" NAP would use 0.8 g/t ore"
Where did you get the 0.8g/t? If you read the CC Gallagher said 12M tonnes at little under 1gr/T and if you look at the last Q3 the HIGH grade stock pile was 1.2g/t and I think the 12M tonne represent a mix of low and high grade. If you look again at the Q3 you will see that the low grade stock pile was not used but last year at 1gr/t.
I think in some precedent CC the grade of the stock pile was indicated ...and it was above 1g/T.
Maybe Gallagher did a mistake at the CC saying "little under" and should have said "little over"?
It will be better if you take a 0.95g/t for the whole 12M tonnes.
That said, it is obvious that it is NOT economical to run the mill with 0.95g/t BUT starts to make sense when it is mixed with the ore from Offset zone. All together the mix can reach 2.5g/t with a low cash cost relative equivalent between the shaft hoisting and stock pile.
The element that is actually improving and seems encouraging is that the recovery at the mill is increasing now at 80.7% almost 2% better than a year ago and is expected to stay that high or even go higher to 81% or 82%.
As always, PAL is a 1/2 glass full or 1/2 glass empty depending on what you want to focus on?
I repeat, IF PAL can finance the last cash needed to run full phase I from Offset, IT WILL RECOVER in 2014.
I think the financing is a DONE DEAL and therefore PAL will trade higher than today somewhere in 2014.
The question is how low this financing process will drive the pps and there is NO WAY to know if we are at the bottom or not now.
The only relief is going to be the financing news and the guidance 2014 that hopefully will give an increase between 20% to 40% in production for 2014 compare to 2013.
A while back I estimate a 0.13 per share positive earning for 2014 but did not calculate that with the BAM % capitalized and it was based on 800 palladium and 195koz which is maybe too high.
Then lets wait for financing and we will see from there
No imho, cash flow is related to production and PAL needs to produce more to eventually get cash flow positive...It is simple. If they produce more they will have more receivable and will free the 24M that they need urgently.
"And the deeper they go into the Offset Zone, the higher the ore grade."
I wish it could be true!!!...Unfortunately, the highest grade so far has been 4.6g/t and at least until 2018 per the report Feb 19th.
Someone earlier talked about 2019 referring to the report but he was wrong...If you read the 16.7 and down you will see that the reserve for phase I go to 2018 with a serious downfall for the last year.
The situation is now very serious and there is still a potential of BK filing, but I do not think PAL will file for the reasons explained in my first post. But it is just guessing at this point.
Financing is coming and better be! the problem is that the equity financing will increase the outstanding from 197M to perhaps 240M-260M shares and just for 20M or 30M xash. Market cap is now at around 78M for the mine!
You should evaluate PAL like Chris Wallace indicated to me recently and it is per EV entreprise value...
With this last financing the EV will be around 320M plus or minus...Which is about what SWC is now.
If financing is done then PAL will start to improve slowly and with it the pps and us shareholders.
We need the 2014 guidance to really model until September 2017 which is the date max for the payment of BAM debt.
So far guidance should be around 140Koz to 230Koz??? and cash cost perhaps at 350 dollars. It is too elusive to really apply a good model. Hoping for 170Koz to 200Koz now but hard to know.
Until these numbers and financing will be announced and secured the pps will keep drifting somewhat...tyvärr
1 - I am failing to understand why you are so rude when you answer my posts again do I know you from somewhere?
2 - "2014 guidance would not be release until late January."
I am well aware of the CC and what has been said and written about PAL and you don't sadly.
What I said is that PAL will try to release guidance earlier and perhaps before Christmas. Call PAL yourself.
Read again the last financing news Dec 2. You really do not do your DD!
"The Company is currently in the process of finalizing its budget and capital requirements for 2014, which will include increased production at lower operating costs and a significantly reduced capital expenditure program of under C$30 million. Formal operating guidance is expected to be issued in December of 2013."
3 - " Also management has consistently mentioned that CAPEX for 2014 would be near $30 million."
