Toronto-based North American Palladium (
TSX:T.PDL,
Stock Forum) released a ‘steady as she goes’ operating guidance release Monday, forecasting increased payable palladium production to 170,000 tonnes, capital investment and exploration budget decreases, underground production increases from 3k to 5k per day by the end of 2014 and planning for a preliminary economic assessment (PEA).
Financing for the plan, however, remains a work in progress.
The forecast saw stocks in the company rise 12.94% to $0.96 per common share in Monday trading.
"Looking ahead to 2014, our operating focus will be on consolidating the growth investments from our past to establish steady-state operations with the new shaft at LDI," said Phil du Toit, President and Chief Executive Officer, in a news release.
"Production through the shaft is gradually increasing, enabling us to target over 170,000 ounces of payable palladium production in 2014 at a significantly reduced capital expenditure program of under $30 million. As we increase underground production, we expect that a decrease in operating costs will follow, further positioning LDI for enhanced operating margins."
Mr. du Toit added: "We recognize that our ability to proceed with our plans is contingent on securing additional financing, which we are working hard to complete. The fundamentals of our asset base remain robust, offering good upside to deliver future production growth in a market where the demand exceeds supply. As part of our long-term objective of becoming a low cost mid-tier palladium producer, in 2014 we also plan to determine the most optimal plan for future organic growth so that we can optimize the resources and leverage the historical investments in site infrastructure."
The company expects the commodity price of palladium to stay strong through 2014.
“With palladium ending 2013 as one the best performing commodities (averaging US$723 per ounce for the year), most metals forecasters agree that the strong performance will continue into 2014 as global car sales are estimated to rise by 4.8%. Although price forecasts vary by institution, the average consensus price is approximately US$815 for 2014, driven by the resilient industrial demand from the automotive sector and the inability of global mine supply to meet demand.”