Jim Gallagher, North American Palladium: Palladium's Price Rally is Not Speculative | Summary and Q&A

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March 18, 2019
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Jim Gallagher, North American Palladium: Palladium's Price Rally is Not Speculative

TL;DR

Palladium prices have hit record highs due to a fundamental deficit in the market, benefiting North American Palladium, which has seen improved operational performance and record earnings.

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Key Insights

  • ✋ Palladium prices have reached record highs due to a fundamental supply-demand deficit in the market, driven by increased demand in the pollution control sector.
  • 😮 North American Palladium has seen improved operational performance and reported record earnings, benefiting from the rising palladium prices.
  • 💐 The rise in palladium prices is not considered a bubble but a genuine market condition, with above-ground stocks and ETFs at their lowest levels in a decade.
  • 🌥️ Direct substitution of palladium with platinum is not easy due to design and chemistry differences, and the palladium market is larger than the platinum market.
  • 🔬 North American Palladium is focusing on expanding production and investing more in exploration to extend the mine's lifespan.
  • ☠️ The company's performance in 2019 is expected to be strong, with plans to increase the production rate and explore new targets.
  • 🪜 The CEO believes that the exploration portfolio will add significant years and potentially decades to the mine's lifespan.

Transcript

I'm Nichola shot with the investing News Network and joining me today is Jim Gallagher CEO of North American palladium we're at day two of PDAC how are you today very good Nicole thank you great and how was the conference been for you so far well so far is just starting but we have a lot of meetings lined up and you get to meet a pretty broad spect... Read More

Questions & Answers

Q: What is driving the increase in the price of palladium?

The CEO attributes the price increase to a fundamental supply-demand deficit in the market, driven by increased demand in the pollution control sector, particularly for catalytic converters.

Q: Has North American Palladium felt the effects of the rising palladium prices?

Yes, the company has experienced improved operational performance and reported record earnings in 2018 due to the combination of higher prices and improved operations. They anticipate a strong year in 2019 as well.

Q: Is the rise in palladium prices a result of speculation or a bubble?

The CEO believes the price increase is not a bubble but a genuine supply-demand issue. The market has seen a step change in demand from the pollution control sector, and there is a significant deficit in above-ground stocks and ETFs.

Q: Can palladium be easily substituted with platinum?

Substitution is not straightforward due to the differences in design and chemistry between palladium and platinum. Palladium is used in larger quantities in catalytic converters, and the palladium market is larger than the platinum market, making direct substitution challenging.

Summary & Key Takeaways

  • Palladium prices have been increasing and have reached record highs in recent months, driven by a fundamental supply-demand imbalance in the market.

  • North American Palladium, a primary palladium miner, has experienced the positive effects of the rising prices, reporting record earnings in 2018 and anticipating a strong year in 2019.

  • Contrary to speculation, the CEO believes that the rise in palladium prices is not a bubble but rather a result of increased demand in the pollution control sector, making direct substitution with platinum difficult.

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