Folks I Absolutely Denounce PAL Management in the Years Since 2008!
Folks you know for a long time I am an absolutely promoter of palladium investment. When it comes to palladium mining play, there are just two mining plays: SWC and PAL. There are no other palladium mining play inthe whole world.
But both companies betrayed my hope that they can leverage on palladium. PAL did much worse.
Do you guys remember that at the end of 2008 when palladium dropped to $165 per ounce. I pounded on the table to urge both companies to use their cash to buy and hoard palladium. I told PAL: You have plenty of cash at hand, you have no debt to worry about, your mine is temporarily shut down so no operating cost to worry about. Why don't you guys use the $80M cash at hand to just purchase palladium at $165.
I told both companies to buy palladium at $165 per ounce, I even proposed to PAL that they should do a secondary offering to rise cash to buy palladium at $165, and turn itself into a proxy for palladium investment.
Had they listened, $80M gets them nearly half a million ounces of palladium, and they wouldhave driven palladium price up to $1000 per ounce, nesting the company $500M worth simply on palladium holdings.
What did they do instead? They spend the money to buy treasury bonds, and buy a worthless gold mine which produces gold at $1900/ounce cash cost. And they dilute the PAL shares to death again and again. All the money they raise they spend on mining and selling palladium cheap and un-profitably.
At the time I said in short to mid term I was much more in favor of SWC than in PAL. So far, SWC out-performed palladium since the low of 2008. But PAL is back to neat the $1.00 low in 2008.
If the PAL management continue the path they would keep diluting shares and drive PAL share value to zero. They need to change. They should have listened to me and turn themselves into a proxy of palladium investment. They should be a holding company, holdingboth palladium bullion above ground and palladium mine underground.
Very say indeed. When they keep diluting shares this is what you get. PAL as a company may do well in the long term future. But shareholders are still losing as they will own an ever smaller pie of the company.
I remain very bullish in palladium and I still hold a big stake in SWC. Palladium price has rallied from the low of $156 at the end of 2008, to now pushing forward to $700 and then over. The palladium bull arguments are intact today. The metal is moving higher without question.
But what value it is in PAL, if they repeatedly dilute the shares to death as they did in the past? The management simply is clueless. I simply can not stand the never ending dilution. Yes they need cash to develop and expand the mine. But NO they don't have to dilute shares at the market low to rise cash.
Come back to PAL in a few years. I told folks to prefer SWC instead years ago. I was right. Right now, the bigger sector to make big money, is coal mining stocks, ACI, ANR, JRCC, BTU.
To be clear, in the last two years I held virtualy nothing in PAL but I still hold a significant position in SWC. As of today, my SWC holding is the second largest in my portfolio. But my main attention now is in coal mining stocks, not in palladium. But I must hold a significant position of SWC at all times, just in case that South Africa blows up and palladium quickly rallies. As for PAL, let's wait another few years and see how it does.
There is a giant underground value in PAL, but the management is not doing the right thign to unlock that value. If you want to recover your loss in PAL, get into coal mining now: ACI, ANR, JRCC, BTU.
I am glad that I picked SWC versus PAL since late 2008 and early 2009.
Very sad. Now PAL is back to the 2008 low of $1.0 per share. Mean while SWC has gained tremendously from the $1.70 low in 2008. What a huge difference between the two management teams. I was glad I betted on SW versus PAL correctly since early 2009.
Told the PAL managements to use their $80M+ cash to hoard palladium at $160 per ounce and turn themselves into a proxy for physical palladium investments,both above ground and underground. Had they listened they would have $360M worth today just in physical palladium holding alone.