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NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: NORTH AMERICAN PALLADIUM LTD
TSE SYMBOL: PDL
NASDAQ SYMBOL: PDLCF
AUGUST 28, 1997
North American Palladium Ltd. Second Quarter Financial
Results
THUNDER BAY, ONTARIO--North American Palladium Ltd. (NASDAQ &
TSE), today released the financial results for the Six Months
ended June 30, 1996. The Company reported a net loss of
$11,459,000 or $0.97 CDN per share (1996 - loss of $4,889,000 or
$0.43 CDN per share), which included depreciation and amortization
of $3,195,000 (1996 - $2,288,000). The net loss for the three
months ended June 30, 1997 was $5,590,000 or $0.47 CDN per share
(1996 - loss of $2,805,000 or $0.25 CDN per share). Cash expended
on operating activities for the six months totalled $ 11,839,000
compared to cash provided by operations of $1,387,000 for the same
period in 1996.
/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,
1996 1997 1996 1997 1996
Revenue from
metal sales $ 20,249 $ 4,410 $ 6,722 $ 8,287 $ 10,440
Income from
mining
operations (22,152) (3,160) (891) (6,358) (2,002)
Net Profit
(Loss) (28,730) (5,590) (2,805) (11,459) (4,889)
Average
shares
outstanding
11,710,814 11,811,910 11,712,961 11,803,406 11,678,943
Net Profit
(Loss)
per share (2.45) (0.47) (0.25) (0.97) (0.43)
Figures in parentheses are losses
/T/
The Company is currently operating a platinum group metals
property northwest of Thunder Bay, Ontario whose principal metal
is palladium. Fixed assets, mining leases and deferred
expenditures, net of depreciation and amortization, at June 30,
1997 totalled $57,704,000, $13,310,000 and $26,913,000
respectively.
The Company reported 160,652 of ore processed for the three months
ended June 30, 1997, less than the 171,829 tons milled in the
first quarter of 1997, however, the concentrate grade and
subsequent quantity of metals produced has increased.
The Company has experienced considerable down-time due to
contractor crushing plant problems and a decrease in surplus power
available from Ontario Hydro during the period. The contract
crushing problem has been alleviated with the completion of the
Secondary Crushing System.
The Secondary Crushing System has been operational since mid-July
and completion of the Primary System is scheduled for completion
by the end of August. The entire system is expected to be
completely operational by mid-September.
Debt Reorganization Transaction
Negotiations have been completed and approved by the Board of
Directors for an additional Debt Reorganization Transaction in
conjunction with the Share Purchase Transaction (collectively, the
"Capital Reorganization"), to reorganize the remaining
indebtedness of the Company to Kaiser-Francis not covered by the
Share Purchase Transaction. The Capital Reorganization transaction
has been approved by both the NASDAQ SmallCap Market and the
Toronto Stock Exchange and has subsequently been submitted to the
shareholders of the Company for approval as "Schedule A -
Resolution of the Shareholders", to the Management Proxy Circular
dated August 15, 1997 in respect of the Special Meeting of
Shareholders to be held in Thunder Bay, Ontario at 11:00 am on
September 17, 1997. In short, the Debt Reorganization Transaction
will convert the remaining debt owed to Kaiser-Francis Oil Company
which is not being cancelled under the Share Purchase Transaction
by consolidating all of the Company's remaining demand debt into
term debt to be covered by one note (the "Term Note") which will
have the following attributes:
1. the outstanding principal amount (and any unpaid interest
thereon) shall be due and payable in full on December 31, 2002;
2. the principal amount of the Term Note (and any unpaid interest
thereon) will bear interest, compounded monthly, at a rate equal
to the greater of (a) Royal Bank of Canada's prime rate of
interest plus 2 percent per annum or (b) Chase Manhattan Bank
NA's prime rate of interest per annum in the United States;
3. interest on the Term Note will not be payable by the Company on
a monthly basis until after December 31, 1998, but will accrue
from the date of issuance of the Term Note and commencing January
1, 1999, interest will be payable on a monthly basis. The
principal amount of the Term Note and any unpaid interest thereon
will continue to be secured by all of the assets of the Company.
The Company believes the Capital Reorganization to be in it's
best interest as the reorganization will significantly decrease
the interest expense burden and enhance operating efficiencies.
In addition, the Capital Reorganization will result in an
adjustment from a shareholders deficiency of Cdn $6.9 million as
at December 31, 1996 to a shareholders equity of approximately
Cdn. $30 million thus meeting NASDAQ's capital and surplus
requirements which will allow NAP to maintain its listing on the
NASDAQ SmallCap Market.
Exploration
The Company has now commenced the 1997 Exploration Program aimed
at increasing present ores reserves. This program has four
targets; the "C" Zone, the North Roby Zone, the "D" Zone and the
South Claim Block. To date, five holes have been completed to
explore the area below the 400 foot level in the "C" zone.
Mineralization, varying in lengths from 108 feet to 530 feet, have
been intersected. At the time of writing, assay results for the
five holes are incomplete so it is premature to comment on the
significance of the mineralization although the Company is
encouraged by the results.
/T/
PRODUCTION STATISTICS - 1997
Production:
Second Quarter First Quarter
Palladium (troy oz.) 13,538 12,179
Platinum (troy oz.) 942 804
Gold (troy oz.) 905 777
Copper (lbs) 218,515 199,501
Nickel (lbs) 182,588 172,232
Tons Ore Mined 284,473 193,609
Tons Ore Crushed 169,152 170,779
Tons Ore Milled 160,652 171,829
Tons Concentrate Produced 2,279 2,158
/T/
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
North American Palladium Ltd.
Michael P. Amsden
President
(807) 345-4479
(807) 345-7796 (FAX)
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