This company is focusing on metals needed for the GREEN REVOLUTION...

Supply and Demand determine price.

This equation provides the basis for economic theory. What happens when you see demand rise, supply pressured, and prices increase? Opportunity!

This “perfect storm” dynamic plays out in palladium as it nears record highs. Investors searching for exposure to the white metal should read on.

Palladium is one of the six platinum-group metals (“PGMs”). It represents a critical component in catalytic converters in automobiles. This critical component manages the car’s exhaust system and controls emissions. Specifically, it turns toxic gases like nitrogen dioxide and carbon monoxide into less harmful forms. 80% of palladium is used in these devices.

Governments around the world continue to crack down on emissions. This is not a fleeting trend, this is the future.

How important is palladium to the development of these EVs?  Tesla (TSLA) has a secret project called “Palladium”. The project is secret and many think this will involve a new battery unit that will serve as the base for its new Model S and X versions.

Demand? Check.

The majority of palladium comes from Russia and South Africa. Russia experienced water-inflow issues at its Norilsk Nickel facility -- the world’s largest palladium mine -- which continue to linger. South African producers scramble to get back online after the coronavirus dragged on output in 2020. The supply constraints create opportunity. Australian and Canadian companies scramble to fill the void.

Supply issues? Check.

Prices of Palladium continue to rise as supply and demand work in its favor. Futures in the white metal broke above key technical resistance of $2500 on March 16, rising to $2749. This was just shy of the all-time high of $2815 set in February of 2020.

Prices? Check.

We have a Canadian mining company that provides investors the opportunity to invest in this dynamic. The company has procured the largest undeveloped palladium project in North America.

Results of its Feasibility Report from the mine highlighted the potential profitability for investors. The results suggest a robust rate of return over a 13-year life.:

  • Internal Rate of Return- reflecting the annualized compounded rate of return at recent metal prices -- of 47%.
  • Net Present Value of $2.02 billion.
  • A Payback period -- the time it takes to get enough income to finance the project -- of 1.5 years.
  • All-in Sustaining Costs -- the operation costs plus additional capital required during the mine life -- of US$809 per ounce. Palladium trades at over three times this level, highlighting profitability potential.
  • The company projects US$979 million of free cash flow over the first three years at base case metal prices, along with Payable metals of 588,00 ounces of palladium, and 122 million pounds of copper from approximately 277,000 tonnes of concentrate shipped.

These are all impressive numbers. The copper exposure is an additional bonus as prices are at their best level since the Great Financial Crisis. Investors looking for opportunities and exposure to palladium should research this Canadian mining company.

Note: It is not true that electric vehicles need palladium at this time, although there is much research in the area. The fact is, gasoline cars are expected to dominate the market for at least the next 15 years. Electric cars do need more than four times the copper of a gasoline car. Additionally, our mine is expected to produce significant platinum, which is needed to make green hydrogen as well as the cars with Hydrogen Fuel Cells

Regards,
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