Not too many people ever think about palladium when it comes to the precious metals. Most of course think gold and silver with a small percentge of people thinking platinum. Unfortunately, this metal goes mostly unnoticed. The reason we don't hear very much about palladium is because it is quite rare and there is very few mines in the world that produce this metal. About 45% of the worlds supply comes from Russia followed by South Africa which produces about 36%. The rest which is less than 20% comes from North America.
This metal is mostly used in the automotive sector. The catalytic converters that are on cars today use this metal to help mitigate pollution and green house gases. Some palladium goes into electronics, dental and jewelry. As an investment, this metal has been one of the best in the metals. While gold and silver are in a slump, this metal is riding high at almost $900 an ounce.
So when it comes to investing, you can look at buying the pysical metal itself or you can look at investing in a palladium miner. Because most mining is done in Russia or South Africa, which both carry a high degree of risk, you need to look closer to home. One such company that is activily mining right now is North American Palladium PDL. North American has been operating its Lac des Iles mine (LDI) located in Ontario, Canada since 1993. LDI is one of only two primary metal producers in the world, offering investors exposure to the price of palladium.
The companies mine produces about 70-80 thousand ounces of metal a year. Continued drilling and exploration has increased the life of the mine to 2019 and beyond. At present the company is mining about 3000 tons per day but plans are to increase that amount to around 5000 tons per day by the year end of 2014. The company has good established infrastructure with excess capacity available for production growth: 15,000 tpd mill & 8,000 tpd new shaft. With the price of this metal continuing to rise, the profitablitly per ounce should also increase.
North American metal has around 380 million share O/S. The stock trades on the TSX as PDL and also the NYSE as PAL. A 52 week high of $1.18 and a low of 25 cents.
Short update from last week write up. Gold Strike GSR popped up almost 50% Monday to a high of 24 cents on almost 2 million shares. News of a Korean investment firm has set this small Yukon explorer on fire. More news is expected shortly.
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