OREANDA-NEWS. April 12, 2010. Norilsk Nickel is mulling the sale of its PGM asset in North America, IFX reported yesterday, citing company officials. The Group purchased a 51.3% stake in Stillwater for USD 100m in cash and a large quantity of palladium in 2003, reported the press-centre of OTKRITIE FC.

View: Norilsk Nickel holds a controlling stake (51.3%) in the Stillwater mining company, which is the only producer of PGMs in the US. Based on current Stillwater stock prices, Norilsk’s stake is worth approximately USD 747.8m. In the past year Stillwater sold 393k ounces of Palladium and 123K ounces of Platinum.

In 2009, company revenue amounted to USD 394m, with EBITDA at about USD 70m. During the past 3 years Stillwater has been loss-making (net loss of USD 9m in 2009), though last year the company showed some improvement thanks to a recovery in PGM prices. Given that the market expects further growth in palladium and platinum prices, we think that Norilsk Nickel chose the right time to consider the sale of Stillwater, hence we view this news as positive for Norilsk Nickel.

Valuation and Action: At present, we do not cover this stock.