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As I recall, in the company documents for management execs are required to hold a certain number of shares to qualify for their bonuses. That is why they have any shares at all. They have some sweet options at a low strike price if they can actually perform in such a way that investors actually bid the stock up. If they cash in at the first stalling point above 25 cents, though, I would bail if I was a long, like I did last year when Jim Gallagher dumped the shares he bought in July in September.
cha-ching: Last comments on this. I mean you don’t know the difference between a balance sheet Cash position of $11.8 million and cash FLOW. The money they have in the bank says nothing about their cash flow. It only states what’s left after operations, investing and finance.
They sold the gold mine in 2013. That money is long since gone. Gone in 2013 losses. They do have a plan now but with the limitations UG, it is hard to see them producing more than about 190k oz Pd in a year. I expect they will project about 200k oz for 2015, perhaps with hope for more in following years like they have done in the past. And all the new equipment is not free. It remains to be seen what their costs will be.
cha-ching: If digging up old articles and Q3 results is due diligence to you, great. What do you know about the actual operations? The haulage of over 1km underground; the COO himself says they can't do more than about 4500 tpd on a good day.
I think the delay in posting 2015 projections relates to financing strategies and the fact that they can't promise more than 200k oz (even that would take very favourable operation success). Investors really need to see if they can generate positive Q4 cash flow after paying all the bills including other expenses. After their Dec 12 PR, the implied message was a very successful Q4 coming. Now we wait and see.
cha-ching. You have a real talent for dredging up ancient history. Anything to add that's a bit more current? Like did they make their 170k oz target in 2014? What is the guidance for 2015. I don't expect them to be able to produce more than 190k oz in 2015 with their current haul/hoist set up.
Thanks so much for that review of an OLD opinion. Where are the 2014 final production numbers AND the 2015 operations projections? In PAL's Dec 12 PR they talked about a release on those specific topics in early 2015.
Case in point. You can talk all you want about supply and demand. There is way more paper (derivatives) trading out there than there is actual metal. THAT determines the price. Sharp drops or advances are designed to knock small traders out.
Supply and demand of the actual metal itself has little or nothing to do with the price we trade in any of the precious metals.
Ask him what the mill run rate has been for Q4. Has the stockpiling from Q3 allowed them to run about 9000 tpd rather than 7000? What portion has been UG ore and at what grade? He may be reluctant to answer that.
In the income statement, ALL the revenues are in the revenue line. The C$46,441,000 in Q3 includes about C$19 million in by-product revenues. You can do that math yourself. The Q3 report says 36430 ounces were sold at US$860. Multiply that out and add about 10% for C$ exchange and subtract from C$46.441 million.
EVERY QUARTER HAS BY PRODUCT REVENUES. THIS IS NOT SOMETHING NEW!! Gallagher's mention of them this quarter seems to have had the desired(?) effect of confusing some investors.
Even with those revenues, they lost C$18 million They expect to produce more Pd this quarter and will, therefore, have more by products. That will not erase any of the costs they incur.
They can credit by-product revenue against costs for the purpose of calculating cash cost per oz. which adds confusion but it does not add more to the revenue line which already includes them.
The www.sedar.com website shows PAL has filed for a $150 million multiple securities shelf offering. That means they can borrow or raise more equities using a variety of vehicles. Check out the Dec 5th posting at Sedar for more info.
I also understand but have not confirmed the resignation of the company controller, Tim Hollaar who will take a similar post at Royal Nickel. I always have questions when controllers resign, but I don't have enough info to read more into it.
HELLO: The revenues for the By products ARE ALREADY IN THE REVENUES! AND they are credited against the Cash Cost per oz sold.
And what prompted your diatribe on tax implications? i didn't even mention taxes.
So far, that has proven easier said than done. The "greater fool" theory has yet to be tested recently on PAL.
Look at the Income statement. ALL the revenues are included there, this is other metal revenues as well. Revenues minus operating expenses minus other expenses PLUS Depreciation gives you a loss of over 12 million dollars. AS A DOUBLE COUNT, when calculating the cash cost per ounce, companies can legally subtract the value of other metal revenue (and not included some expenses) even though it is in the revenue number. That is where the US$589/oz per ounce SOLD comes in. Notice that can be manipulated further based on whether you sell more ounces than you produce, so stockpiling in a poor quarter can help make the number smaller the next quarter when production may be limited. In short the "operating margin" of $271 is MEANINGLESS.
