On October 21, 2008 the Company announced that it was temporarily placing its Lac des Iles Mine on a care and maintenance basis effective October 29, 2008, due to depressed metal prices.

Mill Production Stats

Mining Operations

The Company began mining the Roby Zone in 1993 using open pit mining methods. Ore and waste from the open pit is mined using conventional hydraulic 27 cubic meter and 23 cubic meter shovels, 190 tonne trucks, 187 millimeter blast hole drills and a fleet of conventional ancillary equipment. Mine waste is stockpiled outside of design pit limits.

Development of the underground mine commenced in the second quarter of 2004 in order to access the higher grade portion of the Roby Zone. The underground deposit lies below the ultimate pit bottom of the open pit and extends to a depth of approximately 660 meters below the surface where it is truncated by an offset fault. Commercial production from the underground mine commenced on April 1, 2006. For the three months ended September 30, 2008, the underground mine had an average head grade of 5.41 grams per tonne of palladium compared to 5.77 grams per tonne in the same period last year.

The chosen mining method for the underground mine is sublevel retreat longitudinal longhole stoping with no fill. The mining block interval is 70 meters floor to floor including a 15 meter to 25 meter sill pillar below each haulage level. Stopes are 45 meters to 55 meters high by the width of the ore body. Total intake ventilation for the mine is designed to be 205 cubic meters per minute. There is one intake ventilation raise/secondary egress situated outside the ultimate open pit limits and air exhausts up the main ramp. At the rate of production for the three months ended September 30, 2008, open pit ore reserves would have been exhausted during the first half of 2009 and the current underground mining operation would have continued until late 2010 or early 2011. A preliminary economic assessment of the Offset High Grade Zone (‘‘OHGZ’’) released in May 2008 indicated that the OHGZ could extend underground mining operations to 2018, with production of 6,000 tonnes per day by 2012 and producing 250,000 ounces of palladium annually.

2007 - Lac des Iles Operations

Production in fiscal 2007 from the Lac des Iles Mine increased for the second year in a row as increased grade, recoveries and mill availability improved the year's performance.

Palladium production in 2007 was 286,334 ounces at an average head grade of 2.39 g/t compared with 237,338 ounces in 2006 at a head grade of 2.18 g/t.  As well, byproduct metal production of platinum, goldm nickel and copper all increased proportionately.

The Lac des Iles mining operation was significantly enhanced by the achievement of commercial production from the underground mine on April 1, 2006.  The $46 million underground development program initiated just two years prior was successfully completed on budget and schedule.

Since start-up, the underground mine has more than met our expectations, producing 770,000 tonnes of mill feed in 2007 or 2,106 tpd at an average palladium grade of 5.79 g/t. In the fourth quarter of 2007, production from the underground reached an average of 2,198 tonnes per day at a palladium head grade of 5.98 g/t.

The open-pit continues to provide the builk of the Lac des Iles throughput with total ore production of 4.4 million tonnes at an average grade of 1.79 g/t palladium. The combined open-pit and underground mill throughput in 2007 of 5.0 million tonnes at an average palladium head grade of 2.39 g/t, compared with 4.6 million tonnes at an average palladium head grade of 2.18 g/t last year.

Early in the year the Company undertook a number of initiatives to improve mill performance.  Process optimization, recovery improvements and enhancements to the long-term preventative maintenance program, combined to improve performance by minimizing unscheduled downtime.  In the last quarter of 2007, mill availability reached 87% and palladium recovery rose to 75%.

In 2008 the Company expects to continue on this improved track with estimated production of 300,000 ounces of palladium, an increase of 5% over the 2007 production level of 286,334 ounces.

Statement of Mineral Reserves & Resources (as of December 31, 2007)

LAC DES ILES - OPEN PIT

LAC DES ILES - UNDERGROUND

Notes:

1. The mineral reserve and resource estimates for the LDI property other than the OHGZ were prepared by David Penna, P. Geo (a "qualified person" under NI 43-101), using a cutt-off grade of 1.1 g/t Pd for the open pit and 4.5 g/t Pd for the underground, assuming long-term prices of US$325/oz Pd, US$1,000/oz Pt, US$550/oz Au, US$11/lb Ni and US$2.50/lb Cu. Mr. Penna is an employee of the Company, where he holds the position of Chief Geologist at the Lac des Iles mine. The mineral resource estimates for OHGZ were prepared by Richard E. Routledge, M.Sc., P.Geo. of Scott Wilson RPA. (a "qualified person" under NI 43-101), using a 3.6 g/t Pd equivalent cut-off grade. The open pit reserves are reported as grade diluted blocks but are stated on an in-situ basis.
2. Due to rounding differences, total contained ounces of measured and indicated resources of Pd and Pt may not be equal to the sum of these two mineral resource categories.
3. Pd and Pt ounces are stated as contained ounces. Disclosure of contained ounces is permitted under Canadian regulations; however, the SEC generally permits resources to be reported only as in situ tonnage and grade.

Statement of Mineral Reserves (as of December 31, 2007)

LAC DES ILES - OPEN PIT

Notes:

1. Due to rounding differences, total contained ounces of measured and indicated resources of Pd and Pt may not be equal to the sum of these two mineral resource categories.
2. Although "Measured Resources", "Indicated Resources", and "Inferred Resources" are categories of mineralization that are recognized and required to be disclosed by Canadian regulators, the SEC does not recognize them. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
3. Pd and Pt ounces are stated as contained ounces. Disclosure of contained ounces is permitted under Canadian regulations; however, the SEC generally permits resources to be reported only as in situ tonnage and grade.

LAC DES ILES - UNDERGROUND

Notes:

1. The mineral reserve and resource estimates for the LDI property other than the OHGZ were prepared by David Penna, P. Geo (a "qualified person" under NI 43-101), using a cutt-off grade of 1.1 g/t Pd for the open pit and 4.5 g/t Pd for the underground, assuming long-term prices of US$325/oz Pd, US$1,000/oz Pt, US$550/oz Au, US$11/lb Ni and US$2.50/lb Cu. Mr. Penna is an employee of the Company, where he holds the position of Chief Geologist at the Lac des Iles mine. The mineral resource estimates for OHGZ were prepared by Richard E. Routledge, M.Sc., P.Geo. of Scott Wilson RPA. (a "qualified person" under NI 43-101), using a 3.6 g/t Pd equivalent cut-off grade. The open pit reserves are reported as grade diluted blocks but are stated on an in-situ basis.