Markets

North American Palladium Up 3% as Credit Suisse Looks It Over

Credit Suisse revised its estimates and lowered its target price, but kept an Outperform on North American Palladium Ltd. (PDL.TO) following its LDI Resource Update. PDL is up 3% at $3.71.

"North American Palladium announced an increase of 21% in the PGM (Pd, Pt and Au) content of their M&I resources at LDI, as a result of a 17% improvement in the overall M&I tonnage, as well as a 3% improvement in Pd grade. The increase was a function of both higher metal prices being used as well as additions through exploration over the past year," Credit Suisse said.

"All of the increase was attributable to the Offset Zone, which saw a 68% improvement in tonnage, offset by double-digit declines in grade at the Offset Zone across all metals. Despite the declines in grade, overall grade improved as the Offset Zone now represents a significantly larger portion of the overall resource, and demonstrates significantly higher grades.

"Proven and Probable reserves declined by 48%, as the company has continued to mine the reserves, but we expect future upgrades to reserves when the new LDI mine expansion plan is released in Q3.

"We have lowered our 2012 production estimates to 138 koz of Pd production, from our previous estimate of 192 koz, as we have removed all stockpile production (22% of decrease) and reduced grades being mined to better reflect the company's plan. We have also adjusted our capex assumptions for 2011 and 2012.

"We maintain our Outperform rating on PDL, but reduce our target price to C$7.75 from C$8.50. Our NAVPS declined by just one penny, to C$7.29, as the reductions in capex offset the decreased production, but we have lowered our NAVPS multiple to 1.1x from 1.2x to better reflect the lack of production growth until 2013. Our EPS estimates for 2011/2012/2013 are revised to (C$0.10)/C$0.21/C$0.79 from (C$0.16)/C$0.36/C$0.80."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Commodities

Latest Markets Videos