily High, Low and Settlement Prices

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and 18.5%, respectively. The highest volatility was in December, at 31.1%. During the first four months of 2017 monthly volatility eased, touching a multi-year low of 11.8% in February. Platinum –Gold Spread In 2016 gold prices were at a premium to platinum prices every month, averag-ing a premium of $235.30 for the year. The month with the highest gold price premium was May when it averaged $427.65. The gold premium narrowed from then to $20.90 in October before widening once more over the next sev-eral months. By April 2017 gold prices held a premium to platinum prices by $301.35.

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Platinum Price VolatilityMonthly, Through April 2017

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Monthly Platinum and Gold PricesThrough April 2017

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Platinum - Gold Price Differential Monthly Data, Through April 2017

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0.60.81.01.21.41.61.82.02.22.4

0.60.81.01.21.41.61.82.02.22.4

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Platinum/Gold Price RatioMonthly, Through April 2017Price Ratio Price Ratio

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Platinum Contango and BackwardationDifference between Nymex nearby active and forward active prices, annualized and expressed in percentage terms. Daily, Through 4 May 2017

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Quarterly Real and Nominal Interest Rates and the Price of PlatinumThrough First Quarter 2017. Nominal interest rate is the T-bill. Real interest rate is adjusted using U.S. Consumer Price Index

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Platinum and U.S. InflationQuarterly, Through First Quarter 2017

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102


New York Dealer Platinum PricesMonthly Averages

1960 1961 1962 1963 1964 1965 1966 1967 1968 1969

January $80.00 $83.50 $83.50 $83.50 $88.27 $93.00 $98.50 $102.93 $216.00 $276.00February 83.50 83.50 83.50 83.50 88.50 98.50 98.50 110.50 209.00 261.00March 83.50 83.50 83.50 83.50 88.50 98.50 98.50 110.50 219.00 256.00April 83.50 83.50 83.50 78.50 88.50 98.50 99.65 110.50 227.00 220.00May 83.50 83.50 83.50 78.50 88.50 98.50 100.00 110.50 237.00 198.00June 83.50 83.50 83.50 78.50 88.50 98.50 100.00 110.50 283.00 182.00July 83.50 83.50 83.50 78.50 88.50 98.50 100.00 110.50 292.00 171.00August 83.50 83.50 83.50 78.95 88.50 98.50 100.00 110.50 287.00 167.00S eptember 83.50 83.50 83.50 80.75 88.50 98.50 100.00 110.50 286.00 166.00October 83.50 83.50 83.50 80.50 88.50 98.50 100.00 110.50 276.00 165.00November 83.50 83.50 83.50 82.90 88.50 98.50 100.00 110.50 272.00 180.00December 83.50 83.50 83.50 83.50 88.50 98.50 100.00 115.05 272.00 179.00_______ _______ _______ _______ _______ _______ _______ ________ ________ ________Annual $83.21 $83.50 $83.50 $80.93 $88.48 $98.04 $99.60 $110.25 $256.33 $201.75Percent Change -- 0.4% -3.1% 9.3% 10.8% 1.6% 10.7% 132.5% -21.3%

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

January $176.00 $110.00 $103.67 $129.55 $171.55 $150.64 $141.83 $154.73 $202.76 $363.21February 175.00 105.00 102.00 153.78 211.61 152.28 137.78 161.07 224.08 411.00March 177.00 105.00 102.00 146.50 215.14 150.71 136.65 162.44 225.30 395.73April 175.00 107.00 102.00 139.76 227.50 146.50 150.64 159.70 213.44 391.14May 162.00 105.00 103.09 147.64 210.64 148.24 156.00 156.49 234.89 430.39June 156.00 109.00 128.98 152.48 197.25 146.29 167.21 149.18 244.42 427.52July 150.00 111.00 149.05 166.38 190.14 158.00 169.22 149.12 249.20 415.00August 143.00 117.00 150.48 165.13 185.27 167.95 156.00 146.97 264.30 402.37S eptember 138.00 115.00 140.85 165.33 169.60 153.14 158.44 150.83 269.70 474.42October 127.00 115.00 133.46 167.57 181.27 142.63 156.88 157.38 337.55 516.50November 120.00 106.00 134.50 158.92 177.28 143.29 156.71 167.55 324.25 504.05December 121.00 109.00 142.52 158.50 171.19 143.46 152.16 177.07 339.78 617.00________ ________ ________ ________ _______ _______ _______ _______ _______ _______Annual $151.67 $109.50 $124.38 $154.29 $192.37 $150.26 $153.29 $157.71 $260.81 $445.69Percent Change -24.8% -27.8% 13.6% 24.0% 24.7% -21.9% 2.0% 2.9% 65.4% 70.9%

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

January $820.23 $521.67 $367.75 $461.00 $374.50 $273.91 $364.95 $515.00 $491.58 $527.50February 889.47 479.83 360.89 464.90 390.00 269.22 373.16 514.63 451.85 529.90March 699.05 496.41 317.57 401.87 398.23 259.83 413.33 525.23 491.17 534.30April 599.77 478.36 337.38 414.19 391.91 282.27 417.46 584.50 523.33 538.00May 564.29 461.75 306.75 447.19 386.23 271.89 411.48 605.00 544.53 514.96June 648.33 440.41 275.74 422.59 381.29 264.38 432.38 565.27 576.36 494.18July 664.09 408.00 286.25 435.05 341.14 267.82 439.23 568.30 543.25 500.00August 650.48 422.62 308.77 435.44 337.63 307.64 536.81 608.33 529.13 482.96S eptember 707.38 434.19 325.38 428.91 325.58 309.10 595.24 586.33 506.24 476.45October 671.36 419.00 342.35 393.55 323.82 323.39 570.68 564.48 522.10 483.10November 633.59 393.11 341.47 384.87 327.42 334.05 510.39 494.21 566.50 504.19December 579.64 396.50 358.70 392.86 303.00 334.19 474.00 499.50 557.38 501.75_______ _______ _______ _______ _______ _______ _______ _______ _______ _______Annual $677.31 $445.99 $327.42 $423.53 $356.73 $291.47 $461.59 $552.57 $525.28 $507.27Percent Change 52.0% -34.2% -26.6% 29.4% -15.8% -18.3% 58.4% 19.7% -4.9% -3.4%

103


New York Dealer Platinum PricesMonthly Averages

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

January $492.19 $400.17 $337.05 $355.21 $383.65 $411.55 $412.71 $357.10 $365.60 $350.00February 515.53 379.21 356.42 353.95 389.47 413.05 415.85 358.68 380.25 358.00March 493.77 393.10 353.27 347.17 395.70 412.43 408.90 375.57 391.25 365.60April 474.76 394.00 345.73 365.27 394.10 443.50 401.77 367.23 405.80 353.25May 483.59 384.09 354.95 381.75 393.10 431.36 399.11 381.62 380.75 351.75June 478.57 372.00 364.77 378.64 398.95 435.14 389.88 413.57 350.50 345.00July 475.10 372.48 376.52 398.05 408.40 430.80 391.16 407.14 368.60 345.50August 486.35 342.66 353.33 385.91 407.65 421.57 398.23 414.67 366.50 362.00S eptember 458.04 347.10 360.71 357.57 413.24 425.05 388.35 418.86 356.50 362.00October 415.23 358.64 355.38 363.20 416.35 409.81 382.77 417.82 339.40 406.25November 416.00 359.37 352.05 371.50 410.25 409.00 380.82 389.67 341.75 421.50December 414.25 349.95 359.59 379.83 406.67 406.03 369.04 359.05 346.00 432.00_______ _______ _______ _______ _______ _______ _______ _______ _______ _______Annual $466.95 $371.06 $355.81 $369.84 $401.46 $420.77 $394.88 $388.41 $366.08 $371.07Percent Change -7.9% -20.5% -4.1% 3.9% 8.6% 4.8% -6.2% -1.6% -5.8% 1.4%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

January $424.50 $610.75 $465.00 $614.40 $839.00 $850.75 $1,001.25 $1,129.00 $1,554.60 $920.75February 502.50 595.00 464.25 669.00 833.75 855.50 1,025.25 1,176.75 1,921.50 1,008.75March 469.60 578.20 502.75 665.00 883.00 859.80 1,022.40 1,205.80 1,943.75 1,055.00April 480.00 581.50 531.25 619.75 858.00 859.75 1,072.50 1,260.00 1,949.50 1,136.80May 511.25 601.40 526.00 629.00 790.50 861.75 1,217.50 1,285.20 1,951.40 1,101.00June 544.60 573.75 545.50 650.75 799.75 870.80 1,167.00 1,275.00 1,991.25 1,178.75July 550.00 526.75 522.25 673.80 793.40 865.50 1,205.25 1,294.00 1,864.60 1,136.00August 566.20 441.80 533.40 685.50 833.75 890.75 1,220.00 1,245.80 1,440.50 1,217.50S eptember 581.00 448.25 547.25 699.00 841.20 905.60 1,167.75 1,287.50 1,172.50 1,260.00October 574.25 420.75 569.40 718.00 825.00 921.50 1,066.25 1,383.75 863.00 1,304.00November 584.00 422.00 580.75 750.25 844.00 943.50 1,135.00 1,426.40 798.75 1,361.25December 600.50 450.25 589.25 794.00 838.20 962.80 1,105.00 1,469.00 815.20 1,416.00_______ _______ _______ _______ _______ _______ _______ _______ _______ _______Annual $532.37 $520.87 $531.42 $680.70 $831.63 $887.33 $1,117.10 $1,286.52 $1,522.21 $1,174.65Percent Change 43.5% -2.2% 2.0% 28.1% 22.2% 6.7% 25.9% 15.2% 18.3% -36.2%

2010 2011 2012 2013 2014 2015 2016 2017

January $1,521.25 $1,758.75 $1,437.50 $1,603.60 $1,397.00 $1,220.00 $830.75 $966.25February 1,491.25 1,795.00 1,605.00 1,635.00 1,391.75 1,183.75 900.25 1,012.62March 1,575.00 1,730.00 1,633.00 1,563.75 1,430.25 1,123.50 969.00 961.80April 1,686.25 1,777.50 1,573.75 1,496.25 1,408.25 1,131.80 997.00 964.27May 1,566.25 1,752.50 1,450.00 1,481.10 1,431.60 1,127.75 831.75June 1,526.25 1,738.40 1,407.50 1,433.13 1,431.25 1,078.75 986.50July 1,507.00 1,737.50 1,393.75 1,388.00 1,473.20 1,001.40 1,086.63August 1,518.75 1,749.50 1,419.60 1,490.20 1,434.25 960.00 1,138.13S eptember 1,563.20 1,715.40 1,576.25 1,463.13 1,353.25 963.75 1,055.00October 1,668.75 1,476.25 1,625.25 1,416.70 1,236.60 951.00 961.13November 1,673.25 1,571.00 1,548.00 1,425.38 1,192.25 877.50 966.25December 1,676.00 1,427.00 1,561.25 1,357.50 1,192.00 842.00 916.90_______ _______ _______ _______ _______ _______ _______ _______Annual $1,581.10 $1,685.73 $1,519.24 $1,479.48 $1,364.30 $1,038.43 $969.94 $976.24Percent Change 34.6% 6.6% -9.9% -2.6% -6.4% -23.9% -6.6% 5.6%

Notes: Percent change in 2017 compares the average price through April with the same period in 2016.S ource: Metals Week, CPM Group.May 5, 2017

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105

CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Palladium

106

PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Review and Outlook A shift in investor sentiment toward palladium in the beginning of 2016 provided strong upward momentum to palladium prices over the course of the year. The price of palladium rose to $683.25 at the end of 2016, up from $562.00 at the end of 2015. Even so, the annual average palladium price, basis the nearby active Nymex futures contract settlement price, was $615.49 in 2016, down 10.8% from $690.35 averaged in 2015. These trends persisted in the first half of 2017, and were behind a sharp increase in palladium prices and a wide backwardation that emerged in the market in the middle of June 2017 as this report was being prepared. Palladium prices rose as high as $891.35 on 9 June, , with a very steep backwardation between spot physical

metal and metal prices for forward delivery. For the first part of 2017, through 21 June, palladium prices averaged $787.76, up 44.2% from the same period in 2016. Heavy investor selling earlier had weighed palladium prices down from September 2014 into 2016. By the end of January 2016 prices had been trending downward for 17 months and had dipped below the long-run psychological and technical support level of $500. Such low levels of prices had not been seen since the middle of 2010, and convinced some investors to stop their inventory liquidation at least until prices improved. Since that time investors who had shorted palladium on the Nymex started booking profits in their short positions.

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The Price of PalladiumMonthly Average Metals Week New York Dealer Prices, Through May 2017

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Some of these investors who had shorted palladium were using such shorts to hedge their large positions of the physical metal. The lower prices of palladium enabled them to lock in profits while waiting for the market to improve. As the palladium market tightened in the third quarter of 2016 and prices rose back above $700, there was another bout of inventory liquidation by stale-bull investors. This lasted through the year’s end. In this bout of selling, however, investors were less keen on getting rid of their inventories. Rather, they stopped selling when prices were showing signs of short-term weakness. This shift of investor sentiment from selling heavily into the market toward holding palladium inventories is a critical change for the palladium market. Since 2014 the shortfalls in newly refined metal over fabrication demand had been more than

accommodated by sales of the metal out of investor inventories. While sales of investor inventories continued to cushion the palladium market, the available supplies of palladium became tighter than in the past two years as investors decided to hold on to their palladium. This helped extend a floor to palladium prices. Palladium prices also were supported by positive fabrication demand trends and tightening mine supplies. Fabrication demand for palladium hit a record high last year while mine production fell in Russia and South Africa, the two largest producers of the metal. Going forward, investment demand, and inventory purchases and sales will continue to play an important part in determining prices as they have over the past few years.

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Annual Palladium Fabrication DemandProjected Through 2017

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Fabrication Demand Total palladium fabrication demand rose to a record high 9.35 million ounces in 2016, driven higher primarily by an increase in demand from the auto sector. Increases in demand from the auto sector during 2016 were offset to some extent by softness in demand from the electronics, dental, and jewelry sectors. A healthy passenger vehicle market, increased market share of gasoline vehicles in Europe, and ongoing substitution of platinum with palladium in diesel auto catalysts all helped to boost demand for the metal in the auto sector. Heading into 2017 demand for palladium from the auto sector continues rising. The increase is expected to be relatively lackluster compared to recent years, as many of the major auto markets, especially the

United States, reach what some are calling cyclical peak levels of demand for the current cycle. Some of the softness in demand from the auto industry should be offset by a revival in demand from the electronics sector. Total palladium fabrication demand in 2017 is forecast to reach 9.43 million ounces, up around 0.9% for the year. Palladium fabrication demand from the auto sector is estimated to have risen to a record high 6.26 million ounces in 2016, up 2.1% from 2015. The pace of growth from the sector declined significantly compared to recent years, even as the total amount of metal being used expanded. The growth rate appears to be the lowest rate of increase in annual palladium use since the Great Recession in 2008 – 2009. This slowdown in growth can in large part be attributed to the slowdown in growth from the U.S. market, the largest source

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Palladium Supply and Fabrication Demand BalanceAnnual, Projected Through 2017


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-2500-2000-1500-1000-50005001000150020002500300035004000

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Palladium Market Surplus/DeficitAnnual, Projected Through 2017

of palladium demand from the auto sector. Palladium demand from the electronics sector declined during 2016 to 1.24 million ounces, down 0.7% from 2015. While demand declined, the contraction was small and from a very high level, suggesting that there is still a large amount of palladium being consumed by the electronics sector. Demand for palladium in the electronics industry is expected to rebound during 2017 after going through a slowdown over the past couple of years due to an increase in inventory buildup. Demand is forecast to reach a record 1.26 million ounces during the year, up 1.3% over 2016. Lack of advertising dollars and the consequent dearth of awareness among consumers regarding palladium jewelry resulted in demand for palladium jewelry to continue declining during

2016, slipping to 445,000 ounces from 447,000 ounces in 2015. This trend is not expected to change any time soon and demand for palladium jewelry is expected to soften to 443,000 ounces in 2017. Supply Newly refined palladium supply fell to 9.3 million ounces in 2016, a decline of -1.2% from the previous year. This compared to a 5.4% year-on-year increase in 2015 from th strike-plagued 2014. A decline in palladium mine production, due largely to declines in South Africa and Russia, was mainly responsible for this decrease in total refined metal supplies. Global palladium mine production fell -2.8% from the previous year to 6.9 million ounces last year, recovering strongly from the -3.2%

110


decline in 2014. Much of the decline in 2016 came from South Africa (-7.9%), Russia (-1.9%), and Canada (-2.9%), which more than offset increases in the United States. Despite the small drop in palladium mine production, Russia outpaced South Africa to become the top palladium producing country once more in 2016, accounting for 37.0% of global palladium mine production. It is followed by South Africa, Canada, and the United States, having accounted for roughly 35.9%, 9.8%, and 6.2% of the global total, respectively. Palladium prices rose strongly over the course of 2016, encouraging the recycling of spent auto catalysts that contain significant loadings of palladium. Recovery of palladium from spent auto catalyst, end-of-life electronics scrap, old jewelry scrap, and other scrap is estimated to have risen

3.3% to 2.5 million ounces last year, an all-time high. Total newly refined palladium supply is expected to rebound 2.2% to 9.6 million ounces in 2017, helped by expected increases in mine production and scrap supply. Investment Demand During 2016 the palladium market is estimated to have recorded a small deficit of around 11,000 ounces (within the margin of error for palladium market supply and demand statistics). While sales of investor inventories continued to cushion the palladium market, the available supplies of palladium became tighter than in the past two years as investors decided to hold on to their palladium. This helped extend a floor to palladium prices.

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Note: Russian supply is exports through 2002 and production since 2003.

Annual Palladium SupplyProjected Through 2017

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In the first four months of 2017 investor disposals of palladium lessened further w h i l e o t h e r i n v e s t o r s b e g a n accumulating fresh inventories. There appeared to be some investor interest in gaining long exposure to palladium for the longer term. The palladium market is expected to record a surplus around 117,000 ounces for the year, but to tighten significantly in the years ahead. Such surplus metal may become absorbed by those investors with renewed interest in palladium. Markets The palladium market is the smallest of the major precious metals markets in terms of both ounces and dollar value traded. As with the platinum market the palladium market in ounces terms grew, but in dollar value contracted. The volume of metal traded, which includes physical supply and exchange traded futures and options activity, was 158.6 million ounces in 2016. This was up from 151.2 million ounces traded in 2015, but in terms of dollar value, last year’s palladium market was $98 billion, down from $104 billion in 2015. Last year’s decline in the dollar value of the market from the previous year was the result of the decline in the annual average price of palladium. Prices Palladium prices, basis the nearby active Nymex futures contract settlement prices, averaged $615.49 in 2016, down 10.8% from $690.35 averaged in 2015. Palladium prices have been on a declining trend for the past

two years. During 2016 palladium prices were mostly in an upward trend, ending the year about 20% higher than where they started.

112


Palladium Statistical PositionThousand Troy Ounces

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

Mine Production Russia* 1,608 1,075 1,278 1,412 1,214 1,255 1,380 1,286 1,444 1,256 1,393 1,609 1,512 1,500 1,700 1,900 1,850 2,500 South Africa 714 780 757 832 872 887 697 719 876 1,000 985 1,077 1,090 1,206 1,217 1,300 1,450 1,475 Canada 186 207 154 88 183 170 102 74 155 155 175 169 185 200 200 220 210 168 United States 5 5 8 7 2 6 8 7 18 3 4 92 120 156 191 170 179 224 Others 26 38 38 35 42 49 52 57 56 156 160 162 154 144 150 153 150 154___ _____ ___ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____Total 2,539 2,105 2,235 2,374 2,313 2,366 2,238 2,143 2,549 2,570 2,716 3,109 3,061 3,205 3,458 3,743 3,839 4,521% Change Year Ago - -17.1% 6.2% 6.2% -2.6% 2.3% -5.4% -4.3% 19.0% 0.8% 5.7% 14.5% -1.6% 4.7% 7.9% 8.2% 2.6% 17.8%

Secondary Supply United States 135 134 166 221 162 186 139 178 256 205 173 125 132 135 134 100 115 125 Japan 48 48 48 48 96 80 96 251 200 213 218 243 252 254 269 349 300 310 Taiwan - - - - - - - - 2 37 113 128 154 155 163 127 150 177 Other 113 93 124 158 96 141 102 138 183 190 261 383 376 376 393 424 460 482Total 296 275 338 427 354 407 337 567 641 645 765 879 914 920 959 1,000 1,025 1,094% Change Year Ago - -7.1% 22.9% 26.3% -17.1% 15.0% -17.2% 68.2% 13.1% 0.6% 18.6% 14.9% 4.0% 0.7% 4.2% 4.3% 2.5% 6.7%_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____Total Supply 2,835 2,380 2,573 2,801 2,667 2,773 2,575 2,710 3,190 3,215 3,481 3,988 3,975 4,125 4,417 4,743 4,864 5,615% Change Year Ago - -16.1% 8.1% 8.9% -4.8% 4.0% -7.2% 5.2% 17.7% 0.8% 8.3% 14.6% -0.3% 3.8% 7.1% 7.4% 2.5% 15.4%

Fabrication Demand Electronics 427 481 552 719 585 905 928 1,024 1,387 1,244 1,476 1,568 1,786 1,897 1,889 2,103 1,969 2,176 Automotive 197 128 203 227 181 212 213 270 384 397 413 430 444 479 445 459 434 582 Dental 368 293 480 568 533 490 617 681 863 956 1,151 1,229 1,193 1,155 1,093 1,048 1,070 1,134 Other 940 996 1,136 1,375 1,062 680 725 683 568 561 498 652 709 753 740 714 718 740_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____Total Demand 1,932 1,898 2,371 2,889 2,361 2,287 2,483 2,658 3,201 3,158 3,537 3,879 4,132 4,284 4,167 4,324 4,191 4,632% Change Year Ago - -1.8% 24.9% 21.8% -18.3% -3.1% 8.6% 7.0% 20.4% -1.4% 12.0% 9.7% 6.5% 3.7% -2.7% 3.8% -3.1% 10.5%

Net Surplus or Deficit 903 482 202 -88 306 486 92 52 -11 58 -55 109 -158 -158 250 419 673 983

Inventory Sales ** - - - - - - - - - - - - - - - - - -

Changes in Market Stocks*** 128 13 -107 -31 -14 107 -128 108 172 -123 166 -120 21 -95 -58 24 -72 -17

Price Per Ounce High $62.00 $59.50 $83.35 $183.50 $317.50 $147.00 $100.60 $172.50 $165.40 $131.10 $147.00 $151.30 $148.30 $180.65 $139.10 $102.25 $113.90 $144.40 Low 37.40 41.20 52.40 70.60 142.00 63.30 48.90 88.60 121.50 91.15 96.00 103.65 114.10 130.00 81.15 78.25 76.20 98.10 Average 47.76 49.69 62.71 118.04 198.69 93.92 66.30 133.99 146.49 105.76 115.96 130.58 124.52 146.12 114.50 88.31 87.85 122.16% Change Year Ago - 4.0% 26.2% 88.2% 68.3% -52.7% -29.4% 102.1% 9.3% -27.8% 9.6% 12.6% -4.6% 17.3% -21.6% -22.9% -0.5% 39.1%

Notes: Demand in other countries prior to 1984 is included in the 'Other' category. Excludes transitional economies except as noted. * Prior to 2003 Russian supply represented palladium exports. Russian supply represents mine production since 2003 . Secondaryproduction excludes toll-refined material. Prices are settlement prices for the active nearby contract on the New York Mercantile Exchange.***Changes in market stocks are year-end. Changes in 1997 market stocks exclude U.S. Industry stocks the U.S. Bureau of Mines ceased publication of U.S. Industry stock level data in the third quarter of 1997. ** Inventory sales in 2002 and 2003 were of a stockpile held by a bullion bank. This metal was acquired from the Russian government earlier. As of 2006 Inventories includes changes in ETP holdings. There may be discrepancies due to rounding. Changes in market inventories are year-end.e -- estimate. p -- projections. - no percent change from previous year.Sources: U.S. Bureau of Mines; Statistics Canada; trade sources; CPM Group.June 13, 2017

113


1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011e 2012 2013 2014 2015 2016 2017p

Mine Production3,215 3,950 3,950 2,500 1,700 1,700 1,800 3,550 1,350 3,000 3,200 3,140 3,170 3,120 2,737 2,686 2,732 2,714 2,638 2,590 2,759 2,585 2,536 2,694 Russia*1,500 1,560 1,620 1,789 1,839 1,926 1,849 2,028 2,040 2,169 2,275 2,602 2,833 2,630 2,447 2,443 2,617 2,637 2,384 2,497 1,939 2,674 2,463 2,464 South Africa

224 295 273 258 303 284 337 423 491 441 582 463 508 550 513 229 250 503 519 585 748 692 671 666 Canada213 175 202 277 347 321 337 411 482 460 450 438 473 423 394 418 382 407 404 412 408 411 428 432 United States157 157 160 187 292 344 299 308 294 357 440 408 424 539 442 550 553 575 605 668 685 686 754 731 Others_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

5,309 6,138 6,205 5,012 4,481 4,575 4,622 6,719 4,657 6,427 6,947 7,051 7,409 7,262 6,533 6,326 6,535 6,836 6,550 6,752 6,539 7,048 6,853 6,987 Total17.4% 15.6% 1.1% -19.2% -10.6% 2.1% 1.0% 45.4% -30.7% 38.0% 8.1% 1.5% 5.1% -2.0% -10.0% -3.2% 3.3% 4.6% -4.2% 3.1% -3.2% 7.8% -2.8% 2.0% % Change Year Ago

Secondary Supply131 134 139 144 - - - - - - - - - - - - - - - - - - - - United States315 326 328 328 - - - - - - - - - - - - - - - - - - - - Japan185 190 194 194 - - - - - - - - - - - - - - - - - - - - Taiwan 505 515 531 549 - - - - - - - - - - - - - - - - - - - - Other

1,136 1,165 1,192 1,215 1,253 1,280 1,408 1,520 1,250 1,275 1,313 1,359 1,407 1,508 1,400 1,412 2,209 2,112 2,152 2,348 2,438 2,410 2,490 2,565 Total3.8% 2.6% 2.3% 1.9% 3.1% 2.2% 10.0% 8.0% -17.8% 2.0% 3.0% 3.5% 3.5% 7.2% -7.1% 0.8% 56.4% -4.4% 1.9% 9.1% 3.8% -1.2% 3.3% 3.0% % Change Year Ago_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____6,445 7,303 7,397 6,227 5,734 5,855 6,030 8,239 5,907 7,702 8,260 8,410 8,816 8,770 7,933 7,738 8,743 8,948 8,702 9,100 8,977 9,457 9,343 9,552 Total Supply

14.8% 13.3% 1.3% -15.8% -7.9% 2.1% 3.0% 36.6% -28.3% 30.4% 7.2% 1.8% 4.8% -0.5% -9.5% -2.5% 13.0% 2.3% -2.7% 4.6% -1.4% 5.4% -1.2% 2.2% % Change Year Ago

Fabrication Demand2,528 2,822 2,708 2,978 2,805 2,703 2,630 775 768 880 975 1,070 1,220 1,200 1,125 1,095 1,179 1,207 1,191 1,229 1,246 1,250 1,241 1,257 Electronics

821 1,425 1,809 2,077 2,748 3,180 3,220 2,755 2,860 2,895 3,395 3,860 4,240 4,545 4,252 3,960 4,812 5,035 5,465 5,695 5,921 6,132 6,260 6,335 Automotive1,185 1,245 1,267 1,249 1,143 1,039 872 805 855 788 957 952 765 776 775 782 774 762 756 744 737 727 726 711 Dental

797 790 814 810 791 745 832 821 940 1,054 1,248 1,311 1,380 1,241 1,285 1,206 1,152 1,137 1,134 1,134 1,137 1,134 1,127 1,131 Other_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____5,331 6,282 6,598 7,114 7,487 7,667 7,554 5,156 5,423 5,617 6,575 7,193 7,605 7,762 7,437 7,043 7,917 8,141 8,546 8,801 9,041 9,242 9,353 9,434 Total Demand

15.1% 17.8% 5.0% 7.8% 5.2% 2.4% -1.5% -31.7% 5.2% 3.6% 17.0% 9.4% 5.7% 2.1% -4.2% -5.3% 12.4% 2.8% 5.0% 3.0% 2.7% 2.2% 1.2% 0.9% % Change Year Ago

1,114 1,021 799 -887 -1,753 -1,812 -1,523 3,083 484 2,085 1,685 1,216 1,211 1,007 496 696 826 807 156 298 -64 215 -11 117 Net Surplus or Deficit

- - - - - - - - 1,600 1,600 - - - - - - - - - - - - - - Inventory Sales **

Changes in -80 51 17 -200 -16 19 -51 44 -43 262 468 80 -94 148 275 613 712 -17 -30 164 508 -738 Market Stocks***

YTD Price Per Ounce$162.65 $178.15 $145.25 $227.60 $398.15 $454.65 $975.00 ####### $447.00 $275.00 $344.70 $305.00 $409.00 $389.50 $600.00 $410.00 $804.90 $857.70 $719.75 $783.95 $908.65 $831.65 $771.65 $834.05 High

123.40 129.00 115.75 121.10 200.00 288.05 430.20 305.00 224.00 146.25 177.50 170.20 262.00 315.20 160.30 176.10 380.05 564.15 561.60 $633.25 $700.10 $525.80 $469.80 $709.90 Low143.72 152.75 129.75 174.85 279.26 359.11 684.99 605.73 337.78 202.81 233.08 203.85 323.46 358.28 352.98 266.75 528.97 733.92 644.91 726.51 803.45 690.35 615.49 779.39 Average17.6% 6.3% -15.1% 34.8% 59.7% 28.6% 90.7% -11.6% -44.2% -40.0% 14.9% -12.5% 58.7% 10.8% -1.5% -24.4% 98.3% 38.7% -12.1% 12.7% 10.6% -14.1% -10.8% 42.5% % Change Year Ago

114


Supply Newly refined palladium supply fell to 9.3 million ounces in 2016, a decline of -1.2% from the previous year. This compared to a 5.4% year-on-year increase in 2015. A decline in palladium mine production, due largely to declines in South Africa and Russia, was mainly responsible for this decrease in total refined metal supplies. Global palladium mine production fell -2.8% from the previous year to 6.9 million ounces last year, recovering strongly from the -3.2% decline in 2014. Much of the decline in 2016 came from South Africa (-7.9%), Russia (-1.9%), and Canada (-2.9%), which more than offset increases in the United States. Despite the small drop in palladium mine production, Russia outpaced South Africa to become the

top palladium producing country once more in 2016, accounting for 37.0% of global palladium mine production. It is followed by South Africa, Canada, and the United States, having accounted for roughly 35.9%, 9.8%, and 6.2% of the global total, respectively. Palladium prices rose strongly over the course of 2016, encouraging the recycling of spent auto catalysts that contain significant loadings of palladium. Recovery of palladium from spent auto catalyst, end-of-life electronics scrap, old jewelry scrap, and other scrap is estimated to have risen 3.3% to 2.5 million ounces last year, an all-time high. Total newly refined palladium supply is expected to rebound 2.2% to 9.6 million ounces in 2017, helped by expected increases in mine production and scrap

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Russian Supply



Secondary Supply

Note: Russian supply is exports through 2002 and production since 2003.