Wrong Skittle...PAL indicated that maintenance capex starting 2014 will be 10M. If you start to read the document related to PAL you will find it. Do your DD!
4 - You think PAL needs to give the time frame for capex 2014?
Not logical here Skittle...you mean it could be 30 x 4 or 120M for 2014. or 10 x 4 or 40M for 2014. Did you read the financial situation in which PAL is and how can they sustain a capex so large per quarter?
Use basic common sense before writing.
5 - " Explain how the milling of the 1 g/ton reeks of desperation"
Read what Gallagher said at the CC...the surface ore is about 12M tonne at just under 1g/t average...It is NOT economical to process it at palladium under 800 dollars but the mill runs 14 days per month or 200,000 tonnes per months now and if less Offset zone ore PAL will add more surface low grade to a balance at 25% to 75%. What Jim said is that increasing surface ore and lowering the total average at 2.50 gr/T with a huge cash cost is only a sign of "lean time".
6 -"Your analysis is pretty lame"
No polemic here but how someone who doesn't know PAL basics can write this
If you keep posting here then I will post in reply from time to time...You are one of the rare posters remaining that I follow with Ribble.
Your points are exactly right unfortunately...
1 - the slow process at the shaft still to be at 3,000 TPD *ore only per PAL* by end of December pushed PAL/Gallagher to mix with the stockpile at 1g/T and it is a sign of desperation as you said, that lowered the grade for Q3 at 2.5g/T even using the 4.5g/T from Offset. It is a direct production shortfall due to some hiccups that should have been implied in their Feb 19th report. This is almost a shortfall of 7M per quarter in my quick estimate...Assuming delays from Q2 you can see that BAM gave the exact extension to loan in cash recently. BAM is financing only the completion of the shaft Phase I nothing else.
2 - What they need now is a sufficient cash flow to cover one quarter assuming production will ramp up in Q1 enough to get access to the 24M in credit facility that is contingent to receivable. They may have to wait until Q2 2014 so? It is clear that they will release an equity financing before end of 2014 and I think 20M is what they need to reach Q2 2014 even if break even in Q1 2014.
You are right in a sense that Phil du Toit was too optimistic with the 130M from BAM but maybe BAM was not willing to give more at the time? 130M was the ideal figure.
The mistake was in the fl*t imo that should have been at 40M not 20M but management was afraid to finance full speed?
3 - This is a debate even now without the 2014 guidance which should be released before Christmas per PAL. PAL indicated a 10M maintenance capex for phase I in 2014 and the 30M capex are more related to the general expansion. I still agree it is too much and the 30M should be curtailed to 20M maximum until the mine can produce cash flow positive.
4 - Guidance for 2014 is very important...Before Christmas?
5 - agree
6 - Time will be when financing is secured and guidance is out with BK avoided.
The fundamental situation is more important than any TA consideration even if RSI is under 19 now.
The situation is pretty serious but I do not think PAL will declare bankruptcy anyway and for the ones who can wait, hopefully, pps will improve from here.
What we know is that BAM extended the loan with an extra 15M and gave back the 6+M in interest that PAL paid recently.
The capex for Q4 was about 34M and with the 18M left and the 21+M they got back they are now in a situation with a cash around 6M to start January 2014...
PAL obviously need more cash for next year and I estimate 15M to 30M.
This is what push the pressure down on pps...Because it will be an equity type of financing and I am guessing that the ones who will finance are the very ones who are shorting right now.
The question that we should answer right now is do we think PAL will file for Bankruptcy?
My answer is that I seriously doubt it.
Why, for example, BAM gave an extension of the loan if Bankruptcy was an issue?
BAM felt compelled to give the cash necessary to exactly complete the shaft Phase I job but was reluctant to give the cash they needed until Q1 is achieved. If it was an evident Bankruptcy then BAM would have not deal with PAL and would have refused any extension.
Why PAL management have bothered with BAM again if they were thinking of a bankruptcy now...Why even negotiate for the better the actual covenants of the debt?
Equity financing is always possible at a cost and will involve certain amount of shares and a certain dilution to common shareholders sadly.
