There’s a BOGO Sale on North American Palladium Ltd (USA) (PAL): Stillwater Mining Company (SWC)

Unclogging the pipes
The real problem for North American Palladium Ltd (USA) (NYSEMKT:PAL) is the expansion of its Lac des Iles mine in Quebec, which is taking longer than anticipated to get up and running, leading to higher costs than expected. Although it expects the mine to be fully operational by the end of the third quarter and anticipates its cash costs to be in a range between $375 and $425 an ounce, cash costs are expected to spike to around $600 an ounce.

North American Palladium Ltd (USA) (NYSEMKT:PAL) is trading for around $770 an ounce today, up $40 an ounce from a month ago, and I think we’ll probably see it testing the $800 level sooner or later. Because Stillwater Mining Company (NYSE:SWC) diversified away from platinum group metals to gold and copper — and not without a lot of dissent from shareholders — I see North American Palladium Ltd (USA) (NYSEMKT:PAL) as the one to best cash in on the better opportunities in palladium and platinum.

I’ve noted previously that Anglo American, the world’s biggest platinum miner, is cutting production in South Africa 20% this year in a bid to shore up profitability, and with NAP’s problems depressing its share price, it becomes a potential takeover target. Would that make Anglo interested in acquiring the miner? No such rumblings have been rumored just yet, but if the platinum metals market continues to look as attractive as it appears, it seems to me it would be one large miner that might look for strategic alternatives to quickly get back in the game.

Let me know in the comments box below if you think North American Palladium Ltd (USA) (NYSEMKT:PAL) is more attractive as a standalone company or as an adjunct to some larger player.

The article There’s a BOGO Sale on North American Palladium originally appeared on Fool.com and is written by Rich Duprey.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors and owns shares of Ford.

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