Annual Palladium SupplyProjected Through 2017

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supply. Global palladium mine supply is expected to rise by 2.0% to nearly 7.0 million ounces, boosted by a strong recovery in Russian palladium mine production and a moderate increase in U.S. mine production. Secondary supply of palladium is expected to continue to rise, albeit at a slower pace of 3.0%, to nearly 2.6 million ounces.

Mine Production by Major Country and Company Palladium mine supply fell to nearly 6.9 million ounces in 2016, down 2.8% from the previous year. Declines in Russia and South Africa were largely responsible for the year-on-year decrease in global palladium mine production last year. Palladium production in South Africa fell last year, after rebounding strongly in 2015 following the labor strike-plagued 2014, to nearly 2.5 million ounces from 2.7 million ounces in the previous year. Russian palladium production, largely coming from Norilsk Nickel, dropped 1.9% in 2016 to 2.5 million ounces from the previous year due to changes implemented to the process flowsheet at its Polar and Kola divisions following the closure of its old nickel smelter and PGM concentration plant at its Norilsk mine site as well as the transfer of PGM treatment activities to the Kola division. Mine supply could rise to nearly 7 million ounces in 2017, an increase of 2.0% from the previous year, helped by a rebound in palladium production in

Russia as Norilsk Nickel completes the reconfiguration of its processing routes. South Africa South African palladium mine production fell 7.9% year-on-year last year to nearly 2.5 million ounces after recording a strong recovery in the previous year. Much of the decline in South African palladium supply in 2016 came from a sharp decline at Amplats, where palladium production had risen significantly in the previous year. The level of palladium output from South Africa depends in part on the mix of PGMs ores being mined in a given year. The Merensky Reef is the main ore type being mined by major mining companies; it contains higher levels of platinum (58%-65%) than palladium (26%-31%). South Africa also has other types of ores with higher palladium content. The increasingly mined Platreef, which is exploited at Amplats’ Mogalakwena mine, contains a higher level of palladium (49%) relative to platinum (42%). While palladium is of lower per ounce value compared to platinum, shifts of mine plans as well as initiatives to raise production from lower-cost operations such as Mogalakwena may result in more palladium-intensive ores being mined. This could result in a boost in palladium output, although such increases may not be sustainable for a long period. In 2017 palladium production from South Africa is expected to remain flat at nearly 2.5 million ounces.

116


South African Palladium Mine ProductionThousand Troy Ounces

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

Anglo Platinum 1,546 1,390 1,319 1,199 1,268 1,236 1,195 1,201 1,070 1,370 1,212 1,089% of Total 54.6% 52.9% 53.9% 49.1% 48.4% 46.9% 50.1% 48.1% 55.2% 51.2% 49.2% 44.2%% Change 14.2% -10.1% -5.1% -9.0% 5.7% -2.5% -3.3% 0.5% -10.9% 28.0% -11.5% -10.1%

Impala Platinum 532 582 480 531 619 634 472 477 256 445 431 393% of Total 18.8% 22.1% 19.6% 21.7% 23.7% 24.0% 19.8% 19.1% 13.2% 16.6% 17.5% 16.0%% Change -8.1% 9.4% -17.6% 10.8% 16.6% 2.3% -25.5% 1.2% -46.4% 73.8% -3.1% -8.7%

Lonmin 448 341 329 308 276 340 312 352 179 364 325 307% of Total 15.8% 13.0% 13.4% 12.6% 10.5% 12.9% 13.1% 14.1% 9.2% 13.6% 13.2% 12.4%% Change 9.9% -23.9% -3.7% -6.4% -10.5% 23.4% -8.1% 12.8% -49.1% 103.3% -10.8% -5.6%

Sibanye 142 138 118 96 121 108 77 69 63 78 72 238% of Total 5.0% 5.2% 4.8% 3.9% 4.6% 4.1% 3.2% 2.8% 3.3% 2.9% 2.9% 9.7%% Change 30.5% -2.8% -14.2% -18.7% 25.9% -10.4% -28.8% -10.8% -7.8% 23.5% -8.2% 230.4%

Northam Platinum 96 84 90 93 79 84 89 101 99 122 142 142% of Total 3.4% 3.2% 3.7% 3.8% 3.0% 3.2% 3.8% 4.0% 5.1% 4.6% 5.8% 5.8%% Change -12.5% -12.6% 7.3% 3.9% -15.3% 6.8% 6.1% 13.0% -2.5% 23.7% 16.8% 0.0%

African Rainbow Minerals 10 47 48 113 127 127 132 156 143 160 150 140% of Total 0.3% 1.8% 2.0% 4.6% 4.9% 4.8% 5.5% 6.2% 7.4% 6.0% 6.1% 5.7%% Change 374.7% 2.2% 134.7% 13.1% -0.4% 3.6% 18.6% -8.2% 12.0% -6.2% -7.0%

Norilsk 19 19 13 11 23 24 24 46 48 53 40 35% of Total 0.7% 0.7% 0.5% 0.5% 0.9% 0.9% 1.0% 1.8% 2.5% 2.0% 1.6% 1.4%% Change 0.0% 0.0% -31.6% -15.4% 109.0% 4.9% 0.0% 90.8% 4.3% 10.4% -24.5% -13.3%

Sylvania Resources 6 7 9 13 12 12 15 15 18 15% of Total 0.3% 0.3% 0.3% 0.5% 0.5% 0.5% 0.8% 0.6% 0.7% 0.6%% Change 10.0% 30.7% 47.6% -12.4% 3.0% 22.0% 3.6% 20.0% -15.8%

Sedibelo Platinum Mines 8 13 14 19 45 46 53 50 49% of Total 0.3% 0.5% 0.5% 0.8% 1.8% 2.4% 2.0% 2.0% 2.0%% Change 69.3% 4.3% 35.8% 139.0% 3.5% 14.0% -6.0% -1.3%

Pan African Resources 0.1 0.9 1.1 2.1 3.0 2.7 2.7% of Total 0.0% 0.0% 0.0% 0.1% 0.1% 0.1% 0.1%% Change 616.0% 14.8% 94.4% 43.2% -11.0% 0.0%

Platinum Group Metals 16 49% of Total 0.7% 2.0%% Change 204.5%


Other 5 5 1 5 5 4 4 4 4 4 4 4% Change -54.5% 0.0% 0.0% 400.0% 0.0% -20.0% -5.0% 1.5% 1.5% 1.5% 1.5% 0.0%

Total South African

Mine Production 2,833 2,630 2,447 2,443 2,617 2,637 2,384 2,497 1,939 2,674 2,463 2,464% Change 8.9% -7.2% -7.0% -0.2% 7.1% 0.8% -9.6% 4.8% -22.3% 37.9% -7.9% 0.0%

Note: Production is based on calendar year. Production refers to metal output attributable to company ownership. Exceptions to this include Bafokeng - and 33% Ango Platinum) and Mototolo (50:50 JV between Anglo Platinum and Gelncore).Production at oth these mines has been fully attributed in Anglo Platinum. Rasimone Platinum Mine owned 67% Royal Bafokeng Platinum Ltd. Aquarius was taken over by S ibanye in 2016. Anglo Platinum's Rustenberg mines have been included in S ibanye starting 2017. Figures may not equal sum due to rounding. Source: Company Documents, Industry Sources, RMG, and CPM GroupMay 2017

117


Anglo Platinum is the largest palladium producer in South Africa. The company’s refined palladium output fell to 1.3 million ounces last year, from nearly 1.5 million ounces in 2015. Palladium accounted for a higher portion of the PGMs mix produced by the company between 2014 and 2016. In the past three years palladium was 36.2% of the mix, compared to 33.7% in the previous five years, from 2009 to 2013. Impala Platinum produced 487,500 ounces of palladium from its South African operations in 2016, down 1.9% from 497,100 ounces in the previous year. The company’s palladium production in 2017 is expected to fall 8.9% further to 443,873 ounces. Lonmin’s South African mines produced 324,845 ounces of palladium

last year, down 10.8% from a record high 364,379 ounces in 2015. The decline in palladium production in 2016 was in line with the company’s production guidance in light of unfavorable market conditions as well as shifts in mine schedules. Lonmin’s palladium production is expected to slip further to 306,637 ounces in 2017. Russia In 2016 Russian palladium production extended a downward trajectory (with the exceptions of 2010 and 2014) that has been in place over the past decade. Palladium mine production in the country fell -1.9% to 2.5 million ounces, due largely to a decrease in palladium production at Norilsk Nickel, the country’s world’s palladium producer. Palladium output from Norilsk’s Russian fell -2.0% to 2.5

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77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17p

Russian Production and ExportsAnnual, Projected Through 2017Thousand Ounces Thousand Ounces

Production

Residual

Exports

Indicates Stockpile Withdrawal

118

CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM Russian Palladium Production and ExportsThousand Troy Ounces

Percent ofProduction Exports Production Residual

1970 1,318 - - -

1975 1,672 - - -

1980 2,058 1,214 59% 844

1985 2,540 1,256 49% 1,2841986 2,585 1,393 54% 1,1921987 2,606 1,609 62% 9971988 2,628 1,512 58% 1,1161989 2,641 1,500 57% 1,141

1990 2,655 1,700 64% 9551991 2,814 1,900 68% 9141992 2,696 1,850 69% 8461993 2,500 2,500 100% 01994 2,375 3,215 135% -840

1995 2,400 3,950 165% -1,5501996 2,520 3,950 157% -1,4301997 2,782 2,500 90% 2821998 2,949 1,700 58% 1,2491999 3,002 1,700 57% 1,302

2000 3,302 1,800 55% 1,5022001 3,338 3,550 106% -2122002 2,900 1,350 47% 1,5502003 3,000 1,800 60% 1,2002004 3,200 2,000 63% 1,200

2005 3,140 3,090 98% 502006 3,170 3,080 97% 902007 3,120 3,020 97% 1002008 2,737 2,700 99% 372009 2,686 2,650 99% 362010 2,732 2,575 94% 1572011 2,714 2,600 96% 1142012 2,638 2,510 95% 1282013 2,590 2,435 94% 1552014 2,759 2,566 93% 1932015 2,585 2,404 93% 1812016 2,536 2,384 94% 1522017p 2,694 2,505 93% 189Note: NA -- not availableSources: Bank of Foreign Trade, U.S . Bureau of Mines, Central Intelligence Agency, CPM Group. May 2017

119


million ounces last year, due to the reconfigurat ion of downstream production facilities. This output level was above the higher end of the production guidance issued by the company for the year, however. In the first quarter of 2017 palladium output was down 17% year-on-year, due largely to the increase of work-in-progress materials in transit from the Polar division to the Kola division after the shutdown of its old nickel plant. The disposition of an estimated 1.0 – 2.5 million ounces of palladium owned by the Russian central bank, stored in Switzerland and used as collateral against an international bond sold by the Russian central bank, continues to be up in the air. In 2014 Vladimir Potanin, one of the two major owners of Norilsk Nickel, said he, his partner Roman

Abramovich, and Norilsk were in talks with the Russian central bank about purchasing the palladium from the central bank, giving the cash value of the palladium to the central bank for use as collateral and possibly in paying off the bond when it was due. Talks between the central bank and Mr. Potanin went dark for several months, but have continued through 2015 and 2016. The concept behind the offer to buy the palladium was to take the metal into the hands of palladium-interested parties. In 2001 the Russian central bank used around 3.2 million ounces of palladium it had pledged against an earlier bond to pay off that bond, at a time when palladium prices had spiked up to $1,080 two months earlier and had already fallen to around $750 per ounce. That metal was sold to the bank holding

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Palladium Mine Production in CanadaAnnual, Projected Through 2017

120


the collateral, which later sold it in a mechanical fashion that drove palladium prices down to a low of $146 in the second quarter of 2003. Mr. Potanin would like to avoid having large volumes of palladium in hands that might allow such sales and price patterns to recur, so he proposed in 2014 that he create a fund, now named the Global Palladium Fund, to buy and hold the central bank’s palladium. Related to Norilsk and its key shareholders, the Global Palladium Fund would hold the palladium as a long-term investment, not selling it into weak markets but waiting until such future times when strong demand and tight supplies might drive palladium prices sharply higher. Mr. Potanin has said he would invest between $100 and $200 million of his own money into the fund, and would invite friends and associates to invest

alongside him. Mr. Abramovich has said he may invest in the fund. The Board of Directors of Norilsk Nickel on 1 February approved a proposal that the company also would invest in the fund, perhaps between $200 and $350 million. In total Mr. Potanin has indicated he wished to raise between $1 and $2 billion for the fund. In May 2016, Norilsk Nickel reportedly had begun pilot purchases in the market for its Global Palladium Fund, in which it may invest up to $200 million. Norilsk Nickel intended to buy stocks held by the Russian central bank and hedge funds to reduce market volatility. Such a move should not swing supply and demand balances given it only involves an ownership change in existing market stocks.

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Palladium

Platinum


PGM Mine Production in the United StatesAnnual, Projected through 2017

121


Canada Palladium mine production in Canada fell -2.9% last year to 671,480 ounces. Production declines were recorded at Vale’s Sudbury operations, which in 2016 produced 322,000 ounces of palladium, down from 341,000 ounces in the previous year. North American Palladium’s Lac des Iles mine also saw a decline in production to 149,563 ounces from 166,785 ounces in the previous year. Glencore’s Raglan operations produced 173,000 ounces of palladium, up from 157,000 ounces in 2015. In 2017 Canadian palladium mine production is expected to reach 666,020 ounces, down -0.8% from the previous year.

United States Palladium mine output in the United States stood at 428,200 ounces in 2016, up 4.2% from 410,900 ounces in 2015. Stillwater Mining Company, which operates the Stillwater and the Easter Boulder mines in Montana, is the main palladium producer in the country. The Stillwater mine produced 250,500 ounces of palladium last year, up from 246,400 ounces in the previous year. Palladium mine production in the United States is projected to increase to 431,958 ounces in 2017. Zimbabwe Palladium mine product ion in Zimbabwe reached an all-time high in 2016, up 20.5% to 393,500 ounces from the previous year. Zimplats produced

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Palladium Mine Production in ZimbabweAnnual, Projected Through 2017

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241,400 ounces of palladium last year, accounting for 61.3% of total palladium mine output in Zimbabwe. The Mimosa mine, jointly owned by Aquarius Platinum and Impala, produced 95,700 ounces last year, while the Unki mine, owned by Anglo Platinum, produced 56,500 ounces of palladium. In 2017 pal ladium mine product ion in Zimbabwe is expected to decline -6.2% to 369,120 ounces. Secondary Supply Spent auto catalysts are the largest source of scrap material for palladium, accounting for roughly 81% of the metal’s secondary supply. Electronics also is a major source of palladium secondary supplies, accounting for 18%

of the available scrap material. Old jewelry and other sources of scrap account for a minor portion of the metal’s secondary supply. Palladium secondary supply has been helped in recent years by increased palladium loadings per unit in available spent auto catalysts. Steel prices recovered to some extent over the course of 2016 after remaining weak in the prior two years. This improvement in steel prices and a strong rebound in palladium prices over the course of the year helped encourage more end-of-life (EOL) vehicles to enter the scrap yard and increase the volumes of spent auto catalysts that could be recovered, which helped

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16%

Palladium Secondary Supply in 2016Total = 2.5 million ounces

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Palladium Secondary Supply in 1995Total = 1.21 million ounces

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Available Palladium Scrap Feedstock and Actual Refined Secondary Palladium SupplyAnnual, Projected Through 2017


Available Palladium-Bearing Recyclable Material:


increase the volumes of scrap palladium in the second half of the year. Spent auto catalysts in advanced economies typically have higher loadings of palladium per unit, which also helped boost the amount of palladium that was recovered during the year. Palladium secondary supply rose 3.3% to nearly 2.5 million ounces in 2016 from the previous year. In 2017 palladium secondary supply is forecast to rise further to nearly 2.6 million ounces, an increase of 3.0% from the previous year.

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Notes: * These figures represent Japanese refined recovery of mine output from othercountries, including Australia, Canada, Papua New Guinea, Indonesia, and the Philippines. These figures appear to include some production listed for Canada.Russian supply is exports through 2002 and mine production from 2003 and forward. Source: U.S . Bureau of Mines; CPM Group.May 2017

Palladium Production by Country Troy Ounces

Year RussiaSouth Africa Canada

United States Zimbabwe Japan* Botswana China

1976 N/A 1,608,000 714,000 5,088 NA 18,089 - -1977 2,068,000 1,075,000 780,000 4,910 NA 22,716 - -1978 2,111,000 1,278,000 757,000 8,399 NA 24,221 - -1979 2,154,000 1,412,000 832,000 6,832 NA 22,495 - -1980 2,058,000 1,214,000 872,000 2,438 NA 28,968 - -1981 2,240,000 1,255,000 887,000 5,536 5,200 25,748 - -1982 2,285,000 1,380,000 697,000 7,555 2,765 27,862 - -1983 2,411,000 1,286,000 719,000 7,031 2,395 37,122 - -1984 2,476,000 1,444,000 876,000 17,898 1,222 33,802 - -1985 2,540,000 1,256,000 1,000,000 3,463 965 43,703 - -1986 2,585,000 1,393,000 985,000 3,742 1,125 46,999 - -1987 2,606,000 1,077,000 169,000 92,095 1,150 45,558 - 2,1541988 2,628,000 1,090,000 185,000 119,922 1,100 37,616 - 3,8261989 2,641,000 1,206,000 200,000 155,931 32 26,396 - 3,6361990 2,655,205 1,217,000 200,000 190,654 997 33,758 - 3,3491991 2,814,000 1,300,000 220,000 170,000 965 33,758 - 3,4451992 2,696,000 1,450,000 210,000 179,000 611 31,701 - 3,4451993 2,500,000 1,475,000 168,000 224,000 354 37,938 - 3,7321994 2,375,000 1,500,000 224,000 213,000 643 41,057 - 4,1801995 2,400,000 1,560,000 295,268 175,000 546 40,960 - 4,4051996 2,520,000 1,620,000 272,626 202,000 546 41,217 - 4,2761997 2,782,080 1,789,179 258,086 277,030 7,118 61,054 - 4,5011998 2,949,005 1,838,975 303,328 346,800 28,255 133,458 - 4,3941999 3,002,087 1,926,462 283,541 321,080 38,600 172,135 - 7,0732000 3,302,296 1,849,136 336,716 337,150 11,600 151,494 - 15,2182001 3,338,462 2,028,007 422,700 411,060 11,900 154,484 11,400 8,3592002 2,900,000 2,039,675 491,300 482,000 62,548 180,623 10,800 13,5032003 3,000,000 2,168,925 441,000 460,000 111,000 176,829 33,000 14,7892004 3,200,000 2,274,720 582,000 450,000 176,000 170,399 39,000 21,8632005 3,140,000 2,601,810 463,167 438,000 126,900 173,614 61,086 27,9712006 3,170,000 2,833,397 508,338 473,000 134,400 173,614 64,301 27,0072007 3,120,000 2,629,546 550,400 423,000 134,400 176,829 160,754 46,8872008 2,737,000 2,446,767 513,083 394,000 107,900 176,829 96,452 37,7422009 2,686,000 2,442,960 228,869 417,997 214,900 180,044 96,452 39,1402010 2,732,000 2,616,866 250,227 382,000 221,700 180,044 90,020 41,9362011 2,714,000 2,636,914 502,534 406,900 265,217 180,044 67,520 42,9212012 2,638,000 2,383,711 519,030 404,005 264,303 181,500 83,590 43,9662013 2,590,000 2,497,058 584,754 412,200 313,528 181,500 83,590 44,9962014 2,759,000 1,939,257 747,844 408,200 328,031 181,500 83,590 46,0522015 2,759,000 2,674,165 691,568 410,900 326,569 181,500 83,590 47,1372016 2,585,000 2,463,240 671,480 428,200 393,500 181,500 83,590 48,2512017p 2,536,000 2,464,371 666,020 431,958 369,120 181,500 83,590 49,248

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Australia FinlandSerbia and

Montenegro Brazil Total Year7,950 330 NA NA 2,353,457 19769,581 352 4,951 NA 3,965,510 19777,395 352 5,562 NA 4,191,929 19786,880 396 5,241 NA 4,439,844 19797,100 385 5,150 NA 4,188,041 1980

12,896 1,993 3,119 NA 4,436,492 198113,379 4,662 2,893 NA 4,421,116 198212,000 2,283 2,926 NA 4,479,757 198316,815 1,093 3,100 NA 4,869,930 198415,304 1,125 3,300 91,600 4,955,460 198513,760 3,086 3,100 91,600 5,126,412 198615,800 3,000 3,100 91,600 4,106,457 198713,214 3,408 4,565 90,000 4,176,652 198812,860 3,215 6,398 91,000 4,346,469 198912,860 3,215 4,180 92,000 4,413,218 199012,860 3,215 4,983 94,000 4,657,226 199112,860 3,215 4,179 94,000 4,685,011 199212,860 3,215 2,314 94,000 4,521,413 199312,860 3,215 1,511 94,000 4,469,466 199412,860 3,054 1,479 94,000 4,587,572 199512,860 5,787 1,608 94,000 4,774,921 199612,860 6,143 1,752 94,000 5,293,804 199725,721 4,823 1,608 94,000 5,730,366 199826,235 4,823 804 94,000 5,876,840 199926,106 - 804 94,000 6,124,520 200026,621 - 804 94,000 6,507,798 200125,721 - 900 - 6,207,070 200220,300 - 965 - 6,426,808 200332,000 - 611 - 6,946,592 200417,683 - 611 - 7,050,842 200524,113 - 482 - 7,408,652 200619,290 - 482 - 7,261,588 200722,506 - 482 - 6,532,761 200819,290 - 482 - 6,326,135 200919,290 - 482 - 6,534,565 201019,290 - 482 - 6,835,823 201119,290 12,183 482 - 6,550,061 201219,290 24,639 482 - 6,752,038 201319,290 25,990 482 - 6,539,237 201419,290 27,500 482 - 7,221,702 201519,290 27,500 482 - 6,902,034 201619,290 27,500 482 - 6,829,079 2017p

126


Palladium Secondary SupplyThousand Troy Ounces

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Palladium Contained in Hypothetically Available Scrap Material

Spent Auto CatalystsUnited States 114.0 154.3 186.9 194.3 220.0 250.5 335.5 385.1 444.2 563.6 664.0Western Europe 2.3 4.5 8.3 13.5 20.7 29.5 39.1 53.5 71.7 92.9 117.8Japan 15.5 19.0 25.3 30.4 37.0 45.4 54.8 66.8 86.9 101.6 113.6China N/A N/A N/A N/A 0.0 0.1 0.3 0.5 1.4 2.1 3.1Subtotal 131.7 177.7 220.4 238.3 277.8 325.6 429.6 506.0 604.2 760.1 898.5% Change 21.0% 34.9% 24.0% 8.1% 16.6% 17.2% 32.0% 17.8% 19.4% 25.8% 18.2%

% of Total 10.6% 13.8% 17.2% 18.5% 19.8% 22.0% 37.0% 45.5% 53.5% 65.2% 79.3%

Old Jewelry 8.3 10.8 12.7 12.3 19.5 11.9 11.3 12.5 17.8 17.8 25.6% Change -0.6% 30.1% 17.0% -3.1% 58.8% -39.0% -4.8% 10.2% 43.0% 0.0% 43.6%

% of Total 0.7% 0.8% 1.0% 1.0% 1.4% 0.8% 1.0% 1.1% 1.6% 1.5% 2.3%

EOL Electronics 1,100.0 1,100.0 1,050.0 1,035.6 1,105.8 1,144.9 721.1 594.6 506.3 388.7 208.7% Change 0.0% 0.0% -4.5% -1.4% 6.8% 3.5% -37.0% -17.5% -14.8% -23.2% -46.3%

% of Total 88.7% 85.4% 81.8% 80.5% 78.8% 77.2% 62.1% 53.4% 44.9% 33.3% 18.4%

Total 1,240.1 1,288.5 1,283.1 1,286.2 1,403.1 1,482.3 1,162.0 1,113.1 1,128.3 1,166.6 1,132.7% Change 1.9% 3.9% -0.4% 0.2% 9.1% 5.6% -21.6% -4.2% 1.4% 3.4% -2.9%

Total Refined Palladium from Secondary Sources 1,165.0 1,215.0 1,253.0 1,280.0 1,408.0 1,520.0 1,250.0 1,275.0 1,313.0 1,359.0 1,407.0

% Change 0.0% 4.3% 3.1% 2.2% 10.0% 8.0% -17.8% 2.0% 3.0% 3.5% 3.5%

Notes: Differences in the volume of palladium contained in hypothetically available scrap material and actual refined secondary supply of palladium are due to factors that influence the hoarding and/or release of scrap inventories by collectors. These factors relate mostly to price and economic trends. Additionally, refined supply accounts for refining losses. N/M - Not MeaningfulSource: CPM GroupMay 2017

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

Spent Auto Catalysts800.4 918.1 1,039.5 1,141.9 1,211.4 1,267.8 1,306.8 1,322.0 1,358.1 1,334.8 1,331.5 United States152.1 193.4 272.8 300.9 326.7 346.6 356.0 362.6 383.4 411.6 413.1 Western Europe122.0 139.3 149.7 162.2 176.3 192.8 210.9 229.3 249.3 270.6 291.4 Japan

4.6 6.9 9.9 18.2 24.1 30.7 37.9 57.7 83.9 119.2 165.8 China1,079.2 1,257.6 1,471.9 1,623.2 1,738.5 1,837.8 1,911.6 1,971.7 2,074.7 2,136.2 2,201.9 Subtotal20.1% 16.5% 17.0% 10.3% 7.1% 5.7% 4.0% 3.1% 5.2% 3.0% 3.1% % Change80.9% 82.1% 83.8% 82.7% 82.1% 81.1% 80.5% 80.5% 81.6% 82.3% 81.9% % of Total

23.7 23.6 24.0 38.6 33.4 28.4 27.1 26.3 24.2 22.5 30.5 Old Jewelry-7.5% -0.2% 1.5% 60.9% -13.5% -15.0% -4.6% -3.0% -8.0% -7.0% 35.7% % Change

1.8% 1.5% 1.4% 2.0% 1.6% 1.3% 1.1% 1.1% 1.0% 0.9% 1.1% % of Total

230.9 250.9 260.1 300.0 344.4 400.3 436.7 451.3 442.2 437.8 456.2 EOL Electronics10.7% 8.6% 3.7% 15.3% 14.8% 16.2% 9.1% 3.3% -2.0% -1.0% 4.2% % Change17.3% 16.4% 14.8% 15.3% 16.3% 17.7% 18.4% 18.4% 17.4% 16.9% 17.0% % of Total

1,333.8 1,532.1 1,755.9 1,961.7 2,116.3 2,266.4 2,375.4 2,449.2 2,541.0 2,596.4 2,688.5 Total17.8% 14.9% 14.6% 11.7% 7.9% 7.1% 4.8% 3.1% 3.8% 2.2% 3.5% % Change

1,508.0 1,400.5 1,412.4 2,208.6 2,112.1 2,151.9 2,347.8 2,437.7 2,409.6 2,489.8 2,564.5Total Refined Palladium from Secondary Sources

7.2% -7.1% 0.8% 56.4% -4.4% 1.9% 9.1% 3.8% -1.2% 3.3% 3.0% % Change

128


Fabrication Demand Palladium fabrication demand contin-ued to rise during 2016, driven higher primarily by increased demand from the auto sector. Total palladium demand during 2016 reached a record 9.35 mil-lion ounces, up 1.2% from 2015. While demand rose to a record high, there were many sectors where palladium demand declined, such as in electronics, dental, and jewelry. This weakness was more than offset, however, by the in-crease in demand from the auto sector. A healthy passenger vehicle market, increased market share of gasoline vehi-cles in Europe, and ongoing substitution of platinum with palladium in diesel auto catalysts all helped to boost de-mand for the metal in the auto sector. Heading into 2017, demand for palla-dium from the auto sector is forecast to continue rising. The increase is ex-pected to be relatively lackluster com-

pared to recent years, however, as many of the major auto markets, especially the United States, reach their peak lev-els of demand for the current cycle. Some of the softness in demand from the auto industry should be offset by a revival in demand from the electronics sector. Total palladium fabrication de-mand in 2017 is forecast to reach 9.43 million ounces, up around 0.9% for the year. Automotive Palladium fabrication demand from the auto sector is estimated to have risen to a record high 6.26 million ounces in 2016, up 2.1% from 2015. That said, the pace of growth from the sector declined significantly compared to recent years. The growth rate appears to be the lower rate of increase in annual palladium use since the Great Recession in 2008 – 2009. This slowdown in growth can in large part be attributed to the slowdown

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Annual Palladium Fabrication Demand

129


in growth from the U.S. market, the largest source of palladium demand from the auto sector. U.S. vehicle sales grew at a strong pace post the Great Recession, rising above their pre-recession highs in 2014 and continuing to rise, reaching a record in 2016. At this late stage of the demand cycle, it is normal for the level of new and replacement demand for vehicles to slow. Palladium demand from the U.S. market rose to 1.97 million ounces in 2016, up 0.5% from 2015. This com-pares with an 11.9% compounded growth rate from 2009 to 2015. While consideration should be given to the fact that 2009 was a particularly weak year for demand, the softness in demand growth during 2016 is in stark contrast to previous years. Heading into 2017, vehicle demand in the U.S. could slow further or could potentially decline a little, which is ex-

pected to further weigh on palladium fabrication demand. Palladium demand from the U.S. auto market during 2017 is forecast to remain flat from 2016 lev-els. The overall weakness in auto demand in Japan during 2016 weighed on palla-dium fabrication demand from the country, which slipped to 723,000 ounces, down 1.6% from 2015. Vehicle demand in the country has been rising at a healthy pace during the first quarter of 2017 and this demand could be sus-tained following two consecutive years of declines in auto demand and also some improvement in economic activity in the country during 2016. This is ex-pected to drive higher palladium fabri-cation demand in Japan during 2017 to 738,000 ounces, the highest level of demand since 2014. Palladium demand in the European auto market continued to rise during 2016 for

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Palladium Fabrication Demand By Country and Region Projected Through 2017

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U.S. Light-Duty Vehicle SalesMonthly Through March 2017

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Ratio of US Cars to Light Truck Sales

Note: 2017 data through April.

