March 12, 2020

Coronavirus Fuelling Demand for Precious Metals Like Palladium

Midas Letter
Midas Letter
Coronavirus Fuelling Demand for Precious Metals Like Palladium

Canadian Palladium Resources Inc (CNSX:BULL) (OTCMKTS:DCNNF) (FRA:DCR1) CEO Wayne Tisdale joined Midas Letter to discuss the company’s unique deposits that could generate 7 grams per tonne of palladium. The company hope to double the drilling on the property in the next few months and will mine more than 1.5 million ounces. The CEO attributes the shortage of palladium in the world and Chinese emission increases for the increase of palladium prices – which has gone up 25 percent since the beginning of 2020. Watch the entire interview to learn more about Canadian Palladium projects as well as the future direction of Palladium.

Midas Letter
Midas Letter
Coronavirus Fuelling Demand for Precious Metals Like Palladium

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James West: Wayne Tisdale joins me now. He’s the CEO of Canadian Palladium. Wayne, welcome.

Wayne Tisdale: Good morning.

James West: Wayne, let’s start with an overview: what’s Canadian Palladium all about?

Wayne Tisdale: Well, it’s a company that trades on the CSE under the symbol BULL. We have a palladium project in 60 kilometre, 90 kilometres west of Sudbury.

James West: Right.

Wayne Tisdale: Right. And it’s called the East Bull Region.

James West: I saw the press release this morning.

Wayne Tisdale: It was very good.

James West: Yeah, it was fantastic. I didn’t realize that there were deposits that could generate 7 grams per tonne of palladium.

Wayne Tisdale: Yeah, there is. This one’s a very unique one. It has a resource on it of 523,000 ounces, and we raised the money, I think the third week of January, and we were drilled permitted. So we got one rig running now, and this deposit is unique. It’s an open pit, comes to surface. It dips at about 45 degrees, which is a very good stripping ratio, and it has only been drilled for these resources to 110 metres deep. 

So what we’re doing is going underneath it, and we’re drilling it, and we’re adding to the resource. So we hope to double that in the next few months, and we’re putting our second rig on here in two weeks and we’ll carry on. The goal is to come up with above 1.5 million ounces.

James West: So this deposit is in Sudbury, Ontario?

Wayne Tisdale: It’s outside of Sudbury, 90 miles. So the purpose is to drill this off. This does not have a big CapEx on it; this will become a quarry, and we will then use a road construction company to mine it, basically, pick and quarry. We crush it and ship it to Sudbury.

James West: That’s really interesting. So, how long have you been working on the project now? How much further do you have to go, do you think, till you get to 11.5 million ounces? 

Wayne Tisdale: We’ve had the project a year, and I think we’ll have to work probably till June, with two rigs, to get to that resource we’re looking for.

James West: Wow. Okay, so let’s talk a bit about palladium. What’s driving palladium? It’s gone up 25 percent just since the beginning of 2020.

Wayne Tisdale: I think it’s the shortage of palladium in the world. And, of course, China has increased their emissions another 30 percent, which draws hard on the palladium. South Africa has got a power shortage, and so therefore they have a little bit of a wobble in their mining. And you saw North American Palladium being bought out for $1 billion, which is one of the best deals that anybody’s ever done.

James West: Sure.

Wayne Tisdale: And then you’ve got Norilsk’s that’s probably gone through their whole reserve. So there’s just a huge shortage of the product.

James West: Sure. It’s pretty rare to have a deposit that is primary palladium, is it not?

Wayne Tisdale: Yeah. We have an equivalent; we have other minerals. We’ve got copper, nickel, and gold in there. But the pure palladium we drilled was a very, very, very good for us, yeah.

James West: Right. Okay, so there’s a shortage of supply and probably a shortage of quality deposits left?

Wayne Tisdale: Yes. Well, there could be a lot of quality deposits; the difference between us and everybody else is, again, we come back to the CapEx and the easy exploration. We’re right alongside the highway; it’s a numbered highway. We just drive off, and we drill it.

James West: Wow.

Wayne Tisdale: And it’s a very access, is the whole thing to it.

James West: Well, that’s fantastic. Then, who would be a potentail takeout candidate?

