Exploration drilling at the Lac des les mine of
The new calculation, completed at the end of 2000, shows measured and indicated resources of 145.6 million tonnes grading 1.57 grams palladium, 0.17 gram platinum and 0.12 gram gold per tonne, with 0.06% copper and 0.05% nickel. A further 19.7 million tonnes, grading 1.69 grams palladium, 0.17 gram platinum and 0.1 gram gold, with 0.05% copper and 0.04% nickel, are classified as inferred.
This is a substantial increase over the end of 1999, when Lac des les was carrying a measured and indicated resource of 97.7 million tonnes averaging 1.6 grams palladium, 0.18 gram platinum and 0.13 gram gold per tonne, plus 0.06% copper and 0.05% nickel.
The company plans a 65,000-metre drill campaign in 2001, mainly to upgrade the inferred resource into the measured and indicated categories. The Roby zone remains open at depth and to the east and west, and drilling is also slated for the nearby Twilight and Shear zones.
More drilling is planned on two prospects: the Creek zone, near the proposed Roby pit, and a prospect on the northern margin of the Lac des les intrusion.
Operations at the mine, 85 km northeast of Thunder Bay, Ont., are much-improved over recent money-losing years. In 2000, North American Palladium made $60.8 million on revenue of $109.5 million, for earnings of $1.90 per share. In 1999, the company lost $5.2 million (or 84 per share) on revenue of $44.6 million.
Higher production, credited to an increase in millhead grade, and a substantial increase in the price of palladium both contributed to the better financial showing. In 2000, the mine produced 95,116 oz. palladium, against 64,441 oz. in 1999; about 88% of the palladium was payable. Platinum production grew to 6,074 oz. from 4,744 oz., and gold production to 6,035 oz. from 4,888 oz.
Production from the pit increased, but, without an increase in mill capacity, about 600,000 tonnes was stockpiled; the mine now has 2.9 million tonnes of broken ore ready for milling. Construction of the mine’s new concentrator, which will process 15,000 tonnes a day, was 70%-finished at year-end and is on schedule for a production start in the second quarter of 2001. The new mill now has permanent power, and most other services will be in place by the end of March.
The mine has taken delivery of most of its new fleet of larger equipment, and a lot of the preproduction stripping of the expanded pit has been done.
Cash production costs for palladium declined to US$142 per oz. in 2000 from US$252 in 1999. A decrease in the stripping ratio to 2.8 from 3.2 did not figure in cost savings, as only 893,017 tonnes were milled, down fractionally from the previous year. The company predicts cash costs will average US$160 per oz. over the life of the mine.
North American Palladium has hedged 122,900 oz. of its palladium production over the next three years, at an average price of US$928. All the hedges are in forward-sales contracts; none are in options.
North American has just over $50 million in cash, short-term deposits and receivables. Total current assets are valued at $121.9 million, against current liabilities of $43 million. It has $61 million in longer-term liabilities, including a $59-million project loan.
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