North American palladium
stock gets 500% boost
Thomas Hirschmann
Financial Post, with files from news services
A Northern Ontario mining company is attracting the kind of market
interest normally associated with technology stocks, thanks to the
rising palladium price.
Thunder Bay, Ont.-based North American Palladium Ltd.'s share
price has risen 518% this year, pushing its market value to more
than $80-million.
The rise is due to the soaring price of palladium, the metal
predominantly used in catalytic converters, which reduce emissions
in cars.
The price of palladium futures for delivery in March, 2000, has
risen 36% since last March. Now, with fears of export delays in the
new year from the world's main supplier, Russia, auto
manufacturers and other users have been stockpiling the metal.
With 75% of its revenues accruing from the white-hot metal, North
American Palladium's stock (PDL/TSE) has jumped 97% in the
past two weeks.
It closed down 20½ at $6.80 yesterday, after hitting a 52-week
intraday high of $7.45 on Tuesday.
In the third quarter ended September 31, North American
Palladium produced 15,602 ounces of palladium, down from
22,535 ounces in the year-earlier period.
The sole U.S. palladium producer, Stillwater Mining Co., has seen
its stock gain a more modest 17% this year. The shares (SWC/
NYSE) closed down 7/8 to $31 1/4 (US) in New York.
London-based metal marketer Johnson Matthey PLC estimates
that about 65% of all palladium comes from Russia.
Until demand cools, palladium pricing is in the hands of the
Russians, says Robert Lapple, vice-president of metals marketing at
Stillwater Mining. "The answer to how much higher prices can go is:
You really have to ask the Russians."
Strong demand and uncertain supply have kept palladium buoyant,
although yesterday the March, 2000, contract dropped $5.45 from
a record high to close at $449.2 an ounce on the New York
Mercantile Exchange.
Automakers are keen to find a substitute. But Haren Gandhi, a
technical fellow at Ford Motor Co. working on catalytic converter
technology, said the metal won't be wholly phased out. "I don't
think it's necessary to eliminate the use of palladium. It's still fairly
abundant. If you can reduce dependence upon it, and therefore
reduce annual demand, then you have balanced out the supply and
demand situation." |
