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NEWS RELEASE TRANSMITTED BY CCNMatthews
FOR: NORTH AMERICAN PALLADIUM LTD.
TSE SYMBOL: PDL
NOVEMBER 06 2000 - 16:09 EDT
North American Palladium Ltd. Announces Third Quarter 2000
Results
North American Palladium Ltd. announces results for the Third
Quarter ended September 30, 2000.
/T/ Highlights
----------
* Completed $220 million public equity issue and successful
restructuring of the Balance Sheet on October 13, 2000
* Major mine expansion proceeding on schedule for second
quarter 2001 commissioning
* Produced 28,273 ounces of palladium in the quarter at a cash
cost of US$72 per ounce
* Aggressive exploration program continues to expand resources
Financial Results
-----------------
The Company achieved a net income for the three months ended
September 30, 2000 of $16,552,000 or $1.20 per share on revenues
of $29,376,000 compared to a net loss of $3,159,000 or $0.36 per
share on revenues of $11,961,000 in the prior year period. The
increase in revenue reflects the benefit of sharply higher
palladium prices combined with an 81% increase in palladium
production as a result of processing much higher-grade ore. The
net income per share includes accrued and unpaid dividends on the
Series "A" preferred shares of $1,441,000 for the third quarter
of 2000.
For the nine months ended September 30, 2000 the Company reported
net income of $37,314,000 or $2.65 per share on revenues of
$78,036,000 compared to a net loss of $8,609,000 or $1.01 per
share on revenues of $29,523,000 for the nine months ended
September 30, 1999.
Cash provided from operations (prior to changes in non-cash
working capital) was $22,381,000 for the third quarter of 2000
and $53,952,000 for the nine months ended September 30, 2000.
This compares with cash provided by operations (prior to changes
in non-cash working capital) of $198,000 for the third quarter
1999 and $5,144,000 for the nine months ended September 30, 1999.
The significant improvement in operating cash flow was used to
fund an increase in working capital and for the expansion project
and exploration activities.
Third Quarter Nine Months
September 30, September 30,
(thousands of Canadian Dollars,
except per share amounts)
2000 1999 2000 1999
------ ------ ------ ------
Revenue from Metal Sales 29,376 11,961 78,036 29,523
Income (Loss) from
Operations 20,897 919 49,046 (695)
Net Income (Loss) 16,552 (3,159) 37,314 (8,609)
Operating Cash Flow* 22,381 198 53,952 5,144
Net Income (Loss) per Share 1.20 (0.36) 2.65 (1.01)
*Prior to changes in non-cash working capital
Operating Results
-----------------
Mine production during the third quarter was 795,607 tonnes of
ore and 287,642 tonnes of waste. A total of 568,345 tonnes of
material was placed in stockpiles for milling at a later date.
Total stockpile material at the end of the quarter was 1,604,310
tonnes. Compared to the third quarter of 1999, ore production
more than doubled while waste production decreased by 69%. The
increased ore production and lower waste stripping resulted from
the scheduled reduction in waste stripping requirements as the
Stage 2 pit is nearing completion.
The concentrator processed 227,262 tonnes during the quarter,
producing 28,273 ounces of palladium, a 9% improvement over the
second quarter 2000. The increased palladium production was due
to higher grades and throughput. Improvements in platinum, gold,
nickel and copper production were also achieved for the quarter
compared with the second quarter 2000. Cash costs to produce
palladium, net of other metal credits and royalties, were US$72
per ounce in the quarter compared to US$128 per ounce in the
second quarter. The cash costs of the last two quarters are lower
than normal due to the high grades of ore being milled.
Production Statistics
---------------------
Third Quarter Nine Months
September 30, September 30,
2000 1999 2000 1999
------ ------ ------ ------
Palladium (oz) 28,273 15,602 74,487 46,507
Platinum (oz) 1,741 1,178 4,531 3,459
Gold (oz) 1,520 1,270 4,196 3,384
Copper (lbs) 317,117 373,421 898,179 943,089
Nickel (lbs) 228,901 254,372 647,606 654,929
Ore Tonnes Milled 227,262 230,939 663,955 660,613
Ore Tonnes Mined 795,607 380,288 1,855,567 968,495
Waste Tonnes Mined 287,642 913,867 2,015,487 3,488,300
Mine Expansion Project
----------------------
Construction of the new 15,000 tonne per day mill and related
mine expansion is proceeding on schedule for commissioning and
production ramp-up in the second quarter 2001. Pre-production
stripping of the Phase 3 pit commenced in mid July and continued
to ramp-up through the quarter, resulting in the removal of
1,537,000 tonnes of over burden and waste. Hiring of crews and
commissioning of new larger mining equipment continued through
the quarter. By late October, engineering and procurement were
essentially complete, 16 of 20 construction subcontracts have
been awarded, with earthwork complete and concrete work
essentially complete. All of the capital equipment and components
for the expansion project have been purchased and are at site or
in progress as scheduled.