For example, PAL knew Q3 would suck so:
1) COO sells shares at a small profit when the price pops to 30 cents briefly in September
2) while doing repairs and improvements bring the ore as close to the orepass UG as possible and truck as much to the mill as you can where you stockpile it.
3) use stockpile to produce extra ounces in October (20000 total) and caveat by saying it is not reproducible. Despite that, I can't count the number of times this figure has been quoted in recent posts here and on the Yahoo message board because longs want it desperately to be the norm.
4) investment is risky, so management awards themselves options at the current price!
5) hope that you can improve production in Q4; hope there are no more accidents or equipment failures and MAYBE results will be good enough for you to cash in early next year.
And that dear friends is how it is done. Smoke and mirrors. That does NOT mean that someone couldn't make some money if we can hype it to 25 cents or so. BUT watch what the insiders do with their options at the website www.canadianinsider.com symbol PDL. Any trading they do is reported there within a few days. If the price early in the new year is over 25 or 30 cents and they do NOT sell before the Q4 report, then the news is probably good. If they cash in their options, you should sell your shares.
The answer to my question is, the true total cost of production is C$1100/oz from the Q3 Income statement (C$35,884,000 divided by production of 32,560 ounces). That is why they bleed cash like a stuck pig.
If they had a $271 per oz margin, how did they loose $18 million in the quarter?
I am not predicting a price, just presenting a management strategy:
1) put in place low strike price options
2) hype the stock with a lot of positive hopes and dreams news stories (looks like Seeking Alpha is even on board now!)
3) hope stock price rises
4) cash in options and stuff money (shareholder money, NOT company cash)in pocket before Q4 report!
They aren't going to get any bonus from the treasury because BAM is watching and they may even need money from BAM before year end.
As an investor, you have to be confident this will work before you jump in. The past 3 years, PAL has hit it’s high for the year in early January. Will it do it again? I personally don’t expect a good news story when the Q4 report comes in.
Part 3 is not going well so far. The recent stories are not moving the stock. Maybe everyone is distracted spending all the money they expect to make on PAL at Black Friday sales!! Hey the money will be in the bag by the time the credit card bill comes!
I don't see management options priced so close to the current market price as bullish. I see it as management's attempt to make some money on any bump up, regardless of magnitude. Options are generally priced about the current price when issued so some movement up is required before they are in the money.
They are hoping there has been enough positive news lately to bump the price up so they can cash in before they have to report Q4 results.
As for price projections, I was just giving examples of how much they would gain at various market prices. It is hard to tell how far this optimistic outlook will take the stock price. PAL has done well at the end of the past 3 years and early in the year following based on euphoric exploration and operational promises. They don't have the open pit to save them now, though. In the past years and even more so this year, I believe the Q4 results will cast a cloud over PAL. They will continue to run cash flow negative and will need more cash to get through 2015. We'll see how long regulators allow them to call their reserves reserves when their all in cash costs are more than C$1100/oz.
Based on recent experience, it will not show up anywhere on EDGAR or US boards. They are awarded the options in $CDN and it shows up on the Canadian Insider post.
Sales by the COO , Jim Gallagher, in September 2014, showed up on CanadianInsider but not on US boards last September when he dissolved a open market position he created in July.
Management Options Granted:
The management has been granted options on Nov 21st at a strike price of 16 cents! See www.canadianinsider.com – symbol PDL. Management options are a form of compensation that shareholders pay for. I am concerned that the strike price (16 cents) is so close to the current price. It should be in the 25 to 30 cent range reflecting some risk on managements part. Management has done precious little to earn a bonus this year and the treasury can't fund it. They are hoping that the latest optimistic releases will get it up to maybe even 50 cents. If they can't get more financing at that point, they will cash in their options at a net profit, exercising at 16 cents and immediately selling at 50 cents. Assuming a market price of 50 cents per share, of 50-16 or 34 cents gain per share before tax. That's a gain of over $100,000 for a 300,000 option issue that purchasing shareholders pay for. The cashed in shares add to the shares issued total as well. In my mind that would be a sell signal. If they can score more financing, they will hold the shares hoping for maybe a dollar or more.
IF they process 4500 tpd of 4.3 g/t AVERAGE, not just on miracle day or as a result of stockpiling, then they have a chance at being cash neutral. The 20000 oz in October came after a lull in production during the summer when they made process improvements. The normal tram to the orepass from current stope headings is 1.6 km and growing as they develop downwards. They won't achieve better results than what they can do in Q4 with the current setup. On the Q3 conference call, Mr. Gallagher the COO stated that 5000 tpd won't happen in Q4 or 2015. They need the shaft deepened to the levels they are going to be mining at in the future. A section of this is included in the presentation they published recently and is available on the website.
