In 2001, a new mill facility was commissioned with a nominal design capacity of 15,000 tonnes per day. The processing operation utilizes a conventional flotation technology to produce a palladium-rich concentrate that also contains platinum, nickel, gold and copper.

Ore is first crushed in a gyratory crusher and conveyed to a coarse ore stockpile. With the commissioning of the secondary crusher in 2004, the coarse ore stream can be split so that a portion is crushed in the secondary crusher producing a fine material feed which is then combined with the coarse feed. This mixture of coarse and fine material feeds the SAG mill to increase mill throughput. In 2005, modifications were made to the secondary crusher, including the installation of a slide gate and better control feed distribution.

The ore is ground to a nominal P80 (the size of an opening through which 80% of the product will pass) of 74 microns in a conventional semi-autogenous mill/ball mill/pebble crusher (SABC) circuit. The ground ore then feeds a flotation circuit that is comprised of rougher/scavengers and four stages of cleaning. The flotation circuit in the old concentrator is currently connected to the new concentrator to provide additional cleaner flotation capacity. The final concentrate is thickened and dewatered using two pressure filters.

In 2008, up until the temporary shutdown of the mine, the concentrator processed 3,722,732 tonnes of ore or 11,419 tonnes per calendar day at an average palladium head grade of 2.33 grams per tonne and an average palladium recovery of 75.3%.  In 2007, the concentrator processed 5,006,383 tonnes of ore or 13,716 tonnes per calendar day at an average palladium head grade of 2.39 grams per tonne and an average palladium recovery of 74.8%.

Production costs per tonne of ore milled were $30.85 in 2008 and $24.98 in 2007. Cash costs, which include direct and indirect operating costs, smelting, refining, transportation and sales costs and royalties, net of credits for by-products, were approximately US$283 per ounce of palladium, for 2008 as compared to approximately US$164 per ounce of palladium in 2007.

The following table sets forth the tonnes milled and the metal production of the concentrate for each of the five years ended December 31, 2008:

Notes:

1. The underground mine at Lac des Iles went into commercial production on April 1, 2006.
2. The Lac des Iles mine was placed on care and maintenance on October 29, 2008.

If the Company permanently shuts down the open pit, the mill will be reconfigured to process ore at a lower capacity.  A redesigned mill with a capacity of 6,000 to 7,000 tonnes per day would eliminate the current need for a SAG mill and would significantly reduce operating costs for the mill.  The Preliminary Economic Assessment released on May 7, 2008, suggests that an underground mining operation could be mined at a rate of 6,000 tonnes per day, yielding up to 250,000 oz palladium, 16,000 oz platinum, 17,000 oz gold, two million lbs nickel and 4 million lbs copper annually once full production was achieved.  A detailed prefeasibility study is currently under way to confirm these results.