North American Palladium: Market to Stay Tight for Now, Prices to Rise

At over US$1,650 per ounce, palladium is currently more expensive than most of its precious metal counterparts, including gold, silver and platinum. 

Jim Gallagher, president and CEO of North American Palladium (TSX:PDL,OTC Pink:PALDF), believes that despite its significant rise this year the metal still has room to run.

“It’s a tight market moving forward for the next couple of years,” he said on the sidelines of the Denver Gold Forum. “So potentially even though we set records last week at an over US$1,600 closing price … we expect that that price is going to continue to go up, perhaps for the next two years.”

Gallagher described North American Palladium as a turnaround story, explaining that significant improvements have been made at the company in the last six years.

The changes have come about in part due to the help of major shareholder Brookfield Asset Management. The firm gave North American Palladium a US$130 million loan in 2013 and took full ownership of the company two years later.

“In that time from 2013 until we really started finally making money again in 2017, we fundamentally changed the mining method,” said Gallagher. He added, “There’s a long list of engineering, technical issues, people, motivation issues, culture that we’ve worked on.”

North American Palladium, which was recently added to the inaugural TSX30 list, produces at its Lac des Iles mine in Quebec, and Gallagher said that moving forward it will continue to focus on that asset, and — now that the company is profitable once more — on generating returns for shareholders.

“We at the board level in discussion said, ‘How do we distinguish ourselves?’ And it isn’t being another mining company doing mergers and acquisitions, it’s actually paying a dividend, and paying quite a substantial one,” he commented.

Gallagher expects to see an improvement in North American Palladium’s share price as Brookfield works to sell off its current 81 percent stake in the company.

“I think you’re going to see a lot of dynamics with our stock moving forward, and hopefully it’ll rerate to reflect the cash flows and the dividend that we’re paying as we move forward,” he said.

Watch the interview above for more from Gallagher on North American Palladium and the palladium market. Our full playlist for the Denver Gold Forum can be found on YouTube.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.