131

PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 Annual Palladium UseThousand Troy Ounces

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992ElectronicsNorth America 152 224 287 392 313 345 312 250 389 301 316 318 420 558 579 415 424 Japan 199 177 177 209 177 462 504 646 764 688 874 950 1,044 1,000 950 1,343 1,222 Western Europe 76 80 88 118 95 98 112 128 197 215 242 252 269 281 300 285 263 China Other - - - - - - - - 36 40 44 48 53 58 60 60 60___ ___ ___ ___ ___ ___ ___ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ Subtotal 427 481 552 719 585 905 928 1,024 1,387 1,244 1,476 1,568 1,786 1,897 1,889 2,103 1,969 % of Total 22.1% 25.3% 23.3% 24.9% 24.8% 39.6% 37.4% 38.5% 43.3% 39.4% 41.7% 40.4% 43.2% 44.3% 45.3% 48.6% 47.0% % Change Year Ago - 12.6% 14.8% 30.3% -18.6% 54.7% 2.5% 10.3% 35.4% -10.3% 18.6% 6.2% 13.9% 6.2% -0.4% 11.3% -6.4%AutoNorth America 194 125 199 222 177 129 118 172 286 295 270 250 245 255 230 219 252 Japan - - - - - 80 90 93 96 100 129 161 180 200 180 200 132 Western Europe 3 3 4 5 4 3 5 5 2 2 2 2 2 5 13 15 20 China Other - - - - - - - - - - 12 17 18 18 22 25 30___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ Subtotal 197 128 203 227 181 212 213 270 384 397 413 430 444 479 445 459 434 % of Total 10.2% 6.7% 8.6% 7.9% 7.7% 9.3% 8.6% 10.2% 12.0% 12.6% 11.7% 11.1% 10.8% 11.2% 10.7% 10.6% 10.4% % Change Year Ago - -35.0% 58.6% 11.8% -20.3% 17.1% 0.5% 26.8% 42.1% 3.4% 4.0% 4.1% 3.4% 7.8% -7.1% 3.1% -5.4%DentalNorth America 139 112 206 244 244 255 311 344 347 339 402 334 213 271 197 157 166 Japan 177 119 209 257 225 161 193 199 206 214 309 412 425 435 440 418 450 Germany 39 49 52 54 51 61 87 113 195 260 260 257 257 193 196 193 174 Other Europe 13 13 13 13 13 13 26 25 103 127 160 202 273 230 232 250 250 China Other - - - - - - - - 13 16 19 24 24 26 28 30 30

___ ___ ___ ___ ___ ___ ___ ___ ___ ___ _____ _____ _____ _____ _____ _____ _____ Subtotal 368 293 480 568 533 490 617 681 863 956 1,151 1,229 1,193 1,155 1,093 1,048 1,070 % of Total 19.0% 15.4% 20.2% 19.7% 22.6% 21.4% 24.8% 25.6% 27.0% 30.3% 32.5% 31.7% 28.9% 27.0% 26.2% 24.2% 25.5% % Change Year Ago - -20.4% 63.8% 18.3% -6.2% -8.1% 25.9% 10.4% 26.7% 10.8% 20.3% 6.8% -3.0% -3.2% -5.4% -4.1% 2.1%

JewelryNorth America 6 16 13 12 13 15 8 7 6 8 7 7 6 6 6 11 30 Japan 48 48 48 64 48 64 61 48 57 59 61 72 85 90 95 120 113 Western Europe 23 31 32 30 22 27 30 35 53 55 55 54 53 52 55 59 56 China Other - - - - - - - - 1 2 2 2 2 2 3 3 3__ __ __ ___ __ ___ __ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ Subtotal 77 95 93 106 83 106 99 90 117 124 125 135 146 151 159 193 202 % of Total 4.0% 5.0% 3.9% 3.7% 3.5% 4.6% 4.0% 3.4% 3.7% 3.9% 3.5% 3.5% 3.5% 3.5% 3.8% 4.5% 4.8% % Change Year Ago - 23.4% -2.1% 14.0% -21.7% 27.7% -6.6% -9.1% 30.1% 5.8% 0.8% 8.2% 8.4% 2.9% 5.5% 21.4% 4.7%

Chemical/PetroleumRefiningNorth America 136 170 165 225 142 111 150 90 170 144 105 76 111 144 124 82 86 Japan 222 203 338 434 402 57 53 125 92 45 32 163 123 145 148 150 135 Western Europe - - - - - - - - 101 103 103 110 115 106 110 115 118 China ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ Subtotal 358 373 503 659 544 168 203 215 363 293 240 349 349 395 382 347 339 % of Total 18.5% 19.7% 21.2% 22.8% 23.0% 7.3% 8.2% 8.1% 11.4% 9.3% 6.8% 9.0% 8.4% 9.2% 9.2% 8.0% 8.1% % Change Year Ago - 4.2% 34.9% 31.0% -17.5% -69.1% 20.8% 5.9% 69.0% -19.5% -17.8% 45.0% 0.0% 13.2% -3.2% -9.2% -2.3%

Other UsesNorth America 30 53 48 38 23 34 27 60 57 88 61 100 134 128 127 107 129 Japan 19 19 32 66 35 70 61 24 14 33 48 44 55 55 52 45 23 Western Europe 456 456 460 506 377 302 335 294 17 23 23 25 25 25 20 22 25___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ Subtotal 505 528 540 610 435 406 423 378 88 144 132 169 214 208 199 174 177 % of Total 26.1% 27.8% 22.8% 21.1% 18.4% 17.8% 17.0% 14.2% 2.7% 4.6% 3.7% 4.3% 5.2% 4.8% 4.8% 4.0% 4.2% % Change Year Ago - 4.6% 2.3% 13.0% -28.7% -6.7% 4.2% -10.6% -76.8% 64.3% -8.2% 27.4% 26.9% -2.9% -4.2% -12.6% 1.7%

Total 1,932 1,898 2,371 2,889 2,361 2,287 2,483 2,658 3,201 3,158 3,537 3,879 4,132 4,284 4,167 4,324 4,191% Change Year Ago - -1.8% 24.9% 21.8% -18.3% -3.1% 8.6% 7.0% 20.4% -1.4% 12.0% 9.7% 6.5% 3.7% -2.7% 3.8% -3.1%

Notes: For the years prior to 1984, European chemical and petroleum refining demand is included in Other Uses in the Western Europe row. The subtotals for individual uses here are the sums of the countries for which data are available; other countries may consume palladium in these uses, but estimates are not available. Demand in other countries prior to 1984 in all industries is included in the Other Uses in Western Europe row. There may bediscrepancies due to rounding. p -- projections.Sources: U.S. Bureau of Mines, trade sources, CPM Group.May 1, 2017

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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016p 2017e Electronics

475 523 586 568 643 650 680 620 175 202 210 240 270 300 310 280 235 245 247 245 255 258 258 250 250 North America1,375 1,650 1,850 1,750 1,900 1,710 1,573 1,580 260 146 220 235 265 290 260 220 200 220 210 215 218 221 220 219 225 Japan

256 275 296 280 295 295 280 260 140 170 180 200 205 210 190 170 160 175 175 165 166 167 170 171 175 Western Europe138 171 198 216 226 233 257 260 277 260 262 263 255 257 260 262 265 269 China

70 80 90 110 140 150 170 32 29 52 54 74 97 163 180 178 240 277 312 311 333 340 340 336 338 Other_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____2,176 2,528 2,822 2,708 2,978 2,805 2,703 2,630 775 768 880 975 1,070 1,220 1,200 1,125 1,095 1,179 1,207 1,191 1,229 1,246 1,250 1,241 1,257 Subtotal47.0% 47.4% 44.9% 41.0% 41.9% 37.5% 35.3% 34.8% 15.0% 14.2% 15.7% 14.8% 14.9% 16.0% 15.5% 15.1% 15.5% 14.9% 14.8% 13.9% 14.0% 13.8% 13.5% 13.3% 13.3% % of Total

10.5% 16.2% 11.6% -4.0% 10.0% -5.8% -3.6% -2.7% -70.5% -0.9% 14.6% 10.8% 9.7% 14.0% -1.6% -6.3% -2.7% 7.6% 2.4% -1.3% 3.2% 1.4% 0.3% -0.7% 1.3% % Change Year Ago Auto

400 460 700 900 1,000 1,300 1,400 1,000 900 910 900 1,200 1,450 1,550 1,600 1,300 1,000 1,300 1,450 1,631 1,775 1,872 1,966 1,976 1,978 North America125 130 194 300 350 500 700 900 505 520 540 635 670 780 790 750 600 720 626 764 768 799 735 723 738 Japan22 193 474 545 652 848 880 920 880 900 915 960 990 1,010 1,055 1,002 960 1,000 1,005 970 926 991 1,070 1,129 1,152 Western Europe

59 62 86 123 175 173 215 277 318 476 693 808 845 1,024 1,102 1,168 1,297 1,357 China35 38 57 64 75 100 200 341 408 444 417 425 577 685 823 882 924 1,099 1,145 1,255 1,201 1,157 1,193 1,135 1,111 Other___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___

582 821 1,425 1,809 2,077 2,748 3,180 3,220 2,755 2,860 2,895 3,395 3,860 4,240 4,545 4,252 3,960 4,812 5,035 5,465 5,695 5,921 6,132 6,260 6,335 Subtotal12.6% 15.4% 22.7% 27.4% 29.2% 36.7% 41.5% 42.6% 53.4% 52.7% 51.5% 51.6% 53.7% 55.8% 58.6% 57.2% 56.2% 60.8% 61.8% 63.9% 64.7% 65.5% 66.3% 66.9% 67.2% % of Total

34.1% 41.1% 73.6% 26.9% 14.8% 32.3% 15.7% 1.3% -14.4% 3.8% 1.2% 17.3% 13.7% 9.8% 7.2% -6.4% -6.9% 21.5% 4.6% 8.5% 4.2% 4.0% 3.6% 2.1% 1.2% % Change Year AgoDental

183 193 198 202 205 205 195 120 118 122 150 190 225 235 240 240 245 244 240 235 230 228 226 226 222 North America510 560 576 595 595 580 525 470 475 505 405 520 475 270 268 265 265 260 255 260 260 258 255 255 250 Japan161 140 170 164 149 104 90 80 60 65 67 73 76 80 82 82 83 82 83 82 80 79 77 76 74 Germany250 260 268 273 270 229 206 180 130 140 142 150 150 155 158 160 161 160 155 150 145 142 139 139 137 Other Europe

21 21 22 22 23 24 24 25 26 27 27 28 28 28 28 29 29 27 China30 32 33 33 30 25 23 1 1 1 2 1 2 1 3 2 1 1 1 2 1 1 1 1 1 Other

_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____1,134 1,185 1,245 1,267 1,249 1,143 1,039 872 805 855 788 957 952 765 776 775 782 774 762 756 744 737 727 726 711 Subtotal24.5% 22.2% 19.8% 19.2% 17.6% 15.3% 13.6% 11.5% 15.6% 15.8% 14.0% 14.6% 13.2% 10.1% 10.0% 10.4% 11.1% 9.8% 9.4% 8.8% 8.5% 8.1% 7.9% 7.8% 7.5% % of Total6.0% 4.5% 5.1% 1.8% -1.4% -8.5% -9.1% -16.1% -7.7% 6.2% -7.8% 21.4% -0.5% -19.6% 1.4% -0.1% 0.8% -1.0% -1.6% -0.8% -1.6% -1.0% -1.4% -0.1% -2.1% % Change Year Ago

Jewelry40 42 46 48 52 52 54 45 46 48 48 49 50 60 65 68 75 76 72 70 69 69 68 67 67 North America

120 125 125 121 130 118 115 150 140 165 160 155 145 130 125 125 118 119 114 110 108 105 104 103 103 Japan56 60 62 64 57 57 55 50 50 52 52 53 50 60 62 63 64 65 63 60 62 64 64 65 64 Western Europe

49 66 101 212 356 397 420 269 302 307 201 174 162 155 148 145 144 143 China3 4 6 6 8 8 7 5 6 8 8 20 40 50 60 63 65 68 69 69 67 66 66 67 66 Other___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___

219 231 239 239 247 235 231 299 308 374 480 633 682 720 581 621 629 529 492 471 461 451 447 445 443 Subtotal4.7% 4.3% 3.8% 3.6% 3.5% 3.1% 3.0% 4.0% 6.0% 6.9% 8.5% 9.6% 9.5% 9.5% 7.5% 8.3% 8.9% 6.7% 6.0% 5.5% 5.2% 5.0% 4.8% 4.8% 4.7% % of Total8.4% 5.5% 3.5% 0.0% 3.3% -4.9% -1.7% 29.3% 3.2% 21.3% 28.2% 32.0% 7.7% 5.6% -19.3% 6.9% 1.3% -15.9% -7.1% -4.1% -2.2% -2.2% -0.8% -0.5% -0.6% % Change Year Ago

Chemical/PetroleumRefining

94 105 105 108 106 106 106 90 92 94 97 102 107 115 112 110 100 115 130 137 140 143 142 140 140 North America140 155 140 150 146 140 105 90 70 110 110 135 135 140 135 132 110 120 115 120 125 126 125 125 124 Japan120 130 132 135 133 133 130 120 122 125 128 130 132 135 130 127 107 107 108 106 104 106 106 102 103 Western Europe

60 62 62 65 66 68 74 80 85 89 98 104 108 111 114 117 119 128 China___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___354 390 377 393 385 379 341 360 346 391 400 433 442 464 457 454 406 440 457 471 480 489 490 486 495 Subtotal

7.6% 7.3% 6.0% 6.0% 5.4% 5.1% 4.4% 4.8% 6.7% 7.2% 7.1% 6.6% 6.1% 6.1% 5.9% 6.1% 5.8% 5.6% 5.6% 5.5% 5.4% 5.4% 5.3% 5.2% 5.2% % of Total4.4% 10.2% -3.3% 4.2% -2.0% -1.6% -10.0% 5.5% -4.0% 13.2% 2.1% 8.3% 2.1% 5.1% -1.6% -0.5% -10.6% 8.4% 3.7% 3.0% 1.9% 2.0% 0.2% -0.9% 1.8% % Change Year Ago

Other Uses110 115 118 120 122 122 118 115 115 120 120 122 125 130 133 135 120 125 130 132 134 136 136 136 136 North America30 32 27 29 26 25 25 30 30 30 30 35 35 36 39 40 30 35 33 35 35 36 35 34 35 Japan27 29 29 33 30 30 30 28 22 25 25 25 28 30 32 35 21 23 26 25 24 25 26 26 23 Western Europe___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___

167 176 174 182 178 177 173 173 167 175 175 182 188 196 204 210 171 183 189 192 193 197 197 196 194 Subtotal3.6% 3.3% 2.8% 2.8% 2.5% 2.4% 2.3% 2.3% 3.2% 3.2% 3.1% 2.8% 2.6% 2.6% 2.6% 2.8% 2.4% 2.3% 2.3% 2.2% 2.2% 2.2% 2.1% 2.1% 2.1% % of Total

-5.6% 5.4% -1.1% 4.6% -2.2% -0.6% -2.3% 0.0% -3.5% 4.8% 0.0% 4.0% 3.3% 4.3% 4.1% 2.9% -18.6% 7.0% 3.3% 1.6% 0.5% 2.1% 0.0% -0.5% -1.0% % Change Year Ago

4,632 5,331 6,282 6,598 7,114 7,487 7,667 7,554 5,156 5,423 5,617 6,575 7,193 7,605 7,762 7,437 7,043 7,917 8,141 8,546 8,801 9,041 9,242 9,353 9,434 Total10.5% 15.1% 17.8% 5.0% 7.8% 5.2% 2.4% -1.5% -31.7% 5.2% 3.6% 17.0% 9.4% 5.7% 2.1% -4.2% -5.3% 12.4% 2.8% 5.0% 3.0% 2.7% 2.2% 1.2% 0.9% % Change Year Ago

133


the third consecutive year. Demand from this region rose to a record high 1.13 million ounces in 2016, up 5.5% from 2015. There were several factors that helped palladium fabrication de-mand from the region’s auto sector grow in 2016. Not only was there an increase in vehicle demand in the re-gion, but there also has been an increase in demand for gasoline vehicles, which use more palladium intensive catalysts. Furthermore, over the past several years there has been an ongoing substitution of platinum with palladium in diesel autocatalysts, all of which are factors that were supportive of palladium fabri-cation demand from the European auto sector during 2016. Palladium demand from this region’s auto sector is forecast to continue growing during 2017 reach-ing a new record high of 1.15 million ounces. The increase in demand is ex-pected to be supported by all of the same factors that propelled demand higher in 2016.

Demand from the ‘other’ category, which includes every country and re-gion other than North America, Europe, and Japan, rose strongly to a record 2.4 million ounces in 2016. This was an increase of 3% over 2015 and was in large part driven by China and India. Both of these countries’ auto markets saw an uptick in demand and the large fleets of gasoline powered vehicles in both markets helped to push demand higher, offsetting some of the weakness in demand that occurred from Russia and Brazil, but also from some of the smaller auto markets. The largest con-tributor to this increase in palladium demand was China, which accounted for around 53% of the volume. A sharp increase in the number of vehi-cles sold helped to drive demand higher. This increase in auto demand was driven by a government subsidy for small cars. While the number of cars sold was large, the smaller engine sizes means that holding all other factors that

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influence the amount of PGMs loaded on auto catalysts constant, a smaller engine would require lower PGM load-ings. This curtailed the demand for pal-ladium from China during 2016. This subsidy was initially set to expire during 2016. This resulted in aggressive pur-chases during 2016 and in pulling for-ward demand from 2017. The subsidy was later extended to the end of 2017, which should provide some support to vehicle demand, but a lot of the demand was already met in 2016 which could make demand growth in 2017 relatively lackluster. Demand in Brazil and Russia should also recover some in 2017, which should help support demand. De-mand from ‘other’ countries is forecast to rise to 2.47 million ounces in 2017. U.S. Demand for Cars versus Light Trucks Weakness in oil prices has played an important role in driving higher demand for light trucks in the United States. (SUVs are considered light trucks by U.S. regulators.) This has important implications for PGM demand, particu-larly palladium, because these light trucks are powered by gasoline engines which use palladium intensive catalysts. The volume of light truck sales to cars is important because holding all other factors that influence PGM loadings in auto catalysts constant, the larger the engine size the greater the PGM loading per catalyst. During 2016 light trucks accounted for 61% of total light duty vehicle sales, with the remainder com-prised of passenger cars. This was the highest level that light truck sales have reached at least since 2002, the first year for which such data are available. Consumers are typically very sensitive

to the price of gas in making their deci-sion to purchase light trucks versus cars. During periods when oil prices have risen since 2002, light truck sales have declined. Going forward oil prices are forecast to remain relatively soft compared to the high prices around 2007 - 2014, which is expected to continue encouraging demand for these light trucks. Aside from fuel cost, higher fuel economy standards being enforced by the U.S. government should further encourage the use of these vehicles in the United States. Large vehicles have been profit drivers for all vehicle manufacturers and therefore these companies are taking special efforts to redesign their pick up vehicles to make them more fuel efficient. The Trump Administration has stated it plans to roll back fuel efficiency stan-dards. Whether or not it will, or will be allowed to by the courts, improvements in fuel economy over the past seven years are not likely to be reversed, and further improvements would be ex-pected in the long run. Emissions Standards Emissions standards in the country where the vehicle is being sold is an-other important factor in influencing the amount of PGMs loaded in auto cata-lysts. Tighter emissions standards, hold-ing all the other factors that influence PGM loadings constant, typically re-quire higher PGM loadings. The impor-tance of tighter emissions standards can be clearly seen in the amount of PGMs demanded in different parts of the world.

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In 2016 China was the largest auto mar-ket in the world. Despite this, the United States was the largest consumer of palladium (both markets are primar-ily gasoline markets) in auto catalysts. This is because the emissions standards in the United States are more stringent than those in China. That said, this gap is expected to start narrowing in com-ing years. This expectation is based on the changes in emissions standards in China and the large volume of vehicles being sold in the country. Chinese Emissions Standards Changes Emissions standards in China for pas-senger vehicles and light duty commer-cial vehicles were based on the Euro-pean regulations until China 5, which would be equivalent of Euro 5 emis-sions standards in Europe. In 2015, the government decided that China 6 will be based on U.S. Tier 3 regulations in-stead of Euro 6 regulations. U.S. Tier 3 regulations are significantly more strin-gent than Euro 6 regulations. Tier 3 emissions standards are not only mean-ingfully tighter than Tier 2 standards but are a fraction of allowable limits under Euro 6. Tier 3 emissions standards will be introduced in the United States in 2017 and China 6, its equivalent, will be introduced only in Beijing in 2017. It has been typical for China to introduce new emissions standards first in Beijing and then with a three or four year lag in the rest of the country, so while no date has been released for the launch of China 6 on a nationwide basis there is a fairly high likelihood based on the past that the emissions standards will be launched around 2020 or 2021 on a na-tional level.

Emissions Standards in India India’s emissions standards are modeled on those of Europe and the regulations are phased first into major Indian cities and then on a countrywide basis. Emis-sions standards are at Bharat IV, which is the equivalent of Euro 4, in the large Indian cities. Meanwhile the rest of the country is on Bharat III (Euro 3). The entire country is expected to remain on these emissions standards until 2019. In 2020, the concept of phasing in emis-sions standard first in big cities and then on a nationwide basis will be abandoned and the entire country will be moved onto Bharat VI (Euro 6). The severe pollution occurring in Delhi as of 2016 may focus national attention on air quality, which could lead to changes in emission control regulations. Offsetting factors, such as the economic costs of implementing a more stringent emission control regime more rapidly may prevent this from happening, although such developments are something to be watched in India. Electronics Palladium demand from the electronics sector declined during 2016 to 1.24 mil-lion ounces, down 0.7% from 2015. This was the first decline in demand from the electronics sector since 2012. Demand during 2016 declined due to a buildup in semiconductor inventory globally. While demand declined, it was small and from a very high level, sug-gesting that there is still a large amount of palladium being consumed by the electronics sector. Improvement in con-sumer confidence globally since 2016 has been helping to increase demand for consumer electronics, which should

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help drive down the built up semicon-ductor inventory. Demand for palladium in the electronics industry is expected to rebound during 2017 after going through a slowdown over the past couple of years due to an increase in inventory buildup. Demand is forecast to reach a record 1.26 million ounces during the year, up 1.3% over 2016. Jewelry Palladium jewelry demand continued to decline during 2016, slipping to 445,000 ounces from 447,000 ounces in 2015. This was the lowest level of de-mand since 2002. The lack of advertis-ing for palladium jewelry is the primary reason that demand for the metal from this sector has been suffering. There is not sufficient awareness among con-sumers regarding what palladium jew-elry. Much of the palladium used in

jewelry is in white gold which is often an alloy of gold and palladium. Pure palladium jewelry has a very limited market. Furthermore, the higher price of gold and palladium and the declining price of platinum reduce the need to opt for white gold over platinum. This is trend is not expected to change any time soon and demand for palladium jewelry is expected to soften to 443,000 ounces in 2017. Dental Demand for palladium from the dental sector has been in a long term decline, a trend that continued during 2016. Palla-dium demand from this sector declined to 726,000 ounces in 2016. There has been an ongoing shift toward ceramics, which has weighed on demand for pal-ladium in the dental sector. That said, the strength and durability of precious metals have prevented them from being completely substituted in this use. De-

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Electronics Palladium Demand by RegionAnnual, Projected Through 2017

United States Japan Europe Other

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mand for palladium from the dental sec-tor has stagnated in recent years. Palladium demand in the dental sector tends also to be price sensitive. The sharp uptick in price during the first

several months of 2017 is expected to hurt palladium demand from the dental sector during the year. Demand from this sector is expected to slip to 711,000 ounces during 2017.

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Thousand Ounces

Palladium Demand In Dental

Thousand Ounces

Electronics, 8.9% Dental/medical, 8.1%

Auto, 70.7%

Petrochem, 5.0%Other, 7.3%

U.S. Demand by SectorProjected 2016 Demand: 2,794,665

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Historical U.S. Palladium DemandTroy Ounces

Dentaland

Year Electronics MedicalAutomotive Chemical Petroleum

1955 250,714 - 36,246 -1956 304,990 - 31,449 -1957 285,576 - 25,936 -1958 238,815 - 93,215 -1959 374,080 - 42,394 6031960 271,560 - 73,854 5,3001961 353,010 - 90,533 4491962 327,788 - 110,518 9611963 331,868 - 118,757 16,0081964 350,889 - 117,102 41,8871965 430,384 - 156,796 37,0011966 531,545 - 221,559 28,7601967 324,684 - 192,011 3,5061968 329,012 - 228,318 22,6831969 430,258 - 214,508 1,3371970 429,032 - 184,618 15,4941971 431,505 - 218,651 2,9161972 425,081 - 292,710 14,4991973 524,056 - 259,959 3,7611974 390,237 150,000 163,205 14,8771975 132,247 97,000 142,975 2,2551976 152,312 139,000 194,496 128,229 7,2911977 223,748 112,000 125,010 161,234 8,5071978 286,574 206,000 198,809 146,352 18,9091979 392,372 244,000 222,156 199,743 24,5881980 312,778 244,000 176,518 119,905 22,0131981 345,365 255,000 129,214 90,272 20,8771982 312,372 311,000 118,445 128,778 20,8451983 250,059 344,000 172,050 39,892 49,8701984 389,070 347,000 286,000 78,600 92,1341985 300,677 339,000 295,000 63,236 80,9401986 316,390 402,000 270,000 44,485 60,9591987 318,301 334,000 250,000 34,682 41,3441988 419,534 213,000 245,000 65,000 46,2331989 557,879 271,000 255,000 61,826 81,7591990 578,616 197,000 230,000 76,165 47,8401991 414,840 157,000 219,000 46,779 35,4021992 424,293 166,000 252,000 61,569 24,1131993 475,000 183,000 290,000 70,000 24,0001994 523,000 193,000 460,000 77,000 28,0001995 586,000 198,000 700,000 77,000 28,0001996 568,000 202,000 900,000 79,000 29,0001997 643,000 205,000 1,000,000 78,000 28,0001998 650,000 205,000 1,300,000 80,000 26,0001999 680,000 195,000 1,400,000 81,000 25,0002000 620,000 120,000 1,000,000 68,774 21,2262001 175,000 118,000 900,000 69,000 23,0002002 202,000 122,000 910,000 70,000 24,0002003 210,000 150,000 900,000 72,000 25,0002004 240,000 190,000 1,200,000 76,000 26,0002005 270,000 225,000 1,450,000 79,500 27,5002006 300,000 235,000 1,550,000 85,500 29,5002007 310,000 240,000 1,600,000 89,250 35,0002008 280,000 240,000 1,300,000 94,000 37,5002009 235,000 245,000 1,000,000 100,000 40,0002010 245,000 244,000 1,300,000 83,000 32,0002011 247,000 240,000 1,450,000 93,000 37,0002012 245,000 235,000 1,631,250 97,000 40,0002013 255,000 230,000 1,774,800 99,124 40,8762014 258,000 228,250 1,872,414 99,500 43,8002015 258,000 225,500 1,966,035 99,000 42,0002016p 250,000 226,000 1,975,865 98,800 41,000Notes: Petroleum consumption was included in chemical prior to 1959;glass industry was included in chemical prior to 1960.

