Although less profitable than a year ago,
The 10-per-share earnings compare with a net profit of $11.7 million (or 46 per share) on $23.6 million in the corresponding period of 2000. The difference mostly reflects a 21.5% reduction in palladium output, though the company’s bottom line was also hit by a $2.7-million jump in income taxes.
(The unusual discrepency in per-share earnings reflects a quadrupling in the company’s shares outstanding, to 50.4 million. Nearly all of the newly printed shares relate to a public equity offering completed in late 2000.)
Second-quarter cash flow between 2000 and 2001 fell to $9 million from $15.9 million.
Earnings in the first six months of this year topped $9 million (or 17 per share) on revenue of $41 million, compared with earnings of $20.8 million (81 per share) on $48.7 million in the first half of 2000. Cash flow was halved to $15.9 million.
On June 1, North American Palladium commissioned a 15,000-tonne-per-day concentrator at the Lac des les palladium mine, near Thunder Bay, Ont. The old, 2,500-tonne-per-day concentrator was subsequently shut down in late June.
The concentrator is running at 20% below capacity, but the addition of a pebble crusher in October is expected to correct the problem. Mill recovery rates are also expected to rise as the design capacity is achieved.
Just under 1.8 million tonnes of ore and 4.6 million tonnes of waste were mined from the pit. Of that, 216,988 tonnes were processed in the old plant and 179,060 tonnes in the new one to produce 20,274 oz. palladium.
The remainder of the mined ore was stockpiled, bringing the volume of broken ore to 5.5 million tonnes and the average grade to 1.5 grams. This is considered more than sufficient to satisfy the new throughput rates.
Lac des les paid out US$274 for each ounce of palladium produced, more than twice as much as a year ago but 17% less than in the first quarter. Unit costs are expected to continue falling as stripping ratios taper off to the life-of-mine average of 2.16-to-1.
Cash costs over the life of the mine are forecast at US$160 per oz., net of byproduct credits and royalties.
In exploration news, North American intends to sink four more deep holes into the high-grade Shear zone and deepen 11 holes that were sunk in 2000. Thirteen deep holes have been drilled so far this year, nine of which were completed in the second quarter.
Recent results include 3.72 grams palladium over 51 metres, ending at a vertical depth of 705 metres below surface — the deepest intersection yet. The Shear zone sits beneath the Roby pit, which is planned to bottom at an ultimate depth of 400 metres.
Shallow, stepout drilling is in progress east and west of the Roby pit, and separate areas with high-grade potential are being targeted as well.
Surface mapping and sampling continues at the Baker prospect, about 1 km east of the Roby pit, and at the Buck Lake property, to the west. Geophysical surveying and drilling will follow at Buck Lake.
The 2001 budget calls for $6.5 million in exploration expenditures. About 75% is allocated for the immediate mine area.
At last report, the Lac des les mine hosted proven and probable reserves of 96.2 million tonnes grading 1.55 grams palladium per tonne. Another 49.8 million tonnes averaging 1.62 grams palladium are classified as measured and indicated resources, while 19.7 million tonnes grading 1.69 grams are considered an inferred resource.
On June 30, North American Palladium had $73.6 million in working capital and $94.1 million in long-term debt.
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