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North American Palladium Ltd. Message Board

  • spectra64 spectra64 Jan 14, 2008 7:20 PM Flag

    What was 3Q charge of 6.4 million ?

    Doing my best to get up to speed here. This stock looks great! Can anyone help me with the 6.4 million offset last quarter " negative foreign exchange price adjustment...arising from the mark to marke concentrate awaiting settlement...

    What does this adjustment mean? anyone...

    This is the only thing that I can find other than the dilutiion that caused this to drop back in Novmember...

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    • Why be concerned about what happened in November?....That was the height of tax loss selling!....It's water under the bridge!....Today's price, foretells the future!....And it's looking pretty good!

    • Those are just accounting gimmicks.

      PAL books sales revenue as soon as the metal concentrates are shipped out to smelter, using that day's metal spot price, and use that day's foreign exchange ratio to convert back to Canadian dollars.

      But the actual sale is not closed until 3 to 6 months later when the metals have finished processing. They are sold at the new spot price and convert back to Canadian dollars at the new exchange rate.

      Because these numbers may be different from what was originally booked, two adjustments are applied to close the discrepancy, the commodity price adjustment, and foreign exchange rate adjustment.

      Unfortunately these two adjustments make the quarterly result extremely volatile, making one quarter particularly good and the next particularly bad. But averaged over time, the net effect should cancel out.

      I expect these two adjustments will be VERY favorable in boosting PAL's Q4 result.

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