Concentrator boosts PGM output at Lac des les

With the new concentrator at its Lac des les mine in Ontario nearing capacity, North American Palladium (PDL-T) almost tripled production during the first quarter.

The concentrator received more than 1.2 million tonnes at the daily rate of 13,391 tonnes, resulting in 53,922 oz. palladium for the period. A year earlier, the old concentrator processed only 223,107 tonnes, resulting in 18,838 oz.

The new concentrator has a daily capacity of 15,000 tonnes.

NAP has boosted milling efficiency by blending fine ore from contract crushing with coarser material. This and other improvements resulted in higher concentrate grades during the quarter.

The mine also churned out 4,656 oz. platinum, 3,668 oz. gold, 528 tonnes copper and 302 tonnes nickel — all significantly higher quantities than in the first quarter of last year.

Cash costs between the two periods (net of other metal credits and royalties) fell to US$239 from US$330 per oz., though the higher volumes caused production costs to rise $13 million to $23.4 million.

Earnings for the recent quarter totalled $6.2 million (or 12 per share), compared with $1.3 million (3 per share) a year earlier. Revenue climbed to $44.6 million from $20.2 million, while cash flow from operations doubled to $14 million.

NAP has forward sales contracts for 37,800 oz. palladium at US$945 apiece plus another 50,400 oz. at US$899 each against part of its 2002 and 2003 production, respectively. Also, 6,390 oz. of the platinum produced in 2002 are hedged at US$503 per oz.

Meanwhile, NAP plans to conduct a 48,000-metre, $2.9-million program of infill drilling and geophysics on the Main High Grade zone. A scoping study concludes that a combined underground/ open-pit mine is potentially economic.

Lac des les has proven and probable reserves of 159 million tonnes averaging 1.55 grams palladium per tonne, or 8 million contained ounces of palladium.

At the end of March, NAP had $1.7 million in cash. The company made its second project loan payment of $6.7 million during the quarter and drew down $10.4 million under a US$20-million credit facility with Kaiser-Francis Oil, its largest shareholder. As a result, the combined net debt increased by $3.7 million.

NAP has nearly 50.5 million shares issued and outstanding.

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