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North American Palladium Limited Şirket Message Board

  • bigblue904034 bigblue904034 Jun 9, 2013 7:20 AM Flag

    I am turning Long again and will accumulate on weakness starting next week. Why?

    This question is simple...PAL HAS FINANCING now to COMPLETE Phase I of the shaft at LDI in 2014 and SOLVED its liquidity crisis on both the capex side and the credit facility side. No more bankruptcy risks ahead which was imho around 35/65 now 5/95.

    With the deal with Brookshield of 130M which mature in 2017 they will repay 72M existing debt which will give PAL 58M cash to complete phase I and pay for the other bills.
    Adding a 20M shares flow through which will net another 21M dollars which will give a total roughly 80M in cash for the next few months.
    Adding existing cash at 25M, PAL should have around 100M roughly soon.

    Per the LDI technical report 02/19/2013 that investors SHOULD READ, it is said that the cost for the Phase I remaining in 2012 will be around 62.4M for Q3 and Q4 and another 13.2M+ for 2014.*total of 75.6M for 2012/2014...With sustaining capital from 2013 to 2018 at 35.2M.(see page 28)

    Cash is SECURED now until 2014. Line of credit is re/conducted till July 2014 which is another good positive sign.

    Brookshield is charging a high interest of 15% would have been better at under 12% so. It is about 4.875M per quarter which means a cash cost from 120 dollars/oz to 85 dollars/oz assuming a production starting in Q3 over 45Koz and going up to 55koz in the near future. An increase %cost of roughly 40 to 80 dollars/oz...

    What does it mean?

    PAL expects 250Koz cash cost around 250 dollars/oz in 2015 after Phase I and Phase II completed.
    Per Phil du Toit, Phase II may be pushed back in the future with some new mine design *bulk mining* and we should still expect around 220Koz? per year end of Phase I in 2014 if PAL delivers.
    With the Brookshield extra %cost we will have a cash cost around 320 dollars/oz big deal and PD at 850.

    What we have as production and what will change?

    We are producing perhaps 140koz at 480 or more. Increase with Phase I in production go to +50% with -30% reduction cash cost about.

    PAL is a BUY now from 0.90 to 1.10. IMHO

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    • This is an excellent buying opportunity. BK or poisonous dilution had been priced into the stock as a risk of 30% to 50% prior to Friday's financing news. Sure, it wasn't Angel financing from Heaven, but in reality the fact that (1) PAL is alreading producing 39,000 oz/quarter and (2) sinking of the new shaft in LDI mine is almost complete assures that PAL will be able to make the necessary production to meet interest payments on-time. Meanwhile, once Phase 1 of the expansion is complete, the CAPEX required for that phase changes from a liability to a ROI asset, from the standpoint of valuation. Win-win. I expect PAL to be around $2 PPS by early fall 2013 when additional 6K filings indicate just how close they are to production, and around $2.50 PPS when the first quarterly report shows what the expansion has achieved.

      Sentiment: Strong Buy

    • Excellent points. Been reading all weekend on PAL - all of the Form 6Ks, SeekingAlpha, and other sources. PAL is one of two major world producers of palladium, and their production, which is already healthy at 39,000 oz per quarter, will be increasing by 50 percent. Your analysis of costs is spot on compared to other sources I have been reading.

      Sentiment: Strong Buy

 
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