North American Palladium 2012 Results – 2013 Outlook

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North American PalladiumTHUNDER BAY – Mining – North American Palladium Ltd. has announced financial and operational results for the year ended December 31, 2012. Additionally they have shared updates and guidance for its Lac des Iles mine in 2013.

“Lac des Iles is a world-class palladium asset with significant exploration and development upside,” said André Douchane, Interim CEO and Chairman. “We are excited about the opportunities for organic growth, which are complemented by our existing infrastructure”.

“As highlighted in our January 31, 2013 news release, our recent exploration program has been very successful in identifying a number of new potential sources of ore, and we intend to explore all opportunities available to us to capitalize on the rising palladium prices. Given the recent increase in palladium prices, we intend to evaluate the economics of utilizing the excess capacity at the mill to potentially process our low-grade stockpile”.

“The remainder of 2013 will not be without its challenges; however, we remain completely committed to our long-term strategy to become a low cost, growing mid-tier palladium producer,” added Douchane.

North American Palladium is in the process of exploring divestiture opportunities for its Quebec-based gold division. The year-end financials treat the gold division as a discontinued operation (held for sale) therefore this news release will only focus on the palladium operations.

North American Palladium Results

2012 Results Summary

  • Produced 163,980 ounces of payable palladium at a cash cost per ounce(1) of US$401;
  • 2012 realized palladium selling price of US$640 per ounce, giving a palladium operating margin of US$239 per ounce, or US$39.2 million;
  • 2012 revenue of $160.7 million;
  • 2012 adjusted EBITDA(1) of $28.5 million;
  • Capital expenditures of $166.3 million at LDI, of which $127.5 million was invested in the mine expansion; and
  • Expenditures of $17.2 million in exploration at LDI, of which $14.5 million was expensed.

2013 Outlook Summary

  • Targeting payable palladium production from LDI between 150,000 to 160,000 ounces at a cash cost per ounce in the range of US$375 to US$425;
  • Capital investment budget of $105 million to establish LDI for sustained future growth, consisting of:
    • $79 million to complete Phase I of the LDI mine expansion (as detailed in the Prefeasibility Study filed on February 19, 2013), which is expected to transition operations to shaft production from the Offset Zone by the end of the third quarter of 2013, allowing NAP to increase underground mining at a reduced cash cost; and
    • $26 million on sustaining, exploration and future-oriented capital investments in support of the expanding operations at LDI.
  • Palladium exploration budget of $12 million(2), comprised of 45,000 metres of drilling at LDI to upgrade and expand reserves and resources and identify new targets.

2012 Financial Results

Given NAP’s intent to sell the gold division, the Company has treated the gold division as a discontinued operation (held for sale) and the financial statements have been adjusted accordingly, reflecting the continuing palladium operations. NAP’s current process of exploring divestiture opportunities for its gold assets has provided an indication of the value of these assets. Accordingly, the Company has incurred a non-cash impairment charge of $56.0 million.

As at December 31, 2012, the Company had $32.5 million in working capital, including $20.2 million cash on hand. As at December 31, 2012, the Company had a balance of US$27.5 million available on its US$60.0 million credit facility.

“I am highly encouraged by the cash generation potential at LDI, and look forward to optimizing the capital structure to support the Company’s growth initiatives,” commented Dave Langille, Chief Financial Officer.

Conference Call and Webcast Details



Friday, February 22, 2013


9:00 a.m. ET



Live Call:

1-855-410-0553 or 1-646-583-7389 (PIN: 509471, followed by # sign)


1-877-764-8714 or 1-646-583-7395 (PIN: 336542, followed by # sign)


The conference call replay will be available for 30 days after the live event. An archived audio webcast of the call will also be posted to NAP’s website.

2012 LDI Investments

In 2012, NAP spent $166.3 million on capital expenditures at LDI, including $127.5 million on the LDI mine expansion, and approximately $8.0 million of capitalized interest related to the Company’s debt. The LDI mine expansion-related capital expenditure of $127.5 million includes some cost overruns related to various project scope changes.

Part of the ongoing capital expenditures in 2012 at LDI included capitalizing $7.7 million in upgrades to its tailings management facility (“TMF”). The two severe rainstorms in 2012 resulted in extra water being directed into the TMF which accelerated the Company’s timeline for TMF upgrades that were initially planned for 2013.

During 2012, NAP invested $17.2 million in exploration at LDI of which $14.5 million was expensed. 

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