North American Palladium (PDL-T) saw its first-quarter palladium production nearly halved from a year ago, thanks to several bearing failures in the ball mill at the Lac des les mine, near Thunder Bay, Ont.
During the first three months of 2005, the mill ran through about 1.16 million tonnes of ore averaging 1.9 grams palladium per tonne, and produced 52,572 oz. of palladium, for an average recovery rate of 74%. A year earlier, the mill squeezed 91,261 oz. of palladium out of 1.35 million tonnes of ore averaging 2.7 grams palladium, for an average recovery rate of 77.3%.
At the end of 2004, NAP said it expected to produce around 62,500 oz. palladium in each of the first three quarters of 2005.
The latest quarter also saw the mine produce 5,382 oz. platinum, 4,131 oz. gold, 778,200 lbs. nickel, and 1.6 million lbs. copper as byproducts. A year earlier byproduct production included 6,983 oz. platinum, 7,755 oz. gold, 1.3 million lbs. nickel, and 2.1 million lbs. copper.
Mill availability between the two periods slipped to 86.3% from 89.3%, owing mostly to the bearing failures. The company says the problems with the bearings have been solved and the 15,000-tonne-per-day mill is operating normally.
On the exploration front, the initial hole of a deep drilling program launched late last year managed to return only 0.24 gram palladium per tonne over 5.4 metres from, beginning at a depth of 1,634 metres. The drilling is aimed at extending resources in the Offset High Grade zone
Earlier this year, a second hole designed to cut the zone 300 metres below the known resource cut 5.3 grams palladium, 0.5 gram platinum, and 0.08 gram gold over 3.1 metres (from 1,369 metres).
The company has budgeted $2.5 million for drilling on the Offset High Grade zone and other surface prospects during 2005. A series of shallow holes will also test the southern portion of the Main High Grade zone, which has been displaced by the east-west trending Roby fault system.
At the end of 2004, Lac des les has home to open-pit proven and probable reserves totalling 28.6 million tonnes running 1.8 grams palladium, 0.21 gram platinum, 0.14 gram gold, 0.06% copper, and 0.08% nickel. Another 3.5 million tonnes of underground probable reserves grade 6.6 grams palladium, 0.4 gram platinum, 0.34 gram gold, 0.07% copper, and 0.08% nickel.
Construction of the underground mine began in May 2004; a ramp is being developed to provide access to reserves. Initial production is scheduled for the fourth quarter of 2005; full production, for 2006.
At full steam, the underground mine is expected to produce 2,000 tonnes of ore per day, with the average grade pegged at 6.6 grams palladium per tonne. That ore will be blended with 13,500 tonnes a day from the open pit to produce a mill feed running around 2.3 grams palladium per tonne. The plan is expected to boost the mine’s annual production by about 113,000 oz. to 350,000 oz. per year.
News of the production shortfall saw the company’s shares off as much a 20 to $8.58 in afternoon trading in Toronto on April 6.
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