PRECIOUS METALS — Lac des les still battling for profits

By the end of June, North American Palladium (PDL-T) expects to complete a program of drilling and metallurgical testwork at Lac des les, Canada’s only primary platinum group metals mine.

Once results from this work are in hand, the company will decide whether to proceed with a feasibility study for a proposed expansion.

Situated near Thunder Bay, Ont., Lac des les is an open-pit operation with a flotation mill capable of handling 2,650 tons per day.

Mining began in late 1993. However, achieving profitability was hampered by dilution problems and the negative effect of forward sales programs at lower-than-spot prices.

Despite operational changes, implemented in 1998, that improved grades and lowered dilution, and despite the expiry of the adverse sales contracts, Lac des les is still struggling to achieve profitability. However, it has managed to reduce costs and pare down losses.

North American Palladium reported a net loss of US$1.5 million (or 23 cents per share) in the recent first quarter, down from a loss of $8 million a year earlier. Production between the two periods rose to 284,650 tons of ore and 1.26 million tons of waste from 270,341 tons of ore and 730,530 tons of waste.

The mine produced 17,144 oz. palladium, 1,085 oz. platinum, 966 oz. gold, 219,050 lbs. copper and 157,018 lbs. nickel in the first quarter. This compares with 18,028 oz. palladium, 1,229 oz. platinum, 1,277 oz. gold, 350,227 lbs. copper and 285,450 lbs. nickel in the 1998 first quarter.

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