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Jewelry Percent

and ChangeDecorative Glass Other Total in Totals Year

28,673 - 7,221 322,854 195525,447 - 7,761 369,647 14.5% 195621,257 - 5,387 338,156 -8.5% 195725,129 - 1,802 358,961 6.2% 195834,113 - 5,590 456,780 27.3% 195923,336 6 1,552 375,608 -17.8% 196014,354 5 2,461 460,812 22.7% 196112,975 124 12,595 464,961 0.9% 196213,880 20 3,054 483,587 4.0% 196320,886 110 10,665 541,539 12.0% 196418,203 1,402 23,107 666,893 23.1% 196532,215 1,011 12,020 827,110 24.0% 196618,676 301 25,878 565,056 -31.7% 196717,797 10 62,023 659,843 16.8% 196821,837 3,891 34,581 706,412 7.1% 196917,329 21,147 24,140 691,760 -2.1% 197018,752 237 26,451 698,512 1.0% 197119,375 2,250 27,835 781,750 11.9% 197223,052 1,439 65,157 877,424 12.2% 197321,701 9,549 12,420 761,989 -13.2% 197423,026 17,633 11,942 427,078 -44.0% 19755,700 2,989 26,766 656,783 53.8% 1976

15,567 907 53,023 699,996 6.6% 197712,570 2,757 45,645 917,616 31.1% 197811,766 1,729 36,640 1,132,994 23.5% 197913,491 1,155 21,828 911,688 -19.5% 198014,772 2,922 30,650 889,072 -2.5% 19817,866 213 27,031 926,550 4.2% 19826,711 146 59,582 922,310 -0.5% 19835,884 10 57,134 1,255,832 36.2% 19847,982 - 87,970 1,174,805 -6.5% 19856,521 - 61,182 1,161,537 -1.1% 19867,099 - 100,239 1,085,665 -6.5% 19876,302 354 133,618 1,129,041 4.0% 19885,755 5,819 121,723 1,360,761 20.5% 19895,691 11,124 116,128 1,262,564 -7.2% 1990

10,610 - 107,448 991,078 -21.5% 199130,000 4,051 115,228 1,077,254 8.7% 199240,000 4,500 105,000 1,191,500 10.6% 199342,000 - 115,000 1,438,000 20.7% 199446,000 - 118,000 1,753,000 21.9% 199548,000 - 120,000 1,946,000 11.0% 199652,000 - 122,000 2,128,000 9.4% 199752,000 - 122,000 2,435,000 14.4% 199854,000 - 118,000 2,553,000 4.8% 199945,000 - 115,000 1,990,000 -22.1% 200046,000 - 115,000 1,446,000 -27.3% 200148,000 - 120,000 1,496,000 3.5% 200248,000 - 120,000 1,525,000 1.9% 200349,000 - 122,000 1,903,000 24.8% 200450,000 - 125,000 2,227,000 17.0% 200560,000 - 130,000 2,390,000 7.3% 200665,000 - 133,000 2,472,250 3.4% 200768,000 - 135,000 2,154,500 -12.9% 200875,000 - 120,000 1,815,000 -15.8% 200976,000 - 125,000 2,105,000 16.0% 201072,000 - 130,000 2,269,000 7.8% 201170,000 - 132,000 2,450,250 8.0% 201269,000 - 134,000 2,602,800 6.2% 201368,500 - 136,000 2,706,464 4.0% 201468,000 - 136,000 2,794,535 3.3% 201567,000 - 136,000 2,794,665 0.0% 2016p

Source: U.S. Bureau of Mines, CPM Group. May 1, 2017

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Japanese Palladium DemandThousand Troy Ounces

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

Electronics 199 177 177 209 177 462 504 646 764 688 874 950 1,044 1,000Automotive - - - - - 80 90 93 96 100 129 161 180 200Dental 177 119 209 257 225 161 193 199 206 214 309 412 425 435Jewelry 48 48 48 64 48 64 61 48 57 59 61 72 85 90Chemical/Petroleum Refining 222 203 338 434 402 57 53 125 92 45 32 163 123 145Other 19 19 32 66 35 70 61 24 14 33 48 44 55 55___ ___ ___ _____ ___ ___ ___ _____ _____ _____ _____ _____ _____ _____Total 665 566 804 1,030 887 894 962 1,135 1,229 1,139 1,453 1,802 1,912 1,925% Change Year Ago - -14.9% 42.0% 28.1% -13.9% 0.8% 7.6% 18.0% 8.3% -7.3% 27.6% 24.0% 6.1% 0.7%

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Electronics 950 1,343 1,222 1,375 1,650 1,850 1,750 1,900 1,710 1,573 1,580 260 146 220Automotive 180 200 132 125 130 194 300 350 500 700 900 505 520 540Dental 440 418 450 510 560 576 595 595 580 525 470 475 505 405Jewelry 95 120 113 120 125 125 121 130 118 115 150 140 165 160Chemical/Petroleum Refining 148 150 135 140 155 140 150 146 140 105 90 70 110 110Other 52 45 23 30 32 27 29 26 25 25 30 30 30 30_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____Total 1,865 2,276 2,075 2,300 2,652 2,912 2,945 3,147 3,073 3,043 3,220 1,480 1,476 1,465% Change Year Ago -3.1% 22.0% -8.8% 10.8% 15.3% 9.8% 1.1% 6.9% -2.4% -1.0% 5.8% -54.0% -0.3% -0.7%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

Electronics 235 265 290 260 220 200 220 210 215 218 221 220 219 225Automotive 635 670 780 790 750 600 720 626 764 768 799 735 723 738Dental 520 475 270 268 265 265 260 255 260 260 258 255 255 250Jewelry 155 145 130 125 125 118 119 114 110 108 105 104 103 103Chemical/Petroleum Refining 135 135 140 135 132 110 120 115 120 125 126 125 125 124Other 35 35 36 39 40 30 35 33 35 35 36 35 34 35_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____Total 1,715 1,725 1,646 1,617 1,532 1,323 1,474 1,353 1,504 1,514 1,545 1,474 1,459 1,475

17.1% 0.6% -4.6% -1.8% -5.3% -13.6% 11.4% -8.2% 11.1% 0.7% 2.0% -4.6% -1.0% 1.1%

Note: Totals may not equal the sums of the individual categories due to rounding. Sales to the chemicalindustry through 1980 include sales for use in automobiles; beginning with 1980, sales to petroleum refinersare included in the chemical sector, while sales for use in automotive catalysts are separated. p -- projections.Sources: Japanese trade sources, CPM Group.May 1, 2017

141


Palladium Investment Demand In 2016 investors continued to sell a large amount of palladium from their Exchange Traded Fund inventories, a pattern that emerged and 2015. In contrast to 2015, however, the ETF-based investor selling was not joined by other investors selling palladium in the physical market away from ETFs. In 2015 investors holding physical palladium outside of ETFs also sold. In 2016 they appear to have been relatively significant net buyers. There have been significant levels of stale-bull investor inventory selling at times since 2014, which perhaps was the major force that drove palladium prices lower in 2015 and 2016. Most of the sales came out of ETF holdings, although a significant amount of selling has been apparent from unreported stocks that investors had built up

during between 2000 and 2013. The volumes involved are opaque to the market and the actual selling is seen only by the market makers and others involved in buying this metal from investors. In the beginning of 2016, however, there is a notable shift in investor sentiment toward palladium. Heavy investor selling had weighed palladium prices down since September 2014. By the end of January 2016 prices had been trending down for 17 months and had dipped below the long-run support level of $500. Such low levels of prices had not been seen since the middle of 2010, and convinced some investors to hold off their inventory liquidation until prices improved. In the meantime investors who had shorted palladium on the Nymex started booking profits in their short positions.

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

76 81 86 91 96 01 06 11 16


Deficit/Net Reduction in Inventories

Surplus/Net Additions to Inventories

Annual, Projected Through 2017Palladium Surplus/Deficit

142


Some of these investors who had shorted palladium were using such shorts to hedge their large positions of the physical metal. The lower prices of palladium enabled them to lock in profits while waiting for the market to improve. As the palladium market tightened in the third quarter of 2016 and prices rose back above $700, there was another bout of inventory liquidation by stale-bull investors, which lasted through the year’s end. In this bout of selling, however, investors were less keen on getting rid of their inventories. Rather, they stopped selling when prices were showing signs of short-term weakness. This shift of investor sentiment from selling heavily into the market toward holding palladium inventories is a critical change for the palladium market. Since 2014 the shortfalls in newly refined metal over fabrication

demand had been more than accommodated by sales of the metal out of investor inventories. During 2016 the palladium market was estimated to have recorded a small deficit of around 11,000 ounces (within the margin of error for palladium market supply and demand statistics). While sales of investor inventories continued to cushion the palladium market, the available supplies of palladium became tighter than in the past two years as investors decided to hold on to their palladium. This helped extend a floor to palladium prices. In the first four months of 2017 investor disposals of palladium lessened further w h i l e o t h e r i n v e s t o r s b e g a n accumulating fresh inventories. There appeared to be some investor interest in gaining long exposure to palladium for the longer term. The palladium market

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

07 08 09 10 11 12 13 14 15 16 17

ABSAStandard BankSPPP NYSE (Sprott)MitsubishiSPALSPDMWITEGLTRJulius Baer MSL ASX

PHPD LSE

ZKB

PALL NYSE

Palladium ETP HoldingsThrough April 2017

Mil. Oz. Mil. Oz.

Source: ETP issuer websites, Bloomberg

143


-800

-600

-400

-200

0

200

400

600

800

1,000

1,200

-800

-600

-400

-200

0

200

400

600

800

1,000

1,200

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Thou. Oz. Thou Oz.

Annual Changes to Palladium ETP HoldingsThrough April 2017

Source: Bloomberg, ETP issuer websites.

-30%

-20%

-10%

0%

10%

20%

30%

40%

-400

-300

-200

-100

0

100

200

300

400

500

10 11 12 13 14 15 16 17

Monthly Changes in Palladium ETP Holdings and Prices

Thou Oz Percent

Change in Month-End Palladium Price (RHS)

Through April 2017

144


is expected to record a surplus around 117,000 ounces for the year, but to tighten significantly in the years ahead. Such surplus metal may become absorbed by those investors with renewed interest in palladium. Exchange Traded Products

Over the course of 2016 investors reduced their holdings in palladium ETPs by 586,071 ounces from the end of the previous year. This was a smaller amount of ETP outflows than the net reduction of 695,065 ounces in 2015. This was the second consecutive year in which investors were net sellers of palladium ETPs, as they reduced their physical exposure to the metal.

The decreases in the two South African palladium ETPs, Standard Bank’s palladium ETP and ABSA’s palladium ETP, over the course of 2016 were the main contributors to the net decline in overall palladium ETPs. Combined, these two ETPs recorded an outflow of 303,375 ounces in palladium holdings during 2016. Investors in other palladium ETPs also liquidated their holdings, by a smaller 282,696 ounces for the year.

In the first four months of 2017 palladium ETPs holdings fell another 176,541 ounces. During this period ABSA’s palladium ETP reversed its declining trend of the past two years and increased holdings 7.4%, or 15,529 ounces. Meanwhile Standard Bank’s palladium ETP registered a modest decline of 0.5%, or

2,305 ounces. Investors in other ETPs were liquidating their palladium holdings as well, selling 189,765 ounces on a net basis. ETF Securities’ PHPD ETF was a major contributor to this decline, experiencing 158,623 ounces of palladium liquidations during this four-month period. Futures Over the course of 2016 gross short positions in Nymex palladium held by institutional investors generally trended lower, as investors were exiting most of the shorts they had built in 2015. Meanwhile, institutional investors exhibited renewed interest in building longs in palladium during the second half of 2016 and in early 2017. This improvement of investor sentiment helped extend support to palladium prices, which strengthened for the most part of 2016 and in early 2017. Investors liquidated roughly 28.5% of their gross shorts during the first three months of 2016, from around 1.06 million ounces at the beginning of January to around 754,800 ounces at the end of March. This was followed by two bouts of short building, which pulled up investor gross short positions to a yearly high of 1.33 million ounces on 21 June. For the remainder of 2016 investors mostly were liquidating previously built gross shorts, which fell to 376,200 ounces at the end of the year, a drop of around 72% from the peak reached on 21 June. This low level of a level of gross shorts on palladium was last seen

145


in January 2015, suggesting that most of the investors who had shorted palladium in 2015 and in early 2016 had mostly exited their bearish bets. Meanwhile investors also started rebuilding their gross long positions in Nymex palladium in June 2016. Prior to this investors had been mostly liquidating their gross longs, between September 2014 and June 2016, during which time gross longs were halved from the record high level around 3.13 million ounces in 2 September 2014 to a low of 1.44 million ounces at the end of June 2016. Beginning in June 2016, however, investors resumed their long building in the Nymex palladium market. Gross longs spiked higher to around 2.28 million ounces on 9 August, and remained at generally elevated levels for the next three months. There was a brief bout of gross long liquidations from the middle of October to the middle of November, during which time gross longs dropped to 1.31 million ounces on 8 November 2016. This was mainly due to shifts in investor sentiment toward the precious metals complex ahead of and during the November elections in the United States. In the beginning of 2017 investors largely maintained a steady outlook for Nymex palladium. There were concerns among some of the more bearish investors, however, about the Fed’s interest rate policies as well as slower growth in auto sales at the United States. Overriding these potentially negative factors was investor views

related to longer term growth in palladium use in auto catalysts and lower supplies due to weaker platinum market conditions constraining South African mine output. By the end of April 2017 investor gross short positions were 38% higher than the end of 2016, reaching around 518,000 ounces. Meanwhile there were other investors who were more bullish about the longer term fundamentals of palladium. Gross longs in Nymex palladium held by institutional investors rose to 2.5 million ounces by the end of April 2017, a rise of 37% from the end of 2016. This increased long building and relatively less dynamic short exposures to palladium increased investor net long exposures to Nymex palladium to a high of 2.09 million ounces on 4 April 2017, up from the previous trough around 223,100 ounces on 21 June 2016. During this period prices of palladium had recorded substantial gains, up from a trough around $530-$550 in the middle of June 2016 to around $790 - $830 during the last week of April 2017. It is important to note that while there was a clear shift in many investors attitudes toward more positive dispositions toward palladium, those investors who have made money shorting palladium, along with its sister metal platinum, over the past few years clearly have not abandoned the market. They are less heavily shorting Nymex palladium, but they are still very much present in this metals’ market.

146


Palladium Exchange Traded Product Holdings Troy Ounces

PHPD LSEPalladium ZKB MSL ASX PALL Julius Baer GLTR WITE SPDM SPAL MitsubishiSPPP NYSE

(Sprott) Standard Bank ABSA Total

07 April 14,534 - - - - - - - - - 14,534May 21,997 144,669 - - - - - - - - 166,666June 29,080 192,815 - - - - - - - - 221,895July 38,999 224,943 - - - - - - - - 263,942

August 29,899 224,866 - - - - - - - - 254,765September 29,899 224,708 - - - - - - - - 254,608

October 31,535 237,446 - - - - - - - - 268,981November 34,694 237,446 - - - - - - - - 272,140December 42,969 237,234 - - - - - - - - 280,202

08 January 77,492 237,137 - - - - - - - - 314,629February 201,456 333,120 - - - - - - - - 534,577

March 233,785 342,605 - - - - - - - - 576,390April 217,121 371,229 - - - - - - - - 588,350May 236,703 380,671 - - - - - - - - 617,374June 258,125 386,905 - - - - - - - - 645,030July 275,093 418,709 - - - - - - - - 693,801

August 237,747 418,500 - - - - - - - - 656,247September 240,496 450,194 - - - - - - - - 690,690

October 231,790 465,896 - - - - - - - - 697,686November 171,292 475,272 - - - - - - - - 646,563December 170,265 490,977 - - - - - - - - 661,242

09 January 160,248 532,117 3,879 - - - - - - - 696,244February 241,683 544,669 3,879 - - - - - - - 790,231

March 248,060 557,124 3,879 - - - - - - - 809,063April 274,452 556,906 3,879 - - - - - - - 835,236May 279,888 556,642 3,880 - - - - - - - 840,409June 312,950 556,401 3,879 - - - - - - - 873,230July 342,249 549,832 4,277 - - - - - - - 896,359

August 389,941 540,075 4,277 - - - - - - - 934,293September 529,481 546,212 4,186 - - - - - - - 1,079,878

October 575,783 517,412 4,499 - - - - - - - 1,097,695November 626,743 514,016 4,499 - - - - - - - 1,145,259December 665,329 497,973 4,499 - - - - - - - 1,167,801

10 January 605,479 488,261 7,523 399,925 8,850 - - - - - 1,510,038February 642,844 475,381 7,523 469,793 16,405 - - - - - 1,611,947

March 672,713 465,700 7,812 549,407 27,955 - - - - - 1,723,586April 619,322 456,000 7,812 694,007 37,985 - - - - - 1,815,126May 506,573 478,149 7,812 788,437 48,515 - - - - - 1,829,485June 470,904 495,147 7,812 808,020 49,015 - - - - - 1,830,897July 475,037 450,647 7,710 752,760 50,745 - - - - 7,395 1,744,293

August 488,988.60 450,454.46 5,101.29 752,343.51 51,195.00 - - - - 7,394.67 1,755,478September 510,579.01 450,261.56 5,101.29 717,186.72 49,535.00 - - - - 7,394.67 1,740,058

October 549,184.50 431,131.87 6,027.00 841,287.56 56,935.00 1,732.42 - - 7,394.67 1,893,693November 568,631.54 421,493.06 6,027.00 920,361.81 63,785.00 9,209.24 798.23 - - 7,394.67 1,997,701December 586,775.72 437,082.97 3,307.14 1,088,962.44 73,535.00 10,986.72 5,597.16 - - 7,394.67 2,213,642

11 January 624,614.90 452,672.88 3,308.14 1,153,059.91 73,513.00 11,896.66 7,195.05 - - 9,002.21 2,335,263February 594,849.75 452,483.19 3,308.14 1,212,057.47 81,073.00 13,306.18 7,582.24 - - 10,609.75 2,375,270

March 602,775.75 442,844.38 3,308.14 1,037,722.96 78,473.00 13,985.48 8,765.99 - - 12,217.28 2,200,093April 632,530.49 442,395.09 3,308.14 1,047,070.32 96,243.00 15,430.23 9,173.94 6,388.53 46,870.80 12,217.28 2,311,628May 579,971.49 432,769.16 3,308.14 1,011,928.18 88,843.00 14,269.64 7,578.26 6,387.47 54,070.80 12,217.28 2,211,343June 565,219.49 423,136.78 3,308.14 1,001,509.78 94,843.00 14,553.22 7,973.20 6,385.00 64,549.90 12,217.28 2,193,696July 547,109.24 416,661.63 3,307.14 1,015,890.26 101,743.00 15,086.97 8,765.19 6,382.08 70,049.10 12,217.28 2,197,212

August 520,519.60 416,497.66 3,307.14 921,217.28 126,293.00 14,252.31 8,353.07 6,379.69 63,047.70 12,217.28 2,092,085September 512,785.56 410,032.13 3,307.14 782,108.75 115,943.00 15,445.22 8,739.80 6,378.22 95,064.00 12,217.28 1,962,021

October 489,145.68 409,289.47 4,327.14 687,751.38 126,843.00 14,821.17 7,482.58 6,375.49 97,259.00 12,217.28 1,855,512November 487,484.00 402,836.81 4,327.14 613,222.75 130,893.00 14,821.17 7,482.58 6,373.74 94,759.00 12,217.28 1,774,417December 464,076.69 386,967.19 4,327.14 588,123.00 128,243.00 12,977.17 6,728.05 6,371.78 94,759.00 12,217.28 1,704,790

12 January 459,145.39 387,256.56 4,327.14 647,167.19 123,243.00 12,409.43 6,728.05 6,369.06 94,759.00 12,217.28 1,753,622February 494,994.15 383,954.66 4,327.14 735,713.88 124,043.00 12,121.29 6,300.00 6,367.04 102,059.00 12,217.28 1,882,097

March 512,068.60 383,800.34 4,327.14 784,753.63 123,043.00 12,423.12 6,300.00 6,365.02 95,559.00 12,217.28 1,940,857April 524,472.94 378,907.00 3,706.26 799,148.31 123,643.00 12,322.07 6,300.00 6,362.65 105,672.30 12,217.28 1,972,752May 529,742.00 375,611.56 3,706.26 838,170.88 121,693.00 12,114.90 5,875.33 6,360.63 105,672.30 12,217.28 2,011,164June 535,629.34 369,187.84 3,706.26 827,931.88 124,723.00 12,016.49 5,875.33 6,358.61 97,672.30 12,217.28 1,995,318July 537,420.87 365,895.59 3,706.26 807,744.50 122,223.00 11,718.36 5,875.33 6,356.38 97,672.30 12,860.30 1,971,473

August 525,796.09 369,187.84 3,706.26 827,036.00 130,773.00 11,718.36 5,875.33 6,354.22 97,672.30 12,860.30 1,990,980September 512,108.90 357,160.25 3,706.26 792,152.74 131,923.00 12,031.88 5,875.33 6,352.27 101,472.30 12,860.30 1,935,643

October 514,133.65 355,436.97 3,812.19 752,493.79 132,523.00 12,340.36 5,875.33 6,349.56 101,472.30 12,538.79 1,896,976November 550,720.69 355,276.19 3,812.19 712,675.23 133,923.00 12,632.81 5,875.33 6,347.89 102,981.70 12,538.79 1,896,784December 555,077.11 365,445.47 3,812.19 712,363.30 135,123.00 12,934.77 5,875.33 6,346.43 102,981.70 12,538.79 186,098.00 2,098,596

13 January 554,272.35 363,722.19 3,812.19 716,845.06 177,623.00 13,233.73 6,682.12 6,345.74 102,981.70 11,895.78 186,098.00 2,143,512February 617,855.44 361,998.91 3,812.19 765,638.32 190,373.00 13,809.41 6,682.12 10,229.67 102,981.70 11,252.76 186,098.00 2,270,732

March 603,863.46 360,587.50 3,812.19 765,332.53 195,813.00 14,401.51 6,682.12 10,226.41 101,564.20 11,252.76 187,994.00 2,261,530April 578,536.60 356,716.56 3,812.19 784,500.02 189,263.00 14,987.46 6,682.12 10,222.82 101,564.20 11,252.76 187,994.00 2,245,532May 543,466.38 344,623.06 3,812.19 789,055.94 214,403.00 14,695.00 5,455.04 11,229.09 154,415.20 11,252.76 187,944.00 2,280,352June 524,567.69 331,606.81 3,812.19 788,656.39 188,813.00 14,995.90 5,455.04 11,225.51 155,932.00 11,252.76 187,944.00 2,224,261July 482,659.12 321,308.94 3,812.19 793,161.81 199,643.00 15,203.77 5,455.04 11,221.44 137,635.20 9,645.22 187,944.00 2,167,690

August 469,713.24 305,294.66 3,812.19 763,339.47 193,963.00 15,203.77 5,455.04 11,217.75 170,635.20 9,645.22 187,944.00 2,136,224September 459,690.53 302,983.00 3,812.19 762,943.57 193,653.00 15,850.12 5,455.04 11,213.93 174,355.20 8,359.19 187,708.00 2,126,024

October 459,311.11 295,694.44 3,812.19 694,205.37 196,473.00 15,459.23 5,455.04 11,212.94 173,100.90 8,359.19 187,714.00 2,050,797November 480,145.34 289,344.66 3,812.19 708,399.68 188,473.00 15,251.02 5,455.04 11,206.54 173,100.90 8,359.19 187,055.00 2,070,603December 467,013.50 288,003.97 3,812.19 717,864.88 187,723.00 23,182.86 5,455.04 11,202.73 169,359.70 8,359.19 182,562.00 2,064,539

14 January 461,030.35 286,319.31 3,812.19 717,459.25 195,973.00 23,182.86 5,455.04 11,198.79 170,239.70 8,359.19 169,851.00 2,052,881February 467,911.21 286,190.00 3,596.20 648,826.51 195,973.00 14,588.84 5,455.04 11,195.35 170,907.60 8,359.19 169,851.00 1,982,854

March 505,906.59 283,612.22 3,596.20 643,555.12 201,663.00 15,790.75 5,455.04 11,191.54 157,859.80 8,359.19 169,851.00 33,000.00 20,000.00 2,059,840April 511,074.14 280,381.06 3,596.20 633,544.08 197,183.00 15,185.86 5,455.04 11,187.85 156,015.00 7,073.16 168,489.00 270,888.39 208,769.00 2,468,842May 594,315.20 273,459.13 3,596.20 623,518.80 186,503.00 15,185.86 5,455.04 11,187.85 166,124.90 7,073.16 168,489.00 400,717.72 336,588.14 2,792,214June 571,262.19 267,163.88 3,596.20 628,042.53 169,943.00 15,185.86 5,455.04 11,179.50 166,124.90 7,073.16 168,489.00 437,560.37 420,380.47 2,871,456July 577,660.96 260,871.98 3,596.20 632,670.54 171,583.00 14,881.16 5,037.25 11,178.60 166,059.00 7,073.16 168,489.00 501,326.77 436,214.22 2,956,642

August 456,329.59 256,403.03 3,596.20 622,615.85 162,883.00 14,881.16 5,037.25 11,172.39 164,871.90 7,073.16 168,489.00 530,124.03 436,070.00 2,839,547September 447,174.68 254,441.84 3,596.20 578,518.70 148,913.00 14,567.64 5,037.25 11,169.00 163,940.00 7,073.16 168,489.00 575,786.00 443,925.00 2,822,631

October 393,752.34 241,534.84 2,382.17 558,723.42 146,203.00 13,972.54 5,037.25 11,165.00 166,474.00 7,073.16 168,489.00 693,225.33 476,699.00 2,884,731November 495,433.78 240,542.66 2,382.17 553,586.17 143,093.00 13,376.12 5,037.25 11,162.00 150,915.90 7,073.16 160,961.00 700,070.42 492,531.00 2,976,165December 511,005.20 238,054.38 2,382.17 514,503.51 143,093.00 22,144.70 5,037.25 11,157.18 144,788.40 7,073.16 152,898.00 702,831.62 516,223.20 2,971,192

15 January 492,875.39 236,430.77 2,382.17 489,974.52 143,443.00 23,028.39 5,037.25 11,154.12 144,381.30 7,073.16 151,996.00 705,583.35 508,153.41 2,921,513February 488,274.21 236,337.45 2,382.17 484,907.06 138,573.00 15,067.00 5,037.25 11,279.21 147,832.90 7,073.16 146,375.00 705,387.93 502,960.11 2,891,486

March 469,028.00 229,964.36 2,382.17 460,434.00 136,943.00 14,541.00 5,037.25 11,146.53 133,581.50 7,073.16 138,909.00 727,026.00 478,886.76 2,814,953April 466,918.27 229,839.94 2,382.17 460,222.73 154,683.00 14,237.98 5,037.25 11,279.21 133,581.50 7,073.16 138,909.00 747,711.48 506,594.57 2,878,470May 476,060.56 226,760.70 2,382.17 460,012.59 167,563.00 13,938.47 5,037.25 7,303.77 132,364.50 7,073.16 134,562.00 753,462.91 518,399.13 2,904,920June 471,139.66 222,042.30 2,382.17 445,203.10 165,083.00 14,182.24 5,037.25 7,301.21 133,784.60 7,716.18 134,562.00 765,060.59 526,176.60 2,899,671July 503,459.50 221,948.98 2,382.17 435,289.65 163,913.00 13,582.36 5,037.25 6,237.38 160,973.10 9,966.73 134,562.00 777,017.96 529,993.43 2,964,364

August 500,242.42 220,362.70 2,382.17 381,942.84 164,943.00 14,480.90 4,661.29 6,235.05 165,342.40 10,609.75 118,088.00 756,560.13 537,767.49 2,883,618September 452,682.59 220,269.41 2,382.17 343,056.37 163,193.00 14,480.89 4,661.29 6,233.06 143,186.50 10,609.75 118,088.00 756,189.30 592,239.69 2,827,272

October 400,441.91 218,387.64 2,382.17 338,014.99 138,113.00 14,480.90 4,660.00 6,231.01 158,281.50 10,609.75 110,353.00 684,675.38 430,070.62 2,516,702November 313,871.56 216,804.48 2,382.17 352,396.09 137,393.00 15,359.80 4,575.92 6,229.09 150,303.00 10,609.75 100,399.00 621,788.33 337,563.33 2,269,676December 362,272.76 216,711.17 2,382.17 337,706.17 135,893.00 17,963.45 4,575.92 6,226.43 142,176.00 10,609.75 100,400.00 610,715.92 328,493.92 2,276,127

16 January 362,014.94 223,911.48 2,382.17 318,216.32 126,923.00 17,047.42 4,575.92 6,225.88 135,930.10 11,574.27 96,032.00 610,494.53 328,465.00 2,243,793February 359,595.50 223,815.05 2,382.17 318,118.65 117,713.00 15,885.61 4,261.83 6,222.61 149,241.80 11,574.27 96,032.00 567,612.12 312,412.12 2,184,867

March 359,366.70 223,718.58 2,382.17 313,079.03 117,713.00 15,885.61 3,308.65 6,220.50 143,201.80 11,574.27 96,032.00 606,124.72 312,312.64 2,210,920April 364,846.37 219,629.02 2,382.17 308,113.02 119,083.00 16,187.25 2,526.57 6,220.50 143,201.80 11,574.27 96,032.00 609,918.71 297,348.48 2,197,063May 375,618.88 215,574.80 2,382.17 307,979.57 117,613.00 17,019.74 2,526.57 6,216.01 140,821.80 11,574.27 96,032.00 578,959.90 259,576.74 2,131,895June 380,171.76 215,478.34 2,382.17 307,804.55 116,313.00 18,172.21 0.00 6,214.03 145,821.80 11,574.27 96,032.00 581,741.60 271,359.44 2,153,065July 380,749.77 215,381.91 2,382.17 293,163.32 120,813.00 20,803.00 0.00 6,212.13 152,721.80 11,574.27 96,032.00 566,732.85 271,276.02 2,137,842

August 356,444.95 213,751.84 2,382.17 283,443.80 121,083.00 22,482.38 0.00 6,209.68 161,851.80 11,574.27 96,032.00 536,815.20 259,286.16 2,071,357September 365,703.49 213,655.41 2,382.17 283,342.17 118,273.00 22,784.23 0.00 6,209.68 140,151.80 11,574.27 96,032.00 526,745.28 249,304.56 2,036,158

October 360,917.99 210,494.98 2,382.17 292,740.83 114,273.00 23,724.00 0.00 6,108.63 134,064.50 11,574.27 96,032.00 516,635.97 249,230.69 2,018,179November 360,189.34 210,430.69 2,382.17 268,649.03 106,953.00 24,869.00 0.00 5,465.62 134,700.00 8,037.69 96,032.00 425,493.87 215,503.39 1,858,706December 331,556.52 210,366.38 2,382.17 263,741.25 102,073.00 25,666.33 0.00 5,465.62 8,900.00 8,037.69 96,032.00 426,324.79 209,510.41 1,690,056

17 January 186,629.10 204,183.80 2,382.17 253,958.73 103,253.00 26,781.19 0.00 6,108.63 7,600.00 8,037.69 90,682.00 425,209.06 193,606.08 1,508,431February 182,210.68 204,087.34 2,382.17 253,871.16 105,723.45 27,309.32 0.00 6,108.63 8,300.00 8,037.69 90,694.00 424,090.17 214,299.90 1,527,115

