North American Palladium Ltd. (fka PALDF)

[JD400]

North American Palladium Completes a New Feasibility Study Featuring a Major Expansion of Underground Reserves

Sep 17 2018

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TORONTO, Sept. 17, 2018 (GLOBE NEWSWIRE) -- North American Palladium Ltd. ("NAP" or the "Company") (TSX:PDL) (OTC PINK:PALDF) announced today the results of a new feasibility study (the “Feasibility Study”), incorporating major changes to the life of mine plan for the Lac des Iles Mine Property (“LDI”) in northwestern Ontario. The Feasibility Study has been prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects and will be filed within 45 days on SEDAR and posted on the Company’s website. All currency figures are in Canadian dollars unless otherwise noted.

Based on the success of the recent transition to the sublevel shrinkage mining method (“SLS”) in the lower part of the mine, the Company initiated an internal evaluation of similar underground mass mining approaches for all of the near-surface resources as an alternative to a pushback of the existing Roby open pit proposed in the prior 2017 feasibility study. The positive results of this evaluation prompted the commissioning of the Feasibility Study. The Feasibility Study has improved margins, cash flows, mine life and net present value (“NPV”) relative to the previous study. Additionally, the more selective underground mining method provides the Company with increased flexibility to deal with any future palladium price volatility.

Highlights of the Feasibility Study:

The previously planned pushback of the dormant Roby open pit is now replaced by an expansion of the underground mine using bulk mining methods to extract maximum value from several near-surface resources outside the original mine plan.

Mine life is extended by one year to 2027 with average underground production increasing from 6,000 to more than 12,000 tonnes per day (“tpd”) and includes a total of 40.9 million tonnes of underground and surface reserves at an average palladium grade of 2.31 g/t, yielding 2.32 million ounces of payable palladium production.
Improved key financial metrics, including total revenue of $3.64 billion, total EBITDA1 of $1.51 billion and after-tax NPV(8%) of $637 million, generated by an average operating margin of 43% ($37.86 per tonne of ore milled).

Annual after-tax cash flows of between $52 and $144 million, totaling $909 million over the life of the mine.

Average All-Inclusive Sustaining Cost1 (“AISC”) of US$622 and cash costs of US$504 per ounce of palladium sold, with an average underground mining cost of $33.67 per tonne.

“With the completion of the operational turnaround last year, the Company has now generated positive earnings for five consecutive quarters. The new mine plan outlined in the Feasibility Study generates increased cash flow by optimizing resources previously included in the Roby open pit pushback plan and by adding reserves that were previously sterilized by the open pit design. LDI continues to be one of the lowest cost underground mines in Canada. This new approach will take full advantage of LDI’s large, lower-grade near-surface resources and allow for the mining of more resources at an improved grade than contemplated in the prior 2017 Feasibility Study. The net result is improved operating margins, a longer mine life and greater value creation for shareholders,” said Jim Gallagher, President and CEO of North American Palladium.

“Improved current and long-term consensus for palladium prices also contributed to higher value when compared to the study released 16 months ago. The market has begun to recognize that the primary deficit in the palladium market that has existed for the last few years is likely to continue well into the future. The new Feasibility Study places the Company in a strong position to manage volatility in palladium prices and capitalize on the robust palladium market while continuing to add resources through mine site and greenfields exploration,” continued Mr. Gallagher.

Updated Mineral Reserves and Resources

The new Feasibility Study includes a comprehensive update to the mineral reserves and mineral resources for LDI. The summaries provided below are explained in the accompanying notes at the end of this release and in the new Feasibility Study.

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