TORONTO (miningweekly.com) – For a company that halted its only producing mine a good eight months ago, Toronto-based North American Palladium is doing a fine job of maintaining a steady flow of good news to the market.

First. the firm announced in April it would buy Cadiscor Resources, which owns the closed Sleeping Giant gold mine, in Quebec. (NAP plans to restart the mine by the end of this year.)

Now, the company has reported the discovery of a new underground platinum-group metals zone at its flagship Lac des Iles (LDI) mine, near Thunder Bay, in Ontario, that it said has the potential to extend the mine life and significantly impact the economics of the operation.

LDI has been on care and maintenance since October, after plunging palladium prices rendered the operation unprofitable, but NAP has been working on drilling for a prefeasibility study on developing the underground Offset zone.

The new zone, named the Cowboy zone, was discovered during this infill drilling and is less than 50 m away from the Offset zone, said NAP CEO William Biggar.

The discovery “confirms our belief that the underexplored LDI minesite and 21 000 acre property have considerable upside potential,” he enthused.

Additional drilling will be conducted over the balance of the year to get a handle on the magnitude of the resource in the Cowboy zone and whether the zone extends to surface, Biggar said.

Until now the LDI mine consisted of the Roby zone (open pit and underground) and the underground Offset zone.

The Roby Zone had been mined continuously since 1993 until the mine was put on care and maintenance last year.

When metal prices are warrant it, the company plans to mine the underground Roby zone for its remaining two year life, while at the same time beginning development of the Offset zone, which has the potential for up to an additional 10 years of mine life.

The plan would be to start mining the Offset zone at the completion of Roby zone mining.

The offset zone prefeasibility study is scheduled for completion in the third quarter.

Based on the available assay results from 27 holes, the Cowboy zone sits 30 m to 50 m down section to the west of the Offset zone and extends for up to 250 m along strike and 350 m down dip, NAP said on Thursday.

It remains open in all directions and, similar to the Offset zone, appears to consist of several mineralized subzones.

The company plans to complete a mineral resource estimate for the Cowboy zone in the fourth quarter.