March 178,311.87 204,023.05 2,382.17 253,702.22 111,343.00 27,619.87 0.00 6,108.63 8,300.00 8,037.69 90,187.00 422,044.00 229,053.27 1,541,113April 172,933.49 192,001.88 2,382.17 244,082.42 111,713.00 28,709.60 0.00 6,108.63 8,300.00 8,037.69 90,187.00 424,020.00 225,039.68 1,513,516

147


Palladium ETP Holdings

Data as of 30 April 2017, Changes from 31 December 2016

Month-end Holdings ∆ % ∆ Ounce

PALL ETF Securities 244,082 ↓ -7.45% -19,659

Palladium ZKB - SIX 192,002 ↓ -8.73% -18,365

Palladium Julius Baer 111,713 ↑ 9.44% 9,640

PHPD ETF Securities 172,933 ↓ -47.84% -158,623

GLTR - ETFS 28,710 ↑ 11.86% 3,043

WITE - ETFS - -

Palladium MSL - ASX 2,382 0.00% 0

SPDM iShares 6,109 ↑ 11.76% 643

SPAL Source 8,300 ↓ -6.74% -600

Mitsubishi 8,038 0.00% 0

Standard Bank 424,020 ↓ -0.54% -2,305

ABSA 225,040 ↑ 7.41% 15,529

Sprott 90,187 ↓ -6.09% -5,845

Total 1,513,516 ↓ -10.4% -176,541

Palladium ETP Holdings

Data as of 31 December 2016, Changes from 31 December 2015

Month-end Holdings ∆ % ∆ Ounce

PALL ETF Securities 263,741 ↓ -21.90% -73,965

Palladium ZKB - SIX 210,366 ↓ -2.93% -6,345

Palladium Julius Baer 102,073 ↓ -24.89% -33,820

PHPD ETF Securities 331,557 ↓ -8.48% -30,716

GLTR - ETFS 25,666 ↑ 42.88% 7,703

WITE - ETFS - ↓ -100.00% -4,576

Palladium MSL - ASX 2,382 _ 0.00% 0

SPDM iShares 5,466 ↓ -12.22% -761

SPAL Source 8,900 ↓ -93.74% -133,276

Mitsubishi 8,038 ↓ -24.24% -2,572

Standard Bank 426,325 ↓ -30.19% -184,391

ABSA 209,510 ↓ -36.22% -118,984

Sprott 96,032 ↓ -4.35% -4,368

Total 1,690,056 ↓ -25.7% -586,071

148


-2,000

-1,200

-400

400

1,200

2,000

2,800

3,600

-2,000

-1,200

-400

400

1,200

2,000

2,800

3,600

95 97 99 01 03 05 07 09 11 13 15 17

Gross Long

Net Position in Nymex

Gross Short

'000 Ozs'000 Ozs

Gross Long and Short Positions of Non-Commercial PositionsNymex Palladium Futures & Options. Weekly Data, Through 25 April 2017

-2,200-1,800-1,400-1,000-600-2002006001,0001,4001,8002,2002,6003,0003,400

-2,200-1,800-1,400-1,000

-600-200200600

1,0001,4001,8002,2002,6003,0003,400

J-13A-13J-13O-13J-14A-14J-14O-14J-15A-15J-15O-15J-16A-16J-16O-16J-17A-17

Long

Net Position in Nymex

Short

'000 Ozs'000 Ozs

Gross Long and Short Positions of Non-Commercial PositionsNymex Palladium Futures & Options. Weekly Data, Jan 2013 Through Apr. 2017

149


-2,000-1,600-1,200-800-40004008001,2001,6002,0002,4002,8003,2003,600

-2,000-1,600-1,200

-800-400

0400800

1,2001,6002,0002,4002,8003,2003,600

Nov-09 Oct-10 Sep-11 Aug-12 Jul-13 Jun-14 May-15 Apr-16 Mar-17

Other TradersMoney ManagersNet Position

Gross Long

Gross Short


Disaggregated Non-Commercial PositionsNymex Palladium Futures and Options. Weekly Data, 25 April 2017

150


Palladium Markets The palladium market is the smallest in the precious metals complex. The volume of metal traded, which includes physical supply and exchange traded futures and options activity, was 158.6 million ounces in 2016. while this was up from 151.2 million ounces traded in 2015, in dollar terms the value of these palladium transactions fell last year to $98 billion, from $104 billion in 2015. Obviously, last year’s decline from the previous year was the result of the decline in the annual average prices of palladium. The palladium market consists of futures and options traded at the New York Mercantile Exchange (Nymex), which is part of the CME Group. Palladium futures also trade on the Tokyo Commodity Exchange (Tocom). In 2016 there also was a total of 9.3

million ounces of newly refined physical palladium, down from 9.6 million ounces in 2015. The palladium market compared to the gold market was just 0.6%. Compared to the silver market the palladium market was 3.0%. The palladium market was just 38.5% of the platinum market. Futures Palladium futures trading volume for the Nymex and Tocom totaled 145.1 million ounces in 2016, up 7.1% from 137.4 million ounces in 2015. Last year’s increase in futures trading volume was a reversal of 2015’s decline. Since 2011 the Nymex has accounted for the more than 90% of the combined futures trading volume. More recently, in 2016 Nymex accounted for 99.0% of the futures trading volume,

0

5

10

15

20

25

30

35

40

45

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 170

5

10

15

20

25

30

35

40

45Million Ounces Million Ounces

Trading Volume in the Palladium Futures MarketsMonthly Total, Through April 2017

Nymex

Tocom

151


with its market share rising almost linearly since 2011. Palladium trading volumes on the Nymex were 143.6 million ounces in 2016, up 6.8% from 134.4 million ounces in 2015. From January to April 2017 trading volume at the Nymex was 45.0 million ounces, up from 43.2 million ounces during the same period in 2016. Tocom accounted for just 1.0% of total trading volume of palladium futures in 2016. Palladium trading volume at the Tocom was 1.5 million ounces last year, down from 3.0 million ounces in 2015. During the first four months of this year trading volume at the exchange totaled 467,985 ounces, little changed from the same period in 2016. Combined year-end open interest of palladium futures on the Nymex and Tocom totaled 2.43 million ounces at

the end of 2016, down from 2.51 million ounces at the end of 2015. At the end of April this year combined open interest on both exchanges was 3.72 million ounces, up from 2.36 million ounces at the end of April in 2015 and up from open interest at the end of 2016. Nymex open interest of palladium futures accounted for the majority of activity as in trading volume when compared to the Tocom. At the end of last year Tocom open interest was 53,097 ounces, down from 66,504 ounces at the end of 2015. At the end of April this year open interest on the Tocom was 60,379 ounces, up from both the end of last year and the end of April 2016. Options The only exchange to trade palladium options is the Nymex, which began to

0

1

2

3

4

5

6

7

0

1

2

3

4

5

6

7

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

Tocom

Palladium Open Interest in the Futures MarketsMonth-end, Through April 2017

Nymex


152


offer options on palladium futures contracts in August 2010. That said, the exchange traded palladium options market is still very illiquid. Most options trading activity appears to continue to occur in the over the counter market or interbank market. Options trading volume for palladium futures was 4.21 million ounce last year, up slightly from 4.16 million ounces in 2015. At the end of February 2017 Nymex palladium options volume totaled 600,000 million ounces, down from 636,500 ounces at the end of February 2016. Inventories Reported inventories of palladium are made up of inventories held at Nymex and Tocom registered warehouses, bank vaults for exchange traded products (ETPs), and for dealers, users, and

producers. At the end of 2016 combined inventories in Nymex and Tocom registered depositories were 69,620 ounces, down from 94,282 ounces at the end of 2015. Palladium stocks at Nymex registered warehouses were 59,397 ounces or 85.3% of the exchange inventories. By the end of the first quarter 2017 exchange inventories were 61,041 ounces, of which 57,848 or 94.8% were made up of Nymex stocks. Holdings for ETPs in various depositories at the end of 2016 were 1.76 million ounces, down from 2.37 million ounces at the end of 2015. As of the end of March 2017, ETP holding of palladium were 1.6 million ounces.

0

500

1,000

1,500

2,000

2,500

3,000

0

500

1,000

1,500

2,000

2,500

3,000

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Nymex

Thousand Ounces

Tocom

Reported Palladium InventoriesQuarterly, Through First Quarter 2017

ETF Holdings

153


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17

New York Mercantile Exchange Activity - Open InterestMonth-end, Through April 2017Thousand Ounces Thousand Ounces

0

5,000

10,000

15,000

20,000

25,000

0

5,000

10,000

15,000

20,000

25,000

77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17


New York Mercantile Exchange Activity - Trading VolumeMontly Total, Through April 2017

154


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

Tokyo Commodity Exchange Activity - Trading VolumeMonthly Total, Through April 2017Thousand Ounces Thousand Ounces

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

Tokyo Commodity Exchange Activity - Open InterestMonth-end, Through April 2017Thousand Ounces Thousand Ounces

155


Nymex Palladium Open InterestTroy Ounces

1977 1978 1979 1980 1981 1982 1983

January 59,900 237,200 203,500 220,200 255,500 282,300 690,200February 65,400 267,400 236,400 227,200 240,300 288,500 656,400March 58,800 180,700 179,100 179,100 219,000 281,100 632,200April 59,000 139,700 171,600 175,700 207,200 311,000 702,200May 59,800 193,000 174,300 185,300 275,000 350,400 759,200June 65,000 162,000 155,600 208,400 212,600 305,900 774,800July 65,000 177,700 150,000 236,800 215,600 327,600 969,300August 69,000 175,800 155,000 244,800 230,100 323,300 862,900September 86,800 177,500 197,200 276,700 205,800 309,900 910,600October 123,200 252,200 203,700 306,200 241,500 355,300 840,800November 253,600 222,700 198,600 279,100 274,900 519,700 800,400December 193,100 195,900 225,200 241,000 267,900 543,100 876,400

1984 1985 1986 1987 1988 1989 1990

January 774,200 682,500 666,700 649,000 617,800 640,300 631,500February 738,500 672,800 604,900 650,300 642,600 696,400 578,300March 693,100 655,500 620,600 677,800 638,900 677,800 547,100April 721,500 701,700 610,100 770,700 624,000 959,800 524,100May 701,800 731,700 573,900 771,100 690,700 946,600 568,800June 683,200 652,000 525,900 615,000 674,300 896,000 552,000July 625,800 686,800 533,500 742,200 755,200 780,500 549,400August 620,700 720,000 607,300 867,300 673,400 438,000 575,600September 607,300 619,300 650,900 711,200 654,600 692,400 501,300October 623,800 644,500 694,600 727,100 635,700 687,700 543,300November 683,700 695,000 667,000 685,500 644,300 743,600 504,900December 679,900 642,400 587,200 572,800 642,400 623,700 457,700

1991 1992 1993 1994 1995 1996 1997

January 465,500 414,300 380,600 455,800 785,300 618,500 871,700February 451,900 428,400 469,600 502,700 687,200 708,700 1,194,300March 423,600 412,500 469,600 465,500 775,800 670,300 968,200April 457,800 424,500 555,500 468,800 635,700 828,700 975,400May 448,900 425,400 495,400 459,900 686,500 884,100 940,600June 453,500 385,900 467,600 509,800 649,400 794,800 637,900July 436,600 378,900 519,900 629,100 654,900 800,400 567,300August 445,300 327,100 470,700 259,900 668,500 903,500 409,900September 401,200 295,800 431,700 646,700 595,400 791,100 381,900October 385,700 281,300 465,500 743,500 623,000 811,200 424,400November 401,800 253,500 451,000 739,900 633,500 854,000 438,700December 366,500 345,400 463,800 737,800 619,600 799,500 356,500

156


Nymex Palladium Open InterestTroy Ounces

1998 1999 2000 2001 2002 2003 2004

January 469,800 285,200 340,900 179,200 113,200 204,300 1,084,900February 486,300 336,200 267,900 152,200 114,000 199,400 1,252,500March 539,000 305,200 280,300 153,200 113,600 191,600 1,116,500April 490,900 260,000 183,300 160,400 137,500 219,300 894,300May 439,800 271,700 703,400 158,400 160,800 268,300 880,900June 394,100 279,900 262,200 136,400 202,700 257,800 779,500July 398,100 275,800 312,000 148,700 222,500 283,800 829,700August 282,200 218,600 516,900 119,700 199,000 495,800 943,100S eptember 312,000 305,400 185,700 124,200 190,500 546,300 973,600October 300,400 334,300 191,300 141,500 190,200 566,400 978,000November 271,600 319,600 181,200 150,000 199,900 638,700 1,369,300December 286,100 286,900 184,800 127,400 194,100 734,400 1,265,900

2005 2006 2007 2008 2009 2010 2011

January 1,293,200 1,593,900 1,551,200 2,208,700 1,265,300 2,307,000 2,174,100February 1,382,400 1,690,500 1,712,000 2,182,900 1,154,100 2,180,100 2,261,500March 1,276,300 1,689,900 1,576,100 1,928,900 1,317,400 2,328,700 2,087,300April 1,352,300 1,810,000 1,994,500 1,921,200 1,392,100 2,444,000 2,120,900May 1,321,200 1,720,400 2,162,500 1,764,100 1,556,200 2,156,600 2,010,400June 1,352,800 1,342,300 1,751,100 1,725,200 1,644,400 2,047,500 1,963,000July 1,416,300 1,410,900 1,862,300 1,372,500 1,882,200 2,036,600 2,505,700August 1,338,000 1,146,800 1,628,000 1,345,600 2,227,500 2,025,700 2,041,900S eptember 1,327,500 1,112,700 1,604,000 1,499,600 2,072,200 2,380,200 1,871,700October 1,462,400 1,270,700 1,664,700 1,353,200 2,229,100 2,619,000 1,891,500November 1,493,400 1,171,700 1,486,400 1,324,700 2,380,100 2,284,200 2,025,100December 1,406,300 1,193,000 1,636,000 1,200,600 2,261,500 2,284,900 1,781,500

2012 2013 2014 2015 2016 2017

January 1,939,800 3,615,900 3,905,500 3,364,500 2,553,800 2,848,800February 2,192,000 3,558,900 3,920,000 3,268,700 2,626,600 2,764,500March 2,045,800 3,919,800 4,105,100 3,149,700 2,224,700 3,304,500April 2,163,600 3,619,300 4,292,100 3,248,100 2,307,300 3,659,900May 2,313,700 3,720,200 4,099,900 2,916,900 2,234,100June 2,269,400 3,496,600 4,015,300 3,710,000 2,164,800July 2,369,800 3,764,700 4,578,200 3,796,700 2,802,500August 1,953,700 3,592,700 4,427,500 2,871,000 2,541,800S eptember 1,977,400 3,558,700 3,423,800 2,670,000 2,810,500October 2,075,300 3,874,400 3,369,600 2,601,700 2,275,800November 2,303,100 3,569,000 3,172,100 2,663,600 2,665,400December 2,853,200 3,888,100 3,316,800 2,445,900 2,381,200

Note: Month-end data.S ource: New York Mercantile Exchange, Inc.May 16, 2017

157


Nymex Palladium Trading VolumeTroy Ounces

1977 1978 1979 1980 1981 1982 1983

January 74,300 549,800 316,400 621,100 327,900 153,300 753,200February 79,100 672,000 585,500 819,000 428,200 602,900 268,400March 90,400 518,000 383,200 727,700 262,000 302,200 145,300April 37,100 237,600 662,200 291,900 205,600 196,400 400,500May 53,000 372,200 462,300 403,400 588,500 637,700 868,500June 80,500 204,800 264,200 428,200 195,300 417,400 774,600July 16,400 186,700 279,300 554,900 202,800 384,300 811,500August 63,500 348,600 379,200 462,400 477,500 559,700 291,400September 85,400 120,400 326,600 476,800 301,300 475,000 766,500October 89,600 650,100 453,100 407,900 190,500 433,600 199,500November 722,800 444,700 301,700 564,300 575,400 1,332,800 200,200December 617,100 210,700 535,300 306,600 328,200 888,900 541,000________ ________ ________ ________ ________ ________ ________Annual Total 2,009,200 4,515,600 4,949,000 6,064,200 4,083,200 6,384,200 6,020,600

1984 1985 1986 1987 1988 1989 1990

January 2,237,100 985,200 1,211,500 965,300 1,136,500 1,287,000 513,000February 2,099,800 1,387,100 2,129,600 1,330,000 1,531,500 1,476,200 1,722,300March 1,119,300 1,097,800 868,000 967,400 924,900 1,385,900 725,500April 1,335,000 877,800 979,600 1,927,500 969,500 4,314,700 513,700May 1,837,200 1,727,700 1,234,800 2,130,900 1,307,000 3,101,900 1,374,300June 769,500 721,800 645,600 777,000 1,577,300 1,369,200 568,200July 838,900 789,000 446,000 1,012,900 1,301,200 1,401,000 446,600August 1,424,800 1,426,900 2,276,400 1,829,000 1,290,600 1,664,400 1,167,900September 815,100 832,200 1,626,600 674,300 637,000 1,071,400 540,700October 1,085,500 893,200 1,056,500 1,835,300 709,500 928,900 715,000November 1,545,900 1,482,900 1,409,000 1,604,200 1,427,800 1,774,800 959,200December 963,000 990,300 672,600 974,900 1,175,500 1,032,900 317,800_________ ________ _________ ________ ________ ________ _________Annual Total 16,071,100 13,211,900 14,556,200 16,028,700 13,988,300 20,808,300 9,564,200

1991 1992 1993 1994 1995 1996 1997

January 501,700 721,700 770,800 825,000 1,088,400 1,372,500 1,390,800February 1,054,200 732,300 1,446,100 1,495,300 1,709,200 3,351,900 4,316,000March 538,000 342,900 805,700 606,700 2,100,100 1,193,100 2,270,600April 724,500 283,300 506,300 667,600 1,277,500 1,641,600 2,160,400May 1,052,100 801,100 1,219,000 1,548,100 1,741,300 2,746,700 3,642,200June 444,700 288,100 736,800 651,400 961,500 898,900 1,764,700July 523,000 496,500 704,300 902,400 1,161,600 989,600 1,809,700August 1,011,400 675,200 1,335,600 923,900 1,894,800 2,374,000 1,875,100September 291,400 506,600 697,700 1,569,000 975,400 1,072,100 833,100October 566,800 535,900 922,000 960,300 932,000 814,900 1,309,400November 815,000 674,200 1,247,700 2,138,400 1,666,200 2,887,000 1,314,300December 297,100 791,200 1,368,100 839,000 1,163,300 1,218,700 1,176,300________ _________ ________ ________ ________ ________ ________Annual Total 7,819,900 6,849,000 11,760,100 13,127,100 16,671,300 20,561,000 23,862,600

158


Nymex Palladium Trading VolumeTroy Ounces

1998 1999 2000 2001 2002 2003 2004

January 1,150,600 309,200 458,400 217,100 127,500 420,000 1,709,300February 1,778,600 1,161,400 1,397,600 609,000 337,200 726,600 4,103,600March 1,867,800 408,200 280,300 139,700 153,800 325,600 2,050,800April 1,404,200 709,700 183,300 112,100 152,700 397,100 3,021,400May 1,794,200 889,000 703,400 332,500 612,600 842,000 2,734,300June 737,000 341,100 262,200 101,300 216,600 343,000 1,143,300July 424,100 505,300 312,000 117,300 215,400 422,100 760,600August 873,700 686,800 516,900 322,100 897,100 1,564,500 2,889,500S eptember 621,400 582,600 252,300 52,300 145,200 815,200 1,069,000October 496,200 372,200 246,000 125,500 171,000 758,700 1,503,600November 1,283,900 1,067,000 304,100 326,100 811,800 1,832,300 3,894,100December 693,300 506,900 160,100 137,500 264,400 1,114,200 1,474,500________ ________ ________ ________ ________ ________ ________Annual Total 13,125,000 7,539,400 5,076,600 2,592,500 4,105,300 9,561,300 26,354,000

2005 2006 2007 2008 2009 2010 2011

January 772,800 2,844,700 2,363,600 2,695,400 1,428,400 4,876,200 7,212,100February 4,326,800 5,927,900 6,281,500 10,584,500 4,172,600 9,037,800 12,127,100March 1,697,900 3,257,300 1,498,700 4,941,100 1,450,900 4,833,200 9,440,200April 1,331,600 2,313,500 2,516,600 2,475,000 1,733,200 5,810,400 8,589,700May 4,613,200 6,486,300 6,908,900 6,693,900 5,421,300 13,432,300 13,260,800June 1,359,400 2,585,700 1,632,200 1,893,400 2,340,300 4,593,100 8,066,500July 1,718,500 1,346,400 1,507,200 2,624,500 2,568,900 4,423,300 6,629,000August 4,926,800 4,112,300 6,510,600 5,369,200 5,750,200 8,736,600 13,920,800S eptember 1,774,700 1,622,200 1,697,500 2,525,300 2,539,300 5,428,600 8,093,200October 2,168,000 1,435,100 2,638,500 2,862,700 2,897,600 6,962,300 7,289,500November 5,064,300 4,779,700 5,241,100 4,387,900 7,122,800 15,529,700 11,973,200December 2,440,300 1,100,500 1,302,900 1,329,900 2,871,900 6,135,500 7,350,800________ ________ ________ ________ ________ ________ ________Annual Total 32,194,300 37,811,600 40,099,300 48,382,800 40,297,400 89,799,000 113,952,900

2012 2013 2014 2015 2016 2017

January 7,047,300 12,698,700 8,750,200 9,978,700 9,012,900 11,195,900February 11,975,400 19,882,100 15,876,000 14,692,800 15,115,900 14,164,800March 7,591,000 8,768,100 13,612,600 10,074,800 9,691,700 9,830,800April 6,183,300 12,252,000 11,164,800 7,799,800 9,388,700 9,786,100May 13,603,300 18,101,600 19,588,000 13,110,500 14,258,500June 6,771,000 9,349,700 10,161,000 9,104,400 9,493,700July 5,930,800 7,717,500 9,780,900 10,266,500 10,421,900August 12,373,100 16,389,200 20,847,400 18,509,400 16,985,200S eptember 8,520,900 8,247,000 12,613,200 8,720,100 8,844,000October 8,473,000 9,994,400 11,570,800 9,228,400 11,397,700November 14,583,500 18,213,300 16,194,700 16,238,200 19,853,700December 7,748,300 6,988,000 7,237,600 6,695,600 9,122,400________ ________ ________ ________ ________ ________Annual Total 110,800,900 148,601,600 157,397,200 134,419,200 143,586,300 44,977,600

Notes: Annual trading volume for 2016 through S eptemberS ource: New York Mercantile Exchange, Inc.May 16, 2017

159


Nymex Palladium Options Trading VolumeTroy Ounces, Monthly Total

2010 2011 2012 2013 2014 2015 2016

January 0 193,500 197,200 1,479,600 304,300 615,700 205,000 February 0 338,000 123,400 1,917,400 277,900 228,100 431,500 March 0 79,000 567,900 2,138,000 2,416,500 605,000 419,000 April 0 123,600 481,800 1,385,500 1,970,600 293,200 200,400 May 0 485,000 573,500 570,000 1,544,900 312,100 170,000 June 0 1,104,400 475,200 748,000 1,301,300 446,000 183,700 July 0 107,300 1,132,900 1,220,100 1,275,400 272,700 539,200 August 128,000 275,400 725,100 671,500 1,553,400 397,900 491,000 S eptember 360,000 89,700 282,000 676,000 1,315,800 323,800 275,600 October 42,400 201,500 366,200 928,300 1,047,500 330,000 410,500 November 466,000 12,419 864,900 1,126,200 469,700 273,800 458,100 December 225,000 487,700 840,600 551,400 273,800 64,100 423,200 ________ ________ ________ ________ ________ ________ ________Annual Total 1,221,400 3,497,519 6,630,700 13,412,000 13,751,100 4,162,400 4,207,200

2017

January 468,800February 211,200MarchAprilMayJuneJulyAugustS eptemberOctoberNovemberDecember ________Annual Total 680,000

Note: Annual trading volume for 2017 through February.S ource: New York Mercantile ExchangeMay 22, 2017

160


Nymex Palladium Options Open InterestTroy Ounces, Monthly-End

2010 2011 2012 2013 2014 2015 2016

January 0 588,500 699,100 1,742,800 1,314,800 510,100 450,200February 0 447,500 208,400 1,433,000 477,300 447,500 419,500March 0 493,500 765,800 2,388,000 2,205,000 801,800 440,900April 0 553,000 1,181,600 2,477,000 2,746,200 969,800 466,800May 0 391,500 923,000 1,906,000 1,690,300 433,900 412,000June 0 803,700 1,109,000 1,867,500 1,304,100 569,000 465,700July 0 906,500 1,207,100 2,252,000 1,961,900 565,700 694,600August 128,000 735,200 752,500 1,439,000 1,415,000 429,300 354,400S eptember 448,000 738,300 709,700 1,901,000 1,461,800 521,200 413,900October 448,000 914,400 1,000,700 2,226,500 1,619,700 556,800 356,900November 402,000 504,900 685,100 1,129,500 468,300 447,400 193,900December 495,000 735,100 1,030,400 1,125,600 405,900 344,900 265,200

2017

January 546,900February 308,600MarchAprilMayJuneJulyAugustS eptemberOctoberNovemberDecember

Note: Open Interest for 2017 through February. Month-End.S ource: New York Mercantile ExchangeMay 22, 2017

161


Tocom Palladium Open InterestTroy Ounces

1992 1993 1994 1995 1996 1997 1998 1999 2000

January - 4,032,321 2,664,535 1,962,991 1,408,489 1,111,850 3,627,946 4,686,024 4,503,489February - 4,257,874 2,237,059 1,736,859 1,193,690 4,333,444 3,718,466 5,334,085 2,426,925March - 4,216,206 2,078,348 1,474,992 1,100,903 4,894,071 4,284,977 5,533,355 1,444,079April - 3,923,860 1,736,715 1,712,071 889,432 5,688,643 4,970,172 5,771,447 1,103,459May - 3,690,012 1,586,780 1,820,049 922,901 6,140,761 4,763,186 6,337,138 1,000,593June - 3,331,886 1,334,606 1,793,332 868,695 5,914,485 4,329,634 5,706,052 863,487July - 3,462,241 1,589,818 1,741,537 811,981 5,870,069 4,614,794 5,048,153 772,822August 491,423 3,381,993 2,169,640 1,577,714 1,161,620 4,263,275 4,551,425 4,360,788 638,753S eptember 456,604 3,496,047 2,337,514 1,467,373 1,311,603 3,804,067 4,512,941 4,046,740 572,925October 477,727 3,736,165 2,180,828 1,405,643 1,401,978 3,513,409 4,096,316 3,506,898 347,661November 688,957 3,559,127 2,414,579 1,434,241 1,457,631 3,328,366 4,584,508 3,500,822 304,065December 3,565,445 3,234,904 2,244,197 1,466,553 1,256,336 3,021,262 4,441,856 3,797,798 101,226

2001 2002 2003 2004 2005 2006 2007 2008 2009

January 128,040 149,501 220,875 960,373 933,366 1,101,482 550,403 472,759 364,974February 130,451 146,028 221,598 899,560 862,474 1,011,781 539,794 1,218,430 288,102March 141,929 133,441 235,536 1,161,137 1,084,989 940,793 434,564 1,020,173 266,931April 155,577 143,569 281,640 998,568 1,002,233 848,488 560,483 853,504 258,491May 172,167 151,430 607,792 1,010,383 997,121 840,869 654,041 838,361 255,501June 181,667 137,251 641,358 970,259 922,370 653,125 644,396 945,857 211,905July 184,706 128,378 650,328 1,026,635 758,547 629,012 653,076 861,365 181,137August 187,888 118,105 676,804 1,124,389 652,208 564,630 447,393 575,529 167,489S eptember 151,092 113,138 747,310 1,054,944 615,653 477,341 476,087 512,835 162,811October 149,790 124,327 708,681 1,040,235 683,796 400,999 461,185 428,102 153,021November 132,332 168,598 752,663 1,034,399 1,069,026 496,487 406,159 425,160 156,590December 141,109 198,884 704,968 937,706 927,434 447,489 475,123 375,584 159,869

2010 2011 2012 2013 2014 2015 2016 2017

January 184,272 165,946 122,590 131,946 69,687 108,364 65,057 56,714February 159,580 177,713 121,240 118,491 59,173 105,422 58,257 60,909March 183,114 124,520 133,634 139,614 75,908 113,958 55,701 62,453April 232,498 129,053 120,999 108,653 77,065 94,234 51,602 60,379May 216,197 141,640 103,252 120,565 91,967 96,018 49,239June 193,917 130,692 196,087 83,045 102,480 109,762 49,817July 187,454 135,804 101,709 86,228 94,523 93,896 53,579August 165,222 151,140 103,541 84,540 102,625 75,425 49,094S eptember 175,253 184,898 122,205 74,027 119,986 76,197 47,406October 190,830 126,304 94,137 68,819 91,967 66,166 37,616November 133,924 121,047 99,828 68,529 96,163 67,854 50,637December 189,142 116,273 104,072 74,172 110,775 66,504 53,097

Note: Month-end data.S ource: Tokyo Commodity Exchange.May 16, 2017

162


Tocom Palladium Trading VolumeTroy Ounces

1992 1993 1994 1995 1996 1997 1998 1999 2000

January - 8,343,677 3,026,278 1,886,360 1,578,726 3,482,978 15,377,294 24,071,622 24,661,378February - 19,739,866 3,233,216 1,731,892 3,880,360 18,250,069 11,026,586 37,100,358 19,937,255March - 14,805,044 2,604,493 4,324,763 2,348,365 19,205,956 21,531,752 30,173,417 1,077,755April - 11,397,829 2,052,113 4,072,637 1,744,431 17,139,954 21,378,248 42,301,098 497,065May - 6,251,970 2,390,997 2,981,138 1,504,121 21,223,780 39,637,142 39,414,869 200,620June - 6,041,705 2,803,908 2,718,066 907,613 26,528,351 23,083,905 26,423,604 419,180July - 7,756,718 3,894,925 1,990,142 1,198,271 26,123,301 17,033,230 19,812,832 307,923August 1,980,883 8,703,250 5,625,563 2,489,281 1,691,382 19,160,383 14,763,281 12,383,038 345,009S eptember 797,610 7,169,518 3,984,480 3,311,149 1,777,851 4,986,183 17,941,133 10,407,557 191,264October 570,706 9,193,805 2,828,455 1,835,482 1,681,978 11,987,633 23,887,881 9,843,168 312,408November 1,014,193 4,710,716 3,099,437 1,288,792 1,361,854 6,175,098 20,528,506 10,972,428 153,696December 15,124,301 5,640,706 1,796,756 1,706,091 1,262,991 9,857,973 24,315,742 18,381,340 474,833

