Canada-based platinum-group metals miner North American Palladium (NAP) reports that it will conduct 70 000 m of palladium exploration drilling to expand its reserves and resources, as well as to identify new targets at its Ontario-based Lac des Iles (LDI) palladium mine.

The mine consists of a depleted openpit, an operating underground mine and a large underused mill with a nominal capacity of about 15 000 t/d.

The primary deposits on the property are the Roby zone and Offset zone, which are both palladium deposits with some platinum, gold, nickel, and copper by-products.

Following on the favourable exploration results of the past few years, NAP has estimated its 2012 exploration expenditure at about $116-million, consisting of 70 000 m of drilling of which 64 000 m will be conducted at LDI, with a further 6 000 m being undertaken at NAP’s other nearby properties.

The primary focus of the exploration programme will be underground exploration at LDI targeting the Offset zone to conduct infill drilling, as well as to test extensions of the Offset zone mineralisation towards surface, at depth and to the south.

Further, the expansion will allow LDI to increase its underground mining rate to 3 500 t/d at the start of 2013.

“We expect modest growth in palladium production in 2012, a year in which our top priority is the completion of the first phase of the LDI mine expansion, with the commissioning of the new shaft by year-end. This will enable us, starting in 2013, to reduce our cash costs per ounce while allowing us to increase production,” notes NAP president and CEO William J Biggar.

The company expects its 2012 production to show modest growth from 2011 of between 150 000 oz and 160 000 oz at cash costs of between $375/oz and $400/oz.

In total, the company expects to mill between 1.8-million tons and 2-million tons of underground and surface ore at an average palladium head grade of 3.7 g/t, with a mill recovery rate of 78%.