NA Palladium Searches For Gold Around Sleeping Giant

Now that North American Palladium (PDL-T, PAL-X) has reached commercial production at the Sleeping Giant gold mine and mill 80 km north of Amos, Que., the company is gearing up to spend $6.2 million on gold exploration this year, in hope of finding additional resources that could one day be shipped to the mill.

North American plans to drill 53,000 metres, conduct geophysical surveys and do other grass-roots exploration on its projects in Quebec.

“We want to use the Sleeping Giant mine as a regional centre for milling, so the idea is to look closely at everything we’ve got in the area,” Michel Bouchard, vice-president of exploration and development, said in an interview. “We’ve got a huge tract of land around the mine itself and several properties that aren’t far from there.”

The company decided to diversify into gold after plunging palladium prices forced it to shut down its Lac des les mine near Thunder Bay, Ont., in late 2008. The company has recently asked Lac des les staff to come back to work as palladium has recovered somewhat.

Production will start in the second quarter and the company expects to produce 140,000 oz. palladium per year for the next two years.

It was through a merger with Cadiscor Resources in March 2009 that North American acquired Sleeping Giant, which was then on care and maintenance. The first gold pour at Sleeping Giant was last October, giving the company a new revenue stream. North American anticipates about 50,000 oz. gold will be produced at Sleeping Giant this year.

North American is also spending $6 million to deepen the Sleeping Giant shaft by 200 metres, adding three more mining levels. Once complete, the shaft will reach 1,200 metres depth.

The mine has been in operation for roughly 20 years and has produced more than 1 million oz. gold, but has never had more than a few years of reserves.

“It’s a typical high-grade small vein type deposit,” Bouchard says.

Bouchard notes the 900-tonne-per-day mill is only running at two-thirds capacity, so adding more resources would be ideal.

As a result of this extra capacity, much of the exploration budget will go toward drilling in and around Sleeping Giant.

The company plans to spend $2.1 million drilling 30,000 metres in the underground mine to define and extend gold zones within the mine and at depth.

On top of that, North American plans to do about 3,500 metres of diamond drilling from surface at Sleeping Giant, some reverse-circulation (RC) drilling of overburden and geophysical surveys.

Surrounding the Sleeping Giant property is the Dormex property, where the company will spend $1.2 million on RC drilling, geophysical surveys and a 7,000-metre diamond drill program.

North American is hoping to identify the source of a gold anomaly in overburden detected last year when the company drilled 21 RC holes.

And 70 km east of Sleeping Giant is the Discovery project, which Bouchard says is the most advanced, with indicated resources of 1.3 million tonnes grading 5.74 grams gold per tonne for 235,000 oz. gold and inferred resources of 294,000 oz. gold.

The company wants to spend about $500,000 on about 4,000 metres of surface drilling as it works toward permitting, so it can explore underground.

North American plans to spend another $400,000 on geophysics and 2,500 metres of drilling at the Laflamme option located to the east of Sleeping Giant.

The company believes it might find an extension of Sleeping Giant mineralization on this property.

Bouchard describes the 32-km by 3-km property as a grassroots project with potential.

“The rock types are similar to the ones we have at the mine.”

The company has also earmarked $300,000 for its Flordin property north of Lebel-sur-Quvillon, Que., to finish a National Instrument 43-101 report to upgrade historical resources, while adding new data.