North American Palladium ups resource at Lac des Iles

North American Palladium (PDL-T, PAL-N) has increased indicated resources at its shuttered Lac des Iles mine near Thunder Bay, Ont., by 280%.

The resource estimate focuses on the Offset High Grade zone where NAP completed a $1.7-million drill program in 2007.

Indicated resources now total 12.3 million tonnes grading 5.02 grams palladium per tonne, 0.38 gram platinum, plus gold, nickel and copper, for 1.99 million oz. of palladium and 150,000 oz. of platinum.

Inferred resources stand at 4.6 million tonnes grading 4.85 grams palladium per tonne and 0.37 gram platinum, totaling 717,000 oz. palladium and 55,000 oz. platinum.

The company shut down the mine in October due to a severe drop in the palladium price. NAP plans to start operations back up again when metals prices recover.

Palladium has been hovering around its current price of US$184 per oz. after tumbling from US$475 per oz. last June. Analysts say the mine is economical when palladium sells for around US$300 per oz.

The future of Lac des Iles had been uncertain even with high metals prices because the mine was running low on reserves. NAP originally planned to keep its open pit operation going until mid-2009 and had about two years of reserves left.

A scoping study released last May projected the Offset zone could extend the mine life by 10 years, producing 250,000 oz. palladium, 16,000 oz. platinum, 17,000 oz. gold, 2 million lbs. nickel and 4 million lbs. copper per year. The study looked at a 6,000 tonne per day operation.

Now the company is working on a prefeasibility study on the Offset zone, which it expects to complete in June.

Since the shutdown of the mine in October, NAP has been focusing its efforts on exploration on the property. In October, when it announced the mine closure, NAP had $65 million in cash.

Over 2009, NAP plans to spend $7 million on exploration, drilling 70 holes on its Lac des Iles property.

The company wants to upgrade inferred resources to indicated on the upper portion of the Offset zone. NAP hopes to discover new resources in the East Gabbro Breccia zone, which is to the south of, along strike and up-dip to the Offset zone, and advance under-explored areas within the large intrusive rock complex at Lac des Iles.