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Gold/Mining/Energy : North American Palladium(AMEX:PAL)- PGM Producer
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To: Bobby Yellin who wrote (137)10/6/1997 7:52:00 PM
From: Jason Marcotte   of 976
 
Kaiser Francis Oil Company of Oklahoma is the controlling shareholder of PDL. They own approximately 17.5% of the company's 11 million outstanding common shares. J.P. Sheridan owns approx. 16.9% of the common shares. The company had accrued a $111 million demand debt with Kaiser-Francis, however a debt reorganization took place last month in which Kaiser exchanged $50 million of the debt for 10 million preferred shares. The remaining $61 million was converted to term debt. Although this is a huge debt for a company this size, I think this company is in far better shape than it was even a few weeks ago as it no longer has a huge DEMAND debt overhanging it.

An ore reserve calculation was made in 1995 by Behre Dolbear which concluded that the Roby zone contained a probable geological ore reserve of 6.6 million tons of ore with a combined PGM grade of 0.196 ounces per ton. The C zone contains a further 2.3 million tons of 0.12 ounces per ton of PGM's. The milling facility is currently operating at 2400-2600 tons per day. It should be noted that one of the positive aspects of PDL is that little exploration drilling has been done on the property due to the fact that cash has been in short supply. While this presents problems for the mine plan, it is a very big positive should PDL's finances allow more drilling in the future.

Electrical applications consume 35% of the world's palladium supply. The use of palladium as a catalyst (ie catalytic converters) is also increasing, and this use is responsible for a further 35% of the demand. Dental and other miscellaneous uses consume the balance. Personally, I feel that the fundamentals for palladium prices are compelling. For years, Russia dumped huge quantities onto the open market from its stockpile of unknown reserves. However supply from Russia has decreased dramatically this year, leading me to believe that the stockpile has either diminished or is used. The price of palladium has gone from the $110-120 range at the beginning of the year to the current $185-200 range, and has peaked as high as $240 at various times this year. Considering the lacklustre performance of other precious metals this year, this is an impressive performance.

Hope this info helps.

Jason
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