North American Palladium Continuing to Climb as Broader Market Heads South

Michael Teague |

While the broader market slumped at the open of the week of trading, North American Palladium (PAL) , one of the continent’s only miners of the precious metal, was trading substantially higher for a third consecutive session after the company upgraded reserve and resource estimates as well as its life of mine plan for its Northern Ontario Lac des Iles project.

Shares for one of the continent’s only miners of the precious metal had added as much as 21 percent by midday trading on Monday, after the previous week’s 14-percent gain, on volume about four and a half times the stock’s three-month average, as investors continued to be very pleased with last week’s reserve and resource estimate for Lac des Iles of 5.2 million ounces that was a nearly 25-percent increase on estimates released in January of 2013, while the life of mine (LOM) figure was extended by one year to 2019.

The company has enjoyed more breathing room since lopping off its struggling gold assets last year, and while PAL also mines copper, nickel, and platinum, the doubling down on its namesake business is paying off, particularly given the recent upswing in palladium prices.

Indeed, last year saw the company spend over $91 million on the Lac des Iles project, which is currently the only mind in which it is investing any cash. Upgrades to mine shaft infrastructure, for instance, have pushed production figures higher than PAL’s own guidance for the first half of the year of 3,100 tonnes per day.

Furthermore, shareholders can expect to be on the winning end of recent upgrades, as North American’s capital expenditures for the current year of approximately $34 million are one-third of what they were in the year previous.

The company’s improved performance and relatively unburdened balance sheet arrive just in time for rising spot-prices for the previous metal. Indeed, in the past month,palladium has jumped over $60 to upwards of $790 per ounce, as the metal is the closest possible substitute to platinum, particularly for automobile manufacturers who have been pushing demand higher.

Ahead of the closing bell, shares for North American Palladium were trading about 20 percent higher to $0.60 per, still more than $1 from a 52-week high of $1.78.

 

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