Better than Gold
I first wrote about Palladon in February of 2005 when the stock was $.435. Last December I wrote about them again but as a tax-loss selling candidate. The stock was $.19 a share. The stock has been a disappointment to me and all of my readers for three years now.
That just changed. The long-awaited and long-promised deal was just announced.
It's a barnburner for Palladon and 50% partner, Luxor Capital. A Chinese steel company has agreed to buy 2 million tons a year at market prices, FOB Long Beach, California. They are buying run-of-mine ore. Palladon has to do minimum processing, pretty much blast, mix with an existing stockpile and ship. They will be mining and shipping 55% FE ore.
Here's how the numbers work out. Iron just saw a 65% price increase. 55% iron FOB Long Beach is probably worth between $60 and $90 a ton. It costs Palladon between $35 and maybe $45 to blast, mine, mill and mix. Palladon also picks up the loading in Utah and transportation to the West Coast. So my figures show Palladon's 50% interest in the project should be worth $25 to $45 profit per ton on a million tons. So $25 to $45 million a year profit starting in about 120 days.
Palladon's market cap today is about $27 million dollars. This is the deal we all have been waiting for. Palladon needs to raise about $5 million to begin shipping. They expect to be shipping in about 120 days. I expect the company to have something like 100 million shares fully diluted after the PP.
I owned shares before. As soon as I saw the Press Release I bought more. I intend to participate in the Private Placement which I fully expect to take place at a higher price than today. I am biased. They are advertisers. Do your own math and due diligence. Believe it or not, iron has gone up more in the last 7 years than gold has. Iron is better than gold and Palladon/Luxor are sitting on one of the most attractive deposits in North America.
Apr 3, 2008