Palladium has been on an astronomical rise in the last few months, on the back of strong industrial demand and deep structural supply deficits:
Palladium (Daily – One Year)
While the price of palladium has risen by more than 60% in the last year (to nearly US$2,200 per ounce), the number of viable palladium mining projects across the globe has not increased. In fact, palladium is a relatively scarce metal (palladium is more scarce than platinum and that relative scarcity is now reflected in the price difference between the two metals) and the vast majority of palladium is found in two countries; Russia and South Africa. Both of which have their own challenges from a mining investment standpoint.
Finding a viable palladium investment proposition in a safe mining jurisdiction is a tall order. In late 2019, South African miner Implats paid C$1 billion for struggling Canadian palladium producer North American Palladium. This particular acquisition was a strong sign that the lack of palladium assets had reached an extreme, and perhaps more importantly, producers of the metal were in a rush to acquire more production against the backdrop of deep structural deficits.
When an investor goes to try to find a palladium mining company, the choices are slim to none. In the producer category, there are a few South African companies of which the aforementioned Impala Platinum Holdings (“Implats”) is the main choice. Choices get even slimmer when we look at the palladium developers and junior explorers.
This brings us to Canadian Palladium Resources (CSE:BULL), an Ontario focused palladium developer whose flagship East Bull Palladium Project near Sudbury, Ontario hosts a 523,000 palladium-equivalent resource grading 1.46 grams/tonne Pd-Eq. Canadian Palladium intends to complete a financing in the next month and move quickly to begin drilling out East Bull in order to upgrade the resource in terms of size, grade, as well as upgrade inferred ounces to measured and indicated.
Key points to understand about East Bull:
- Drilled over 1,800 meter strike length to maximum depth of 120 meters (near surface open-pittable resource).
- Mineralized zone has a 3,600 meter strike length and is open at depth.
- Potential target of 4x current resource to 240 m depth for 2,000,000 oz palladium-equivalent.
- Mining friendly jurisdiction and brownfields exploration from an existing resource in a prolific platinum group metals region of Canada (Sudbury).
- Canadian Palladium will drill 4,000+ meters over roughly 20 holes, and the drill targets have already been identified and drill permits are in hand.
Canadian Palladium CEO Wayne Tisdale offered the following comments about BULL and its upcoming drill program at East Bull:
“With Palladium reaching new highs of over $2,100/oz, we look forward to drilling the East Bull Palladium project to further expand the 43-101 compliant 523,000 oz palladium equivalent resource we have. This name change reflects our focus on a world-class asset in a mining friendly jurisdiction.”
With a challenging 2019 behind it, BULL is poised to ride the palladium bull market in 2020 and at a recent share price of C$.12, BULL has a modest fully-diluted market cap of only C$7 million. This leaves substantial room for upside should the company have drilling success and prove out a larger and/or higher grade palladium resource at East Bull.
BULL.CA (Daily – One Year)
Disclosure: The author owns Canadian Palladium shares at the time of publishing and may choose to buy or sell at any time without notice.
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