"Given PAL's quarterly performance it is safe to say that they have mined at east 26,500 troy ounces of palladium. At an average of $850 that is $22,525,000 at a cash cost of $500 that is $13,250,000. Or earnings of $9,275,000."
"it is safe to say that they have mined at least 26,500 "
Not safe at all since PdT said they lost some weeks of production in July due to mine accident and safety issues.
Wrong. You cannot use cash costs to determine earnings.
How about subtracting:
"The Company has made a payment of approximately US$23.4 million to Brookfield Capital Partners Ltd. ("Brookfield"), its senior secured term loan lender, representing US$16.2 million of accrued interest and US$7.2 million of the associated pre-payment fee."
that they paid in July. Now the +$10M for the two months becomes -$16M. Plus normal July and Aug interest of about 4.5M and now down to -$20M on a cash flow basis. And that's ignoring all the other costs such as G/A, explor/dev,etc
"They are going to smash earnings!"
No, you will not see any positive EPS this quarter.
Q2 was -.03 (would have been -.06 but outstanding shares doubled from Q2 2013)
Q3 has some positives and negatives so I am going with the same -.02 to -.04 for Q3.
Maybe you use fuzzy math to convince yourself PAL is a buy, but it doesn't fool others. PD at 13 year high, PAL just pennies off all time low. The market has spoken.
Exploratory drilling results may extend the potential LOM but as we have seen it takes time, much money and skill to develop that potential. Not sure that PAL has enough of any of these. If nothing else it would take a sizable financing to develop what drilling finds. To carry out PdT stated goal of extending shaft to lower offset zone will take money they don't have at the moment.
"Isn't it obvious that the above ground stock pile is the same mined ore just run through the mill again"
I don't think so. They have this huge surface stockpile from their pit mining days. If you think through the milling process, it is clear you can't run the ore back through the mill. It is crushed into a fine powder and the the metals are are "floated" out in large bubbling tanks where the metals are skimmed from the surface. That is then dried (called concentrate) and shipped to a smelter. What falls to the bottom can't be run through the mill again, but could be run through floatation again.
Just a couple of comments.
I would think that as they increase shaft TPD they will not maintain 50/50 shaft/surface but slack off surface TPD. Primarily because of ore handling equipment availability.
Estimate of secondary minerals is a bit low. Latest PAL presentation has secondary mineral revenue about 50% of PD revenue.
Your $60,000,000 is revenue not profit. Profit pays BAM not revenue. Q1 report will be the final answer as to profit.
If they reach 5000 TPD and IF PD stays around $900 IMO they may just break even in Q1 2015. That's why I don't think there is much upside to PAL, two big IFs to just get to even.
And IMO there will have to be another financing by year end of Q1 2015 in order to deepen LDI shaft as PdT says he wants (and needs) to do.
WAs not meant to be all inclusive , just an example of a significant cost not included in "cash cost".
A very crude estimate = all costs / produced ounces.
From Q3 report:
All costs = revenue + loss = 50M + 10M = 60M
Since the get about 35% of the revenue from byproducts we should reduce the revenue by 35% go get costs per PD ounce.
50M x .65 + 10M = 42.5m / 39223oz = 1083/oz.
This is probably an overestimate since it includes since it includes some smaller no-cash items like depreciation.
My best guestimate is about $1050/oz. But it would be much better if PAL would reveal their all-in and all-in sustaining costs.
Since a portion of the costs are fixed, cost/oz will come down as they get TPD up. So bottom line is that IF they get TPD to 5000 TPD and IF PD stays around 900 they may be operating just about break even by the end of Q4. Those are two big IFs to just break even.
You would have to ask PAL to reveal their all-in costs and all in sustaining costs. Some miners have started to do this as it is the only true way to understand actual cost. For example, cash cost does NOT include interest expense. BAM (130M at 15%) alone adds about $120 /oz to costs assuming about 160,000 oz/year.
Doesn't really matter. Cash costs grossly underestimate the true cost of producing Pd and continuing to produce Pd.
Easy to do in print, harder to do in the mine.
Q1 = 3050 TPD
Q2 = 2900 TPD
Does that look like it's going in the right direction to reach 5000TPD by YE?
They said they lost several weeks in July because of sad mine accident.
First the TPD we are all referring to is TPD from LDI shaft. Don't really care about surface TPD as grade is very low. One tonne from shaft at 4.5+ g/t is worth 4-5 tons of surface at 1 g/t.
My estimate for shaft TPD Q3 is 3150 TPD.
That said I still see about a 50/50 mix.
Some things that will affect q3. Big cash payment to BAM.
4Koz of Q2 inventory to be sold in q3.
"So why would they not be increasing production through to the end of the year?"
A good question. Q1 was 3050 TPD, Q2 2900 TPD. Q3 guided weaker than Q3. Do you still believe they can get to 5000TPD by year end? Do you believe anything PdT says? I don't believe he is deliberately lying but is just overoptimistic about what PAL can accomplish.
Nothing to do with PD price. Has to do with TPD at LDI and financial (cash)position at end of Q3.
Q3 was guided lower than Q2 so no reason to jump into PAL now. All-in costs are probably higher than $900 anyway, but then PAL refuses to reveal all-in costs or all-in sustaining costs so "investors" are left to guess.
'For $1800 you can buy 100 shares of SWC or 6792 shares of PAL. Which stock do you prefer based upon risk versus reward analysis?'
Your 6792 shares of PAL are currently worth $1715 -5%
The 100 shares of SWC are currently worth $1842 +2%
That's a 7% difference in just 4 days.
Seems the risk is with PAL and the reward is with SWC.
Will continue to track.
Yes, but that is not known for several weeks after ore is mined after it is milled nad concentrated. I don't expect grade to vary much but I do expect TPD to ramp up so I will be happy with TPD as a starter.