Globe says North American Palladium facing tough times
North American Palladium Ltd PDL
Shares issued 50,338,809 Jan 16 close $9.21
Thu 17 Jan 2002 In the News
The Globe and Mail reports in its Thursday, Jan. 17, edition that North
American Palladium has problems looming. The Globe's Vox column says the
palladium market is not completely free and open because the Russians
control enough stock to be able to manipulate the price. However, given the
economic climate, and the Russians' decidedly lukewarm embrace of oil
cut-backs, The Globe figures they are not inclined to hoard, even if the
price weakens. More important is that North American Palladium's main mine
is not living up to the firm's rosy projections. The ore body is decent,
but mining it is proving tough. In the fourth quarter, recoveries were only
70 per cent, whereas the firm had projected 83 per cent. Other mines have
better grades in their waste than this one has in its mill feed, says The
Globe. NAP's production also contains high levels of magnesium oxide, which
costs more to process. Improvements are likely, but they will take at least
six months to trickle down to the bottom line. More capital will also have
to be committed. In the meantime, NAP is burdened with $130-million in
debt, the servicing of which, under the worst-case scenario, will be very
tight. |
