Exploration, market conditions could extend mine's life

The Lac des Iles mine restarted operations at half strength in April, but company officials said Wednesday that successful exploration could keep the site alive for another 10 years.

North American Palladium Ltd. placed the Lac des Iles mine on care and maintenance closure in 2008 because of low metal prices. There are about 200 less employees working at the mine today than there were when the mine last operated at full strength. With those employees in place, the company plans to produce 140,000 ounces of palladium per year.

Dave Passfield, vice-president of operations with North American Palladium Ltd, said the company is producing less palladium after the restart, but added that further exploration found two new deposits of the rare metal that could keep the site alive for another decade.

"The future is this offset zone," Passfield said. "It’s a faulted off extension of the ore body and that is what we are working on with quite a bit of exploration and engineering. If all our plans come to fruition then we’ll be back to producing 240,000 ounces. Hopefully, that is a couple years down the road."

Most of the mining operation focused on the Roby zone, with has an estimated life of two years. Passfield said the company produced about 250,000 ounces of palladium per year the markets forced them to stop production.

Exploration later found the two new zones the company has named Cowboy and Outlaw. The two new deposits would likely produce less palladium than the Roby zone, but would still help extend the life of the mine.

Passfield said they are spending $15 million on exploration.

"We haven’t found any of the limits yet," he said. "This ore body is pretty big and opens in all directions. That’s kind of what we are investing our money into right now."

The mine put the brakes on production when the demand for palladium, which is used primarily in the production of automobiles, fell below $200 per ounce.

Passfield said the company wanted to capitalize on the recent demand of $500 per ounce and restarted operations. He said demand needs to stay at least above the $300 per ounce level for the company to turn a profit or break even.

Passfield said the company also produces various other metals such as gold, nickel, copper and platinum.