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North American Palladium Limited ┼×irket Message Board

  • bigblue904034 bigblue904034 Jul 22, 2013 5:32 AM Flag

    Palladium up now 19% in 2 weeks at almost 750...Gold now above 1300.

    Precious metals are doing quite well the last 2 weeks and Gold is trading at 1,315 dollars, way above its 1200s support.
    Again, for the ones who like GOLD I advise to trade IAG and PVG not long so Gold is not out of the woods yet. Keep an eye on PLG in the 0.90-0.80 it is a good potential for pt.

    This is setting some good base for PAL which will reach the 1.20 or even 1.30 sooner or later depending of course on the LDI update? I have still a target around 1.25 short term.
    PAL is more than ever a BUY between 1.10 and 0.90 and I will buy again by increment as low as I can.
    I already bought only 3k shares at 1.11-1.10 end of cession last Friday. May buy more at 1.10 or lower today if I can this week but not very probable.

    But, be careful, PAL will have some pretty tough time to keep a pps above 1 when Q2 will be released and I will not keep much of my holding around mid-August. Do not be caught this time the risk is evident.
    As always PAL trading needs a fine timing depending on the knowledge of fundamentals. If a drop on earnings to under 1? that I expect and hope, it will be a signal for an accumulation for the long run!!! because PAL will probably reach 3,300 tpd from the shaft by end of Q4 and the Company will start to improve then significantly and with it the pps of course.

    Is there ANY traders left here who can give a personal comment on PAL direction and an idea of a rational trading?


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    • I agree Blue,
      I also bought some on the way down on Friday.
      Palladium has been outperforming all the other PM's (not because of a rise in Pd, but rather the severe drop in AU, AG, etc.). Nevertheless, this shows that Pd is running its own course (based on the supply/demand fundamentals).
      It is now almost trading at 0.6x gold, which I think will be a resistance, but once that is taken out, I expect it to head higher towards 0.8x gold, and later next year 1.0x Gold.
      If Gold would drop to $950 by early-mid june 2014, and the ratio stands at 1.0x, that would give $950 Pd.

      The debt they have taken on at 15% is expensive to say the least.
      However, if we take 15% on 130M, that makes 19,5M$ on interest expense.
      At the current rate of production (160.000 ounces annually), PAL would need a $125 Pd increase to make up for those costs. ($125x160,000 ounces = 20M in extra cash flow). Not even talking about highe production and lower costs in the not-so-far-away future.
      I finally agree with the slideshows posted on the website, that NAP is now highly leveraged to higher Pd prices, due to the fact that they have taken on debt, instead of diluting shareholders massively.
      Every $ increase more than a $125 increase in the price of Pd leads to extra $$$ in the bottom line.

      I see resistance at the 200EMA (1.47CAD). Price hasn't been able to break through this level since it dropped below it in early 2011. It has tried to do so several times, but without succeeding.. Once it does, I think the race is off, and PAL could be headed MUCH higher.

      PS: Martin Armstrong has been extremely right about precious metals, and if you google "Martin Armstrong Palladium Not Gold", you will see that he is bullish on Pd...

      Sentiment: Strong Buy

      • 1 Reply to profi_times
      • Finally someone interesting here! thank you Profi time.

        I am less bullish on palladium now because of the weakening of Gold but I do see 800+ dollars for palladium in 2014 to 2016. It is at least one less problem for PAL which may benefit from that somehow.

        The debt for PAL is now a HUGE cost burden 15% can even go to 19% if the interest is not paid?
        PAL had to pay off the prior debt at 10% penalty too etc etc...
        It comes to a point where Phil du Toit must deliver what has been promised and any delays or miscalculation will have serious financial effects down the road.

        You should read Brookfield covenant regarding EBITDA minimum for 2014 etc etc.
        The rate of production that you have referred to, has been revised by Du toit for 2013 and will be more around 140k oz.
        I expect only 33Koz to 32Koz for Q2 and not much more for Q3 and Q4....Q2 will show a cash cost at 600+ going lower only during Q3 and Q4 mostly.

        Short term I think a target at 1.25-1.30 around the 100MA could be possible to achieve if palladium stay strong and LDI delivers some news soon?

        I do not think your target at 1.45 and more will be reached soon and not before Q4-2013.
        I see PAL going down in August September and re-testing the lows at 0.90 or even less when the full extent of the impact of financial burden will be unveiled with Q2. If you believe PAL can achieve Phase I then it will be the time to really accumulate PAL for the long run assuming some encouraging progress at the shaft and a starting of production by shaft to the 3300 TPD estimated by end of Q4. I hope the Phase II delay will be explained also...

        Until somewhere in 2014 it will be much prudent to trade PAL on a short time frame or even day trade imho. PAL is risky but could pay off a lot in 2014-2015 assuming PAL will deliver what has been promised and in time?