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Wednesday January 5, 3:09 pm Eastern Time
Company Press Release
North American Palladium Ltd. Announces Positive Feasibility Study On Major Mine Expansion
THUNDER BAY, Ontario--(BUSINESS WIRE)--Jan. 5, 2000--(TSE:PDL. - news)
North American Palladium Ltd. is pleased to announce that it has received a positive detailed feasibility study on the proposed major expansion of the Lac des Iles open pit palladium mine. The feasibility study was prepared by AGRA Simons Limited and supports an expansion of the operation to 15,000 tonnes per day from the current 2,400 tonnes per day. AGRA Simons concludes that the Lac des Iles Expansion Project is technically feasible and economically viable and recommends its development as an open pit mining operation combined with ore processing facilities to produce a bulk flotation concentrate. The expanded operation is expected to produce an annual average of 248,900 ounces palladium, 24,200 ounces platinum, 19,100 ounces gold, plus copper, nickel and cobalt over an eleven-year mine life.
The study follows a highly successful core drilling program during 1999 which significantly increased the geological resource at Lac des Iles to over 5.0 million ounces of palladium. As a result of the feasibility study, the Company is pleased to report a new mineable Proven and Probable Reserve of 74.2 million tonnes with an average grade of 1.64 g/t palladium, 0.18 g/t platinum, 0.14 g/t gold, 0.066% copper, and 0.055% nickel. The Reserve is based on a cut off grade of 0.92 g/t palladium equivalent. The Reserve is diluted only on the east side of the deposit where high-grade reserve blocks in contact with the barren hanging wall are diluted by 15%. The average strip ratio over the life of the mine is 2.26:1. The Company reports an additional Measured and Indicated Resource of 23.5 million tonnes at 1.46 g/t palladium, 0.18 g/t platinum, 0.11 g/t gold, 0.049% copper and 0.052% nickel which is located outside the proposed pit shell.
Subject to the availability of financing and environmental permits, the Company anticipates construction start-up in March 2000, with concentrator commissioning in second quarter 2001. The expansion capital is estimated at US$126.5 million. The capital cost includes a new 15,000 tonne per day concentrator, larger primary and ancillary mining equipment, pre-production stripping, expanded tailings management facility and new site infrastructure. During the expansion phase, the existing concentrator will continue to operate at capacity until commissioning of the new concentrator. The new concentrator will process 5.5 million tonnes of ore per year and palladium recovery is estimated to improve to 80.7% for the life of the mine as a result of finer grinding and a longer floatation retention time.
AGRA Simons expects that the initial capital costs will be repaid within 2.5 years, following commissioning of the new mill. The after-tax internal rate of return is expected to be 26.6% while the net present value of the after-tax cash flows, discounted at 7.5%, is US$100.0 million. The study was based on conservative palladium prices of US$350 per ounce for the period 2000 to 2002 and US$320 per ounce thereafter. Currently, palladium is trading in the range of US$450 per ounce. The direct operating cash cost of palladium production during the mine life is estimated at US$131 per ounce. This cash cost is net of other metal credits, excluding royalties.
The Company intends to finance the project capital requirement with debt and has been in discussion with several lenders. With the receipt of the positive feasibility study, the lenders can now finalize their due diligence process which will permit the Company to select the lead bank to finance the expansion.
The Lac des Iles palladium deposit is mainly contained within the Roby Zone which is fully open at depth and from surface exploration indications appears open to the southeast. During the first half of 2000 the Company has committed up to US$3 million for further exploration. This program will consist primarily of core drilling to test the down dip and southeastern extensions of the deposit plus additional targets in close proximity to the proposed expanded pit. The drilling program will be initiated in mid January, 2000.
The Lac des Iles Mine is located 85 km north of Thunder Bay, Ontario and is Canada's only primary producer of platinum group metals and one of the largest platinum group metals deposits in the world. Palladium is a vital and essential component in the production of auto catalysts, which significantly reduce harmful automobile emissions. World demand for palladium continues to increase as a result of legislation enforcing stricter vehicle emission limits.
Forward Looking Statements - Some statements contained in this release are forward-looking and, therefore, involve uncertainties or risks that could cause actual results to differ materially. Such forward-looking statements include comments regarding the Lac des Iles Feasibility Study, financing, permitting, metal prices, operating costs and performance, profitability, exploration programs and reserves. Factors that could cause actual results to differ materially include metal price volatility, economic and political events affecting metal supply and demand, fluctuations in ore grade, ore tons milled, geological, technical, mining or processing problems, future results of exploration programs, and availability of financing. The Company disclaims any obligation to update forward looking statements. |
