60 cents per share Takeover target There is less of a well established basis for valuing PGMs. Recently Paradigm Capital, in an analysis of the sector, suggested that US$30-70 per ounce would be an appropriate valuation for an ounce of PGMs in the ground. And that $50 (again, $50!) as an average could be used.
Using that metric, and applying it to Palladium One, based only on their 2019 indicated 636,000 ounces, the company should have been worth C$ 42 million a year ago. If you include the inferred resource, that would make the company worth C$0.61 a share.
But there is clearly a lot more than 1 million ounces of palladium equivalent at LK. An additional million ounces could make this a C$0.60 stock. Any drilling success beyond the current program would only increase the intrinsic value.
Shareholders would get a possible spin-out bonus, and there is the unknowable but fascinating potential of drilling success in the KS area.
The management has been building value through the drillbit. It seems likely that, well before the time comes to discuss production plans, the company will be acquired. However things develop, the current price level represents an opportunity for gains.
Michael Colligan
Partner, Private Equity
https://bluelakesadvisors.com/palladium-one-a-noble-metals-story-to-note/