North American Palladium (PAL) Spikes on Updated Reserves of Canadian Mine

Joel Anderson  |

Shares in small-cap palladium mining company North American Palladium (PAL) jumped on Friday, representing the second-straight day of gains and meaning the stock is up a cool 25 percent over March 20 and March 21. Friday’s jump of over 10 percent was driven by an update on mineral reserves and resource estimates for its Lac des Iles mine in Northwestern Ontario.

Shares gapped up almost 11 percent to $0.51 apiece at open and climbed as high as $0.55 each in early trading before pulling back and hovering around $0.52 a share.

The total reserves and resources of 5.2 million ounces is a 24 percent bump over the previous technical report from January of 2013. Total reserves were up 12 percent to 1.3 million ounces of palladium, and the current life of mine (LOM) increased by one year to 2019.

"We are pleased with the overall increase in contained palladium ounces in our reserves and resources and the improved economics of our updated life of mine plan for LDI," said President and CEO Phil du Toit. "Our operations are performing well year to date and the fundamentals for the palladium market remain favorable. As we continue through 2014 we will focus on continued operational improvements, lowering unit costs and further diamond drilling to potentially convert our large mineral resource to reserves."

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The increase in reserves and resources means the company will have to file a new, updated NI 43-101 technical report, and has expressed an intent to do so before March 31. On the whole, the increase in reserves has the company’s executives and investors alike bullish on the future for the small-cap miner.

"Mine operations continue to perform well with several large stopes in the production cycle and significant broken ore inventory underground. Tonnage mined is as per plan and grade has been above guidance year to date due partly to some strategic stope sequencing decisions made late last year," said COO Jim Gallagher. "Performance at the concentrator has been above guidance with recoveries in the first two months averaging 84.5%, reflecting positive results from the process improvements implemented in December 2013. We have also taken short-term measures to improve throughput of the ore handling system feeding the shaft and are on track to complete permanent solutions in the second half of 2014, which are expected to allow us to achieve higher production rates at lower unit costs."

While palladium and its congener platinum don’t get the sort of press that precious metals like silver and gold do, they are nonetheless rarer commodities that are essential to making catalytic converters. Canada represents one of the smaller players in this market, with Russia and South Africa controlling a combined nearly-90 percent of global production.

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