Lac des les suffers setback (September 11, 2002)

Just when it looked like things were beginning to improve, North American Palladium (PDL-T) has been forced to temporarily shut down the primary crusher at its Lac des les palladium mine in northwestern Ontario.

The company plans to lift the crusher’s main shaft in order to examine the lower drive unit. The crusher has been suffering operating disruptions resulting in reduced mill feed. Consultants and representatives from the equipment manufacturers are on site. The company did not comment on how long operations would be disrupted.

The mill at Lac des les will continue to operate at full capacity until Sept. 12, when the mill will begin running through stockpiled ore at a significantly reduced rate.

NAP also plans to suspend all mining and non-essential activities until the crusher resumes normal operations.

Last September, NAP officially cut the ribbon at a newly expanded 15,000-tonne-per-day mill at Lac des les. At a cost of $220 million the mill was designed to boost process capacity at the mine by a factor of six, reflecting the expansion of reserves in 1999.

The party was short-lived as operational problems cropped up. Since then, the company has: replaced the pebble crusher with a larger one; contracted out fine-ore crushing; and installed a new liner in the semi-autogenous grinding (SAG) mill. Modifications were also made to the SAG mill and grinding and flotation circuits.

During the recent second quarter, palladium production soared 207% relative to the corresponding period of 2001. The mill cranked out 62,168 oz. palladium-in-concentrate plus platinum, gold, copper and nickel during the three months ended June 30. Direct mining cost climbed, but cash costs fell by 15% to US$223 per oz., net of byproduct credits.

The quarter also saw Lakefield Research commission a pilot plant at the Lac des Iles mill in an attempt to further boost throughput and recovery rates.

At last count, reserves at Lac des les stood at 93.5 million tonnes grading 1.53 grams palladium, plus platinum, gold, copper and nickel. The estimate is based on a cutoff grade of 0.7 gram palladium and a palladium price of US$400 per oz.

News of the shutdown sent investors fleeing; NAP’s shares ended 69 or nearly 8% lower at $8.05 on the Toronto Stock Exchange on Sept. 11.

After the markets closed on Wednesday, NAP announced that it was looking for a new president and chief executive officer following the resignation of Keith Minty. In the meantime, current chairman, Michael Amsden, will take over the reigns.