PAL (NYSE MKT): $ 0.31 -0.01 -2.73% Volume: 2,342,719 April 16, 2014
PDL (TSX): $ 0.34 -0.01 -2.02% Volume: 895,554 April 16, 2014
PALLADIUM: $ 802.50 +7.50 +0.94% Volume: April 16, 2014
PLATINUM: $ 1,438.70 -2.30 -0.16% Volume: April 16, 2014
exploration

Reserves & Resources

The Company has completed an update to its LDI mineral reserves and resources. The effective date for the new reserve and resource estimates, shown in Table 1, is December 31, 2013. The new estimates exclude material mined up until the effective date. The resource estimates provided in Table 1 were prepared by NAP Qualified Persons in accordance with NI 43-101 guidelines. The reserve estimates provided in Table 1 were prepared by qualified persons from Tetra Tech, also in accordance with NI 43-101 guidelines. A detailed discussion of the resource and reserve estimates presented in Table 1 will be contained in a NI 43-101 technical report containing an updated pre-feasibility study for the Lac des Iles mine. This report is expected to be filed on SEDAR on or before March 31, 2014. The following discussion provides summary information for the new resource and reserve estimates for LDI with reference to Table 1.

TABLE 1: Mineral reserve and mineral resource estimates for the Lac des Iles mine property effective December 31st, 2013.

Reserves & Resources

                 
NEAR SURFACE RESERVES
Category/Source Pd Cut-Off Tonnes Pd Pt Au Ni Cu Pd Contained
Proven (g/t) (000's) (g/t) (g/t) (g/t) (%) (%) (000's oz)
Low-Grade Stockpile (RGO) 0.95 4,876 0.97 0.12 0.08 0.06 0.03 152
Roby Zone Open Pit 1.09 716 1.31 0.16 0.13 0.07 0.06 30
Total Proven - 5,592 1.01 0.13 0.09 0.06 0.03 182
Probable
Roby Zone Open Pit 1.09 293 1.39 0.18 0.15 0.08 0.07 13
Total Reserve - 5,885 1.03 0.13 0.09 0.06 0.04 195
NEAR-SURFACE RESOURCES
Category/Source Pd Cut-Off Tonnes Pd Pt Au Ni Cu Pd Contained
Measured (g/t) (000's) (g/t) (g/t) (g/t) (%) (%) (000's oz)
Low-Grade Stockpile (RGO) 0.95 7,679 0.97 0.12 0.08 0.06 0.03 239
Roby Zone Pit Expansion 1.00 10,476 1.60 0.21 0.12 0.07 0.05 539
Sheriff Zone 1.50 1,725 2.06 0.21 0.11 0.06 0.07 114
North VT Rim 1.00 437 2.03 0.12 0.03 0.03 0.01 28
Total Measured - 20,317 1.41 0.17 0.10 0.07 0.04 921
Indicated
Roby Zone Pit Expansion 1.00 5,393 1.53 0.21 0.11 0.07 0.05 265
Sheriff Zone 1.50 35 1.74 0.20 0.14 0.07 0.09 2
North VT Rim 1.00 14 1.75 0.12 0.03 0.03 0.01 1
Total Indicated 5,442 1.53 0.21 0.11 0.07 0.05 268
Total Measured + Indicated - 25,759 1.44 0.18 0.10 0.07 0.04 1,189
UNDERGROUND RESERVES - HANGINGWALL ZONES
Category/Source Pd Cut-Off Tonnes Pd Pt Au Ni Cu Pd Contained
Proven (g/t) (000's) (g/t) (g/t) (g/t) (%) (%) (000's oz)
Offset Hangingwall Zone 2.60 4,499 4.06 0.28 0.28 0.11 0.08 587
Roby Hangingwall Zone 2.40 847 3.51 0.23 0.20 0.05 0.04 96
Total Proven - 5,346 3.97 0.27 0.27 0.10 0.07 683
Probable
Offset Hangingwall Zone 2.60 3,564 3.82 0.27 0.27 0.10 0.09 438
Roby Hangingwall Zone 2.40 251 3.17 0.22 0.18 0.05 0.04 26
Total Probable 3,815 3.78 0.27 0.26 0.10 0.09 463
Total Reserve - 9,161 3.89 0.27 0.27 0.10 0.08 1,146
UNDERGROUND RESOURCES - HANGINGWALL ZONES
Category/Source Pd Cut-Off Tonnes Pd Pt Au Ni Cu Pd Contained
Measured (g/t) (000's) (g/t) (g/t) (g/t) (%) (%) (000's oz)
Offset Hangingwall Zone 2.50 2,418 4.34 0.31 0.28 0.11 0.08 337
Indicated
Offset Hangingwall Zone 2.50 3,234 4.19 0.30 0.29 0.12 0.10 436
Total Measured + Indicated 2.50 5,652 4.25 0.30 0.29 0.12 0.09 773
Inferred
Offset Hangingwall Zone 2.50 5,942 3.75 0.23 0.23 0.10 0.09
UNDERGROUND RESOURCES - FOOTWALL ZONES
Category/Source Pd Cut-Off Tonnes Pd Pt Au Ni Cu Pd Contained
Measured (g/t) (000's) (g/t) (g/t) (g/t) (%) (%) (000's oz)
Offset Footwall Zone 1.50 11,011 2.24 0.23 0.16 0.08 0.06 793
Roby Footwall Zone 1.50 4,159 2.43 0.21 0.18 0.06 0.05 325
Total Measured 1.50 15,170 2.29 0.22 0.17 0.07 0.06 1,118
Indicated
Offset Footwall Zone 1.50 8,810 2.12 0.22 0.16 0.08 0.07 600
Roby Footwall Zone 1.50 2,341 2.34 0.20 0.17 0.06 0.05 176
Total Indicated 1.50 11,151 2.17 0.22 0.16 0.08 0.07 777
Total Measured + Indicated 1.50 26,321 2.24 0.22 0.16 0.08 0.07 1,895
Inferred
Offset Footwall Zone 1.50 9,530 2.16 0.15 0.12 0.06 0.05
Roby Footwall Zone 1.50 248 2.43 0.18 0.08 0.03 0.02
Total Inferred 1.50 9,778 2.17 0.15 0.12 0.06 0.05
COMBINED RESERVES AND RESOURCES - ALL SOURCES
Category/Source Tonnes Pd Pt Au Ni Cu Pd Contained
Sub-Category (000's) (g/t) (g/t) (g/t) (%) (%) (000's oz)
Total Proven + Probable 15,046 2.77 0.21 0.20 0.08 0.06 1,341
Total Measured + Indicated 57,732 2.08 0.21 0.15 0.08 0.06 3,857
Total Inferred 15,720 2.77 0.18 0.16 0.07 0.07