The truck shop and mill buildings are nearing completion, the
overhead cranes and lighting are installed and temporary power is
complete to both structures. The primary crusher and mill
concrete structures will be complete in late November, at which
time the material handling and mill mechanical, piping,
electrical and instrumentation work will commence
To date, three quarters of the US$140 million capital cost has
been committed or spent and we are on budget and on schedule for
commissioning in the second quarter 2001.
Expanding Reserves and Resources
--------------------------------
Palladium resources continue to expand at Lac des Iles by
systematic step-out drilling of the Roby and Twilight Zones. In
early August, AGRA Simons updated the resource model with the
additional assay data generated from 57,000 metres of drill core
completed in the first seven months of the year. The interim
resource was reported at 121,650,000 tonnes grading 1.63 g/t Pd,
which contains 6,385,000 ounces of palladium. This represents an
increase of 1,362,000 ounces of palladium over that which was
reported at December 31, 1999. Six diamond drills are continuing
to drill at the mine site and are scheduled to operate until mid
December, resulting in an additional 53,000 metres of drill core.
The results of the entire 2000 drill program will be used to
update the resource model and recalculate the reserves, which
will be reported during the first quarter of 2001.
Off site exploration programs were continued during the quarter.
Geological mapping and prospecting in both the north and south
sections of the Lac des Iles project were undertaken. At the Buck
Lake project, the entire intrusion was mapped and prospected and
selected targets were stripped and sampled. Results of the
surface exploration program will be evaluated during the fourth
quarter and targets prioritized for additional exploration.
Balance Sheet Restructed and Strengthened
-----------------------------------------
On October 13, 2000, the Company successfully completed a
comprehensive capital restructuring that has substantially
reduced debt and eliminated the preferred shares and accrued
dividends. The $220 million public equity issue will fund the
balance of the mine expansion capital and allowed the Company to
repay in full, the notes and interest due to its major
shareholder, Kaiser-Francis Oil Company. Coincident with the
public equity issue, the outstanding preferred shares and
accumulated arrears dividends were converted to common shares. In
addition, the Company had earlier arranged a six year US$90
million project loan facility with a syndicate of three Canadian
banks for the purposes of partially funding the expansion
project. Following the public equity issue and balance sheet
restructuring there were 48,256,568 common shares outstanding, a
US$90 million project loan facility and significant cash flow
from the existing smaller scale operation to fund the expansion
project and the required working capital buildup.
New U.S. Exchange Listing
-------------------------
The Company was approved to list its common shares on the
American Stock Exchange under the symbol "PAL" with the
successful completion of its public equity offering. We are
pleased to report that trading on AMEX commenced on October 13,
2000.
North American Palladium's Lac des Iles Mine is Canada's only
primary producer of platinum group metals and is one of the
largest open pit bulk mineable palladium reserves in the world.
Palladium use in the auto industry has increased rapidly in
recent years and future demand prospects are robust and supported
by more stringent hydrocarbon emissions standards for cars,
particularly in the United States and Europe.
For further information contact:
Keith C. Minty - President & C.E.O.
Tel: (416) 360-2656
Fax: (416) 360-7709
or
George D. Faught - Vice President Finance & CFO
Tel: (416)360-2650
Fax: (416) 360-7709
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
profitability, operating performance, metal prices and markets
and costs of production. 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, exploration programs and future results of
exploration programs at the Lac des Iles Mine, future
profitability and production. The Company disclaims any
obligation to update forward-looking statements.
NORTH AMERICAN PALLADIUM LTD.
CONSOLIDATED BALANCE SHEETS
[Canadian Funds in Thousands of Dollars]
[Unaudited]
September 30 December 31
2000 1999
------------ -----------
ASSETS
CURRENT ASSETS
Cash $ 8,854 $ 157
Accounts receivable 3,284 307
Concentrate inventories awaiting
settlement, net 53,454 30,513
Inventories 5,113 2,784
Prepaid expenses and other assets 803 211
------------ -----------
71,508 33,972
Mining interests, net 60,433 57,013
Expansion project 66,146 -
Mine closure deposit 880 430
Deferred foreign exchange loss 4,898 787
------------ -----------
$ 203,865 $ 92,202
------------ -----------
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 25,907 $ 1,464
Advances on palladium settlements 8,299 15,946
