NAP will really help boost PGM exploration interest in Thunder Bay:
North American Palladium Ltd -
North American Palladium receives Lac des Iles
study
North American Palladium Ltd
PDL
Shares issued 11,837,836
2000-01-04 close $7
Wednesday Jan 5 2000
Mr. Keith Minty reports
North American Palladium 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 11-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 five million
ounces of palladium. As a result of the feasibility study, the company is pleased to
report a new minable proven and probable reserve of 74.2 million tonnes with an
average grade of 1.64 grams per tonne palladium, 0.18 g/t platinum, 0.14 g/t gold,
0.066 per cent copper, and 0.055 per cent nickel. The reserve is based on a
cutoff 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 per cent. The average strip ratio over the life
of the mine is 2.26 to 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 per cent copper and 0.052 per cent nickel which is outside
the proposed pit shell.
Subject to the availability of financing and environmental permits, the company
anticipates construction startup in March, 2000, with concentrator commissioning
in second quarter 2001. The expansion capital is estimated at $126.5-million
(U.S.). The capital cost includes a new 15,000-tonne-per-day concentrator,
larger primary and ancillary mining equipment, preproduction 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 per cent 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 per cent while the net present value of the after-tax cash
flows, discounted at 7.5 per cent, is $100-million (U.S.). The study was based on
conservative palladium prices of $350 (U.S.) per ounce for the period 2000 to
2002 and $320 (U.S.) per ounce thereafter. Currently, palladium is trading in the
range of $450 (U.S.) per ounce. The direct operating cash cost of palladium
production during the mine life is estimated at $131 (U.S.) 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
$3-million (U.S.) 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 85 kilometres north of Thunder Bay, Ont., 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.
WARNING: The company relies upon litigation protection for "forward-looking"
statements.
(c) Copyright 2000 Canjex Publishing Ltd. canada-stockwatch.com |