_________ _________ _________ _________ _________ _________ _________ _________ _________Annual Total 19,487,693 109,754,805 37,340,620 30,335,794 20,937,945 184,121,660 250,504,700 281,285,331 48,578,387

2001 2002 2003 2004 2005 2006 2007 2008 2009

January 253,187 580,545 558,264 2,295,365 726,959 1,737,872 1,004,596 798,526 292,057February 367,048 381,371 464,175 1,473,111 734,964 3,395,641 990,176 12,074,199 489,639March 351,326 386,965 429,115 3,363,185 1,838,375 2,504,666 875,447 8,427,735 484,141April 525,422 284,533 672,319 5,061,801 696,625 2,440,091 1,074,041 2,281,427 724,547May 472,808 382,046 1,551,720 1,527,125 628,529 1,636,742 987,283 1,467,710 380,455June 379,297 368,254 1,755,909 1,911,196 672,126 1,404,872 1,105,774 1,982,233 621,151July 695,805 202,115 1,208,013 1,028,516 874,627 749,721 768,626 1,716,556 316,700August 602,921 179,690 1,448,564 804,795 713,552 644,975 944,796 1,605,106 431,044S eptember 408,860 170,334 2,426,925 889,095 750,589 854,613 374,523 1,129,067 291,237October 560,724 163,245 1,191,809 886,346 1,225,278 750,300 800,069 686,256 415,322November 373,752 584,451 567,282 699,132 3,073,202 703,183 534,537 489,108 375,681December 656,018 554,695 1,003,583 1,228,364 3,658,907 609,962 564,726 361,550 378,188

_________ _________ _________ _________ _________ _________ _________ _________ _________Annual Total 5,647,168 4,238,246 13,277,679 21,168,031 15,593,732 17,432,638 10,024,594 33,019,474 5,200,161

2010 2011 2012 2013 2014 2015 2016 2017

January 631,375 662,239 252,077 395,067 214,365 287,379 169,804 167,585February 345,588 549,391 307,055 533,428 172,746 189,046 116,176 95,536March 538,781 590,286 287,089 453,566 228,109 342,115 120,999 102,336April 1,034,496 343,417 214,220 448,502 212,436 300,400 94,282 102,528May 949,908 300,930 206,890 385,808 193,820 183,355 93,558June 406,497 381,371 218,030 404,761 324,320 306,524 88,302July 337,341 310,961 173,951 258,588 290,803 417,830 160,544August 297,603 479,415 192,518 186,297 418,264 308,116 129,824S eptember 424,244 537,913 208,529 233,366 480,620 173,903 105,711October 636,728 556,335 252,560 169,900 440,496 183,982 80,248November 1,103,411 257,237 257,672 174,096 312,842 192,181 177,327December 862,908 343,224 319,787 183,452 416,046 132,863 183,645

_________ _________ _________ _________ _________ _________ _________ _________Annual Total 7,568,878 5,312,721 2,890,377 3,826,830 3,704,866 3,017,694 1,520,421 467,985

S ource: Tokyo Commodity Exchange.Note: Annual trading volume for 2017 through April.May 8, 2017

163


Reported Market InventoriesQuarterly, Troy Ounces

Exchanges U.S . Industry Nymex Tocom

% % %Ounces of Total Ounces of Total Ounces of Total Ounces % of Total Total

1977 I 359,023 94.7 20,000 5.3 - - - - 379,023 II 359,514 91.7 32,400 8.3 - - - - 391,914 III 376,306 94.1 23,700 5.9 - - - - 400,006 IV 378,049 84.7 68,300 15.3 - - - - 446,349

1978 I 314,473 82.4 67,400 17.6 - - - - 381,873 II 320,298 83.1 65,100 16.9 - - - - 385,398 III 299,451 85.7 50,100 14.3 - - - - 349,551 IV 299,473 88.2 40,000 12.7 - - - - 339,473

- - - -1979 I 337,077 91.3 32,000 8.7 - - - - 369,077 II 314,855 92.0 27,300 8.0 - - - - 342,155 III 336,546 91.3 32,200 8.7 - - - - 368,746 IV 284,478 92.3 23,700 7.7 - - - - 308,178

1980 I 311,995 91.1 30,500 8.9 - - - - 342,495 II 280,734 90.9 28,200 9.1 - - - - 308,934 III 289,765 90.3 31,300 9.7 - - - - 321,065 IV 261,631 89.0 32,200 11.0 - - - - 293,831

1981 I 312,457 86.3 49,700 13.7 - - - - 362,157 II 317,784 77.6 91,900 22.4 - - - - 409,684 III 299,911 75.7 96,500 24.3 - - - - 396,411 IV 302,769 75.5 98,400 24.5 - - - - 401,169

1982 I 216,863 69.6 94,800 30.4 - - - - 311,663 II 213,440 70.2 90,700 29.8 - - - - 304,140 III 252,514 73.4 91,400 26.6 - - - - 343,914 IV 208,771 76.4 64,650 23.6 - - - - 273,421

1983 I 328,442 69.8 142,100 30.2 - - - - 470,542 II 314,810 71.3 127,000 28.7 - - - - 441,810 III 297,105 75.1 98,300 24.9 - - - - 395,405 IV 302,295 79.3 79,100 20.7 - - - - 381,395

1984 I 262,411 77.2 77,300 22.8 - - - - 339,711 II 481,447 86.4 75,800 13.6 - - - - 557,247 III 435,634 89.3 52,300 10.7 - - - - 487,934 IV 486,934 87.9 66,900 12.7 - - - - 553,834

1985 I 370,772 83.2 75,000 16.8 - - - - 445,772 II 321,553 82.8 66,800 17.2 - - - - 388,353 III 319,488 79.1 84,600 20.9 - - - - 404,088 IV 319,836 74.2 111,400 23.3 - - - - 431,236

1986 I 290,304 71.1 117,800 28.9 - - - - 408,104 II 284,505 75.9 90,500 24.1 - - - - 375,005 III 315,644 78.1 88,400 21.9 - - - - 404,044 IV 489,662 82.0 107,300 16.8 - - - - 596,962

Exchange Traded Products

164





1987 I 285,293 72.9 106,200 14.4 - - - - 391,493 II 312,114 75.2 103,200 24.8 - - - - 415,314 III 324,330 79.5 83,500 20.5 - - - - 407,830 IV 415,620 87.1 61,800 12.9 - - - - 477,420

1988 I 454,486 81.0 106,300 19.0 - - - - 560,786 II 466,015 80.2 115,400 19.8 - - - - 581,415 III 452,221 78.0 127,200 22.0 - - - - 579,421 IV 463,557 93.0 35,100 7.0 - - - - 498,657

- -1989 I 375,352 83.9 71,800 16.1 - - - - 447,152 II 355,136 89.7 40,896 10.3 - - - - 396,032 III 324,433 79.7 82,499 20.3 - - - - 406,931 IV 313,570 77.6 90,500 22.4 - - - - 404,070

1990 I 270,720 78.3 74,900 21.7 - - - - 345,620 II 309,247 81.1 71,900 18.9 - - - - 381,147 III 310,520 82.5 65,900 17.5 - - - - 376,420 IV 280,863 81.1 65,400 18.9 - - - - 346,263

1991 I 259,584 75.7 83,400 24.3 - - - - 342,984 II 259,713 76.1 81,502 23.9 - - - - 341,215 III 257,109 76.1 89,602 26.5 - - - - 337,711 IV 257,302 69.5 112,688 30.5 - - - - 369,990

1992 I 266,080 79.9 76,904 23.1 - - - - 333,210 II 286,458 80.4 69,900 19.6 - - - - 356,358 III 281,965 79.6 72,400 20.4 - - - - 354,365 IV 247,755 83.3 49,800 16.7 - - - - 297,555

1993 I 387,400 89.1 47,400 10.9 22,956 5.0 - - 457,756 II 304,462 88.9 38,200 11.1 19,098 5.3 - - 361,760 III 280,228 83.8 54,300 16.2 18,905 5.3 - - 353,433 IV 242,674 86.8 36,900 13.2 70,506 20.1 - - 350,080

1994 I 237,084 86.5 37,000 13.5 52,181 16.0 - - 326,265 II 240,079 78.3 26,500 8.6 40,317 13.1 - - 306,896 III 195,252 80.3 48,000 19.7 36,073 12.9 - - 279,325 IV 164,100 72.0 63,700 28.0 5,594 2.4 - - 233,394

1995 I 150,000 72.3 49,500 23.9 8,006 3.9 - - 207,506 II 170,000 84.2 0 0.0 31,926 15.8 - - 201,926 III 163,000 66.6 60,600 24.8 21,027 8.6 - - 244,627 IV 154,000 61.3 69,100 27.5 28,260 11.2 - - 251,360

1996 I 147,000 78.3 22,200 11.8 18,615 9.9 - - 187,815 II 147,000 74.4 31,000 15.7 19,580 9.9 - - 197,580 III 150,000 61.1 67,300 27.4 28,068 11.4 - - 245,368 IV 150,000 56.0 98,500 36.8 19,483 7.3 - - 267,983


165





1997 I 153,000 47.2 158,900 49.0 12,539 3.9 - - 324,439 II 140,000 81.3 28,400 16.5 3,762 2.2 - - 172,162 III - - 57,900 99.2 482 0.8 - - 58,382 IV - - 65,500 96.6 2,315 3.4 - - 67,815

1998 I - - 55,100 97.3 1,543 2.7 - - 56,643 II - - 33,500 96.1 1,350 3.9 - - 34,850 III - - 41,100 93.8 2,701 6.2 - - 43,801 IV - - 46,400 89.6 5,401 10.4 - - 51,801

- -1999 I - - 53,400 97.7 1,254 2.3 - - 54,654 II - - 48,400 93.7 3,279 6.3 - - 51,679 III - - 32,200 76.6 9,838 23.4 - - 42,038 IV - - 33,300 47.3 37,038 52.7 - - 70,338

2000 I - - 19,600 47.8 21,412 52.2 - - 41,012 II - - 21,600 87.2 3,183 12.8 - - 24,783 III - - 12,400 79.6 3,183 20.4 - - 15,583 IV - - 15,900 83.3 3,183 16.7 - - 19,083

2001 I - - 20,500 86.6 3,183 13.4 - - 23,683 II - - 10,500 76.7 3,183 23.3 - - 13,683 III - - 42,200 96.3 1,640 3.7 - - 43,840 IV - - 60,200 95.7 2,701 4.3 - - 62,901

2002 I - - 244,800 98.7 3,279 1.3 - - 248,079 II - - 279,100 98.0 5,691 2.0 - - 284,791 III - - 1,986 25.9 5,691 74.1 - - 7,677 IV - - 620,600 99.3 4,437 0.7 - - 625,037

02003 I - - 230,100 98.1 4,437 1.9 - - 234,537 II - - 274,900 97.9 5,980 2.1 - - 280,880 III - - 1,987 27.2 5,305 72.8 - - 7,292 IV - - 677,800 98.4 10,899 1.6 - - 688,699

2004 I - - 323,300 97.8 7,234 2.2 - - 330,534 II - - 519,700 98.6 7,620 1.4 - - 527,320 III - - 745,300 98.9 7,909 1.1 - - 753,209 IV - - 724,400 96.6 25,463 3.4 - - 749,863

2005 I - - 676,800 96.9 21,798 3.1 - - 698,598 II - - 718,600 97.0 22,570 3.0 - - 741,170 III - - 694,500 96.9 22,570 3.1 - - 717,070 IV - - 800,200 96.4 29,611 3.6 - - 829,811

2006 I - - 1,193,100 97.8 27,103 2.2 - - 1,220,203 II - - 1,111,800 97.5 28,164 2.5 - - 1,139,964 III - - 944,500 97.5 23,824 2.5 - - 968,324 IV - - 715,100 97.1 21,027 2.9 - - 736,127


166






2007 I - - 715,700 92.8 55,267 7.2 - - 770,967 II - - 608,500 90.8 47,165 7.0 14,534 2.2 670,199 III - - 634,900 67.1 47,165 5.0 263,942 27.9 946,007 IV - - 571,000 64.6 43,982 5.0 268,981 30.4 883,963

2008 I - - 523,000 61.2 17,265 2.0 314,629 36.8 854,894 II - - 456,600 42.6 26,910 2.5 588,350 54.9 1,071,860 III - - 433,000 37.3 33,951 2.9 693,801 59.8 1,160,753 IV - - 428,900 37.0 32,215 2.8 697,686 60.2 1,158,801

2009 I - - 345,000 32.5 21,027 2.0 696,244 65.5 1,062,270 II - - 429,100 33.4 20,448 1.6 835,236 65.0 1,284,784 III - - 548,800 37.5 16,397 1.1 896,359 61.3 1,461,556 IV - - 661,100 37.3 12,635 0.7 1,097,695 62.0 1,771,430

2010 I - - 635,400 29.5 11,960 0.6 1,510,038 70.0 2,157,398II - - 626,700 25.5 13,310 0.5 1,815,126 73.9 2,455,136III - - 614,200 25.9 13,310 0.6 1,744,293 73.5 2,371,804IV - - 577,900 23.3 11,478 0.5 1,893,693 76.3 2,483,071

2011 I - - 520,600 18.2 11,285 0.4 2,335,263 81.4 2,867,148II - - 503,300 17.8 10,996 0.4 2,311,628 81.8 2,825,923III - - 547,900 19.9 10,996 0.4 2,197,212 79.7 2,756,107IV - - 603,300 24.5 6,945 0.3 1,855,512 75.3 2,465,757

2012 I - - 593,100 25.2 5,305 0.2 1,753,622 74.6 2,352,027II - - 574,800 22.5 8,006 0.3 1,972,752 77.2 2,555,557III - - 542,000 21.5 4,919 0.2 1,971,473 78.3 2,518,392IV - - 533,800 21.9 4,823 0.2 1,896,976 77.9 2,435,599

2013 I - - 553,029 20.5 4,340 0.2 2,143,512 79.4 2,700,881II - - 565,839 20.1 4,147 0.1 2,245,532 79.8 2,815,518III - - 557,450 20.4 5,016 0.2 2,167,690 79.4 2,730,155IV - - 545,513 21.0 3,472 0.1 2,050,797 78.9 2,599,783

2014 I - - 417,863 16.9 2,604 0.1 2,052,881 83.0 2,473,348II - - 341,663 12.1 3,183 0.1 2,468,842 87.7 2,813,688III - - 268,784 8.3 2,218 0.1 2,956,642 91.6 3,227,644IV - - 221,466 7.1 2,025 0.1 2,884,731 92.8 3,108,223

2015 I - - 184,474 5.9 2,025 0.1 2,921,513 94.0 3,108,012II - - 143,605 4.7 5,208 0.2 2,899,671 95.1 3,048,484III - - 95,448 3.3 7,041 0.2 2,827,272 96.5 2,929,761IV - - 83,865 3.5 10,417 0.4 2,276,127 96.0 2,370,408

2016 I - - 65,870 2.9 11,478 0.5 2,210,920 96.6 2,288,267II - - 68,367 3.1 11,671 0.5 2,153,065 96.4 2,233,103III - - 68,425 3.2 11,381 0.5 2,036,158 96.2 2,115,964IV - 59,397 3.4 10,224 0.6 1,690,056 96.0 1,759,677

2017 I 57,858 3.6 3,183 0.2 1,541,113 96.2 1,602,154

Notes: Quarterly stock levels are end-quarter; year-end figure may reflect annual reporting. Industrial stocks as reported to the Bureau of Mines on a voluntary basis by traders, refiners, and users. The U.S . Bureau of Mines stopped reporting year-end data in 1995. In the third quarter of 1997, U.S . Bureau of Mines ceased publication of U.S . Industry stock level data.S ources: U.S . Bureau of Mines, New York Mercantile Exchange, Inc., Tokyo Commodity Exchange, ETP issuer websites, Bloomberg.May 18, 2017

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Prices Even though palladium prices ended last year more than one-fifth higher than they started the year, on an annual average basis prices declined. Palladium prices, basis the nearby active Nymex futures contract settlement prices, averaged $615.49 in 2016. This was down 10.8% from $690.35 averaged in 2015. While palladium prices have come off in the past two years, they remain at historically high levels. The chart below shows that palladium prices moved steadily higher through 2016. Palladium prices continued to move in a wide trading range in 2016, expanding to a $324.50 band from $313.60 in 2015. In 2016 prices moved between an intraday low of $451.50 and an intraday high of $776. These levels were lower

than the previous year’s figures, when palladium touched an intraday low of $520 and an intraday high of $833.60. Price Trends in 2016 While on an annual average basis palladium prices fell, on a year-end to year-end basis prices actually rose. Palladium prices ended 2016 at $683.25, up 21.6% from $562 at the end of 2015. Palladium recouped a substantial part of its losses from the decline of 29.6% in prices during 2015, when it dropped from $798.40 at the end of 2014. Palladium prices entered 2016 on a downward trend. Prices began January at $544.20, ending the month at $498.50. Prices had fallen to an intraday low of $451.50 in the middle of the month, on 12 January. This proved to be the low for the year. Platinum traded on

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Daily High, Low and Settlement PricesThrough 4 May 2017

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either side of $500 in February, moving above $550 in early March. Prices briefly topped $600 on 21 and 22 March before ending the quarter at $564, slightly higher than where prices began for the year. During the second quarter of the year palladium prices moved broadly sideways, between $523 and $632, as they consolidated the gain or recovery that occurred in early March. Prices fell into early April before rising to their quarterly high in late April. Palladium then fell to around $550 and traded on either side of this level for the remainder of the quarter. In July prices began to trend higher once more, breaking above $700 by 27 July. Palladium traded mainly sideways in August, before prices fell to test the $650 support level in the middle of September. By the end of September, however, prices were back above $700. Palladium price volatility picked up in the last quarter of 2016 as prices fell from above $700 at the start of October to near $600 by late October and early November before surging to above $750 in late November. Prices settled at $771.65 on 30 November and reached an intraday high of $776 on 1 December. These were the highs for 2016. Palladium prices eventually fell, ending 2016 at $683.25. In 2017 palladium prices have continued their upward trend. Palladium rose to trade above $750 in early January, breaking below this level only a few times each month since then, if any. Prices held below $800 until the second half of March, when palladium

began to trade on either side of this level. As of 4 May palladium prices had settled at $800.65. Volatility The annual volatility rate for 2016 was 29.8%, little changed from 29.4% in 2015. Volatility is calculated as the standard deviation of the daily logarithmic price changes based on the nearby active Nymex contract settlement price. January 2016 was the most volatile month of the year, measuring at 37.5%. Volatility remained around this level in the first quarter, then eased to between 22% and 29% in the second quarter on a monthly basis. Volatility dropped to 15.4% in July, as would be expected to happen in the summer months of the Northern Hemisphere, but picked up in August to 32%. During the remaining four months of 2016 monthly price volatility ranged from 22.7% to 26.7%. Platinum / Palladium Ratio Platinum prices have typically held a premium to palladium prices. There was an exception in recent times during 2000 and 2001, when there was uncertainty and some lack Russian supply. Over the most recent years, however, the premium of platinum to palladium has narrowed. In October 2012 platinum prices held more than a $1,000 premium to palladium. In April 2017 that premium was between $150 and $200, and more recently in early May 2017 it had narrowed to around $100. The platinum to palladium ratio has shrunk from 2.6 in October 2012 to 1.2 in April 2017. The narrowing trend was prevalent for most of 2016.

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Palladium Price VolatilityMonthly Data, through April 2017

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02004006008001,0001,2001,4001,6001,8002,0002,200

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Monthly Palladium and Platinum PricesThrough April 2017

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Platinum - Palladium Price DifferentialDaily, Through 4 May 2017$/Ounce $/Ounce

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Platinum - Palladium Price RatioMonthly Data, Through April 2017

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Quarterly Real and Nominal Palladium PricesThrough First Quarter 2017. Basis Metals Week New York Dealer Price

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Palladium and U.S. InflationQuarterly, Through First Quarter 2017. Inflation is change in U.S. Consumer Price Index. Palladium price is Metals Week New York Dealer Price$/Ounce Percent Change

Inflation Palladium (left scale)

172


New York Dealer Palladium PricesMonthly Averages

1968 1969 1970 1971 1972 1973 1974

January $44.00 $42.75 $35.50 $35.00 $34.50 $65.05 $87.55February 46.00 40.88 35.50 35.00 35.50 66.89 99.67March 51.50 40.80 36.00 35.00 35.50 65.46 114.52April 49.60 39.13 36.00 35.00 35.50 65.43 140.82May 49.00 38.75 36.00 35.00 35.50 74.82 142.91June 49.25 37.70 36.00 35.25 37.43 79.10 134.00July 49.10 36.50 36.00 35.25 48.90 81.19 139.91August 45.50 36.50 36.00 35.25 53.04 82.22 141.32September 44.88 36.40 36.00 35.25 57.20 80.21 132.80October 42.88 36.50 36.00 35.25 65.21 82.00 131.55November 42.00 36.50 35.40 34.75 67.00 81.50 130.06December 42.00 35.88 35.00 34.50 67.57 81.50 119.95______ ______ ______ ______ ______ ______ _______Annual $46.31 $38.19 $35.78 $35.04 $47.74 $75.45 $126.25Percent Change -- -17.5% -6.3% -2.1% 36.2% 58.0% 67.3%

1975 1976 1977 1978 1979 1980 1981

January $111.00 $42.29 $54.61 $55.69 $76.00 $230.96 $127.71February 100.94 38.00 58.22 63.83 99.44 271.05 111.67March 89.24 37.34 57.10 63.33 95.18 230.24 118.73April 82.73 39.55 54.50 60.00 94.38 194.55 107.18May 66.33 42.19 52.06 60.94 108.55 159.81 102.80June 53.19 51.06 44.52 59.46 124.02 170.43 92.50July 54.82 56.75 44.01 59.53 123.36 199.23 84.65August 55.14 51.09 42.08 61.51 121.08 204.91 85.52September 49.24 52.88 41.98 60.46 142.47 213.00 86.62October 46.23 51.90 42.78 73.71 144.55 201.32 78.45November 43.71 52.49 49.03 67.40 141.53 183.12 69.36December 42.77 51.00 51.21 70.11 167.38 150.77 69.77______ ______ ______ ______ _______ _______ ______Annual $66.28 $47.21 $49.34 $63.00 $119.83 $200.78 $94.58Percent Change -47.5% -28.8% 4.5% 27.7% 90.2% 67.6% -52.9%

1982 1983 1984 1985 1986 1987 1988

January $66.50 $125.10 $156.14 $121.29 $102.43 $122.75 $123.66February 67.17 124.90 160.13 124.44 100.95 119.50 118.90March 66.91 101.89 160.27 112.98 110.10 122.50 121.44April 69.19 120.33 160.10 112.05 106.77 135.93 121.50May 67.88 131.48 155.14 108.00 107.74 144.70 122.10June 56.64 132.73 152.86 98.38 110.19 136.71 127.46July 56.62 146.45 138.10 94.48 111.23 139.50 124.45August 59.46 148.07 137.44 102.89 128.31 140.00 122.96September 64.26 150.98 138.05 98.80 140.14 136.71 119.62October 62.58 142.00 140.36 100.75 134.84 129.24 120.68November 74.47 145.91 145.58 100.47 121.94 111.21 125.48December 90.23 164.10 134.00 94.55 116.89 120.59 131.14______ _______ _______ _______ _______ _______ _______Annual $66.82 $136.16 $148.18 $105.76 $115.96 $129.95 $123.28Percent Change -29.3% 103.8% 8.8% -28.6% 9.6% 12.1% -5.1%

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New York Dealer Palladium PricesMonthly Averages

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

January $134.95 $134.93 $84.29 $81.31 $108.79 $123.88 $155.05 $128.52 $120.26 $216.28February 141.05 135.24 82.90 84.71 108.11 130.53 156.66 135.75 132.63 232.13March 145.07 129.57 84.33 83.83 104.83 131.61 160.28 137.31 144.29 251.50April 166.25 126.57 94.39 82.93 112.41 132.02 167.75 135.61 150.02 294.00May 152.36 118.41 94.05 82.03 118.00 135.00 159.14 133.53 165.24 320.00June 152.46 114.57 96.00 79.59 124.11 136.84 157.66 128.00 188.48 267.50July 149.95 115.95 94.50 85.28 137.10 144.75 154.68 131.02 178.27 294.80August 133.61 115.02 81.32 84.48 133.36 151.35 148.98 126.61 204.43 280.25September 136.57 103.47 81.23 89.62 119.52 151.19 141.05 120.63 187.05 278.00October 136.98 93.68 83.94 93.67 126.80 153.20 134.33 116.64 200.00 275.60November 138.14 92.78 85.95 94.06 127.38 155.90 133.52 117.03 203.67 274.25December 136.98 87.25 80.30 103.95 123.17 153.17 130.20 117.52 194.41 290.00_______ _______ _______ ______ _______ _______ _______ _______ _______ _______Annual $143.70 $113.95 $86.93 $87.12 $120.30 $141.62 $149.94 $127.35 $172.40 $272.86Percent Change 16.6% -20.7% -23.7% 0.2% 38.1% 17.7% 5.9% -15.1% 35.4% 58.3%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

January $313.00 $439.25 $985.00 $400.40 $244.00 $208.50 $181.25 $264.50 $329.75 $368.60February 341.00 565.00 982.50 366.25 247.25 229.25 179.75 276.25 334.25 442.75March 349.60 650.60 766.40 366.25 220.50 254.75 190.00 296.00 344.40 465.75April 353.75 566.00 673.25 363.25 156.75 275.00 196.00 336.25 359.50 437.75May 317.00 565.00 644.00 351.20 158.40 237.25 187.75 356.25 361.60 418.60June 337.75 619.40 601.75 330.25 174.50 223.75 184.00 303.40 365.00 430.75July 327.60 678.75 526.75 316.75 168.40 215.60 179.50 309.25 363.50 417.00August 337.50 733.00 434.40 317.00 175.50 210.25 185.00 321.00 338.20 302.25September 354.30 715.75 429.50 322.25 202.50 208.40 184.40 316.00 330.25 237.75October 380.25 732.00 323.00 312.60 193.80 212.25 200.75 304.25 356.25 190.00November 394.75 772.40 320.40 281.00 194.25 211.75 233.50 318.00 359.80 189.50December 419.00 892.50 376.25 236.25 193.20 187.60 253.80 323.00 346.50 168.40_______ _______ _______ _______ _______ _______ _______ _______ _______ _______Annual $352.13 $660.80 $588.60 $330.29 $194.09 $222.86 $196.31 $310.35 $349.08 $339.09Percent Change 29.1% 87.7% -10.9% -43.9% -41.2% 14.8% -11.9% 58.1% 12.5% -2.9%

2009 2010 2011 2012 2013 2014 2015 2016 2017

January $178.50 $420.25 $766.25 $633.25 $697.40 $719.80 $765.25 $499.13 $742.25February 200.00 405.00 796.75 682.50 731.25 716.25 770.75 509.45 751.94March 195.00 445.60 740.00 670.20 738.75 752.25 778.25 570.28 773.54April 220.40 515.00 752.50 640.00 686.50 771.25 750.20 563.00 776.41May 219.00 452.50 706.25 606.00 718.20 804.40 771.25 575.25June 234.75 445.00 747.40 594.50 714.13 817.00 721.25 552.50July 240.80 439.00 767.50 568.25 708.50 859.80 627.00 644.75August 265.25 475.00 731.75 581.40 741.20 860.00 573.75 704.88September 289.25 520.80 692.00 634.00 701.25 829.50 576.00 683.90October 306.40 571.25 615.76 624.75 725.90 750.40 667.20 655.63November 340.50 661.25 611.75 613.00 735.63 758.25 555.75 677.63December 362.00 721.00 607.00 675.50 703.50 789.40 551.90 710.70_______ _______ _______ _______ _______ _______ _______ _______ _______Annual $254.32 $505.97 $711.24 $626.95 $716.85 $785.69 $675.71 $612.26 $761.03Percent Change -25.0% 98.9% 40.6% -11.9% 14.3% 9.6% -14.0% -20.6% 44.6%

Note: Percent change in 2017 compares the average price through Aprilwith the same period in 2016.Source: Metals Week, CPM Group.May 8, 2017

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175

RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Rhodium

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CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM

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Review and Outlook After declining for five consecutive years, the price of rhodium showed some signs of bottoming out during 2016. Prices started the year at $660 and spent the year trading in a range between $625 and $825. The average price during 2016 was $693.74, down 26.9% from 2015. After moving mostly sideways during the first nine months of the year, the price of rhodium picked up toward the end of the year, supported by an overall optimistic view toward industrial commodities that swept the markets following the election of Donald Trump as U.S. president. This sentiment toward industrial commodities continued into the first several months of 2017. Strength in palladium prices, inventory building by automakers, and lack of

inventory liquidation by holders of rhodium in expectation of higher prices helped push the price of rhodium higher during the first several months of 2017. The price of rhodium rose to $1,025 in April 2017 before softening in May to around $930, which was still higher than levels seen in 2016. The rhodium market was in a deficit of newly refined metal relative to fabrication demand for the third consecutive year in 2016. The market was in a deficit of 48,700 ounces in 2016, up from a deficit of 37,134 ounces in 2015. A decline in South African mine supply and an uptick in fabrication demand were the primary reasons for the expansion of the deficit. The deficit is forecast to shrink in 2017 to 45,000 ounces as supply rises slightly and fabrication demand moderates. These deficits have been met by a

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Daily JM Rhodium PricesThrough 2 June 2017

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Selected Rhodium StatisticsTroy Ounces

