Lac des les suffers setback (September 17, 2002)

Just when it looked like things were beginning to improve, North American Palladium (PDL-T) has been forced to temporarily shut down the primary crusher at its Lac des les open-pit, palladium-platinum mine in northwestern Ontario.

Plagued by operating disruptions, which led to reduced mill feed, the company lifted the crusher’s main shaft and found two vertical fractures in the bottom shell. Repairs will begin immediately and take about 6 to 8 weeks to complete.

During the repairs, Lac des les’ mill will continue to run at between 12,000 and 14,000 tonnes per day. The mill will receive feed from the reactivated old primary crusher and an existing portable contract crusher, which will be supplemented with additional equipment. The mill will also work on existing broken ore stockpiles averaging 1.5 grams palladium per tonne.

At the end of June, the broken ore stockpile stood at 8.1 million tonnes grading 1.18 grams palladium for about 308,800 oz. of contained palladium.

The company will also suspend all mining and non-essential activities until the primary crusher returns to action. It plans on filing a claim under its property and business interruption insurance to cover any losses associated with the shutdown.

Last September, NAP officially cut the ribbon at a newly expanded 15,000-tonne-per-day mill at Lac des les. At a cost of $220 million the mill was designed to boost process capacity at the mine by a factor of six, reflecting the expansion of reserves in 1999.

The party was short-lived as operational problems cropped up. Since then, the company has: replaced the pebble crusher with a larger one; contracted out fine-ore crushing; and installed a new liner in the semi-autogenous grinding (SAG) mill. Modifications were also made to the SAG mill and grinding and flotation circuits.

During the recent second quarter, palladium production soared 207% relative to the corresponding period of 2001. The mill, running just short of nameplate capacity, squeezed out 62,168 oz. palladium-in-concentrate plus platinum, gold, copper and nickel from nearly 1.3 million tonnes (382,061 tonnes a year earlier) of ore during the three months ended June 30. Direct mining cost climbed, but cash costs fell by 15% to US$223 per oz., net of byproduct credits. Palladium recoveries climbed to 76% from 68.9% in the second quarter 2001.

The quarter also saw Lakefield Research commission a pilot plant at the Lac des les mill in an attempt to further boost throughput and recovery rates.

At last count, reserves at Lac des les stood at 93.5 million tonnes grading 1.53 grams palladium, plus platinum, gold, copper and nickel. The estimate is based on a cutoff grade of 0.7 gram palladium and a palladium price of US$400 per oz.

Suffering another blow, NAP announced the resignation of Keith Minty as its chief executive officer. Minty, who oversaw the $236-million mill expansion at Lac des les, is replaced by current chairman, Michael Amsden, until a new president and chief executive is found.