The big question is will BAM keep them going and at what cost? Can they do an equity issue, and at what dilution? It is going to have to be one or the other.
There are two parts to the equation. The ounces don't come out of thin air. They are mined and using the Q3 data, they are mined at over C$1100 per ounce, just for production. That does not include discretionary spending, interest or general expenses. The C$950 they receive is still about $150/oz short which translates into a loss of about C$50,000 per day.
I was a PAL shareholder and was considering going long while PAL was "on sale". A little analysis of the Q3 financials knowledge of the challenges in mining at LDI has been discouraging. I am not optimistic that the Pd price can almost double regardless of what happens in Russia. They have moved their Pd to Switzerland for the most part, but I am unsure of volume.
The real issue for PAL is cash flow. It doesn't matter what you find if you can't generate positive cash flow from operations. In fact, if they can't generate positive CF in Q4, I wouldn't be surprised if regulators don't challenge PAL's ability to define any of their mineralization as a reserve.
After reviewing the posts here and the Yahoo message board, however, it appears that investors don't do simple math and like to believe everything will be OK. They managed to find a desperation loan from Brookfield last year, but I don't expect that to work this time because of the burdensome debt and production challenges. Brookfield will likely take it over and sell it for 10 cents on the dollar to get their money back. Shareholders will be out in the cold.
The only buyer I can see are the Chinese. They took over CaNickel at Waboden MB a few years ago looking for nickel. Ground conditions were bad. On care and maintenance now. They may be looking for a Pd source (with nickel and copper by products), though, now that they are concerned with pollution.
I estimate that between the 11 million cash (Sept 30) and sales revenue in this quarter they will make it into early January 2015 but not much further. All this just by looking at press releases and financial statements. Just simple arithmetic, a track record of dismal UG performance and no hope from the COO that things will improve any time soon during the Q3 conference call.
Weewillie re 8833: What shines through in your posting is well developed sarcasm but little substance to reflect any brain activity. If you don’t think a COO selling shares in the middle of what he knows is a dismal quarter isn’t a sell signal then you have a wee brain as well. The actual results just confirmed why he sold a month before quarter end.
haul out your Q3 report. 32560 oz produced. Add the production costs, smelting and royalty ($35.884 million). Divide to get C$1,102/oz. Now add in general, interest and exploration and you get C$48.376 million. Divide and you get C$1485/oz. I ignored the Fx amount. Completely rationale and number based. The PERFECTLY LEGAL US$589/oz reported does NOT reflect the total costs. Cash cost per ounce SOLD (not produced which is where the money went) is narrowly defined and can be manipulated based on timing sales.
I only found this board a short while ago and it doesn’t look like anyone with mining experience comments here, only speculators. The optimism I speak of comes from comments on the exploration report and promises and more promises of the CEO, many of which come from other boards. The management has been telling everyone everything will be OK for a year now. It’s not OK and there doesn’t appear to be any chance it will be OK if you know the mine. The defeatist tone of the COO was unmistakable on the Q3 conference call.
The institutions still own millions of shares. Enough to play it and affect the price for a time. With high costs and only low cash, I expect they will make it to the end of the year. Early in the new year, I expect some very bad news for shareholders. Between now and then the only question is whether there are enough fools out there to bid this up short term.
weewillie: I was long until the COO of the company sold the long position he created in July in September. Thought that was as obvious a sell signal as you are going to see. I sold in early September. Clearly he knew what we now all know. They cannot produce 5000 tpd from UG (quoting Mr Gallagher from the Q3 cc)in Q4 of this year or in 2015.
I have been watching message boards, though, and am astonished at the optimism. I wonder if we can drag a run to say, 30 or 40 cents out of this thing before the Q4 report. Maybe the institutions will "play tennis" with it before dumping it. Only danger is PAL will go bankrupt before then.
With current Opex at $1100/oz (using Q3 report numbers from the IS) and $1485 when you add general, interest and exploration, the Pd price would have to go to US$1400 for PAL to just break even.
With production Costs at over US$1000/oz and over US$1200/oz with admin and interest, there is no hope for positive cash flow! Why would anyone want to "load up" at any price?!
PAL is faced with challenging mining and all in cash costs of over US$1300/oz using the info in the Q3 report. Based on the mining configuration, that can't change? Can the Pd price reach, say US$1500?
Posting test