1977 1978 1979 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Mine Production South Africa 77,000 74,000 82,000 86,000 103,000 180,000 212,000 271,000 285,000 311,000 355,000 358,000 436,440 392,085 437,150 416,567 Russia* - - - 24,000 33,000 150,000 120,000 118,000 115,000 85,000 63,000 70,000 70,000 47,000 0 14,000 Canada 17,700 13,200 7,500 15,600 13,200 20,000 22,000 20,000 16,000 18,000 16,200 19,440 18,468 18,000 18,540 19,652 Other - - - - - - - 2,000 3,000 3,000 2,000 2,000 2,000 4,863 4,909 3,000_______ _______ _______ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ Total 94,700 87,200 89,500 125,600 149,200 350,000 354,000 411,000 419,000 417,000 436,200 449,440 526,908 461,948 460,599 453,219 % Change Year Ago 10.4% -7.9% 2.6% 40.3% 4.0% 12.5% 1.1% 16.1% 1.9% -0.5% 4.6% 3.0% 17.2% -12.3% -0.3% -1.6%

Secondary Supply Total 5,333 8,588 8,286 16,141 11,609 25,000 30,000 23,000 30,200 32,700 30,000 36,000 39,000 45,000 50,000 60,000 % Change Year Ago -36.4% 61.0% -3.5% 94.8% 18.5% 14.4% 20.0% -23.3% 31.3% 8.3% -8.3% 20.0% 8.3% 15.4% 11.1% 20.0%_______ _______ _______ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________Total Supply 100,033 95,788 97,786 141,741 160,809 375,000 384,000 434,000 449,200 449,700 466,200 485,440 565,908 506,948 510,599 513,219 % Change Year Ago 6.2% -4.2% 2.1% 45.0% 4.9% 12.7% 2.4% 13.0% 3.5% 0.1% 3.7% 4.1% 16.6% -10.4% 0.7% 0.5%

Fabrication Demand Automotive 871 2,939 26,136 37,012 114,188 270,000 306,000 329,000 344,000 354,366 356,800 360,000 369,000 384,000 404,000 463,500 Electronics 18,796 22,367 26,568 21,248 15,310 27,809 24,851 19,200 24,500 22,450 25,255 25,900 26,200 27,000 27,500 55,163 Other 62,363 72,434 69,732 44,750 30,662 51,697 51,705 43,091 48,300 42,466 37,850 42,300 65,525 68,880 69,650 116,341 Other Countries 29,000 27,000 35,000 35,000 33,000 32,000 29,000 24,000 23,000 22,000 20,000 21,000 4,000______ ______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ Total 82,030 97,740 122,437 132,010 187,161 384,506 417,556 424,291 448,800 448,282 443,905 451,200 482,725 499,880 522,150 639,004 % Change Year Ago 18.3% 19.2% 25.3% 7.8% 1.1% 8.9% 8.6% 1.6% 5.8% -0.1% -1.0% 1.6% 7.0% 3.6% 4.5% 22.4%

Apparent Surplus or Deficit 18,003 -1,952 -24,651 9,731 -26,352 -9,506 -33,556 9,709 400 1,418 22,295 34,240 83,183 7,068 -11,551 -125,785

Price per Ounce High $445 $645 $830 $870 $1,145 $5,500 $5,500 $2,950 $1,175 $900 $590 $330 $330 $715 $950 $2,550 Low 375 448 670 610 615 2,000 1,425 1,725 725 565 240 215 175 360 725 980 Average 411 525 772 728 928 3,567 3,737 2,365 1,066 713 424 281 268 575 862 1,833% Change Year Ago 32.4% 28.0% 46.9% -5.7% 51.5% 174.4% 4.8% -36.7% -54.9% -33.1% -40.5% -33.8% -4.4% 114.3% 50.1% 112.5%

Notes: Secondary supply for Europe includes small amounts recovered elsewhere in the years prior to 1987. * Prior to 2003 Russian supply represented rhodium exports. Russian supply represents mine production since 2003. Automotive includes U.S., Japanese, and European data. Electronics and other Uses include U.S. and Japanese use only. Other Countries include European use excluding auto catalysts. Industrial stocks are as of year end. Prices are Metals Week New York Dealer monthly average prices, 2012 through April; percent change is from the same 2011 period. There may be discrepancies due to rounding. e -- estimate. p -- projections.Sources: U.S. Bureau of Mines; trade sources; CPM Group.May 20, 2017

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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

466,600 466,005 524,070 513,180 654,902 677,559 643,570 624,160 656,305 642,992 641,774 582,541 599,446 433,570 614,539 599,895 590,53148,000 100,000 108,000 105,000 100,000 95,000 94,000 88,000 87,000 87,000 87,000 88,000 87,000 88,000 87,000 86,000 92,61819,510 19,510 20,000 35,500 35,600 35,700 27,810 29,245 21,601 9,795 23,710 21,204 22,024 25,929 23,570 26,010 27,8033,000 7,000 15,000 19,100 13,700 13,900 14,300 14,800 20,000 24,200 27,713 28,567 37,087 35,204 36,096 43,800 40,164________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________

537,110 592,515 667,070 672,780 804,202 822,159 779,680 756,205 784,906 763,987 780,197 720,312 745,557 582,703 761,206 755,704 751,11618.5% 10.3% 12.6% 0.9% 19.5% 2.2% -5.2% -3.0% 3.8% -2.7% 2.1% -7.7% 3.5% -21.8% 30.6% -0.7% -0.6%

70,000 80,000 100,000 130,000 140,000 150,000 170,000 154,136 139,895 182,215 173,989 167,491 206,295 211,000 214,623 220,938 233,84016.7% 14.3% 25.0% 30.0% 7.7% 7.1% 13.3% -9.3% -9.2% 30.3% -4.5% -3.7% 23.2% 2.3% 1.7% 2.9% 5.8%________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________

607,110 672,515 767,070 802,780 944,202 972,159 949,680 910,341 924,801 946,202 954,186 887,803 951,852 793,703 975,828 976,642 984,95618.3% 10.8% 14.1% 4.7% 17.6% 3.0% -2.3% -4.1% 1.6% 2.3% 0.8% -7.0% 7.2% -16.6% 22.9% 0.1% 0.9%

430,000 551,000 584,000 718,000 795,000 865,000 877,550 818,168 689,875 734,160 739,177 775,854 790,001 820,248 851,759 866,639 872,11942,830 41,571 40,879 44,950 44,884 45,526 45,947 44,580 41,246 43,860 44,457 44,338 43,897 43,616 44,136 43,667 44,19796,540 99,778 103,754 110,488 102,415 95,470 95,426 95,913 93,543 98,882 103,724 108,817 110,488 113,164 115,067 113,291 112,4602,000 4,000 4,000 4,000 5,000 5,000 5,000 4,000 2,000 4,000 4,000 2,000 2,000 2,000 2,000 1,750 1,250_______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______

571,370 696,349 732,632 877,438 947,299 1,010,996 1,023,922 962,661 826,664 880,901 891,358 931,009 946,387 979,028 1,012,962 1,025,346 1,030,025-10.6% 21.9% 5.2% 19.8% 8.0% 6.7% 1.3% -6.0% -14.1% 6.6% 1.2% 4.4% 1.7% 3.4% 3.5% 1.2% 0.5%

35,740 -23,834 34,438 -74,658 -3,097 -38,837 -74,242 -52,321 98,137 65,300 62,828 -43,206 5,465 -185,324 -37,134 -48,704 -45,069

YTD$2,150 $2,941 $575 $1,275 $2,950 $5,900 $6,725 $9,494 $2,285 $2,712 $2,285 $1,415 $1,206 $1,475 $1,245 $740 $1,015

673 1,346 385 475 1,275 2,960 5,400 1,050 1,038 2,375 1,038 1,038 1,070 1,025 640 640 9301,478 776 487 903 1,967 4,359 6,051 6,240 1,478 2,354 1,931 1,195 1,029 1,060 950 689 956

-19.3% -47.5% -37.2% 85.3% 117.9% 121.6% 38.8% 3.1% -76.3% 59.3% -18.0% -38.1% -17.0% 8.9% -10.4% -27.4% 38.7%

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combination of selling by investors and industrial entities that had inventories. Some of the industrial stocks have come from producers and the semi-fabricators that process and sell their metal, especially during the 2014 strike. Other industrial sales were from fabricators whose demand for rhodium has declined in some cases and who have determined that they did not need to hold as much rhodium in inventory as they formerly did.

The weakness in annual average rhodium prices during 2016 coupled with a deficit in the market suggests that inventory holders were willing and ready net sellers of the metal to meet fabrication demand needs. A majority of the investor liquidation came from investors in the one existing rhodium exchange traded fund, who sold 45,300 ounces of the metal on a net basis during 2016. The balance 3,400 ounces

is estimated to have come from liquidation of unreported inventories from both other investors and industrial users.

Rhodium prices are likely to remain supported around current levels as an absence of sales from inventory holders, who are showing signs of being more willing to wait for higher prices, keep prices supported. Furthermore, continued tightness in the supply of newly refined rhodium relative to fabricat ion demand is forcing automakers to build larger inventories, which should also provide support to prices. Most of this inventory building was done during the first quarter, which is when it is typically done, and is likely to resume after the summer in the northern hemisphere.

Newly refined total rhodium supply was largely flat at 977,000 ounces in 2016,

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Rhodium Exchange Traded Product HoldingsDaily, Through 31 May 2017

Ounces Ounces

Note: Metal is stored in the United Kingdom and is the combined holdings of the ETC's two primary listings, the db Physical Rhodium ETC (EUR) traded on the Xetra and Borse Italiano and the db Physical Rhodium ETC traded on the LSE.Source: db, Bloomberg

181


compared to an estimated 976,000 ounces in the previous year. Global rhodium mine supply was down 0.7% in 2016 from 2015, levels when output had recovered strongly from the South African labor strike in 2014. There was an increase in the amount of rhodium recovered from spent auto catalysts, which helped push secondary supply higher. This source of supply rose to 221,000 ounces in 2016, up 2.9% from 2015. Growth in total refined rhodium supply is expected to be muted in 2017, up 0.9% to 985,000 ounces. Rhodium mine supply is expected to slip further to 751,000 ounces, down 0.6% due to lower South African production. Secondary supply of rhodium, meanwhile, is forecast to rise 5.8% to 234,000 ounces in 2017.

Total rhodium fabrication demand rose 1.3% in 2016 to a record 1.026 million ounces during the year. The auto and glass industries were primarily responsible for the rise in rhodium fabrication demand during 2016. Demand for rhodium is forecast to continue rising slightly during 2017, reaching 1.03 million ounces supported by demand from the auto and electronics sector during the year. The largest source of demand for rhodium is from autocatalysts, which rose to an estimated 867,000 ounces in 2016, up 1.7% from 2015. Ongoing thrifting, increased popularity of Selective Reduction Catalyst, and reduced demand for autos from Japan weighed on the growth rate of demand for rhodium from the auto sector during 2016. Even so, 2016 saw the second highest level of rhodium fabrication

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Rhodium Surplus/DeficitAnnual, Projected Through 2017

Thousand Ounces

Surplus/ Net Additions to Inventories

Deficit/ Net Reduction in Inventories

Thousand Ounces

182


demand on record from the auto sector. The ongoing tightening of emissions standards should continue to provide support to rhodium fabrication demand. The incremental benefits of these tighter emissions standards are expected to wane going forward, as catalyst makers rely on alternate catalyst and power-train technologies to meet tighter emissions regulations.

183


Supply Total supply of newly refined rhodium was largely flat at 977,000 ounces in 2016 from 976,000 ounces in the previous year.

Global rhodium mine supply was down 0.7% from a year ago after recovering strongly from the South African labor strike in 2014. Increased recovery of rhodium from spent auto catalysts helped pull secondary supply higher, rising 2.9% from 2015 to 221,000 ounces last year.

Growth in total refined rhodium supply is expected to be muted in 2017, up by 0.9% to 985,000 ounces. Rhodium mine supply is expected to slip further by 0.6% to 751,000 ounces, due to moderately lower South African production. Secondary supply of rhodium is forecast to rise 5.8% further to 234,000 ounces in 2017.

Mine Supply Rhodium is the most difficult and time consuming metal to recover and refine from ore. Prior to the use of rhodium in auto catalysts, there was relatively less requirement for the metal. This meant that platinum group metal (PGM) producers did not have as great of an incentive to refine the metal from the residual material left after other metals, including platinum, palladium, iridium, and ruthenium, had been extracted from the polymetallic PGM-bearing smelter matte. In the 1970s perhaps around 40% of the rhodium contained in ore was recovered during the smelting and refining process. Rhodium is the last metal to be extracted from the matte th rough a complex ser ies o f hydrochemical and pyrometallurgical processes. This means it has the longest lead time

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Annual Rhodium SupplyProjected Through 2017

184


and is the most costly to produce. It also led to some rhodium not being refined back when there was not a great deal of demand for it. The increase in demand since the late 1970s has pushed refiners to improve recovery rates for the metal and has encouraged greater refining of rhodium. In contrast to that 40% recovery rate back in the 1970s (and through much of the 1980s into the 1990s), today probably 85% - 90% of rhodium is recovered to refined metal form. Rhodium supply i s the mos t geographically concentrated among the major platinum group metals. In 2016, South Africa accounted for 79.4% of global mine supply. This compared to platinum and palladium, in which South Africa accounted for 70.5% and 35.9% of global mine supplies, respectively. As a result of this high level of concentration, rhodium mine supply was heavily swayed by the South African labor strike in 2014 and the sharp production recovery in 2015. Global rhodium mine supply is expected to moderately decline -1.6% from last year to 751,000 ounces in 2017, due to expected lower production levels at South Africa. South Africa Similar to trends in platinum and palladium mine production, South Africa’s rhodium mine production fell in 2016 after a strong rebound in the previous year, down 2.4% year-on-year to 600,000 ounces. Pruduction had been 615,000 ounces in 2015. It is projected to be around 591,000 ounces in 2017. Anglo Platinum, the world’s largest producer of rhodium, recorded a 0.6%

year-on-year increase in its rhodium production to 293,300 ounces last year. Output increases at some of its operations more than offset declines at other operations. Amandelbult’s rhodium output rose sharply in 2016, up 13.0% to 72,000 ounces, while its Union mine produced 6.2% more rhodium than the previous year. R h o d i u m p r o d u c t i o n a t i t s Mogalakwena mine fell slightly to 28,000 ounces last year after a record year in 2015. Impala Platinum produced 128,900 ounces of rhodium from its South African operations last year, down 7.7% from 2015. Implats’ rhodium output is forecast to decline further to 125,063 ounces in 2017. Lonmin produced 101,390 ounces of rhodium last year, down 10.8% from 2015. Rhodium production is expected to fall 5.6% to 95,707 ounces in 2017. Russia Russia’s rhodium mine supply comes almost entirely from Norilsk Nickel. The company is estimated to have produced 84,000 ounces in 2016, down from around 87,000 ounces in the previous year. Most of the rhodium produced at Norilsk Nickel is exported once it is refined. There is little use for the metal domestically other than some auto catalyst production capacity in the country, and small electronics and chemical process catalyst work. Russian rhodium exports are estimated at 84,000 ounces in 2016.

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Russian Production and ExportsAnnual, Projected Through 2017Thousand Ounces

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South African PGM ProductionAnnual, Projected Through 2017. Indexed to 100 = 1990

186


South African Rhodium Mine ProductionThousand Troy Ounces

2010 2011 2012 2013 2014 2015 2016 2017p

Anglo Platinum 277.5 279.6 268.5 249.3 188.2 257.7 257.5 209.8% of Total 43.2% 43.6% 46.1% 41.6% 43.4% 41.9% 42.9% 35.5%% Change -7.2% 0.8% -4.0% -7.1% -24.5% 37.0% -0.1% -18.5%

Impala Platinum 154.7 151.8 111.4 134.2 63.6 123.8 112.1 109.8% of Total 24.1% 23.6% 19.1% 22.4% 14.7% 20.1% 18.7% 18.6%% Change 6.4% -1.9% -26.6% 20.4% -52.7% 94.8% -9.5% -2.0%

Lonmin 87.4 92.5 97.1 100.2 68.6 113.7 101.4 95.7% of Total 13.6% 14.4% 16.7% 16.7% 15.8% 18.5% 16.9% 16.2%% Change -11.2% 5.8% 5.0% 3.1% -31.5% 65.8% -10.8% -5.6%

Sibanye 39.9 37.5 25.7 22.7 22.4 24.6 25.4 67.6% of Total 6.2% 5.8% 4.4% 3.8% 5.2% 4.0% 4.2% 11.4%% Change 17.7% -6.0% -31.6% -11.6% -1.0% 9.5% 3.5% 165.8%

Northam Platinum 21.1 22.5 23.9 28.2 33.1 39.5 45.9 45.9% of Total 3.3% 3.5% 4.1% 4.7% 7.6% 6.4% 7.7% 7.8%% Change -15.3% 6.8% 6.1% 18.4% 17.4% 19.1% 16.4% 0.0%

African Rainbow Minerals 25.2 26.6 25.2 30.4 27.5 28.9 30.4 28.6% of Total 3.9% 4.1% 4.3% 5.1% 6.3% 4.7% 5.1% 4.9%% Change 0.7% 5.4% -5.2% 20.5% -9.5% 5.2% 4.9% -5.6%

Norilsk 1.2 1.3 1.4 2.6 2.7 2.9 2.2 1.9% of Total 0.2% 0.2% 0.2% 0.4% 0.6% 0.5% 0.4% 0.3%% Change 90.0% 10.1% 9.2% 80.5% 2.6% 9.0% -24.7% -13.3%

Sylvania Resources 4.9 7.1 6.2 8.9 8.9 8.3 9.9 8.3% of Total 0.8% 1.1% 1.1% 1.5% 2.0% 1.3% 1.7% 1.4%% Change 136.2% 43.9% -12.4% 43.7% 0.0% -7.1% 20.0% -15.8%

Sedibelo Platinum Mines 3.6 3.8 5.1 11.9 12.4 10.6 9.9 9.8% of Total 0.6% 0.6% 0.9% 2.0% 2.8% 1.7% 1.7% 1.7%% Change 61.6% 4.3% 35.8% 133.7% 3.5% -14.5% -6.0% -1.3%

Pan African 0.04 0.3 0.4 0.7 1.0 0.9 0.9% of Total 0.0% 0.1% 0.1% 0.2% 0.2% 0.1% 0.2%% Change 616.0% 14.8% 94.4% 43.2% -11.0% 0.0%

Platinum Group Metals 4 12% of Total 0.6% 2.0%% Change 204.5%


Other 0.5 0.5 0.4 0.4 0.4 0.4 0.4 0.4% Change N/M 0.0% -20.0% 1.0% 1.0% 1.0% N/M 0.0%

Total South African Mine Production 643.0 641.8 582.5 599.4 433.6 614.5 599.9 590.5

% Change -2.0% -0.2% -9.2% 2.9% -27.7% 41.7% -2.4% -1.6%

Note: Production forecasts are based on calendar year. Source: Company Documents, Industry Sources, RMG, and CPM GroupMay 2017

187


Notes: NA -- not available.Sources: Bank of Foreign Trade, U.S . Bureau of Mines, Central Intelligence Agency, CPM Group. May 2017

Russian Rhodium Production and ExportsThousand Troy Ounces

Percent ofProduction Exports Production Residual

1976 80 - - -1977 88 - - -1978 90 - - -1979 92 - - -

1980 93 24 26% 69.01981 95 23 24% 72.01982 97 33 34% 64.01983 102 43 42% 59.01984 104 38 37% 66.0

1985 104 33 32% 71.01986 104 67 64% 37.01987 105 92 88% 13.01988 106 100 94% 6.01989 107 132 123% -25.0

1990 108 150 140% -42.51991 108 120 112% -12.51992 100 118 118% -18.01993 90 115 128% -25.01994 80 85 106% -5.0

1995 80 63 79% 17.01996 84 70 83% 14.01997 93 70 75% 22.71998 100 47 47% 53.01999 102 0 0% 101.8

2000 112 14 13% 97.92001 113 48 42% 65.22002 105 100 95% 5.02003 108 108 100% 0.02004 105 105 100% 0.0

2005 100 100 100% 0.02006 95 94 99% 1.02007 94 92 98% 2.02008 88 85 97% 3.02009 87 84 97% 3.0

2010 87 82 94% 5.02011 87 82 94% 5.02012 88 81 92% 7.02013 87 81 93% 6.02014 88 87 99% 1.0

2015 87 85 98% 2.02016 86 84 98% 2.02017p 93 83 90% 9.6

188


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04 05 06 07 08 09 10 11 12 13 14 15 16 17p

Rhodium Mine Production in ZimbabweAnnual, Projected Through 2017Ounces Ounces

Zimbabwe Zimbabwe is the third largest producer of rhodium in the world. Mine output from the country reached an all-time high of 43,800 ounces in 2016, up 21.3% from the previous year. Much of the increase came from rhodium production at Zimplats, which grew 36.2% to 27,100 ounces last year from 2015. In 2017 rhodium production in Zimbabwe is forecast to fall slightly to 40,164 ounces after a record year in 2016. Canada Output in Canada totaled 26,010 ounces in 2016, up from 23,570 ounces in the previous year. Vale’s Sudbury operations produced most of the country’s rhodium output, which

reached 19,910 ounces last year. Canadian rhodium mine production is expected to rise further in 2017 to 27,803 ounces. Secondary Supply Rhodium secondary supply comes almost entirely from spent auto catalysts. A negligible amount comes from end-of-life electronics. Most of the rhodium used in glass and fiber glass manufacturing equipment is recovered and refined on a toll basis, with the manufacturers or their leasing agents retaining ownership of the metal during the recovery, refining, and re-fabrication processes rather than selling scrap and buying new rhodium. Increased availability of rhodium-bearing scrap coupled with increased

189


efficiency of metal recovery from some of the refining operations have been helping improve secondary supply of rhodium, a trend expected to continue. Recovery of rhodium is less pegged to price trends of rhodium and is more closely aligned with the prices scrap collectors can receive in total for old spent auto catalysts. Secondary supply of rhodium rose 2.9% to 220,900 ounces in 2016, as rising volumes of scrapped automobiles, due to some improvement in global steel

prices during the year, helped increase the availability of spent auto catalysts. Higher loadings of rhodium that were contained in those scrap feeds also helped. In 2017 rhodium secondary supply is forecast to rise further to 233,800 ounces, an increase of 5.8% from the previous year.

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Available Rhodium Scrap Feedstock and Actual Refined Secondary Rhodium SupplyAnnual, Projected Through 2017

Thousand Troy Ounces Thousand Troy Ounces

Available Spent Auto Catalyst Rhodium Material:

Refined Secondary Supply

190


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191


Fabrication Demand Total rhodium fabrication demand rose to a record 1.026 million ounces in 2016, up 1.3% from 2015. The increase was driven primarily by increased demand from the auto and glass sectors. Healthy vehicle demand helped boost demand from the auto sector while weak rhodium prices helped demand from the glass sector. Demand for rhodium is forecast to continue rising slightly during 2017, reaching 1.03 million ounces supported by demand from the auto and electronics sector during the year. Automotive Rhodium demand from the auto sector rose to an estimated 867,000 ounces in 2016, up 1.7% from 2015. This was the second highest level of demand on record. Demand growth slowed,

however, during 2016 relative to the preceding two years on account of a decline in demand from vehicles in Japan, ongoing thrifting of the metal in auto catalysts, and the increased use of Selective Reduction Catalyst. Demand is forecast to rise to 872,000 ounces in 2017, up 0.6% from 2016. Trends related to thrifting and the use of SCRs are expected to continue during 2017, although these trends will be offset by the fact that vehicle demand in Japan is forecast to grow during the year. Increased demand for vehicles in Japan is expected to be offset by slower growth in demand from the United States, China, and Europe. Increased Emphasis on Nitrogen Oxide Emissions As global emission standards get tighter there is an increased emphasis on reducing the level of nitrogen oxide

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Rhodium Fabrication DemandAnnual Data, Projected Through 2017

192


emissions (nitrous oxide and nitric oxide, collectively referred to as nitrogen oxides or NOx in the auto emission control market). Nitrogen oxides emissions are of particular importance to the rhodium market because it is the only PGM that is capable of reducing nitrogen oxides to harmless ni trogen and oxygen emissions. The other two PGMs typically loaded in auto catalysts, platinum and palladium, are used for oxidizing carbon monoxide, reducing hydrocarbons, and oxidizing some of the gases that result from the reduction of hydrocarbons into their constituent elemental gases. These emissions have already been reduced significantly in the earlier phases of emissions controls. All of the major auto markets are now at Euro 4 or higher. As the world moves from Euro 3 to Euro 4, NOx emissions

are reduced by 50% for diesel vehicles and 53% for gasoline engines, from Euro 4 to Euro 5 NOx emissions are reduced by a further 28% for diesel and 25% for gasoline vehicles. Euro 6 reduces NOx emissions by another 92% for diesel and keep them unchanged for gasoline. While NOx emissions from gasoline are left untouched in Euro 6, they are now 60% lower than Euro 3 and are 25% lower than Euro 6 for diesel. The Tier 2 emission standard presently in effect in the United States also puts special emphasis on the reduction of NOx emissions. The reduction is from 0.6 grams per mile in the Tier 1 provision to 0.2 g/mile in Tier 2 and 0.16 g/mile in Tier 3. Reduced Incremental Benefit While the tightening of emissions standards is typically positive for PGM

0.00

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2.50

3.00

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0.00

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Particulate Matter

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European Diesel Passenger Vehicle Emission Standards

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Source: Dieselnet, CPM Group Source: Dieselnet, CPM Group

193


demand, there is expected to be a lowered incremental benefit to PGM demand in catalysts moving forward. This is already being seen to some degree. The loadings are increased as emissions standards become tighter, essentially to ensure that the internal surface area of the auto catalyst, over which emissions flow, is coated with s u f f i c i e n t P G M s fo r o p t i ma l performance. But the increase of PGM loadings has a limited benefit. There are essentially two reasons why the benefit of tighter emissions may not be as beneficial for PGM demand in the future as they have been in the past. The first is the use of nanotechnology, which has been making inroads into the auto catalyst market over the past few years and is likely to become a more established technology in the sector over the next several years. It has been applied to on-road vehicles since around 2011.

The second is that auto makers will need to do more than just optimizing their traditional PGM catalysts, increasing fuel efficiency, and improving fuel quality to curb emissions in the face of ever tightening regulations. They will need to do all this and more to be able to meet future regulations. There already is some shift away from traditional catalysts toward SCR catalysts, which are more efficient in curbing emissions. Furthermore as some of the traditional efforts mentioned here begin to fall short in meeting tighter regulations, they are expected to potentially push automakers and governments to make electric and hybrid vehicles a larger share of the market to meet emissions standards. Selective Catalytic Reduction There is a growing popularity of Selective Catalytic Reduction (SCR)

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Note: Euro 2 did not have NOx only limits. Euro 2 had combined limits on NOx and HC, which exaggerates the decline in NOx emissions for Euro 3 shown here.

NOx Emissions Reduction from Previous Standards for Gasoline Cars

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NOx Emissions Reduction from Previous Standards for Diesel Cars

194


systems that are being fitted on large commercial vehicles. These catalysts, using urea, have been used in stationery site catalysts since the 1980s. Meeting tightening emissions standards in developed countries is becoming increasingly difficult with traditional catalysts. The SCR catalyst system is more efficient at reducing toxins. It is a more expensive catalyst system, however, which has made it more popular in large commercial vehicles such as trucks and buses and high end cars. The SCR catalyst itself does not contain any PGMs, with PGMs used only in the downstream catalysts to ensure that emissions remain low even when exhaust temperatures drop. The impact of SCR catalysts is an overall reduction in the use of PGMs per vehicle. Electronics Rhodium is used in a wide range of electronics and electrical applications. The surge in the price of rhodium in 2008 has largely been responsible for lower per unit demand from the electronics sector. There are certain qualities inherent to rhodium that do not allow the metal to be completely substituted, however. Furthermore, the sheer increase in the volume of electronic items that are being produced has, to some degree, offset this decline in per unit usage of rhodium. Rhodium demand from electronics declined during 2016 due to the overall condition of the electronics market. Demand slipped to 43,700 million ounces in 2016, down 1.1% from 2015.

