Overview of Expansion:
In late 2010, NAP commenced a major expansion of its Lac des Iles (LDI) mine to increase underground production and reduce cash costs per ounce. The mine expansion consists of transitioning underground operations to shaft haulage while utilizing a high volume bulk mining method.
The key development aspects of Phase I of the expansion include:
1. Sinking the shaft 825 metres from surface. Since the shaft can transport more ore much faster, the shaft will enable the Company to increase its underground mining rate. NAP is targeting to start utilizing the new shaft by the beginning of the fourth quarter of 2013, with full operational benefits of the shaft to be realized starting in 2014.
2. Setting up underground infrastructure to mine the Offset Zone using a bulk mining method. Currently, this includes expanding the ramp at depth, building new mine levels, and setting up mining stopes for production.
3. Setting up surface infrastructure to service the expanded underground operations. This includes the construction of the headframe, the hoist house, the service, auxiliary and production hoists, the electrical sub-stations, etc. Through the substantial investments made in 2011 and in 2012, the surface infrastructure is now essentially completed with most key structures fully operational.
Through the utilization of the shaft and the bulk mining method, operations are expected to benefit from increased mining rates and decreased operating costs, transforming LDI into a low cost producer with a rising production profile.
Recent Progress:
The Company remains well positioned to start hoisting ore from the new shaft during October. On September 23, 2013, the Company announced that the shaft sinking recently reached the 825-metre level and that steel fitting and concrete lining are being completed.
Beyond Phase I:
The Company is currently evaluating a number of prospective exploration targets that represent low cost production opportunities that could augment Phase I production at LDI.
Although this is still under review, preliminary indications show that a combination of these opportunities could potentially increase the Company’s palladium production up to 250,000 ounces by 2015, and that these targets would cost less to develop than sinking the shaft at a further depth. This would potentially allow NAP to defer Phase II capital spending, without compromising the production growth it represented.