Taxes payable 401 549
Current portion of obligations under
capital lease 572 818
------------ -----------
35,179 18,777
Provision for mine closure costs 675 587
Obligations under capital leases 1,421 1,905
Notes and interest payable -
Kaiser-Francis Oil Company 133,976 119,730
Project term loan 43,044 -
------------ -----------
214,295 140,999
------------ -----------
SHAREHOLDERS' DEFICIENCY
Capital stock
Outstanding: 12,582,175 common shares
(1999 - 12,224,504) 31,827 30,774
Outstanding: 10,000,000 Series A
preferred shares 50,000 50,000
Deficit (92,257) (129,571)
------------ -----------
Total shareholders' deficiency (10,430) (48,797)
------------ -----------
$ 203,865 $ 92,202
------------ -----------
NORTH AMERICAN PALLADIUM LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
[Canadian Funds in Thousands of Dollars Except Share and Per
Share Amounts]
[Unaudited]
Quarter Ended Nine Months Ended
September 30 September 30
2000 1999 2000 1999
------- ------- ------- -------
Revenues $ 29,376 $ 11,961 $ 78,036 $ 29,523
Deduct: smelting,
refining and
freight costs (1,745) (1,764) (5,018) (3,993)
------- ------- ------- -------
Net revenue from
mining operations 27,631 10,197 73,018 25,530
------- ------- ------- -------
Operating expenses
Production costs
including
overheads 4,560 6,813 17,306 19,583
Amortization 2,075 2,086 6,067 5,864
Administrative
expenses 68 49 511 391
Environmental costs
(Quebec) -- 300 -- 300
Provision for mine
closure costs 31 30 88 87
------- ------- ------- -------
Total operating
expenses 6,734 9,278 23,972 26,225
------- ------- ------- -------
Income (loss) from
mining operations 20,897 919 49,046 (695)
------- ------- ------- -------
Other income (expenses)
Interest income 43 11 100 41
Gain (loss) on palladium
forward contracts -- (1,117) -- 302
Gain (loss) on disposal
of capital assets -- -- (348) (3)
Interest (311) -- (612) --
Interest on
long-term debt (3,020) (2,496) (8,707) (6,945)
Amortization of deferred
foreign exchange
loss (308) (231) (504) (1,227)
Foreign exchange
gain (loss) (670) (164) (1,429) 133
------- ------- ------- -------
Total other income
(expenses) (4,266) (3,997) (11,500) (7,699)
------- ------- ------- -------
Income (loss) before
income taxes 16,631 (3,078) 37,546 (8,394)
Income taxes (79) (81) (232) (215)
------- ------- ------- -------
Net income (loss) for
the period 16,552 (3,159) 37,314 (8,609)
Deficit, beginning
of period (108,809) (129,871) (129,571) (124,421)
------- ------- ------- -------
Deficit, end
of period $ (92,257) $ (133,030) $ (92,257) $ (133,030)
------- ------- ------- -------
Net income (loss)
per share $ 1.20 $ (0.36) $ 2.65 $ (1.01)
------- ------- ------- -------
Fully-diluted income
(loss) per share $ 0.64 $ (0.36) $ 1.42 $ (1.01)
------- ------- ------- -------
Weighted average number
of shares
outstanding 12,553,352 12,121,103 12,465,781 12,096,045
------- ------- ------- -------
NORTH AMERICAN PALLADIUM LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[Canadian Funds in Thousands of Dollars]
[Unaudited]
Quarter Ended Nine Months Ended
September 30 September 30
2000 1999 2000 1999
------- ------- ------- -------
Cash Provided by
(used in)
Operations
Net Income (loss) for
the period $ 16,552 $ (3,159) $ 37,314 $ (8,609)
Operating items not
involving cash
Amortization 2,075 2,086 6,067 5,864
Amortization of
deferred foreign
exchange loss 308 231 504 1,227
Foreign exchange loss
on interest payable 395 -- 924 --
Loss on disposal of
capital assets -- -- 348 3
Provision for mine
closure costs 31 30 88 87
Gain on palladium
forward contracts -- (1,117) -- 302
Unpaid interest
expense-Kaiser-
Francis 3,020 2,127 8,707 6,270
------- ------- ------- -------
22,381 198 53,952 5,144
Changes in non-cash
working capital (7,571) (9,037) (26,163) (22,970)
------- ------- ------- -------
14,810 (8,839) 27,789 (17,826)
------- ------- ------- -------
Financing Activities
Mine closure
deposit (150) -- (450) --
Advances on palladium
settlements (6,089) 5,633 (7,647) 16,650
Obligations under
capital leases (187) (230) (730) (740)
Notes payable-Kaiser
Francis (8,875) 1,410 -- 3,510
Project term loan 43,044 -- 43,044 --
Issuance of common
shares 311 73 1,053 217
------- ------- ------- -------
28,054 6,886 35,270 19,637
------- ------- ------- -------
Investing Activities
Additions to plant
and equipment (21) (858) (36) (1,703)
Expansion
Project (29,226) -- (44,527) --
Mining claims,
exploration and
development
costs (5,921) (1,584) (9,974) (5,157)
Proceeds on disposal
of plant and
equipment -- -- 175 3
Proceeds on palladium
forward contracts -- 3,949 -- 4,265
------- ------- ------- -------
(35,168) 1,507 (54,362) (2,592)
Increase (decrease)
in cash 7,696 (446) 8,697 (781)
Cash, beginning
of period 1,158 631 157 966
------- ------- ------- -------
Cash, end of
period $ 8,854 $ 185 $ 8,854 $ 185
------- ------- ------- -------
------- ------- ------- -------
- 30 -
Trading Symbol TSE - PDL
AMEX - PAL
/T/
-30-
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