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Gold/Mining/Energy : North American Palladium(AMEX:PAL)- PGM Producer
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To: koan who wrote (614)6/14/2000 2:16:00 PM
From: Elizabeth Andrews   of 976
 
They have a hedging plan in place. They have an end user supply contract with an unnamed Japanese car manufacturer, which is subject to suitable financing for the expansion. They haven't said whether the subject has been removed yet. That deal involves a deal for the car company to buy 100% of the production for five years at a floor price of US $325 per ounce. The contract also has a ceiling price of US $550 per ounce on 50% of the production. Presumably the car company has to buy the other 50% at market. So if the deal goes through then PDL would not be able to sell forward any future production. What we don't know is if this agreement covers current production or production from the new mine and mill when commissioned. The new mine is expected to be running in Q2-2001.

In the meantime if the production is un-hedged they only have about 70,000 oz to play with between now and then. That could generate about US $30 million cash, however.
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