My thinking is that PAL will decide for around 20M cash and the conversion will be around 0.35/0.40 * it may have been set already*
It will not be a flow-through because not related to Phase I, but another type of equity financing is almost certain. It will be around 40M to 60M shares at 0.35/0.40? and 250M shares outstanding.
Then we will start another game...because PAL will survive and may rise again.
All the yahoo forums I have participated to are noisy and dirty from time to time...but it comes to a point when the noise is not fun anymore and the level of the posters is below the 77 IQ...Some posts that I read make me feel dirty in a sense that I am associated with this idiots by participating.
Then I do not see what I can contribute here anymore that can be rewarding for me? I have started to communicate on Investor Village for another bankrupt threaten Company called HNR and it is built to increase the quality of the posters and also the quality of the post is much better.
I do not know if they have a PAL forum so?
I have talked to Camilla yesterday regarding the financing and the shaft etc etc...If you are interested just drop me an email at bigblue904034 and I will tell you what we talked about...Nothing that can be qualified as insider knowledge so but quite helpful so.
I wish you luck here so
sköt om dig och ta det lungt ;-)
Unfortunately this forum is now a pure trash and is not fun anymore...Is there any other forum where some decent investor and trader are communicating that you know?
Yes, it is not BAM they can care less but Languille at the CC said he wants to boost the receivable to access not the 20M but the 24M remaining in the credit facility.
The problem is that it is not an overnight process and PAL still need more financing that may not wait until the credit facility can be access...Therefore a flow through is probable even at these pps...
I said that the Canadian government had some sort of loan for PAL but the process is long and may not be accessed in time but still exist so and confirmed by Camilla.
So far palladium is pretty bullish and still trade within the bullish triangle boundaries at the low so now at 709/710....If support is breached then we may go down fast to 650? but if support hold we will see 765 and more after if break out.
I believe palladium will trade above 750/800 in few months but still remain to be proven. The new palladium SA ETF should help if launch before 2014.
As for the production for 2014, I had a wild guess at 195Koz for 2014 based on what Gallagher said at the CC but estimates fluctuate from 140koz to 230koz and without any guidance from PAL we are just in the dark right now with a goal at 250koz by 2015?
The situation is SERIOUS but not still desperate, as long as palladium stays strong and the shaft finally produces what it has been designed and paid for....
PAL is at a LOW right now financially and even in production with a silent management on both sides... pending CC with problems with the shaft crusher and God know what else?
It is about time that PAL delivers some good solid news with the production at the shaft and indicates a production around or closing to 3,000 TPD. Hoping for cash cost at 300 in Q1 2014...
PRODUCTION now is the key to survival...
If we look at PAL without any fundamental or financing implication and barely looking at the chart then PAL is now a SCREAMING BUY which contrast quite a lot with my fundamental opinion.
It has been about 6 trading days at RSI around 21 which is very low, which means that the technical trader has been accumulating PAL in the 0.44/0.46 area and should add more if the pps goes lower from here with an increased amount. 0,45 is quite strong...
To experience first hand this theory I sat up an account aside where I am buying PAL and accumulating in relation with RSI. Anyone here can look at the chart and see that trading the RSI for PAL has been one of the best strategy for the past 5 years....No 100% guarantee so.
So far this account hold an amount of shares averaging 0.4515 and will be sold out at RSI 55 whenever it will happen and at what pps.
RSI may go further down and 18 is not out of the question although the past 3 years 20 haven't really been breached...I am talking about the real RSI(14) and not any exotic RSI that make no sense in theory.
No matter what you do, think before acting!! PAL is very risky at the moment and may surprise us all in BOTH direction we do not have the whole ingredients to make the right sauce here.
Invest only cash you can afford to be dormant for a while...My experience is that many stocks like PAL get some sort of bounce all of a sudden and sadly many end up selling at a steep loss and see PAL looking strong after that.
I do not know if it will happen here but it has happened many times in my trading life and loss could have been strong gain instead. Then take it easy fellows...
