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Gold/Mining/Energy : North American Palladium(AMEX:PAL)- PGM Producer
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To: Sleeper who wrote (506)3/6/2000 7:10:00 PM
From: Elizabeth Andrews  Read Replies (2) of 976
 
I reread all their stuff on the weekend. Can't find a recent balance sheet anywhere and I guess you have to figure it's a mess anyhow and also irrelevant to the current exercise.

The info says that the operating cost per ounce of Pd will be US$131, after crediting the other metals. I presume this is before the NSR and smelting charges. If they add $44 per oz that gets us to US$175 per ounce. This is before interest charges. If the interest is $20 million per year that adds about $80 per ounce which gets us to US$255 per ounce.
At Pd US$600 per ounce the expanded mine churns out US$86.3 million cash flow.
Apparently, the feasibility was done with Pd at US$350 and that generated a payback of 2.5 years.

There are 12.2 million shares issued and 10 million convertible pfd held by Kaiser. If the financing for the expansion includes an equity component of C$50 plus C$150 debt,and Kaiser converts the pfd's there will be about 27.2 million shares issued. This implies that the proposed mine has pre-tax cash flow of around C$4.50 per share. It is currently trading for 2.2 times this possible future CF/sh. Is C$10 too low???? Methinks so. In the third year the interest charge goes away and cash flow increase to C$5.25 or so. The stock is also under-owned by institutions. Even with no sweethearts this stock looks like a bargain.
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