NAP’s Q2 earnings unchanged from 2001

Higher production in the second quarter translated into more revenue for North American Palladium (PDL-T), but earnings were little-changed from the corresponding period of 2001.

NAP pocketed $7.5 million (or 15 per share) in the three months ended June 30 as revenue soared to nearly $42 million. Higher operating, interest and accounting charges related to the mill expansion at the Lac des les operation are what kept the company’s bottom line unchanged from the second quarter of last year, when revenue was half as much.

Situated in Thunder Bay, Ont., the Lac des les mine can now handle 15,000 tonnes of ore daily, or five times more than the original operation. This reflects an expansion of reserves in 1999, which was completed at a cost of $220 million.

The expansion saw 207% more palladium produced in the recent quarter than in the corresponding period last year. Although direct mining expenses were obviously higher, cash costs fell by 15% to US$223 per oz., net of byproduct credits (T.N.M., July 22/02).

In contrast to the earnings picture, cash flow brightened by $1 million, to just over $10 million. After changes to working capital, cash provided by operations was $14.7 million — nearly $4 million more than a year earlier.

For the six months ended June 30, NAP showed a profit of $13.8 million (27 per share) and revenue of $86.3 million, which compares with about $9 million (18 per share) and $41 million, respectively, in the first half of 2001. Cash provided by operations would have shown a similarly robust increase were it not for a drop in palladium prices and an increase in the Canadian dollar.

NAP drained almost $8 million on financing and investment activities, leaving it with $7.6 million going into the second half of the year. This compares with about $4.5 million a year ago, when $37 million was won from financings and $58 million spent on investments.

At June 30, NAP had $68 million in working capital, most of which was a reflection of unpaid concentrate contracts. The company continues to reduce its debt, having repaid $6.7 million in the second quarter. It now owes $117 million.

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