N.A. Palladium boosts Q2 output at Lac des Iles

Vancouver – With underground operations now fully on-stream, North American Palladium‘s (PDL-T, PAL-X) Lac des Iles mine, located just north of Thunder Bay, Ontario, showed improved performance over its 2006-Q2 production period.

Palladium output for the latest quarter came in at 57,326 ozs., a 22% rise over Q1 production and up 19% from last year’s corresponding quarter. Additionally, by-product metal production in the latest Q2 was 5,487 ozs. of platinum, 4,200 ozs. of gold, 619,276 lbs. of nickel and 1,258,978 lbs. of copper.

Blending of richer ore from the recently commissioned Lac des Iles underground operations boosted average mill feed grade to 2.22 grams palladium per tonne in the latest three month period, up from 1.79 grams palladium in 2006-Q1 and 1.78 grams in 2005-Q2. Higher recoveries were also realized in the most recent quarter with 73.1% for palladium (versus 70.2% in last year’s Q2) from 1.1 million tonnes of ore processed from April 1-to-June 30 (averaging 12,105 tonnes per day).

North American Palladium reaped the benefit of a significant rally in the spot palladium price, which averaged US$347 per oz. over the latest quarter, up from the US$290 per oz. in the first three months of 2006 and US$192 per oz. in last year’s Q2.

Plagued by recent processing issues and equipment availability shortfalls, the company continues to optimize operations at Lac des Iles. Mill availability rose to 88.3% in June with further refinements expected to boost the figure to over 90% later this year.

Earlier this year, the mine suffered a tailings dam leak that took production off-stream for almost two weeks; and in 2005, crusher problems negatively effected throughput resulting in a significant drop in metal production.

Proven and probable open pit reserves at Lac des Iles, as of year-end 2005, was 13.5 million tonnes grading 2.13 grams palladium per tonne, 0.22 gram platinum per tonne, 0.16 gram gold per tonne, 0.07% copper and 0.06% nickel. Underground probable reserves stood at 3.5 million tonnes at 6.62 grams palladium, 0.4 gram platinum, 0.34 gram gold, 0.07% copper and 0.08% nickel.

Open pit mining is currently in Phase 4 at the Roby pit where the company expected to extract about 16 million tonnes of rock in 2006. It anticipates the strip ratio will drop to 2.1-to-1 this year compared to the 2005 strip ratio of 3.1-to-1.

About 18% of the mill feed is now supplied from underground operations, currently producing over 2,000-tonnes-per-day from the second and third stopes of the Main zone. Underground mining is targeting the main mineralized ultramafic intrusive unit that extends beneath the ultimate pit floor. Additionally, the deeper Offset zone may potentially be mined in the future.

Shares of North American Palladium dropped a dime on the quarterly production figures to close at $8.90 apiece. The company posts a $465-million market capitalization based on its 52.3 million shares outstanding. The stock has a 52-week trading range of $5.02-to-$14.88.