Since late summer of 2019, the price of palladium has rallied from the $1,500 area to almost $2,800. That's close to an 80% rally in about 6 months. A few of the reasons for this price explosion is that most of the palladium in the world comes from Russia and South Africa. With trade sanctions on Russia imposed, industry ends up buying from South Africa. Still, that country is seeing droughts and water shortages, which in turn wreak havoc on the hydro situation, and with power outages happening, the country ends up seeing a lot of its mines being shuttered or working at partial capacities.
The second reason for the rally in six palladium prices, of course, is the extra global demand for the metal due to the increase in hybrid cars, which use this metal to control pollution. This is happening all at the same time governments are imposing tougher regulations on carbon emissions. So it's the classic increased demand plus decreased product, which equals price explosion.
A third reason could also be that the price of rhodium is getting to a point where an alternative needs to be found. I wrote an article back in September 2019 about sky-high rhodium prices, when they were $4,000 an ounce. Today, that price has reached $12,000 an ounce, and palladium is keeping in line.
As far as investing in palladium goes, you can buy the metal itself from various bullion dealers like Kitco and so on. Aside from investing in the metal itself and paying the huge premiums, though, there are a few mining companies that explore and mine for palladium that you could consider investing in.
Palladium One Mining Inc. (TSXV:PDM), formerly known as Nickle One, has properties in Canada and Finland. It holds interests in the Lantinen Koillismaa project in north-central Finland, and in August 2019, the company acquired the Tyko property in Ontario, Canada.
New Age Metals Inc. (TSXV:NAM) has interests in the River Valley PGE project in Ontario and the Genesis PGE/polymetallic project in south-central Alaska. The company also has interests in lithium properties.
Grid Metals Corp. (TSXV:GRDM)Â has interests in East Bull Lake, a platinum group metals-nickel-copper exploration project, as well as the Bannockburn nickel property located in the Sudbury Mining Division, Ontario. The company also has the Makwa Mayville Project located in the Bird River Greenstone Belt, approximately 145 km from Winnipeg, Manitoba. The project consists of two open pit NI 43-101 resources containing nickel copper platinum group metals and cobalt mineralization.
Group Ten Metals Inc. (TSXV:PGE) has the STILLWATER WEST PROJECT, where it owns a 100% interest on a large 54 km2 claim block that adjoins the producing J-M Reef PGE deposit. This is the area where still Stillwater Mining is located and this area has some of the highest-grade major PGE deposit in the world and the largest outside of South Africa and Russia. The company also owns the Kluane Project in the Burwash Yukon area. This project has one of the largest undeveloped PGE-Ni-Cu projects in North America at 6 Moz of Pt+Pd+Au and 3 Blbs of Ni+Cu in M&I resources and an additional 2 Moz of Pt+Pd+Au and 1 Blbs of Ni+Cu in Inferred resources.
Platinum Group Metals Ltd. (TSX:PTM) has operations in South Africa and is focused on the production at the Maseve Mine and the exploration of the Waterberg platinum deposit. The Waterberg Project is a bulk underground deposit in northern South Africa. The company discovered it and believes it has the potential to be a low-cost producer of palladium, platinum, rhodium, and gold.
Generation Mining (TSXV:GENM) owns a 51% interest (with an option to earn up to an 80% interest) in the Marathon PGM deposit near Marathon, Ontario.
So the big question is, will palladium continue to go up in price like rhodium, for instance? Rhodium today sits between $10 - 12,000 per ounce. Some market watchers say yes. There are market forecasters who see $5,000 before 2025, and there are probably commodity traders who are also calculating the future price also now that issues like the Coronavirus are starting to put hiccups in supply chains. Palladium could become a lot more expensive unless a junior mining company can somehow find and develop a deposit to fill that supply gap. But with 10 year construction build times on any mine today, most see the price continue to go up.
If you enjoyed this article, please feel free to share. When seeking out mining stocks always use Due Diligence and see our Disclaimer and be sure to sign up for our free news letter located on the right hand side of this page.
