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North American Palladium Limited ┼×irket Message Board

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  • reichardschwartz reichardschwartz Aug 10, 2012 4:26 PM Flag

    Conf call

    And if, as you say, the share price dropped considerably, you could buy more or initiate a position with considerably less risk, or a greater margin of safety. Look, with all debt paid and zero cash, someone would buy that mine. If so, you as a shareholder would get paid a portion of what that mine is worth after all the Company debt is paid. The leftover is split between warrants, options, preferred, and common. You get to determine what the Company's assets are worth, and what your suspected share of the sale of those assets would be.

    But the assets speak for themselves. Bottom line, NAP produces and sells a commodity. Dealing with a commodity implies high capex and capital costs relative to inflation. Management has the task of speaking for the business.

    Here are some questions by which to gauge management. Has NAP ever failed to deliver product. How is NAP revered among its peers, including competitors, lenders, and industrial users of its product, i.e.: smelters? And how well does the company's management reduce costs? And finally but ultimately, does the company shift the operational and budgetary targets every year or few years to accommodate results?

    Unless we're being lied to by management, or we are fools and fail to see our mistakes in analyzing the numbers, then management is doing two things well. They are reducing costs and hitting targets. Pd is a commodity; however, NAP has the opportunity to build itself as a consistently dependable supplier of the commodity.

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    • <<Look, with all debt paid and zero cash, someone would buy that mine.>>

      $600 of PD in the ground is not worth $600 if it costs $400 to mine/refine it.

      If your theory held up, SG would be sold already. Lots of gold, but cost more to mine than it's worth. That's why they shut it down. Biggest asset in the SG hole is the $50M they dropped into it (measured in loonies per ton)

      << The leftover is split between warrants, options, preferred, and common.>>

      Not even close. First come secured creditors, payroll,taxes. Then other debt holders. Then common (usually nothing by that time.) Wts and and options get nothing unless they are ITM and are exercised and become common shares.

      • 1 Reply to bellbell63
      • I included debt holders first, btw, before I split the money between common, warrants and option holders. I left out payroll, but I derive payroll costs by subtracting cost per ounce from the quarterly revenue data and building a derivative to figure expected costs of labor by x date, say 31Dec. I add costs to the total debt before I give any money to shareholders in the event of an asset sale. I also exclude deferred taxes and consider an appropriate %age for corporate taxes on quarterly and annual revenues and build a derivative in order to subtract taxes on gross revenues over time. As far as debt, I subtract it all. I would not have overlooked any of the debt in any form. I KNOW debt holders get first dibs. Then, I dilute the number of shares outstanding by adding in options and warrants.

        LDI has an asset value that holds a fair market value. You can derive a minima and a maxima using low and high Pd prices in association with industrial outputs and federal trade deficits to construct a fair market value of the mine, in CAD or USD. Use trade deficit date to determine expected exchange rates. To clarify, I'm referring specifically to the sale of LDI.

        Vezza's fair mkt value is quite different.

        So maybe wasn't as clear as I could have been.