According to Mackie Research:
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NORTH AMERICAN PALLADIUM LTD. – SELL
TARGET: $0.00 (from $0.13)
Potentially Massive Equity Dilution
DETAILS – A Potential Restructuring Plan
A debt restructuring plan: PDL announced a debt restructuring agreement which effectively converts existing debt for a 98% equity interest in the company, of which at least 92% interest would be held by Brookfield. The residual 2% would be held by the existing shareholders. In addition, Brookfield has granted an immediate additional credit line of $25 million, and has agreed to back-stop a $50 million rights offering.
A structuring was required, but really – this is more than a hair-cut: No exchange rate terms of the reorganization was disclosed, but with 384.4 million shares outstanding pre-reorganization means ~19.14 billon shares needs to be outstanding post-reorganization to reduce this positon to 2%. Clearly a roll back of ~100:1 would be required post-reorganization just to reduce the shares outstanding to a reasonable level. Further, it also means that debt levels would have be converted at a share price of ~$0.015/sh for every $1.00 face value of debt – a huge discount to the pre-announcement equity price ($0.26/sh). The alternative to not agreeing to reorganization would be bankruptcy, in which case the secured debt holders would ultimately take-over the company.
Also looking to sell the company: As part of the restructuring plan it was also announced that CIBC has been retained to seek a potential buyer for PDL, but the search process has only until June 30 to find a superior offer. In our opinion, this exercise will likely fail to yield results.
IMPACT – Hugely Negative
From an existing shareholders perspective, massive dilution: The effective conversion price for the debt values of PDL at ~$0.015/sh, roughly equivalent to our original thesis that given the level of debt, there was minimal residual value for existing shareholders. .......
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March 5, 2015
(Bloomberg) -- Shrinking platinum stockpiles, growing demand from carmakers and new uses being trotted out in the energy field are stoking producers’ expectations that prices of the metal are poised to rebound from a five-year low.
Production of the shiny metal, used for jewelry and in catalytic converters in cars, will fall short of consumption this year by about 500,000 ounces, according to a January estimate by Credit Suisse Group AG. That’s prompting industry leaders to debate how long it will take for buyers to use up reserves and start paying more for a less available product.
Platinum is “in its strongest position” in a decade, said Chris Griffith, chief executive officer of Johannesburg-based Anglo American Platinum Ltd., the industry’s largest producer. “The fundamentals are that demand is increasing.”
Griffith said he believes prices will begin trending upwards relatively soon. Meanwhile, Terence Goodlace, CEO of Impala Platinum Holdings Ltd., the second-biggest producer, sees increases further out, estimating it will be two to 2 1/2 years for excess supplies to be depleted, with prices starting to recover in the second half of next year.
“The above-ground stocks for us is still a very, very big thing,” Goodlace told reporters at a media round table.
Platinum’s lustrous appearance and durability make it popular for jewelry, while its chemical properties mean it’s well-suited for industrial applications. In southern Africa, source of more than 80 percent of mined platinum, the ore is typically produced with related metals such as palladium and rhodium, while in other regions it’s a byproduct of extracting other metals such as copper and nickel.
Higher prices can’t come soon enough for an industry that’s been struggling for about four years.
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TORONTO, March 2 (Reuters) - Canadian uranium explorer Denison Mines Corp is willing to be either a buyer or seller once merger and acquisition activity in the sector accelerates, its top executive said on Monday.
"We could be on either side of the fence, quite frankly," Chief Executive Ron Hochstein told Reuters during the Prospectors & Developers Association of Canada mining convention in Toronto.
Denison, part of the Lundin group of companies, owns what analysts say are two particularly attractive assets in northern Saskatchewan's Athabasca Basin that could put it in play.
They include 22.5 percent of Areva SA's McClean Lake mill, which processes uranium from Cameco Corp's new Cigar Lake mine.
Denison is also developing the Wheeler River project, which includes the high-grade Phoenix deposit.
On the buyer side, Denison is one of several parties to sign nondisclosure agreements with junior miner Fission Uranium Corp , owner of one of the world's most promising pre-production uranium deposits, and is eyeing possible acquisition of other Athabasca projects.
A partial recovery in the spot uranium price has offered hope that the sector's four-year slump since Japan's Fukushima meltdown is nearing an end. The spot price of about $38.75 per pound is about 38 percent higher than last year's low.
Hochstein said the company will not sell its mill stake or Wheeler River project except as part of a takeover of the entire company, describing them as "crown jewels".
The eastern Athabasca Basin, one of the world's richest uranium sources, has two other mills that are owned by Cameco and Areva. Owning a piece of McClean Lake sets Denison apart from other explorers, Hochstein said.
I am not a tool from Dundee Capital Markets. Dundee Capital Markets is the only brokerage that currently covers Western Lithium USA Corporation right now. I am just a regular individual investor that wanted to share this Dundee analyst report with everyone on this message board. That is all.
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February 24, 2015
BUY, Speculative Risk
Dundee target: C$1.30
High Purity Lithium Carbonate Produced as Initial Pilot Run Successful
We recommend Western Lithium with a BUY and C$1.30/sh price target.
Production of high purity, 99.8% lithium carbonate (LCE) from its first pilot plant trial run in Germany highlights one main thing - the plant works. Initial results help confirm the design parameters laid out in previous technical reports and de-risks the proposed flow sheet for its massive Kings Valley clay hosted lithium deposit located in Nevada. While the news isn't a surprise, this is the first time we are hearing of a battery grade purity product at demonstration scale. With the world watching construction of Tesla's Gigafactory in WLC's backyard, and more recently digesting rumors of Apple developing an electric vehicle (or driverless car), Western Lithium has become one of the premier lithium investments.
Pilot plant works. Less than 100 kg LCE was produced but management is touting quality over quantity at this stage. 75t of material at 12 tpd was calcined, with 5 tpd treated at the crystallization facility. Recoveries were in line with design at 85-90%. The pilot facility is designed to produce 72kg/day of LCE or 20t/year if operated continuously. Several tonnes of different products are scheduled.
Preparing for Round #2. Upgrading the plant, improving operating procedures and enhancing reagents are underway with a main goal of achieving the optimum phase chemistry (dropping the right compounds out of solution at the right time). Plant modifications including the addition of an automatic feed system and dust collection units to improve the leach circuit. Byproduct production of potassium and sodium sulphates (K2SO4 and Na2SO4) is hopeful during the next pilot run.
Li hydroxide studies underway. LiOH is becoming a preferred compound. Used in EV batteries, it is a key growth market with demand expected to increase 20% pa .....