In one way, it was a good news because the risk of BK is now pushed away for a while...But what a financing all together!!! Wonder how they can make it by 2017 with 169M at 20.5% now? Without it we would be at under 0.10
Unfortunately, BAM was not willing to give enough and more financing is needed soon. How soon? Probably during Q1 2014...
I estimate the cash needed at about 15M or about 30M to 50M shares depending on the pps negotiated at the time? I do not see anything else for cash...and therefore I expect more downside later for the pps..
Another possible event is to manage to unlock the 60M credit facility and get to use the 24M remaining but I do not see how unless they can show an increase in receivable or convince the bank of a soon rapid increase. Tough...
The question is now how high production for 2014 will be in their "soon to be released guidance 2014"? What is the production at the shaft now until end of December? Yes, production from 2014 to 2018 is a key of survival for PAL. We know already that a 30M future capex in 2014 is planed but even small it is too large and will eat up any profit for 2014? What the hell they are thinking?...no cash means under 10M capex.
Phil du Toit should not wait any longer to present...
Without these keys fundamental numbers we cannot really model a financial situation for the next few years and it is very important. If the guidance is above 200Koz that I hope we may get a pop soon to 0.65?
A range around 0.35 to 0.65 seems what we may have these few months imho.
At last, it is important that the BAM covenants have been re-negotiated because written as they were could have signify some unfortunate breach and default during 2014. I still have to read the modify covenants so...
As a trader I will still trade PAL and did some day trading in the 0.44 to 0.46 and think there is some good opportunity but unfortunately as a long I am still HOLD/SELL and will reduce my holding in relation to my day trading gain if any.
Yes you are right...If PAL goes belly up the mine will stop producing 100% and will be dead for a long while or almost dead. No smooth transition and bills will not be paid...
Management and employees will go looking for another job...The value of the mine will go down like a stone and you can find few examples of that in the past. Value will be calculated from the possible reserve and cash flow possible...
BAM will have a 130M debt without any interest for a mine that will not be worth its initial investment and nobody to produce there...The mine is not even a turn key product now and proved uneconomical by essence.
And what about the deal at the mill etc etc...It will be a pure headache with CAS from irate shareholders and battle to get some crumbs left if any.
Thinking putting PAL in forced BK for 25M dollars is illogical in a sense that BAM is a finance company who doesn't intend to run a mine as a manager and cannot. You need high quality professionals and leadership they do not have handy.
Therefore the 25M financing will be a given from BAM. The question is why it takes so long to release the news? Maybe PAL is looking for other alternatives including some other partnership or take over if possible?
LOGIC BAM is forced to help PAL because its survival means 20%+1.5% interest paid until September 2017 the latest and a potential total return on investment then depending on production schedule and palladium price. Using this second loan to secure even tighter the property reserve left in 2017.
Interest alone in 4 years are paying for the 160M at 20.5%...4 years is about 2.11 time capital.
In 2017, BAM will have the mine as pure profit but not now!
This is what I explained to you yesterday by saying PAL/BAM is a financial partnership already.
You are a trooper and I appreciate it, I am grateful you are posting here too.
I hope that we will profit with PAL and this small conversation will help balance the risk of an over-sized holding. The situation is not crystal clear now and we need different opinions to get a balanced judgment if ever possible?
A bit like compensating a system of n equations with p unknowns using the least square procedure and minimizing the residues. Even if we know that there is no real solution we may close to it.
I have sent an email to Camilla recently asking her to have some sort of Conference Call to address the shaft situation and else...
They said that the crusher should be functional now and it will be nice to know what production PAL is having now or soon. Also, Phil du Toit could address the financing situation and give more details and at last a pre-idea of the 2014 guidance like Camilla suggested to me before end of 2013.
We will see...
What you are saying make sense unfortunately and PAL is a risky play even at this level.
But you have to admit that the death spiral and a catastrophic drop may not be realistic right now because of the amount of cash needed. Down the road it may be clearer if production expectation is not achieved or if Palladium goes down under 650?
