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Gold/Mining/Energy : North American Palladium(AMEX:PAL)- PGM Producer -- Ignore unavailable to you. Want to Upgrade?

To: Elizabeth Andrews who wrote (828)	1/8/2001 5:35:04 PM
From: Sleeper	Read Replies (2) \| Respond to of 976

Palladium Surges Above $1,000 on Concerns About Russian Supplies Monday, January 8, 2001 10:49 AM ET A WSJ.com News Roundup NEW YORK -- Palladium futures surged above $1,000 an ounce Monday for the first time on continuing concerns about sporadic supplies out of Russia, the world's biggest producer and exporter of the metal. Natural gas also rallied, supported by strong cash prices, while oil prices finished mostly lower. At the New York Commodities Exchange, March palladium settled up $39.60, or 4%, to $1025.60 an ounce, off its intraday and all-time high of $1035 an ounce. Extremely thin volume contributed to the large price move. Palladium futures have set a series of record highs since early December, flirting with the $1000 level, on concerns Russian supplies would be delayed again. Russia produces two-thirds of the world's palladium, which is used to make jewelry as well as for industrial purposes, but its exports have been hampered by legal complications and bureaucratic wrangling in its export procedures. The latest information is that the signing of export quotas has been pushed back to late January from late December. "This will be the fifth consecutive year that Russian supplies in the first part of the year remain questionable," said William O'Neill, director of commodities research at Merrill Lynch. In addition to concerns about shipments, speculators in Japan have driven prices higher. This time last year, palladium was trading at $440 an ounce, but steady demand from the auto industry -- which uses the metal to make catalytic converters -- and the erratic supply from Russia have lifted prices to lofty levels. "How high is up? To call for $1200 here is far less than unreasonable," Mr. O'Neill said. Dealers said they noticed platinum coming out of Russia last week -- which capped that metal's rise to a 13-year high -- but there is no evidence of any palladium being sold. Meanwhile, April platinum, which usually trades in tandem with palladium, rose $9.80 to $629.50 an ounce. Russia supplies about 25% of the world's platinum, Mr. O'Neill said. He noted that auto makers, especially General Motors Corp., are actively working to reduce their dependence on palladium in the production of catalytic converters. GM "engineers have been doing everything possible to switch to platinum," to make catalytic converters, Mr. O'Neill said. "But it's not one of those light-switch problems you can turn on and off." He noted that GM, the nation's largest auto maker, has reduced its dependence on palladium this year and will do so even more next year. Sleeper

To: Elizabeth Andrews who wrote (828)	1/11/2001 1:37:50 PM
From: Claude Cormier	Read Replies (2) \| Respond to of 976

<I think that this is such a unique situation that using the PE model may not be the best valuation model for this stock given its remarkable position in the Pd market. > Agreed. I think that PDL will eventually sell at a P/CF multiple of at least 10 implying a price of $C30 in 2002 assuming stable exchange rates. I am using an average PF price of US$550 for the next 5 years. I know that PD is higher than that now, but since 50% of their production will be capped at US$550 and there is a possibility that prices fall back below that level in the next 5 years, $550 appears conservative. Of course, if PD still sells above $900 by the time they expand, look for higher cash flows and then higher price. A P/CF of 10 is very reasonable IMO for this special situation.