Palladon Ventures: Update on financing and offtake agreement
On a day when the market was down almost 2%, very few companies were able to stay green. Palladon not only was green, it was up 17% today. CML, Palladon owns 21% of CML, had very good news about its offtake agreements for its iron ore production, construction of concentrator, and hedging future production.
The company signed two major offtake agreements for its run-of-mine production from now until June ’12 (when the company expects the concentrator to be ready). The company should be shipping atleast 100K+ tons per month of run-of-mine production until June ’12. This is good news because of the increased production and locking in logistics and shipping resources.
The construction on concentrator looks to be on track for a June ’12 launch. Once in place, management is looking at 2M+ tons of concentrate production per month. Also, the management has purchased hedges to lock in high rates, $141 per ton. Also, the grade of the production could be much better than I had expected, management is expecting 67% Fe.
Next 12-24 months will be very interesting for PLL. With a regular 100K+ ton per month of production and future production target of 2M tons per month, I think it is still cheap.