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NEWS RELEASE TRANSMITTED BY CCNMatthews
FOR: NORTH AMERICAN PALLADIUM LTD.
TSE SYMBOL: PDL
JANUARY 05 2000 - 15:15 EDT
North American Palladium Ltd. Announces Positive
Feasibility Study On Major Mine Expansion
Thunder Bay, Ontario
North American Palladium Ltd. is pleased to announce that it has
received a positive detailed feasibility study on the proposed
major expansion of the Lac des Iles open pit palladium mine. The
feasibility study was prepared by AGRA Simons Limited and
supports an expansion of the operation to 15,000 tonnes per day
from the current 2,400 tonnes per day. AGRA Simons concludes that
the Lac des Iles Expansion Project is technically feasible and
economically viable and recommends its development as an open pit
mining operation combined with ore processing facilities to
produce a bulk flotation concentrate. The expanded operation is
expected to produce an annual average of 248,900 ounces
palladium, 24,200 ounces platinum, 19,100 ounces gold, plus
copper, nickel and cobalt over an eleven-year mine life.
The study follows a highly successful core drilling program
during 1999 which significantly increased the geological resource
at Lac des Iles to over 5.0 million ounces of palladium. As a
result of the feasibility study, the Company is pleased to report
a new mineable Proven and Probable Reserve of 74.2 million tonnes
with an average grade of 1.64 g/t palladium, 0.18 g/t platinum,
0.14 g/t gold, 0.066% copper, and 0.055% nickel. The Reserve is
based on a cut off grade of 0.92 g/t palladium equivalent. The
Reserve is diluted only on the east side of the deposit where
high-grade reserve blocks in contact with the barren hanging wall
are diluted by 15%. The average strip ratio over the life of the
mine is 2.26:1. The Company reports an additional Measured and
Indicated Resource of 23.5 million tonnes at 1.46 g/t palladium,
0.18 g/t platinum, 0.11 g/t gold, 0.049% copper and 0.052% nickel
which is located outside the proposed pit shell.
Subject to the availability of financing and environmental
permits, the Company anticipates construction start-up in March
2000, with concentrator commissioning in second quarter 2001. The
expansion capital is estimated at US$126.5 million. The capital
cost includes a new 15,000 tonne per day concentrator, larger
primary and ancillary mining equipment, pre-production stripping,
expanded tailings management facility and new site
infrastructure. During the expansion phase, the existing
concentrator will continue to operate at capacity until
commissioning of the new concentrator. The new concentrator will
process 5.5 million tonnes of ore per year and palladium recovery
is estimated to improve to 80.7% for the life of the mine as a
result of finer grinding and a longer floatation retention time.
AGRA Simons expects that the initial capital costs will be repaid
within 2.5 years, following commissioning of the new mill. The
after-tax internal rate of return is expected to be 26.6% while
the net present value of the after-tax cash flows, discounted at
7.5%, is US$100.0 million. The study was based on conservative
palladium prices of US$350 per ounce for the period 2000 to 2002
and US$320 per ounce thereafter. Currently, palladium is trading
in the range of US$450 per ounce. The direct operating cash cost
of palladium production during the mine life is estimated at
US$131 per ounce. This cash cost is net of other metal credits,
excluding royalties.
The Company intends to finance the project capital requirement
with debt and has been in discussion with several lenders. With
the receipt of the positive feasibility study, the lenders can
now finalize their due diligence process which will permit the
Company to select the lead bank to finance the expansion.
The Lac des Iles palladium deposit is mainly contained within the
Roby Zone which is fully open at depth and from surface
exploration indications appears open to the southeast. During the
first half of 2000 the Company has committed up to US$3 million
for further exploration. This program will consist primarily of
core drilling to test the down dip and southeastern extensions of
the deposit plus additional targets in close proximity to the
proposed expanded pit. The drilling program will be initiated in
mid January, 2000.
The Lac des Iles Mine is located 85 km north of Thunder Bay,
Ontario and is Canada's only primary producer of platinum group
metals and one of the largest platinum group metals deposits in
the world. Palladium is a vital and essential component in the
production of auto catalysts, which significantly reduce harmful
automobile emissions. World demand for palladium continues to
increase as a result of legislation enforcing stricter vehicle
emission limits.
For further information contact:
Keith C. Minty - President & CEO
Tel: (807) 624-0960 Ext. 14 Fax: (807) 624-0961
or
George D. Faught - Vice President Finance & CFO
Tel: (416) 232-9532 Fax: (416) 207-9288
Forward Looking Statements - Some statements contained in this
release are forward-looking and, therefore, involve uncertainties
or risks that could cause actual results to differ materially.
Such forward-looking statements include comments regarding the
Lac des Iles Feasibility Study, financing, permitting, metal
prices, operating costs and performance, profitability,
exploration programs and reserves. Factors that could cause
actual results to differ materially include metal price
volatility, economic and political events affecting metal supply
and demand, fluctuations in ore grade, ore tons milled,
geological, technical, mining or processing problems, future
results of exploration programs, and availability of financing.
The Company disclaims any obligation to update forward looking
statements.
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