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NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: NORTH AMERICAN PALLADIUM LTD
TSE SYMBOL: PDL
NASDAQ SYMBOL: PDLCF
SEPTEMBER 4, 1996
North American Palladium Ltd. Announces Financial Results
for the Six Months ended June 30, 1996
THUNDER BAY, ONTARIO--North American Palladium Ltd. (NASDAQ and TSE), today
released the financial results for the Six Months ended June 30, 1996. The
Company reported a net loss of $4,889,000 or $0.43 CDN per share (1995 -
loss of $669,000 or $0.06 CDN per share ), which included depreciation and
amortization of $2,288,000 (1995 - $2,093,000). The net loss for the three
months ended June 30, 1996 of $2,805,000 or $0.25 CDN per share (1995 -
profit of $1,142,000 or $0.10 CDN per share). Cash provided by operating
activities for the six months totaled $ 1,387,000 (1995 $5,822,000).
/T/
NORTH AMERICAN PALLADIUM LTD.
CORPORATE REPORT
(Canadian Funds in Thousands of Dollars Except Share
and Per Share Amounts)
Year Ended Three Months Ended Six Months Ended
December 31, June 30, June 30,
1995 1996 1995 1996 1995
Revenue
from
metal
sales $27,351 $6,722 $8,288 $10,440 $12,794
Income from
mining
operations 1,462 (891) 1,473 (2,002) 889
Net Profit
(Loss) (2,473) (2,805) 1,142 (4,889) (669)
Average shares
outstanding
11,528,133 11,712,961 11,513,269 11,678,943 11,493,327
Net Profit
(Loss)
per share (0.22) (0.25) 0.10 (0.43) (0.06)
Figures in parentheses are losses
/T/
The Company is currently operating a platinum group metals property
northwest of Thunder Bay, Ontario. Fixed assets, Mining leases and deferred
expenditures , net of depreciation and amortization, at June 30, 1996 total
$35,233,000, $14,359,000 and $36, 283,000 respectively.
The financial statements for the period ended June 30, 1996 include the
accounts of the Company and its wholly owned subsidiaries Lac des Iles Mines
Ltd. and North American Metals Management Ltd.
In commenting on Second Quarter results, C. D. McDoulett, Jr., President and
Chief Executive Officer, noted that while tons milled hit the 199,000 mark,
head grades continued to suffer as development work on both the Roby Zone
and the "C" Zone continued at a heavy pace, resulting in fewer ounces of
precious metals being produced. Palladium production was approximately
5,000 ounces short of the same quarter in 1995, and metals prices were down
an approximately 26 percent.
The Company today also announced it had achieved a pair of new production
records for processing ore through its concentrator. During the month of
July 1996, the Company processed a total of 80,715 short dry tons through
its facility located at the Lac des Iles mine site north of Thunder Bay.
The previous record of 73,463 short dry tons was established in August
1995. During the July/August period, the Company processed a total of
152,799 short dry tons, eclipsing the previous record of 144,336 short dry
tons set in July/August 1995.
In commenting on the two months' operation, C. D. McDoulett, Jr., Company
President and CEO, noted "Not only did we have an outstanding month from the
throughput point of view, but we also produced a very good grade of
concentrate which contained relatively small amounts of moisture.
Accordingly, our smelter/processing costs will be down significantly."
The Company also said today that its Board of Directors have determined to
temporarily suspend any and all efforts to effect a placement of the
Company's equity and/or debt securities, pending an improvement in general
market conditions.
In commenting on the Company's decision, C. D. McDoulett, Jr., President and
CEO, observed "The overall equity markets in North America are now in
disarray, particularly in so far as Canadian Junior mining stocks are
concerned. Our Board feels that our stock is significantly undervalued at
this time, particularly when you consider that we have nearly completed a
$20 million capital program which will dramatically change our cost
structure."
The Company said that its principal lender and 18 percent shareholder,
Kaiser-Francis Oil Company of Tulsa, Oklahoma, has provided sufficient funds
to cover the current capital costs of the major projects, estimated to be
less than US$10 million.
The capital projects currently nearing completion include the installation
of a 65 kilometer power line running from Silver Falls on Dog Lake to the
mine site, the construction of new crushing facilities, the installation of
a new pressure filter system in the mill, and the construction of a new
maintenance shop for heavy equipment.
McDoulett noted that completion of the power line, which will replace
portable diesel generators, will lower power costs from the current rate of
approximately 13 cents per kW hour to less than three cents per kW hour.
Total power costs exceeded $4 mill ion per year in prior years. With the
addition of new equipment, power consumption is expected to increase by as
much as 50 percent.
Similarly, crushing costs have varied between $5 and $6 per ton for the past
two years with throughput and breakdowns having significant adverse impacts
on operations and financial results. With the commissioning of the new
system, crushing costs are projected to drop to between $2 and $2.50 per ton
with all bottlenecks eliminated. The system will be operated on a single
shift basis, allowing the offshift for maintenance. The new system will
also produce a substantially smaller product which will require less milling
time, thus increasing the throughput capacity of the present mill.
The installation of the pressure filter, which is expected to cost
approximately $700,000 CDN installed, will eliminate an estimated $450,000
per year in moisture penalties and will enable the Company to qualify for a
processing rate which is $20 per ton lower that its present base rate,
saving a additional $175,000 to $200,000 CDN per year.
Approximately $1.3 million in smaller projects such as automating reagent
supply in the mill and the addition of flotation cells has been underway on
a job basis as part of routine maintenance for the past several months and
is expected to continue for the balance of the year.
McDoulett noted that construction on the Company's various capital projects
was proceeding at full speed, with the power line expected to be completed
and fully connected by early October. Installation of the new pressure
filter system to control concentrate moisture content is expected to be
completed by the end of September. The new crushing system is expected to
be completed in December.
North American Palladium Ltd. owns and operates a platinum group metals mine
located approximately fifty miles north of Thunder Bay, Ontario, Canada.
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FOR FURTHER INFORMATION PLEASE CONTACT:
North American Palladium Ltd.
C.D. McDoulett, Jr.
President and CEO
(807) 345-4479
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