LA Private

Palladium making a comeback: Chalice

Chalice Mining Managing Director Alex Dorsch says palladium is a misunderstood critical mineral.

“Palladium is in a very weird position because people perceive it as a metal not needed for the energy transition,” Dorsch told the first day of the Tribeca Future Facing Commodities Conference in Singapore.

The key driver of palladium demand is plug-in hybrid electric vehicles (PHEV) and internal combustion engine vehicles.

Dorsch said consumers were favouring PHEVs over battery electric vehicles due to their lower cost, longer range and the lack of charging infrastructure.

While the sale of EVs in February were down 15% year-on-year, the sale of PHEVs jumped 25%.

“That’s not the narrative the media is telling you right now,” Dorsch said.

“There’s a perception that palladium demand is going to be destroyed by EVs but that is absolutely not true.”

Prices for palladium have been at cyclical lows but are creeping higher.

Palladium supply has been decreasing, while demand remains “robust”.

Chalice estimates about 50% of the global palladium market is underwater at current prices.

In 2022, 78% of global palladium supply came from Russia and South Africa.

Chalice’s proposed Gonneville project would be in the second quartile of global palladium projects on a cost basis.

“We’re going to out-compete South Africa,” Dorsch said.

Gonneville hosts a resource of 16 million ounces of palladium-platinum-gold, as well as 860,000 tonnes of nickel, 520,000t of copper and 83,000t of cobalt.

It is the world’s largest undeveloped palladium resource.

“The Western World has had a capex holiday and a discovery holiday,” Dorsch said.

Chalice is working on a update to its high-grade resource, after which it will update its scoping study.

Earlier this month, Argonaut head of research Hayden Bairstow pointed out that Chalice’s share price had underperformed against the rebounding palladium price.

“We retain our bullish outlook for palladium, with our base case assuming a further 6% in FY25 from current levels and circa 20-30% in the medium-term, with our long-term price US$1300/oz 22% above current spot prices,” he said.

On that basis, Bairstow upgraded his price target for Chalice by 9% to A$2.40. Chalice shares closed at A$1.03 on Tuesday.