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Message: Announces First Quarter 2009 Results
| May 7, 2009 |
| North American Palladium Announces First Quarter 2009 Results |
| TORONTO, ONTARIO--(Marketwire - May 7, 2009) - North American Palladium Ltd. (TSX:PDL)(NYSE Amex:PAL) today announced financial results for the first quarter ended March 31, 2009. "I am pleased with the progress made on advancing our strategic initiatives in the first quarter," said Bill Biggar, President and CEO. "The previously announced acquisition of Cadiscor Resources Inc., expected to close in late May following approval by Cadiscor's shareholders, is an important step towards our vision of creating a mid-tier precious metals company operating multiple mines in mining-friendly jurisdictions. Cadiscor's Sleeping Giant gold mine is expected to resume operations in the fourth quarter, at a production rate of 50,000 ounces per year. At our Lac des Iles mine, our $7 million exploration program is well underway. Our operations team is also working on a prefeasibility study to verify our belief that the Roby underground mine and the Offset Zone will allow for another 12 years of underground mining. In addition, mine site personnel are refining a restart plan for the Lac des Iles mine with the objective of streamlining processes and lowering operating costs. From an operational perspective, we expect to be able to resume mining within three months of making a "go" decision." FINANCIAL HIGHLIGHTS - On March 31, 2009 the Company announced the planned acquisition of Cadiscor Resources Inc. in an all share transaction. Coincident with the signing of the agreement, the Company advanced $7.5 million to Cadiscor to assist with the restart of the Sleeping Giant gold mine in Quebec, expected to be producing in the fourth quarter of 2009. - For the quarter ended March 31, 2009 there was no palladium production as compared to 61,091 ounces in the first quarter last year due to the Lac des Iles mine being on a care and maintenance basis during the quarter. - Revenue after pricing adjustments for the quarter ended March 31, 2009 was $5.0 million compared to $70.8 million in the first quarter last year. The first quarter 2009 revenue is entirely attributable to positive commodity and foreign exchange pricing adjustments, as compared to $19.7 million of positive pricing adjustments in the first quarter of 2008. - During the three months ended March 31, 2009, the first full quarter that the Lac des Iles mine was on care and maintenance, the Company incurred care and maintenance costs of $3.2 million, general and administration costs of $2.0 million and exploration expenditures of $2.4 million, primarily on the Offset Zone project at Lac des Iles. - Net income for the quarter ended March 31, 2009 was $0.3 million or $0.00 per share compared to net income of $12.6 million or $0.16 per share in the first quarter last year. - Palladium sales settled during the quarter ended March 31, 2009 were realized at an average price of US$197 per ounce compared to US$434 per ounce in the first quarter last year, a decrease of 55%. - Concentrate awaiting settlement as at March 31, 2009 was $20.1 million and included 45,146 ounces of palladium provisionally valued at the spot price of US$215 per ounce or contractually agreed upon prices. The Company's performance is highly correlated to prevailing palladium and by-product metal prices as it continues to sell all its metal production into the spot markets. - Net working capital as at March 31, 2009 was $79.4 million (including cash and cash equivalents of $47.5 million) compared to $86.1 million as at December 31, 2008. Outlook As of May 6, 2009 the spot price of palladium and platinum, the Company's two main metals, was US$226 per ounce and US$1,136 per ounce respectively, representing an increase of 23% and 27% respectively, compared to December 31, 2008. Palladium and platinum prices have not yet reached a level at which the Company's management would consider the restart of production at the Lac des Iles mine. Approximately 50% of palladium and platinum demand is for the manufacture of automotive catalytic converters. While there are some signs of a global economic recovery, the outlook for the automotive industry over the near term remains challenging. On the other hand, the medium to longer term outlook for the pricing of palladium and platinum appears to be quite positive based on credible third party forecasts predicting renewed growth in global automotive sales, particularly in the BRIC (Brazil, Russia, India and China) countries. As at March 31, 2009 the Company had net working capital of $79.4 million, including cash and cash equivalents of $47.5 million. In addition to the cash on hand, management expects to realize additional cash flow over the next few months as payment is received for metal sales made prior to the mine closure. While in care and maintenance mode, the Company has retained senior mine management and its exploration team. Management estimates that mine site personnel costs, care and maintenance expenditures at the mine, and corporate overhead costs will continue to be in the range of $5 million to $6 million per quarter. This estimate does not include discretionary investment in exploration activities. Going forward, management intends to focus on strategic initiatives, including: 1. Continuing the work required to complete a prefeasibility study on the Offset Zone to a depth of up to 1,200 metres below surface. This project has the potential to extend the life of the Lac des Iles mine significantly. Mineralization is currently known to exist to a depth of at least 1,670 metres. The results of the prefeasibility study are expected to be available in the third quarter of 2009. 2. Carrying out drilling and exploration operations on the largely unexplored Lac des Iles property to discover new resources. 3. Leveraging the Company's strong balance sheet to pursue potential acquisitions and joint venture opportunities that may emerge in these difficult and volatile markets. In the current environment, management expects that there will be many attractive strategic opportunities to consider. The Company will pursue acquisition and joint venture opportunities aggressively but with discipline to ensure that only those transactions that can deliver enhanced shareholder value over the long-term are pursued. While the Lac des Iles mine is on care and maintenance, management is re-evaluating the current mine plan and mill configuration with a view to reducing operating costs and ensuring that the Company is well positioned to profit when metal prices recover and operations resume. Conference Call and Webcast The Company will host its first quarter earnings conference call at 2:00 p.m. ET on Friday, May 8, 2009. The toll-free conference call dial-in number in North America is 1-888-789-0150 and the local and overseas dial-in number is 416-695-6622. The conference call will be simultaneously webcast and archived at www.napalladium.com and at www.investorcalendar.com/IC/CEPage.a... . A replay of the conference call will be available until May 29, 2009 toll-free at 1-800-408-3053, locally and overseas at 416-695-5800, access code #5585268. Further information about the first quarter results are available in the Company's financial statements and MD&A, which will be filed on its website, with Canadian provincial securities authorities (www.sedar.com) and with the U.S. Securities and Exchange Commission (www.sec.gov). About North American Palladium North American Palladium is a precious metals company that owns one of North America's largest palladium mines, historically producing approximately 4% of global palladium supply. The Company's palladium production at its Lac des Iles mine is strengthened by a significant contribution from platinum, gold, nickel and copper by-product metals. The Lac des Iles mine was placed on temporary care and maintenance in October 2008 due to low metal prices. Prior to the temporary shutdown, the mine had annual production of 270,000 ounces of palladium, 20,000 ounces of platinum and 20,000 ounces of gold. The mine, which can be quickly restarted upon a strengthening of metal prices, hosts in situ measured and indicated mineral resources of 3.7 million ounces of palladium, 300,000 ounces of platinum and 250,000 ounces of gold, giving investors significant leverage to an increase in commodity prices. The Company benefits from operating in a politically stable jurisdiction with developed infrastructure and a history of innovation and excellence in mining. Please visit www.napalladium.com for more information. |
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