< Return to Bulls page

Huge reserves of essential metals

Still Water Mining (SWC) closed yesterday at $10.68.

These guys produce palladium and platinum -- over 450,000 ounces of palladium and 135,000 ounces of platinum annually. Production problems and labor disputes have put a short-term pall over the stock. The twelve-month price target on the stock is $25 per share.

Earnings came out recently - not disastrous, but not great, either. The main thing that Wall Street is upset about is the production numbers. Year over year production was down 7%. Without any context, that is a big deal.

But several things impacted the quarterly production numbers: they lost seven days of production due to a strike; they lost employees due to a restructuring of the work schedule; and they experienced equipment failures and mining inefficiencies.

Are we really surprised that they were experiencing “mining inefficiencies” and “equipment failure” during a quarter in which their miners were striking? Do you think that some elements of their workforce were sending a message?

The good news is that their labor woes appear to be behind them, and that none of this is earth-shattering stuff - this is business as usual for most companies.

The thing to focus on is that at these prices, their palladium reserves are currently valued at less than $20 per ounce while spot market palladium trades above $360!

Long story short, these guys have huge reserves of essential industrial metals at very, very cheap prices. But the really juicy piece of the pie is that MMC Norilsk Nickel, the massive Russian mining company, already owns 50% of Still Water Mining, so don’t be surprised if they make a bid for the other 50% of SWC when palladium prices start cooking again.

With or without a takeover deal, though, the stock deserves a hefty premium considering that the market is valuing their palladium reserves so cheaply, matched with the fact that those reserves are in the most politically secure country in the world - Billings, Montana, USA to be exact.

Wikinvest © 2006, 2007, 2008, 2009. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.