NAP commissions expanded mine

Lac des les, Canada’s only primary producer of platinum group metals, should be producing at an expanded rate of 15,000 tonnes per day by the third quarter of this year. Operator North American Palladium (PDL-T) says commissioning of the new mill was achieved on schedule, despite an aggressive timetable and an extremely harsh winter.

Capital costs for the expansion program rang in at $220 million, some $12 million more than budgeted. The increase was caused by scoping changes, combined with the replacing and retrofitting of several poorly fabricated vendor-supplied components, including the pebble crusher. The originally supplied, pre-built pebble crusher was unable to meet specifications during pre-operational testing and had to be replaced. However, the primary crusher is processing ore, and the mill has already produced its first palladium-rich concentrate.

North American Palladium (NAP) also encountered delays related to the delivery of necessary mine-loading equipment and other components, resulting in lowered production estimates for this year. Lac des les is expected to produce about 150,000 oz. palladium during 2001, rather than the budgeted 200,000 oz.

“We’re not happy about it,” President Keith Minty told shareholders at the company’s recent annual meeting. “But we’ll get these ounces later, in subsequent years.”

Palladium production is expected to be more than 300,000 oz. in each of 2002 and 2003, though the average annual metal production over the life of the mine remains at about 250,000 oz. palladium, 18,000 oz. gold, 6 million lbs. copper and 2 million lbs. nickel. Production costs are expected to average US$160 per oz. over the mine life.

Last year, Lac des les produced 95,116 oz. palladium, 6,074 oz. platinum and 6,035 oz. gold, plus copper and nickel, at cash costs averaging US$142 per oz. palladium. More than 85% of the mine’s revenue is derived from palladium, which is mainly used in the manufacture of autocatalysts to reduce smog-generating emissions.

Recent exploration has boosted reserves to 96.2 million tonnes grading 1.55 grams palladium, 0.17 gram platinum and 0.12 gram gold per tonne, plus 0.06% copper and 0.05% nickel. This represents a 17% increase over reserves at the end of 1999, reflecting an expansion of the pit outline to 1,100 metres in length, 850 metres in width and 400 metres in depth.

“Our resources have increased 480% since 1998,” Minty said, before noting that the company’s discovery costs of US$2 per oz. are among the lowest in the industry.

North American Palladium says existing reserves will allow for at least 17 years of production at the expanded daily milling rate of 15,000 tonnes in the new plant. The previous mill handled 2,400 tonnes per day.

Exploration is ongoing, with 65,000 metres of drilling planned for this year. Most of the holes will be directed at the Roby zone, which remains open at depth and to the east and west. Drilling will also test the high-grade Shear zone, or the core of the deposit, to determine its potential for being mined by underground bulk methods.

Although the current mine plan assumes an ultimate pit depth of 400 metres, recent exploration has shown that the High Grade shear zone persists to a depth of 620 metres. The zone, which remains open at depth, has an average thickness of 17 metres and an average grade of 6.5 grams per tonne.

About 75% of this year’s $6.5-million program is being allocated toward mine-site exploration, including several deep holes to test the down-plunge extension of the High Grade shear zone to a depth of up to 1,000 metres.

The current phase of drilling is designed to infill the Shear zone at 60-metre spacings, to an initial depth of 625 metres. Selected results from this work include 9 metres grading 16.95 grams palladium, 81 metres of 3.8 grams, and 19.8 metres of 6 grams.