North American Palladium gets $130 million loan

North American Palladium (TSE: PDL) says it secured US$130 million in debt that will go towards expansion at its Lac des Iles mine in Ontario. Part of the loan will also go towards the repayment of C$72 million in senior secured notes.
North American Palladium gets $130 million loan

North American Palladium (TSE: PDL) says it secured US$130 million in debt that will go towards expansion at its Lac des Iles mine in Ontario.

The private equity branch of Brookfield Asset Management will provide the loan, part of which which will also go towards the repayment of C$72 million in senior secured notes.

Additionally, the Toronto-based miner announced a C$20 million private placement, to be issued in two tranches, and extended its US$60 million line of credit until July 2014.

With this latest round of financing, the company says it can finish the first phase of its mine development. North American Palladium says it may defer capital expenditures in the next phase, a move it says will not compromise production growth.

North American Palladium said in May that it had underestimated the capital required to finish the first phase. It expects expenditures this year to be 35 per cent higher than the previous guidance of $105 million.

The stock spiked as much as 19 per cent in trading Friday afternoon, but sunk about five per cent lower to $1.11 as the closing bell approached.

Earlier this week, CIBC had slashed its target price for the stock to $1.10 from $1.30. That followed a series of downgrades following signs of uncertainty around its 2013 output.

Last month, GMP Securities downgraded North American Palladium to a hold from a buy, RBC Capital cut the stock to underperform from sector perform and cut the price target to $1.25 from $1.75, and Raymond James replaced its outperform rating with a market perform rating. Currently, Raymond James has a $1.40 price target, down from $2.50.

Analysts predict North American Palladium will lose three cents per share in the current quarter. Ninety days ago the mean consensus was a penny loss.

In May, North American Palladium said its net loss widened to C$2.8 million, or two cents a share in the first quarter, from a net loss of C$928,000, or one cent per share.

At that time, the company was skeptical that it could acheive the low end of its 150,000 to 160,000 ounce production guidance.

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