Wayne Tisdale: Oh, there’s lots of them around. I don’t know, Richard Sutcliffe is helping us. He said he could find – the goal is to be able to sell this in the ground.

James West: Right.

Wayne Tisdale: Per ounce, and then move on.

James West: Right. So this is a – one of those quick and dirty mining plays?

Wayne Tisdale: This is another US Cobalt. 

James West: Yeah, right, okay. So yeah, let’s talk about your history in the mining space. You’ve had multiple successes over the years.

Wayne Tisdale: I’ve had a few.

James West: Yeah.

Wayne Tisdale: Well, I’ve had the opportunity of participating with a team, yeah?

James West: Sure.

Wayne Tisdale: So yeah, we had Rainy River was a big one. Nelson Baker and I and our team started that.

James West: Sure. Rainy River was sold to New Gold?

Wayne Tisdale: Yeah.

James West: For how much?

Wayne Tisdale: Four hundred and some million?

James West: Yeah, right. Okay, and then some of the other ones?

Wayne Tisdale: Well, we had US Cobalt, which was very good.

James West: Right.

Wayne Tisdale: We also had, if you step out in the oil and gas, we were the first people to talk on the Bakken play in Saskatchewan, and sold that to Crescent Point.

James West: Right. Wow.

Wayne Tisdale: And that was a good project.

James West: Sure. So there’s not a lot of competition, then, in the palladium space for investor dollars at this point?

Wayne Tisdale: Yeah, there’s quite a few good companies out there, yeah. They’re coming back. New Generation is a great company; a lot of exploration. We’re a little different on the exploration side, because we don’t have a big – it’s a straight drill job, is what it is. So we don’t have to do much more than that. 

We outlined, it was a little geophysics last year, found our targets were good and strong, and so we’re just drilling underneath the target, underneath the structure, to find more.

James West: Sure. Is it, in your opinion, is it likely that palladium continues to rise in price?

Wayne Tisdale: I don’t know. They’re talking $3500 an ounce. That seems high, but in this range, it’s amazing. I mean, this is very, very profitable.

James West: Sure. It sounds really, really promising, and recently we received communication from the BCSC that if we were going to talk about the good, we had to talk about the bad. So, where are the risk factors in this project?

Wayne Tisdale: I guess the risk factors is that we wouldn’t find the 1.5 million ounces.

James West: [laughter]

Wayne Tisdale: That’s the big risk.

James West: That’s a big risk.

Wayne Tisdale: Yeah, we miss on all holes. It hasn’t happened yet, but we could.

James West: Sure. Price of palladium could collapse back to $700.

Wayne Tisdale: It could. I don’t think so, but you know, it could do all that; we have to give both sides of the story.

James West: Yeah, exactly. Okay, so then, in terms of the precious metal complex, then, palladium is lesser-known than gold and silver, obviously, but is the best price performer in the group. Why is palladium, in your opinion, so under-appreciated?

Wayne Tisdale: Palladium? I think it is appreciated.

James West: Okay. [laughter]

Wayne Tisdale: It is by the market, today. I mean, we got a huge market in it. Again, there’s a shortage. They say there’s a million ounce short on where we sit today.

I mean, when they start stealing catalytic converters even in Calgary, they’re stealing them, and they’re getting $1,000 for a catalytic converter.

James West: Really? Just for the content of the palladium?

Wayne Tisdale: For the palladium, yeah. So they, say, take it to a junkyard, and then they ship it.

James West: So there’s $1,000 worth of palladium in every catalytic converter?

Wayne Tisdale: Mostly, yes.

James West: And every car has a catalytic – 

Wayne Tisdale: Mostly in the hybrids, for sure.

James West: Very good. So, who else is involved, who’s driving the exploration in this?

Wayne Tisdale: Garry Clarks. He’s the head of the Ontario Prospectors’ Association. He was the first guy to write the report for Rainy River, so we worked with Garry for a long time, and he’s a partner. And he’s got a great team, and he’s done a lot.

James West: Wow, fantastic. All right, Wayne, well, that’s a great introduction. We’ll leave it there and come back to you soon. Thanks for joining me today.

Wayne Tisdale: Thank you very much! Okay.

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