Thunder Bay, Ont. — Unique by virtue of the metal it produces, Canada’s only primary palladium mine is now among the few operations to expand production when most are struggling just to survive.
Annual production is projected at 250,000 oz., plus byproduct platinum, gold, copper and nickel. At this rate, reserves will last 17 years, though deep exploration is delineating material beneath the pit shell.
Cash operating costs are forecast at US$160 per oz., leaving plenty of breathing room at current metal prices. Nevertheless, North American Palladium has a marketing agreement with an unnamed automotive company that ensures a floor price of US$325 on every ounce produced until mid-2005.
The surface deposit is exploited by a fleet of seven 190-tonne haulage trucks, two shovels, a front-end loader and other equipment. Maintenance is carried out in a newly erected building fitted with three bays, each large enough to house any vehicle, and serviced by $8 million in inventories warehoused in an adjoining structure.
Prestripping began earlier this year, and the pit is now four times as large as it was beforehand. The pit will ultimately extend to 1 km in length, 1 km in width and bottom at 425 metres below surface. The waste-to-ore stripping ratio is forecast at 2.16-to-1.
The mine continues to have little impact on the environment, which partly explains the company’s receipt of necessary construction permits just 60 days after deciding to expand. Air emissions are negligible, as the mine trucks concentrates to Sudbury for smelting, and tailings are benign, consisting essentially of talc and silica.
Addressing the crowd gathered for the celebration, Keith Minty, president of North American Palladium, praised the company’s shareholders, contractors and bankers.
“It has been a long haul, but we are on our way because of the perseverance of our employees,” he said.
The mine employs 285 people directly, another 740 people indirectly and is expected to inject millions into the local economy. Exactly how big a role the mine plays in local life was underscored by Joe Comuzzi, member of parliament for Superior North, who noted “you can’t live in Thunder Bay without knowing about the mining projects in the region, and Lac des les always comes up in conversation.”
North American Palladium gave the green light to expand in April 2000 after contractor AGRA Simons concluded that the inclusion of low-grade mineralization in the mine plan would support a six-fold increase in production. Development lasted 14 months, with the new mill replacing the old one in June.
“Lac des les was in a pretty precarious position, financially struggling at 2,500 tonnes a day, and we didn’t have much in the way of ore reserves,” said director Michael Amsden. “So, we brought in Keith [in 1998] to determine what we should do — get what we could and shut her down, or develop what potential there was for a bigger operation.”
Indeed, Lac des les is an operation founded on persistence. The project took root in 1963, when high concentrations of palladium were detected in rocks visibly rich in nickel-copper mineralization. Although eight zones were soon outlined, a decade would pass before prospector Phillipe Roby, after whom the deposit is named, observed mineralization striking northwards, not east-west as others before him had thought.
By then, Toronto mine promoter Patrick Sheridan had taken the reins, striking a deal to incorporate Lac des les into Boston Bay Mines, later renamed Madeliene Mines. Two attempts were made over the next 15 years to start production, adding to an unsuccessful attempt in the mid-1960s, with the second one resulting in a brief spark of life in 1990.
A year later, the project began to take on its current form when Kaiser-Francis Oil wrestled control of Madeleine Mines from Sheridan, subsequently renaming it North American Palladium. Production was resuscitated in 1993 and has continued ever since, but 2000 marked the first year in which the mine actually recorded a profit.
“Keith and his team have done a tremendous job in turning the mine around,” noted Amsden. “I’ve been proud to work with this group, and I’m sure all the other directors share the same sentiment.”
The new mill, nothing more than a conventional flotation circuit, is expected to continue this reversal in fortune. More than 12,000 tonnes were being treated by the official opening, with full capacity to be reached by year-end.
Recovery rates for palladium, currently in the low seventies, are expected to rise to 82% in the coming weeks. This represents a significant improvement over previous recoveries, which essentially reflects finer grinding of ore and greater retention time in the cells.
Reserves at Lac des les stand at 96.2 million tonnes grading 1.55 grams palladium per tonne — an incredible increase of 269% since 1998. Another 40.8 million tonnes averaging 1.62 grams are classified as a measured and indicated resource, and still more material is classified as inferred.
The deposit sits in a mafic-to-ultramafic intrusive complex after which the mine is named. Mineralization dips sub-vertically to 550 metres below surface, whereupon a fault offsets it 250 metres to the west to continue for at least 155 metres downdip.
“There’s definitely underground potential, but it’s a matter of when and where we’ll go,” noted Chief Geologist Douglas Kim.
Kim added that the deepest intersection so far, ending at 705 metres, shows no sign of the zone’s letting up at depth. The interval ran 6 grams palladium over 19.8 metres, though better grades and widths occur higher up in the system.
Additional surface exposures are known to occur north of the mine area and elsewhere on the company’s 150-sq.-km. parcel of land. But, as Kim aptly puts it, “why go over there, when we have so much here.”
North American Palladium has spent US$2 outlining each resource ounce, which Minty called “exceptional when compared with the average cost of US$30 per oz. for the gold industry.”
About $6.4 million will be spent in 2001.
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