PAL needs about 25M and will most probably get the financing from BAM at a high interest rate...A bit like an extension of the first loan, Why killing the cow when the milk is so good?
If PAL goes belly up even BAM will get pennies to a dollar and it doesn't make sense not to help bridging this smal financial gap. It is just simple logic here...
Then, the traders like trader1968fl or even skittle1235 are RIGHT in investing at 0.45 support like I do and even Ribble accumulation make sense...It is a least just my humbe opinion so.
Do I think it is a 100% sure thing? of course NOT and the pps can go further down all of a sudden. Future is promise to no man!
News should come pretty soon and you will see that they will get the cash needed...and the street will buy the news to 0.60/0.65 perhaps? Then Q4 may offer some relief although not as much as PAL was hoping for...If the shaft is delivering in 2014 then PAL will turn the corner for a while hoping that palladium will be strong.
It is a big gamble right now because PAL is still silent but you know as well as I know that they will get the cash although at a cost...If you have the cash you may be smart to start accumulating now and buy more if it goes lower, I will.
If not, then why don't you get so involved with PAL, you have no skin in the game!
There are so many fish in the sea...shareholders do not need to get more miserable here and you can use your time to pump elsewhere and give some positive instead. It is a win win situation...
Do I know you from somewhere? Just stay on the subject and bring your knowledge to the table whoever you are.
Wrong or right is not really important here but what you think of the situation is...
If you disagree and think I am wrong it is fine, just elaborate clearly your thinking and reasoning and we will see from that.
Rible doesn't need anyone like you and we both respect each other very much, even before you came to the game. Communication necessitate some level of intelligence that I hope you have somehow?
So far, you haven't shown any knowledge regarding PAL fundamental or TA and your reasoning for investing 96K shares without any proof seems feeble at best.
Then, now, read again our posts and give your personal opinion.
Thank you in advance
Now I have to say that even if the risk of reorganization is present and will be present down the road, I really do not think that this limited cash shortfall for working capital purpose will put PAL into a spiral death or BK at least not in 2014...
I believe PAL WILL FINANCE the gap and will find the 25M or more that are necessary to complete phase I. The question is how much this new financing will cost shareholders from the actual pps?
Already it is almost certain that PAL will not pay BAM interest and the 15% + 1.5% will change to 19% +1.5%...A flow through of 15M with a pps at under 0.50 may be suicidal and plunge the pps to 0.25 then again BAM will be the one who else?
It is certain that the street already factored in, a large part of this financing into the pps at 0.45/0.50. I may be optimistic here so...and I may be blinded by TA who is a screaming BUY as we speak with RSI at 22 for the past 5 days which is almost a record oversold if you look at the whole history of PAL graph.
If you use a thinking by continuity and set RSI at 50 you can see that PAL may well reach 0.65 on its own momentum with a possible low at 0.35.
Then the trader is coming to the rescue here and I see some good opportunities down the road with a reasonable ratio risk/reward.
The real question is only the trading timing not the immediate survival of PAL at least for me...
Thank you for your post and hope it will serve others to understand better what is going on...
You clarified better your thinking but you did not explain much in my opinion.
"Should NAP management even hint at a partnership or buyout, then it would be a different story."
Wrong! PAL has past this situation a while back Ribble. The financial partnership has been done with BAM who totally owns PAL!...the debt is worth 0.66 a share more than the actual pps.
But the problem is that this partnership is ONLY CAUSTIC for PAL and until 2017.
BAM is a NEGATIVE player who is strangling slowly PAL with an % at 20.5% *if they differ % payment* and stringent covenant that can push PAL in bk down the road, and it is not dreaming just facts.
"My conclusions are that a partnership or buyout is not going to happen"
Can't you see what has happened? The only idea that I am bringing to the table here is to switch a NEGATIVE partner with an ACTIVE and POSITIVE one. If possible?
"My conclusions are that NAP management both knew and still knows what they are doing."