Notes

  1. Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
  2. Palladium ounces are stated as contained ounces. Disclosure of contained ounces is permitted under Canadian regulations; however, the US Securities and Exchange Commission (SEC) generally permits resources to be reported only as in place tonnage and grade.
  3. Resources listed in Table 1.1 are exclusive of reserves. Resources and reserves reflect depletion from mining activities to December 31, 2013.
  4. Tonnages are rounded to nearest '000 tonnes. Palladium, platinum and gold grades are rounded to nearest 0.01 g/t. Nickel and copper grades are rounded to nearest 0.01%. Rounded numbers used to calculate contained palladium (oz) and average resource and reserve tonnage and grades.
  5. All reserve and resource estimates were prepared in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects (NI 43-101) and the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) classification system. US investors should refer to the Annual Information Form for an overview on how Canadian Standards differ significantly from US requirements.
  6. The mineral resource for the Offset hangingwall and footwall zones was estimated as of December 31, 2013 by Denis Decharte P.Eng, an employee of North American Palladium Ltd. (NAP) and a qualified person (QP) under NI 43-101. The mineral resource calculation uses a minimum 2.5 g/t palladium resource block cut-off for the hangingwall zone and a minimum 1.5 g/t palladium resource block cut-off for the footwall zone. The mineral resource estimate is based on the combination of geological modeling, geostatistics, and conventional block modelling (5 m by 5 m by 5 m blocks). 1 m composite intervals were used with a grade capping at 30 g/t for palladium and 3 g/t for gold. Grade capping was determined not to be necessary for others metals. The Offset Zone resource models used the ordinary kriging (OK) grade interpolation method within a 3DI block model with mineralized zones defined by wireframe solids. The mineral resource is exclusive of mineral reserve and mined-out material as of December 31, 2013.
  7. The mineral resource for the Roby footwall zone was estimated as of December 31, 2013 by Denis Decharte P.Eng, an employee of NAP and a QP under NI 43-101. The mineral resource calculation uses a minimum 1.5 g/t palladium resource block cut-off. The mineral resource estimate is based on the combination of geological modeling, geostatistics, and conventional block modelling (5 m by 5 m by 5 m blocks). Grade capping was determined not to be necessary, however influence of composite intervals with palladium grade higher than 50 g/t were limited in space. The Roby Zone resource models used the OK grade interpolation method within a 3DI block model with mineralized zones defined by wireframe solids. The mineral resource is exclusive of mineral reserve and mined-out material as of December 31, 2013.
  8. Mineral resource estimates for the near-surface portion of the western part of the North VT Rim Zone (west and east deep zones) at the Lac des Iles Mine Property was prepared by Chris Roney, P.Geo., a QP and a private consultant to the Company. This resource estimate was based on a 1.0 g/t palladium cut-off grade. The North VT Rim Zone mineral resources were estimated from drilling completed to April 15, 2013. The mineral resource uses a minimum 1.0 g/t palladium resource block cut-off. The mineral resource estimate is based on the combination of geological modeling, geostatistics, and conventional block modeling (5 m by 5 m by 5 m blocks). The North VT Rim resource models used the inverse distance squared (ID2) grade interpolation method. North American Palladium Ltd. 1-4 1496780200-REP-R0002-01 Technical Report for Lac des Iles Mine, Ontario Incorporating Prefeasibility Study for Life of Mine Plan.
  9. Mineral resource estimates for the low-grade stockpile (RGO) was prepared by David N. Penna, P.Geo., an employee of Lac des Iles Mines Ltd. and a QP within the meaning of NI 43-101.
  10. As with mineral resources, the estimate of mineral reserves may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. The mineral reserves were estimated from geological block models provided by Denis Decharte P.Eng. and from RGO stockpile resource information provided by Dave Penna, P. Geo., employees of NAP and QPs under NI 43-101. The geological block models reflect updates that are based upon diamond drilling completed after March 31, 2012 and before December 31, 2013.