Demand is forecast to rise to 44.2 million ounces in 2017 as product inventory that was built up in 2016, which weighed on demand during that year, gets worked through and there is a fresh demand from this sector. Chemical Catalysts The PGMs, mostly platinum in combination with rhodium, are also used in chemical catalysts. The metals are used in the production of nitric acid, which is used in fertilizers and explosives. The need for increased productivity in the agricultural sector is expected to keep the demand for fertilizers high. The explosives are typically used for road construction and mining. The overall slowdown in demand from the mining sector has weighed on rhodium demand from this sector. Rhodium demand slipped to 51,160 ounces in 2016, down 1.8% from 2016 and is forecast to slip to 51,080 ounces in 2017. Glass Platinum and rhodium are the two PGMs that are used in glass manufacturing equipment. The typical breakdown between platinum and rhodium used in glass manufacturing equipment is 80% platinum and 20% rhodium. The manufacturer can change the breakdown to be 90% platinum and 10% rhodium. The decision to change the mix is largely driven by the relative prices of the two metals. Making a change in the composition even within the prescribed limits of 80% - 20% or 90% - 10% platinum and rhodium is complicated by

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196


the fact that it takes more than an ounce of platinum to meet the efficiency of one ounce of rhodium. This means that to alter the composition so that it is a cost-effective change would require that the price of rhodium would have to rise enough to offset the increased use of platinum. That said, this has not been an issue in recent years, with the price of rhodium trading at a discount to platinum. This discount benefitted the use of rhodium

from this sector. While the price had moved to a significant discount to platinum in 2016, the price of rhodium has bounced back strongly since the last quarter of 2016 and into the first four months of 2017. In March and April of 2017, the price of rhodium rose to be at par and at times higher than the price of platinum. It should also be noted that replacement demand for platinum and rhodium from this industry if fairly low in large part

Annual Rhodium UseTroy Ounces

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992

Automotive U.S. 391 871 2,939 26,136 37,012 30,009 26,323 19,734 63,000 74,000 92,500 90,000 95,000 97,000 105,000 95,000 105,000 Japan - - - - - 14,468 14,468 27,328 36,330 40,188 64,301 65,266 64,301 67,000 70,000 85,000 64,000 Europe - - - - - - - - - - 13,000 55,000 58,000 76,000 95,000 126,000 120,000 China Other Co - - - - - - - - - - - - - - - - 40,000___ ___ _____ ______ ______ ______ ______ ______ ______ _______ _______ _______ _______ _______ _______ _______ _______ Subtota 391 871 2,939 26,136 37,012 44,477 40,791 47,062 99,330 114,188 169,801 210,266 217,301 240,000 270,000 306,000 329,000 % of Tot 0.6% 1.1% 3.0% 21.3% 28.0% 33.1% 35.1% 30.4% 53.7% 61.0% 64.2% 69.9% 72.3% 68.0% 70.2% 73.3% 77.5% % Chang - 122.8% 237.4% 789.3% 41.6% 20.2% -8.3% 15.4% 111.1% 15.0% 48.7% 23.8% 3.3% 10.4% 12.5% 13.3% 7.5%

Electronics U.S. 9,062 10,758 14,329 16,923 14,818 12,050 9,392 8,472 9,023 5,665 6,813 5,775 3,955 8,745 8,809 5,851 5,900 Japan 6,430 8,038 8,038 9,645 6,430 13,825 13,503 12,217 12,860 9,645 14,468 19,290 17,683 18,400 19,000 19,000 13,300 China ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ Subtota 15,492 18,796 22,367 26,568 21,248 25,875 22,895 20,689 21,883 15,310 21,281 25,065 21,638 27,145 27,809 24,851 19,200 % of Tot 22.3% 22.9% 22.9% 21.7% 16.1% 19.2% 19.7% 13.4% 11.8% 8.2% 8.0% 8.3% 7.2% 7.7% 7.2% 6.0% 4.5% % Chang - 21.3% 19.0% 18.8% -20.0% 21.8% -11.5% -9.6% 5.8% -30.0% 39.0% 17.8% -13.7% 25.5% 2.4% -10.6% -22.7%

Chemical U.S. 19,225 20,245 19,397 11,684 5,273 8,899 6,873 3,984 4,631 4,096 5,083 3,446 3,504 6,076 5,433 5,841 5,048 Japan 6,430 6,430 6,430 11,253 11,253 6,430 6,109 8,038 9,645 10,288 11,253 12,217 10,288 11,000 11,250 10,000 7,500 Europe - - - - - - - - - - - - China ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ Subtota 25,655 26,675 25,827 22,937 16,526 15,329 12,982 12,022 14,276 14,384 16,336 15,663 13,792 17,076 16,683 15,841 12,548 % of Tot 37.0% 32.5% 26.4% 18.7% 12.5% 11.4% 11.2% 7.8% 7.7% 7.7% 6.2% 5.2% 4.6% 4.8% 4.3% 3.8% 3.0% % Chang - 4.0% -3.2% -11.2% -28.0% -7.2% -15.3% -7.4% 18.8% 0.8% 13.6% -4.1% -11.9% 23.8% -2.3% -5.0% -20.8%

Glass U.S. 3,828 13,986 16,605 15,376 8,581 3,950 2,005 2,033 2,941 2,467 2,952 1,772 2,733 5,691 997 161 386 Japan 6,430 6,430 6,430 8,038 6,430 3,215 2,251 2,251 3,215 3,537 3,537 3,858 3,215 3,600 3,700 3,500 3,000 Europe - - - - - - - - - - - - - - - - - China ______ ______ ______ ______ ______ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ Subtota 10,258 20,416 23,035 23,414 15,011 7,165 4,256 4,284 6,156 6,004 6,489 5,630 5,948 9,291 4,697 3,661 3,386 % of Tot 14.8% 24.9% 23.6% 19.1% 11.4% 5.3% 3.7% 2.8% 3.3% 3.2% 2.5% 1.9% 2.0% 2.6% 1.2% 0.9% 0.8% % Chang - 99.0% 12.8% 1.6% -35.9% -52.3% -40.6% 0.7% 43.7% -2.5% 8.1% -13.2% 5.6% 56.2% -49.4% -22.1% -7.5%

Other U.S. 8,369 9,356 16,370 13,351 7,844 7,202 5,322 10,002 8,342 8,024 11,580 12,548 10,787 16,236 22,987 26,203 22,657 Japan 9,163 5,916 7,202 10,031 5,369 1,961 836 29,482 997 2,251 12,539 6,430 257 7,000 7,330 6,000 4,500______ ______ ______ ______ ______ _____ _____ ______ _____ ______ ______ ______ ______ ______ ______ ______ ______ Subtota 17,532 15,272 23,572 23,382 13,213 9,163 6,158 39,484 9,339 10,275 24,119 18,978 11,044 23,236 30,317 32,203 27,157 % of Tot 25.3% 18.6% 24.1% 19.1% 10.0% 6.8% 5.3% 25.5% 5.0% 5.5% 9.1% 6.3% 3.7% 6.6% 7.9% 7.7% 6.4% % Chang - -12.9% 54.3% -0.8% -43.5% -30.7% -32.8% 541.2% -76.3% 10.0% 134.7% -21.3% -41.8% 110.4% 30.5% 6.2% -15.7%

Other Countries(excluding - - - - 29,000 32,500 29,000 31,250 34,060 27,000 26,500 25,350 31,000 36,270 35,000 35,000 33,000

Total 69,328 82,030 97,740 122,437 132,010 134,509 116,081 154,791 185,045 187,161 264,525 300,953 300,723 353,018 384,506 417,556 424,291 % Chang - 18.3% 19.2% 25.3% 7.8% 1.9% -13.7% 33.3% 19.5% 1.1% 41.3% 13.8% -0.1% 17.4% 8.9% 8.6% 1.6%

Notes: There may be discrepancies due to rounding. p -- projections.Sources: U.S. Bureau of Mines, trade sources, CPM Group.May 15, 2016

197


because around 95% to 97% of PGMs used in these application is recovered from the equipment, which reduces the need for fresh PGMs substantially. Demand for PGMs in this industry is expected to come from the building on new capacity for glass manufacturing. While demand for all kinds of glass is expected to grow over the long term, in the short term building of new capacity

may slow, especially with the expected relative softness in demand from the solar panel market. Rhodium demand from this sector reached 41,380 ounces in 2016, up 1.1% from 2015. Demand for rhodium from the glass industry is expected to slip slightly to 41,130 ounces in 2017.

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016p 2017p

Automotive125,000 132,000 138,000 138,000 143,000 152,000 154,000 170,000 170,000 190,000 210,000 320,000 370,000 395,000 383,150 320,000 230,000 250,000 262,500 294,000 311,640 320,989 337,039 340,409 341,260 U.S.49,000 35,366 24,800 25,000 26,000 26,000 32,000 67,500 50,000 84,000 85,000 90,000 100,000 105,000 110,000 112,000 90,000 95,000 85,500 102,600 103,113 106,722 104,588 103,019 104,049 Japan

125,000 137,000 140,000 142,000 145,000 158,000 164,000 172,000 160,000 215,000 225,000 240,000 250,000 280,000 274,400 266,168 244,875 249,160 244,177 219,759 210,969 227,846 243,795 253,547 255,449 Europe4,573 4,851 6,725 9,570 13,614 13,472 16,691 21,547 24,703 37,013 49,247 58,068 64,581 72,937 80,317 77,741 85,583 93,385 China

45,000 50,000 54,000 55,000 55,000 48,000 54,000 49,427 45,149 55,275 54,430 54,386 61,528 68,309 88,453 95,297 87,987 90,753 88,932 94,914 91,342 84,374 88,597 84,082 77,976 Other Countries_______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______344,000 354,366 356,800 360,000 369,000 384,000 404,000 463,500 430,000 551,000 584,000 718,000 795,000 865,000 877,550 818,168 689,875 734,160 739,177 775,854 790,001 820,248 851,759 866,639 872,119 Subtotal

76.6% 79.0% 80.4% 79.8% 76.4% 76.8% 77.4% 72.5% 75.3% 79.1% 79.7% 81.8% 83.9% 85.6% 85.7% 85.0% 83.5% 83.3% 82.9% 83.3% 83.8% 83.8% 84.1% 84.4% 84.5% % of Total4.6% 3.0% 0.7% 0.9% 2.5% 4.1% 5.2% 14.7% -7.2% 28.1% 6.0% 22.9% 10.7% 8.8% 1.5% -6.8% -15.7% 6.4% 0.7% 5.0% 1.8% 3.8% 3.8% 1.7% 0.6% % Change Year Ago

Electronics7,500 8,000 9,000 9,500 9,800 10,000 10,500 10,800 7,000 7,400 7,500 8,500 8,500 8,000 8,000 7,000 6,000 7,000 10,500 9,000 8,750 8,500 9,000 9,000 9,000 U.S.

17,000 14,450 16,255 16,400 16,400 17,000 17,000 34,000 25,000 23,000 22,000 25,000 25,000 26,000 26,000 25,000 23,000 25,000 22,000 23,500 23,250 23,100 23,000 22,500 23,000 Japan10,363 10,830 11,171 11,379 11,450 11,384 11,526 11,947 12,580 12,246 11,860 11,957 11,838 11,897 12,016 12,136 12,167 12,197 China_______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______

24,500 22,450 25,255 25,900 26,200 27,000 27,500 55,163 42,830 41,571 40,879 44,950 44,884 45,526 45,947 44,580 41,246 43,860 44,457 44,338 43,897 43,616 44,136 43,667 44,197 Subtotal5.5% 5.0% 5.7% 5.7% 5.4% 5.4% 5.3% 8.6% 7.5% 6.0% 5.6% 5.1% 4.7% 4.5% 4.5% 4.6% 5.0% 5.0% 5.0% 4.8% 4.5% 4.5% 4.4% 4.3% 4.3% % of Total

27.6% -8.4% 12.5% 2.6% 1.2% 3.1% 1.9% 100.6% -22.4% -2.9% -1.7% 10.0% -0.1% 1.4% 0.9% -3.0% -7.5% 6.3% 1.4% -0.3% -1.0% -0.6% 1.2% -1.1% 1.2% % Change Year Ago

Chemical6,200 6,300 6,500 7,000 12,000 12,500 12,750 12,200 12,200 12,300 12,350 14,000 11,000 10,000 9,500 9,500 10,000 10,900 12,000 13,000 11,500 12,000 12,000 11,000 11,250 U.S.8,500 6,800 9,100 11,000 15,000 16,000 15,500 20,000 15,000 16,000 17,000 19,000 17,000 16,000 16,000 16,000 15,000 15,800 14,500 16,000 16,250 16,300 15,750 15,500 15,250 Japan

- - - - 6,000 6,250 6,000 7,000 5,000 5,500 6,500 8,000 7,000 6,000 7,000 7,000 7,000 7,000 7,000 7,000 7,500 8,000 8,000 8,000 7,500 Europe6,501 7,507 7,677 7,918 7,557 7,705 7,017 7,809 8,801 8,073 10,412 11,973 12,836 13,862 15,055 16,334 16,661 17,077 China_______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______

14,700 13,100 15,600 18,000 33,000 34,750 34,250 45,701 39,707 41,477 43,768 48,557 42,705 39,017 40,309 41,301 40,073 44,112 45,473 48,836 49,112 51,355 52,084 51,161 51,077 Subtotal3.3% 2.9% 3.5% 4.0% 6.8% 7.0% 6.6% 7.2% 6.9% 6.0% 6.0% 5.5% 4.5% 3.9% 3.9% 4.3% 4.8% 5.0% 5.1% 5.2% 5.2% 5.2% 5.1% 5.0% 5.0% % of Total

17.2% -10.9% 19.1% 15.4% 83.3% 5.3% -1.4% 33.4% -13.1% 4.5% 5.5% 10.9% -12.1% -8.6% 3.3% 2.5% -3.0% 10.1% 3.1% 7.4% 0.6% 4.6% 1.4% -1.8% -0.2% % Change Year Ago

Glass600 500 500 600 625 1,500 1,200 1,200 2,000 3,000 4,000 5,000 6,000 5,000 4,000 3,750 3,750 5,000 10,000 9,000 9,000 9,250 9,400 9,500 9,500 U.S.

3,300 2,706 3,350 3,900 3,900 4,200 4,200 12,000 10,000 10,000 9,000 11,000 12,000 11,000 10,000 10,000 9,000 9,000 7,000 9,000 10,000 10,500 10,750 11,000 10,750 Japan- - - - 7,000 5,500 6,500 14,000 7,500 7,000 8,000 8,000 8,000 8,000 9,000 9,000 8,250 8,000 8,000 8,000 8,250 8,300 8,350 8,250 8,000 Europe

7,440 8,333 9,301 9,486 9,931 9,710 9,453 11,117 11,362 11,770 11,770 11,770 11,982 12,126 12,259 12,443 12,630 12,882 China_______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______3,900 3,206 3,850 4,500 11,525 11,200 11,900 34,640 27,833 29,301 30,486 33,931 35,710 33,453 34,117 34,112 32,770 33,770 36,770 37,982 39,376 40,309 40,943 41,380 41,132 Subtotal0.9% 0.7% 0.9% 1.0% 2.4% 2.2% 2.3% 5.4% 4.9% 4.2% 4.2% 3.9% 3.8% 3.3% 3.3% 3.5% 4.0% 3.8% 4.1% 4.1% 4.1% 4.1% 4.0% 4.0% 4.0% % of Total

15.2% -17.8% 20.1% 16.9% 156.1% -2.8% 6.3% 191.1% -19.7% 5.3% 4.0% 11.3% 5.2% -6.3% 2.0% 0.0% -3.9% 3.1% 8.9% 3.3% 3.7% 2.4% 1.6% 1.1% -0.6% % Change Year Ago

Other24,000 21,600 12,200 13,300 14,500 15,970 16,400 16,000 14,000 15,000 15,500 14,000 12,000 12,000 11,000 10,500 10,500 11,000 11,480 11,000 11,000 10,750 11,000 10,000 9,750 U.S.

5,700 4,560 6,200 6,500 6,500 6,960 7,100 20,000 15,000 14,000 14,000 14,000 12,000 11,000 10,000 10,000 10,200 10,000 10,000 11,000 11,000 10,750 11,040 10,750 10,500 Japan_______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______29,700 26,160 18,400 19,800 21,000 22,930 23,500 36,000 29,000 29,000 29,500 28,000 24,000 23,000 21,000 20,500 20,700 21,000 21,480 22,000 22,000 21,500 22,040 22,040 22,040 Subtotal

6.6% 5.8% 4.1% 4.4% 4.4% 4.6% 4.5% 5.6% 5.1% 4.2% 4.0% 3.2% 2.5% 2.3% 2.1% 2.1% 2.5% 2.4% 2.4% 2.4% 2.2% 2.2% 2.2% 2.1% 2.1% % of Total9.4% -11.9% -29.7% 7.6% 6.1% 9.2% 2.5% 53.2% -19.4% 0.0% 1.7% -5.1% -14.3% -4.2% -8.7% -2.4% 1.0% 1.4% 2.3% 2.4% -2.3% 0.0% 0.0% 0.0% 0.0% % Change Year Ago

Other Countries32,000 29,000 24,000 23,000 22,000 20,000 21,000 4,000 2,000 4,000 4,000 4,000 5,000 5,000 5,000 4,000 2,000 4,000 4,000 2,000 2,000 2,000 2,000 1,750 1,250 (excluding auto)

448,800 448,282 443,905 451,200 482,725 499,880 522,150 639,004 571,370 696,349 732,632 877,438 947,299 1,010,996 1,023,922 962,661 826,664 880,901 891,358 931,009 946,387 979,028 1,012,962 1,026,636 1,031,815 Total5.8% -0.1% -1.0% 1.6% 7.0% 3.6% 4.5% 22.4% -10.6% 21.9% 5.2% 19.8% 8.0% 6.7% 1.3% -6.0% -14.1% 6.6% 1.2% 4.4% 1.7% 3.4% 3.5% 1.3% 0.5% % Change Year Ago

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Historical U.S. Rhodium DemandTroy Ounces

Year Automotive Electronics Glass Chemical Jewelry1955 - 1,408 - 14,929 2,7981956 - 1,193 - 13,379 2,8341957 - 1,665 - 12,610 2,3371958 - 1,714 - 12,790 3,5231959 - 5,649 8,375 12,023 4,407

1960 - 4,163 8,273 7,705 4,1751961 - 3,004 2,481 6,880 5,5931962 - 5,265 5,111 8,276 6,5461963 - 6,676 13,191 9,537 7,0441964 - 7,687 23,923 13,179 8,296

1965 - 7,924 10,275 12,499 7,4981966 - 9,216 34,491 14,210 9,1001967 - 11,736 11,281 17,770 8,7751968 - 9,514 7,441 14,507 7,0591969 - 10,788 10,839 18,060 5,622

1970 - 9,056 7,138 26,445 5,3431971 - 9,084 3,362 14,910 5,4191972 - 7,867 13,923 15,358 6,5931973 - 13,187 16,689 23,772 12,5261974 - 15,538 7,464 23,328 10,460

1975 - 8,252 4,471 15,440 4,9321976 391 9,062 3,828 19,225 5,1701977 871 10,758 13,986 20,245 5,0111978 2,939 14,329 16,605 19,397 9,9501979 26,136 16,923 15,376 11,684 7,458

1980 37,012 14,818 8,581 5,273 5,4341981 30,009 12,050 3,950 8,899 3,6181982 26,323 9,392 2,005 6,873 3,3721983 19,734 8,472 2,033 3,984 2,2481984 63,000 9,023 2,941 4,631 1,238

1985 74,000 5,665 2,467 4,096 2,2221986 92,500 6,813 2,952 5,083 3,1941987 90,000 5,775 1,772 3,446 7,3911988 95,000 3,955 2,733 3,504 5,6911989 97,000 8,745 5,691 6,076 6,591

1990 105,000 8,809 997 5,433 6,2691991 95,000 5,851 161 5,841 4,9511992 105,000 5,900 386 5,048 3,7201993 125,000 7,500 600 6,200 3,0001994 132,000 8,000 500 6,300 3,150

1995 138,000 9,000 500 6,500 -1996 138,000 9,500 600 7,000 -1997 143,000 9,800 625 12,000 -1998 152,000 10,000 1,500 12,500 -1999 154,000 10,500 1,200 12,750 -

2000 170,000 10,800 1,200 12,200 -2001 170,000 7,000 2,000 12,200 -2002 190,000 7,400 3,000 12,300 -2003 210,000 7,500 4,000 12,350 -2004 320,000 8,500 5,000 14,000 -

2005 370,000 8,500 6,000 11,000 -2006 395,000 8,000 5,000 10,000 -2007 383,150 8,000 4,000 9,500 -2008 320,000 7,000 3,750 9,500 -2009 230,000 6,000 3,750 10,000 -2010 250,000 7,000 5,000 10,900 -2011 262,500 10,500 10,000 12,000 -2012 294,000 9,000 9,000 13,000 -2013 311,640 8,750 9,000 11,500 -2014 320,989 8,500 9,250 12,000 -2015 337,039 9,000 9,400 12,000 -2016 340,409 9,000 9,500 11,000 -2017p 341,260 9,000 9,500 11,250 -Note: Consumption by the glass and petroleum industries is included in chemical figures for years prior to 1959. There may be discrepancies due to rounding.

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PercentChange

Petroleum Dental Miscellaneous Total in Totals Year- 29 51 19,215 1955- 56 102 17,564 -8.6% 1956- 243 598 17,453 -0.6% 1957- 51 503 18,581 6.5% 1958

45 138 176 30,813 65.8% 1959

33 83 183 24,615 -20.1% 1960550 16 650 19,174 -22.1% 1961152 44 659 26,053 35.9% 1962188 10 422 37,068 42.3% 1963

2,121 38 182 55,426 49.5% 1964

369 124 221 38,910 -29.8% 1965517 335 1,819 69,688 79.1% 1966397 77 4,916 54,952 -21.1% 1967201 38 6,016 44,776 -18.5% 1968

2,341 339 2,155 50,144 12.0% 1969

59 51 805 48,897 -2.5% 1970176 31 1,384 34,366 -29.7% 1971149 48 2,157 46,095 34.1% 1972

3,057 297 3,987 73,515 59.5% 19731,239 373 3,200 61,602 -16.2% 1974

114 41 3,598 36,848 -40.2% 19751 75 3,123 40,875 10.9% 1976- 275 4,070 55,216 35.1% 1977

281 232 5,907 69,640 26.1% 19781,223 45 4,625 83,470 19.9% 1979

662 45 1,703 73,528 -11.9% 1980- 35 3,549 62,110 -15.5% 19814 7 1,939 49,915 -19.6% 1982- 173 7,581 44,225 -11.4% 1983

11 427 6,666 87,937 98.8% 1984

31 352 5,419 94,252 7.2% 1985- 611 7,775 118,928 26.2% 1986- 334 4,823 113,541 -4.5% 1987

32 64 5,000 115,979 2.1% 1988868 - 8,777 133,748 15.3% 1989

- - 16,718 143,226 7.1% 1990- - 21,252 133,055 -7.1% 1991- - 18,937 138,990 4.5% 1992

1,000 - 20,000 163,299 17.5% 19931,250 - 17,200 168,399 3.1% 1994

- - 12,200 166,199 -1.3% 1995- - 13,300 168,399 1.3% 1996- - 14,500 179,924 6.8% 1997- - 15,970 191,970 6.7% 1998- - 16,400 194,850 1.5% 1999

- - 16,000 210,200 7.9% 2000- - 14,000 205,200 -2.4% 2001- - 15,000 227,700 11.0% 2002- - 15,500 249,350 9.5% 2003- - 14,000 361,500 45.0% 2004

- - 12,000 407,500 12.7% 2005- - 12,000 430,000 5.5% 2006- - 11,000 415,650 -3.3% 2007- - 10,500 350,750 -15.6% 2008- - 10,500 260,250 -25.8% 2009- - 11,000 283,900 9.1% 2010- - 11,480 306,480 8.0% 2011- - 11,000 336,000 9.6% 2012- - 11,000 351,890 4.7% 2013- - 10,750 361,489 2.7% 2014- - 11,000 378,439 4.7% 2015- - 10,000 379,909 0.4% 2016- - 9,750 380,760 0.2% 2017p

Source: U.S. Bureau of Mines, CPM Group.May 1, 2017

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Annual U.S. Rhodium DemandProjected Through 2017


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Japanese Rhodium DemandTroy Ounces

1974 1975 1976 1977 1978 1979 1980 1981 1982

- - - - - - - 14,468 14,4686,430 8,038 6,430 8,038 8,038 9,645 6,430 13,825 13,5036,430 9,645 6,430 6,430 6,430 11,253 11,253 6,430 6,1098,038 9,645 6,430 6,430 6,430 8,038 6,430 3,215 2,2513,987 18,037 9,163 5,916 7,202 10,031 5,369 1,961 836______ ______ ______ ______ ______ ______ ______ ______ ______

24,885 45,365 28,453 26,814 28,100 38,967 29,482 39,899 37,166-- 82.3% -37.3% -5.8% 4.8% 38.7% -24.3% 35.3% -6.8%

1983 1984 1985 1986 1987 1988 1989 1990 1991

27,328 36,330 40,188 64,301 65,266 64,301 67,000 70,000 85,00012,217 12,860 9,645 14,468 19,290 17,683 18,400 19,000 19,000

8,038 9,645 10,288 11,253 12,217 10,288 11,000 11,250 10,0002,251 3,215 3,537 3,537 3,858 3,215 3,600 3,700 3,500

29,482 997 2,251 12,539 6,430 257 7,000 7,330 6,000______ ______ ______ ______ ______ ______ ______ ______ ______79,316 63,048 65,909 106,097 107,062 95,745 107,000 111,280 123,500

113.4% -20.5% 4.5% 61.0% 0.9% -10.6% 11.8% 4.0% 11.0%

1992 1993 1994 1995 1996 1997 1998 1999 2000

64,000 49,000 35,366 24,800 25,000 26,000 26,000 32,000 67,50013,300 17,000 14,450 16,255 16,400 16,400 17,000 17,000 34,000

7,500 8,500 6,800 9,100 11,000 10,600 16,000 15,500 20,0003,000 3,300 2,706 3,350 3,900 3,900 4,200 4,200 12,0004,500 5,700 4,560 6,200 6,500 6,500 6,960 7,100 20,000______ ______ ______ ______ ______ ______ ______ ______ ______

92,300 83,500 63,882 59,705 62,800 63,400 70,160 75,800 153,500-25.3% -9.5% -23.5% -6.5% 5.2% 1.0% 10.7% 8.0% 102.5%

2001 2002 2003 2004 2005 2006 2007 2008 2009

50,000 84,000 85,000 90,000 100,000 105,000 110,000 112,000 90,00025,000 23,000 22,000 25,000 25,000 26,000 26,000 25,000 23,00015,000 16,000 17,000 19,000 17,000 16,000 16,000 16,000 15,00010,000 10,000 9,000 11,000 12,000 11,000 10,000 10,000 9,00015,000 14,000 14,000 14,000 12,000 11,000 10,000 10,000 10,200______ ______ ______ ______ ______ ______ ______ ______ ______

115,000 147,000 147,000 159,000 166,000 169,000 172,000 173,000 147,200-25.1% 27.8% 0.0% 8.2% 4.4% 1.8% 1.8% 0.6% -14.9%

2010 2011 2012 2013 2014 2015 2016 2017p

95,000 85,500 102,600 103,113 106,722 104,588 103,019 104,04925,000 22,000 23,500 23,250 23,100 23,000 22,500 23,00015,800 14,500 16,000 16,250 16,300 15,750 15,500 15,250

9,000 7,000 9,000 10,000 10,500 10,750 11,000 10,75010,000 10,000 11,000 11,000 10,750 11,040 10,750 10,500______ ______ ______ ______ ______ ______ ______ ______

154,800 139,000 162,100 163,613 167,372 165,128 162,769 163,5495.2% -10.2% 16.6% 0.9% 2.3% -1.3% -1.4% 0.5%

Notes: Sales for use in automobiles prior to 1981 were included in salesfor use by the chemical sector. There may be discrepancies due to rounding.Sources: Japanese trade sources, CPM Group. p - projections.May 1, 2017

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CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 MINOR PGMS

Minor PGMs

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MINOR PGMS CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

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$/Ounce$/Ounce

Iridium PricesMetals Week NY dealer weekly low prices, through 25 May 2017

Minor PGMs Ruthenium, iridium, and osmium often are referred to as the minor PGMs, given the smaller size of their markets. That may not be fair. These are critical metals that have long served in a number of useful applications. Their volumes of mine output are much lower than those of platinum and palladium. Ruthenium output actually can approach output levels of rhodium, although the dollar value is much less, given the price spread between the two metals. As a consequence of their smaller supply volumes, fabrication demand also tends to be much lower for these metals. It is not so much that these metals are not useful in a number of electronic, metallic, mechanical, ca t a ly t i c , medica l , and o the r applications. They simply do not exist in sufficient volumes to allow their use

in any products that involve large numbers of units being manufactured. For example, researchers showed that iridium offers various valuable pe r fo rmance enhancemen t s i n automotive emission control catalysts and some semi-conductor applications. There simply is not enough iridium around to allow the metal to be used in these applications, however, given the tens of millions of units that are produced every year. Even with the supply constraints, however, iridium, ruthenium, and even osmium, so long overlooked by most market participants, have been benefiting from on-going research and development efforts across a range of technologies. These metals have found uses in which their presence is critical, despite supply constraints and fears that any major new use will drive prices higher.

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Last year and during the first half of this year there has been a noticeable increase in demand for all three of these metals in various uses. The result is that iridium prices began rising in the middle of 2016, and have continued to rise in 2017. Ruthenium prices began rising in the first five months of 2017. Osmium prices, mired at $350 since 1998, have not changed on any official fabricator price sheet, even though there is a clear pick up in fabrication demand. Iridium, ruthenium, and osmium are not being used in increasing volumes in a number of new products and applications, including electronics, chemical process catalysts, and other new technologies. Unfortunately for the curious, almost all of the new uses are confidential to the companies deploying the new technologies, so little to nothing can be said about the applications. Indeed, the companies that

are now buying and deploying these metals in these new uses do not even want it pointed out in public that the prices are rising due to new uses, as that also goes against their best commercial interests. CPM used the low end of the Metals Week dealer quotes for these metals. The logic is that if these prices are available in the market, it is likely that more users are buying at the low end of prevailing prices than at the high end. Iridium prices began rising in the middle of 2016. Much earlier, the iridium price had spent much of the time from 1992 to 1997 below $100 per ounce, dropping to around $30 per ounce from 1993 into 1996. Prices began rising then as new applications came into production. Iridium had risen to $525 by 1998, before subsiding to for a few years. By 2002 – 2003 prices

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Metals Week New York Dealer Prices, Through 25 May 2017The Price of Ruthenium

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were below $100 once more, only to rise again. Iridium entered an extended bull market that took the metal to $1,060 in September 2011, around the time many other commodities prices were peaking. Iridium average $987.92 in 2011 and $1,025.57 in 2012, using the low end of the Metals Week dealer quote. Prices dropped sharply after that, hitting $350 in December 2013. Iridium traded between $400 and $550 for much of the period from 2013 until September 2016. In the middle of last year industrial demand from a handful of new uses and companies emerged. Prices began rising. By the end of 2016 iridium was trading at $700 and above. The price averaged $567.79 in 2016, up 12.0% from 2015. In the first five months of 2017 iridium rose further to $960 by the end of May.

The price averaged $790.24 during the first five months of this year, up 61% from the same period last year. The $960 at the end of May was 37.1% higher than the price at the start of this year. Annual average ruthenium prices have been falling at double-digit rates since 2011, through 2016. On a more frequent basis, the low end of the weekly Metals Week dealer Ruthenium price fell from a short term high around $75 in May 2014 to around $50 by September and October of that year. Prices continued to weaken, touching $30 by July 2015. Prices moved sideways between $35 and $42 from then until March of this year. Prices then started rising, increasing 88.6% between March and the end of May.

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The Price of OsmiumMetals Week New York Dealer Prices, Through 25 May 2017$/Ounce $/Ounce

208