After getting the 130M and 20M in ft few months ago now phil du Toit said at the CC
"So let's look at the preliminary indications for Q4. We have an optimistic forecast that we were aiming for internally, but it's proving to be a little bit more challenging than previously conceived"
"Looking at our balance sheet, it's apparent now that we are faced with a short-term liquidity shortfall for working capital purposes, and need to breach the gap until NAP achieves profitable or breakeven operations in 2014."
This is a big slap in our shareholder face from Phil du Toit. HUGE mistake not to finance with enough room for hiccups...Because of that PAL is now facing a liquidity squeeze as we speak. I was 100% behind Phil before that BUT this situation is his own doing.
"cut it close" is totally wrong it is a miss with dire consequence for us and the pps which collapse for that reason. Now lets hope that they will finance...
Not logic Ribble...
You wrote 2 posts ago...
""Most of the posters who are long PAL are negative to the idea of a partnership"
"I am not against a partnership."
Which side of the story is yours? You cannot negative and not against as far as I am concerned. Just elaborate why you are or are not in favor of PAL finding some financial support that way?
Do not know if management knows "what he is doing" but what I know is that they have BADLY miscalculated the amount of cash they needed to complete Phase I and this is a big mistake that cost us almost 40% in pps.
I do not say PAL will declare bankruptcy, I have said only that there is a serious financing problem to close the gap and I think it will be solved without a bankruptcy filing. It is not a terrible amount of cash they need...If I was thinking that BK is a probable event I would have sold out just after the CC and I did not do that...
Late here now...
Just go and ask Phil du Toit to wait and see what will happen...
They had only 18M left at the end of the last quarter and should be spending another 35M this quarter...18-35 = minus 17M and another 5M in interest payment...minus 23M by end of December.
Yes, right, wait and see...
Time will tell but you did not answer my question...again, why are you against a partnership?
The question is not that PAL is or is not a significant source of PGM, who cares...PAL is about to produce around 200Koz of palladium in 2014 and 250koz by 2015 at a significant low cash cost.
This is significant compare to the world production...
But the question shareholders are asking is why all this palladium is not enough to give the pps a boost?
Then without a partnership or a take-over PAL will be totally controlled by BAM and BAM may be even more in control with the next financing coming. This is a forced financial partnership anyway with an interest at soon 19%+ 1.5% that will totally bleed out the Company till 2017 no matter how high the production will be.
What is your solution of this problem, is there any? How do you see PAL surviving on its own?
Thank you for your reply
Most of the posters who are long PAL are negative to the idea of a partnership between SWC and PAL...In fact, it is now more a question of saving PAL from an insolvency down the road rather than a real partnership at the moment.
It is difficult to conceive why SWC cannot use this opportunity with a price tag so low compare to the palladium reserve in play. PAL is one of the rarest mine of palladium in the US continent with a safe environment and a production schedule that will offer 250Koz at under 300 dollars cost by 2015 without a huge amount of capex left to spend. SWC is the sure bridge to that without BK.
I was hoping for a pps around 1.25 to 1.50 for a take-over but this sudden fall and this cash squeeze will cut probably by almost half the price tag estimated? or around 0.8 to 0.9 for shareholders if there is still time and if lucky enough? A total price tag including the debt lease etc at around 400M and not even the cost of the phase I...
BAM debt is a BIG negative it cannot be paid off until 2017 and also BAM covenants and the Canadian government do not allow a non Canadian company to acquire PAL. Here is why Marathon can be played because it is a Canadian co that SWC owns. It is about 450Kms away from PAL in Canada.
I do not know what Phil du toit and Languille are doing right now, but it is certain that they are looking at all the potential to survive until Q1 2014...Hoping!
They need about 25M almost immediately to close the gap and will probably release the news of a financing early or mid December along with probably the guidance for 2014. Hard to know which direction PAL will take after that? But it is possible that we will see a small positive if financing is secured no matter what the cost will be and it will be high if they chose by force to ask BAM for more or use a f-t equity?
Technically the 2 last trading are showing a new up trend and perhaps a bottom at 0.45? Next week should be confirmed or not next week to 0.55/0.65