  11. Mineral resources for the Sheriff Zone are based on estimates originally provided in the Company’s September 5, 2013 press release.
  12. The mineral reserves were estimated by William Richard McBride, P.Eng. of Tetra Tech and Wenchang Ni, P.Eng. of Tetra Tech; with input by Dave Penna, P. Geo., an employee of NAP and QPs under NI 43-101 on allocation of indirect mining costs and John Cooney, P. Eng., an employee of NAP and QP under NI 43-101 on the use of the Lac Des Isle Mine 2014 budget for unit cost determinations; and with additional input by Cam McKinnon, P.Eng. of Tetra Tech on recoveries; and Philip Bridson, P.Eng. of Tetra Tech on metal prices and exchange rate, independent QPs within the meaning of NI 43-101.
  13. Reserves were estimated to the 1065 Mine Level (4,435 m elevation), a maximum depth of 1,072.5 m.
  14. The following metal price assumptions were used for reserves estimation: US$700/oz palladium, US$1,453/oz platinum, US$1,320/oz gold, US$6.47/lb nickel, and US$3.26/lb copper. A Cdn$/US$ exchange rate of Cdn$1.00 = US$0.95 was also applied.
  15. An average production rate of 5,272 t/d was used to determine the reserves. The following recoveries were used in the assumptions to determine the reserves: 86.3% palladium, 80.3% platinum, 80.4% gold, 38.8% nickel, and 88.7% copper. The effective date of NAP’s Lac des Iles Mine resource models for the Offset Zone and for the Roby Zone, as prepared by NAP’s Denis Decharte P.Eng., is December 31, 2013 and as a result of “mining depletion” the user of this reserve information should ensure that this is based upon the most recent resource estimate for the Property.
  16. It should also be noted that the mineral reserve estimate for the Offset Zone as provided in 2013 as part of the technical report labeled “Technical Report Lac des Iles Mine, Ontario, Incorporating Prefeasibility Study Offset Zone Phase I, effective January 31, 2013” reflected a different mining method with a different set of economic circumstances that thereby lead to that January 2013 reserve estimate in that prior report to be non-applicable to the unconsolidated fill mining method demonstrated as being viable by this prefeasibility study work. It should be further noted that “mining depletion” during 2013 is not accounted for in the reserves, as in place underground mining developments were removed from the resource model prepared by NAP’s Denis Decharte P.Eng., and thereby from the reserve numbers; and a 0% mining recovery was applied to known mined-out stopes. The projected top down, long-hole with unconsolidated fill mining method, its potential production profile and the plans referred to in this prefeasibility study are preliminary in nature and additional technical studies will need to be completed in order to prove out their viability. There is no certainty that this mining method will be realized or that the production capabilities as represented will be realized. A mine production decision that is made without a feasibility study carries additional potential risks which include but are not limited to the lack of details pertaining to geotechnical and ventilation field study inputs for mine design, ore handling upgrades and their impact on mining schedules, metallurgical flow sheets and process plant designs that in themselves may require additional economic analysis and internal studies to ensure satisfactory operational conditions and decisions regarding future targeted production. Numbers may not add due to rounding.

SHEBANDOWAN WEST MINERAL RESOURCES
Tonnes Pd Pt Au Cu Ni Pd Pt
Property Category (000's) (g/t) (g/t) (g/t) (%) (%) (000's oz) (000's oz)
Shebandowan West
Measured 368 1.19 0.37 0.22 0.89 0.66 14 4
Indicated 924 1.05 0.33 0.23 0.92 0.60 31 10
Measured and Indicated 1,292 1.09 0.34 0.23 0.91 0.62 45 14
Inferred 171 0.97 0.27 0.18 1.11 0.61 5 1

Shebandowan West

Mineral Resources for the Shebandowan West project were estimated as of August 9, 2007 by F.H. Brown, CPG, Pr. Sci. Nat., a Qualified Person under NI 43 101, using a cut-off grade of US$60.00 NSR and 18-month trailing average metal prices of US$300/oz Pd, US$750/oz Pt, US$400/oz Au, US$7/lb Ni and US$1.50/lb Cu. The estimate assumes a net inventory to North American Palladium of 50% for the Shebandowan West project. The Company’s interest is currently 50%, which could be reduced to 40% upon the exercise by Vale of a back in right.

Exploration