North American Palladium records quarterly profit

Although hindered by an operational setback, North American Palladium (PDL-T) earned $2.9 million in the third quarter as revenue soared to over $46.5 million. The 6-per-share profit compares with losses of $6.6 million (13 per share) on $23.2 million in the corresponding period of 2001.

In early September, North American was forced to shut down its Lac des Iles mill in northern Ontario, when two vertical fractures formed in the bottom shell of the primary crusher. The problem has since been repaired, and a charge of $2 million will be recorded in the current quarter.

Nevertheless, Lac des Iles cranked out 51,168 ounces palladium-in-concentrate in the third quarter at a total cash cost of US$282 per oz., net of byproduct credits. This compares with production of 62,168 ounces, at US$223, in the previous quarter and 36,891 ounces, at US$306, in the comparable period a year ago, when the plant had begun operating at full tilt.

Over 1.38 million tonnes was mined from the pit at a stripping ratio of 1.83-to-1. Of that, 662,049 tonnes exceeded 1.1 grams palladium per tonne, meaning the rest rang in at between 0.7 gram and 1.09 grams per tonne.

The mill, with the benefit of contract crushers and a crusher from the old mill, processed over 1.2 million tonnes grading 1.83 grams palladium. The average recovery rate came to 71.9% — 14% better than a year ago.

North American now has over 8.3 million tonnes of broken ore in stockpile. The stockpile averages 1.14 grams palladium.

North American realized an average US$490 per oz. for its recent production, or US$165 more than the average spot price for the quarter. This partly reflects the benefits of forward sales on 12,600 ounces at an average US$899 per oz.

Cash flow for the quarter topped $14.2 million, versus $627,000 a year ago. The two largest non-cash items in the recent quarter were amortization charges, at $4.9 million, and unrealized foreign exchange losses, at $6 million.

On Sept. 30, North American had nearly $64 million in working capital and $62 million in long-term debt. The company also owes $18 million to Kaiser-Francis Oil, which owns 51.7% of its outstanding shares.