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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: yard_man who wrote (256193)	8/15/2003 10:38:46 PM
From: mishedlo	Read Replies (1) of 436258

PAL biz.yahoo.com Many factors influence the price of palladium, including global supply and demand, speculative activities, international political and economic conditions and production levels and costs in other platinum group metal producing countries, particularly Russia and South Africa. To offset the price risk, the Company entered into the Palladium Sales Contract and other hedge contracts to cover a portion of expected annual production. Without the Palladium Sales Contract and other hedging contracts the Company's profitability would be significantly impacted by the current depressed spot palladium price. At June 30, 2003, the Company had fully recognized the revenue relating to the palladium forward contracts and therefore does not expect to recognize palladium revenue above the Palladium Sales Contract floor price of US$325 per ounce for the second half of 2003. In the short term, the fundamentals for palladium are very weak with abundant supply and lack of demand, however the Company is optimistic that the fundamentals for palladium will improve in the medium term. The possible development of a substitute alloy or synthetic material, which has catalytic characteristics similar to platinum group metals, may result in a future decrease in demand for palladium and platinum. Currency fluctuations may affect cash flow since production currently is sold in United States dollars, whereas the Company's administration, operating and exploration expenses are incurred in Canadian dollars. As a result, changes in the exchange rate between Canadian and United States dollars can affect revenue and profitability. The Company has hedged US$53.0 million of its revenue for 2003 at an average C$/US$ exchange rate of approximately 1.59.

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