Mr. John Vincic reports
NORTH AMERICAN PALLADIUM ANNOUNCES FILING OF PRELIMINARY ECONOMIC ASSESSMENT FOR LAC DES ILES MINE ON SEDAR
North American Palladium Ltd. (NAP) has filed the National Instrument 43-101 technical report for Lac des Iles mine, Ontario, incorporating a preliminary economic assessment of the mine expansion plan on SEDAR.
A preliminary economic assessment is at a scoping level and is therefore preliminary in nature. The phase 2 expansion includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the conclusions in the PEA will be realized. All economic assessments are calculated at the Lac des Iles mine (LDI) level and therefore do not include certain costs including, but not limited to, corporate office, interest, financing and exploration expenses.
Summary results of the 2015 PEA were discussed in a news release dated Feb. 26, 2015. The PEA supports the new base case, which extends the mine life from 2019 to 2029 and includes current operations with the addition of an open-pit expansion. The PEA also includes the potential phase 2 shaft-deepening project, where preliminary positive results indicate that further exploration and technical investigation are justified.
In the finalized PEA, 1.2 million tonnes of inferred mineral resources has been removed from the base-case plan in order to establish a clear separation of inferred mineral resources from mineral reserves in the economic analysis of the mine expansion scenarios. The financial results of the current mine plan, the two expansion scenarios and the base case are shown in the tables.
FINANCIAL RESULTS FOR CURRENT MINE PLAN
LOM totals Units Current mine plan
Production kt 22,329
Pd g/t 2.06
Pd recovery % 80.9%
Pd recovered oz 1,197,516
Pd payable oz 1,084,414
Net smelter return less royalties $M 1,326
Total opex $M (776)
EBITDA $M 550
Project capex $M (8)
Sustaining capex $M (84)
Change in working capital $M 70
Closure costs $M (15)
Pretax cash flow $M 513
Taxes $M (21)
Aftertax cash flow $M 493
Aftertax NPV at 5% $M 435
FINANCIAL RESULTS FOR OPEN-PIT AND PHASE 2 EXPANSION SCENARIOS
LOM totals Units Open-pit expansion Phase 2 expansion
Production kt 38,514 10,857
Pd g/t 1.27 3.27
Pd recovery % 75.9% 84.5%
Pd recovered oz 1,194,222 963,102
Pd payable oz 1,080,105 871,476
Net smelter return less
royalties $M 1,438 980
Total opex $M (961) (538)
EBITDA $M 477 442
Project capex $M (51) (242)
Sustaining capex $M (143) (50)
Change in working capital $M - -
Closure costs $M - -
Pretax cash flow $M 283 151
Taxes $M (35) (33)
Aftertax cash flow $M 248 117
Aftertax NPV at 5% $M 138 22
Aftertax IRR % 31% 7%
FINANCIAL RESULTS FOR THE BASE-CASE SCENARIO
(Includes current mine plan plus open-pit expansion)
LOM totals Units Base case
Production kt 60,843
Pd g/t 1.56
Pd recovery % 78.3%
Pd recovered oz 2,391,013
Pd payable oz 2,164,520
Net smelter return less royalties $M 2,765
Total opex $M (1,738)
EBITDA $M 1,027
Project capex $M (59)
Sustaining capex $M (226)
Change in working capital $M 70
Closure costs $M (15)
Pretax cash flow $M 797
Taxes $M (56)
Aftertax cash flow $M 741
Aftertax NPV at 5% $M 573
The differences between the Feb. 26, 2015, news release and the finalized PEA are as follows:
Current mine plan (proven and probable with measured and indicated; no inferred resources)
-
Production tonnes were changed from 23.0 million tonnes (Mt) to 22.3 Mt.
- Average palladium grade was changed from 2.11 grams per tonne to 2.06 g/t.
- Aftertax net present value was changed from $457-million to $435-million at a 5-per-cent discount rate.
Open-pit expansion (measured and indicated; no inferred resources)
- Production tonnes were changed from 39.0 Mt to 38.5 Mt.
- Average palladium grade was changed from 1.28 g/t to 1.27 g/t.
- Aftertax NPV was changed from $136-million to $138-million at a 5-per-cent discount rate.
- Aftertax IRR was changed from 30 per cent to 31 per cent.
Base-case scenario (proven and probable with measured and indicated; no inferred resources)
- Production tonnes were changed from 62.0 Mt to 60.8 Mt.
- Average palladium grade was changed from 1.59 g/t to 1.56 g/t.
- Aftertax NPV was changed from $593-million to $573-million at a 5-per-cent discount rate.
Phase 2 expansion (measured and indicated with inferred resources)
- Project metrics were unchanged.
Technical information and qualified persons
The content of this news release has been reviewed and approved by Dave Peck, PGeo, the company's vice-president, exploration, an employee of NAP. Robert Duinker, PEng, senior consultant at Hatch Ltd., has reviewed and approved the disclosure of the economic evaluation and cash flow estimates. Brian Young, PEng, senior mining consultant at Hatch Ltd., has reviewed and approved the disclosure of the life-of-mine plan and associated production data for the base-case and phase 2 scenarios. Mr. Peck, Mr. Duinker and Mr. Young are qualified persons as defined in National Instrument 43-101.
Additional information can be found in NAP's Form 40-F/annual information form on file with the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities, available at EDGAR and SEDAR, respectively. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
We seek Safe Harbor.
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