TORONTO (miningweekly.com) – Toronto-based North American Palladium (NAP), which wants to build itself into a mid-tier precious metals company with “multiple mines”, is targeting annual gold production of 250 000 oz, CEO William Biggar said on Friday.

As a first step, the firm announced last month that it will buy Cadiscor Resources, which recently acquired the closed Sleeping Giant gold mine, in Quebec, from Iamgold.

NAP plans to restart mining operations at Sleeping Giant in the fourth quarter of this year, and expects the mine to produce around 50 000 oz/y of gold, at cash costs of $450/oz.

However, at this rate the reserves will be mined out within three years, and so the company will be hoping to increase the mine's life through exploration.

The firm, which had net working capital of C$79,4-million at the end of March, including cash and cash equivalents of C$47,5-million will also continue to look for potential acquisitions and joint-venture opportunities, Biggar said.

“In the current environment, we expect that there will be many attractive strategic opportunities to consider.”

Closer to home, NAP is working on a prefeasibility study on developing the Offset zone at its flagship Lac des Illes (LDI) palladium mine, and expects to have the results of the study by August, Biggar said.

LDI, located in Thunder Bay, Ontario, was put on care-and-maintenance in October, after plunging palladium prices rendered the operation unprofitable.

When the mine reopens, it will be at lower thoughput levels, but with higher grade ore, and so palladium production will likely be similar to before the closure.

By May 6, palladium prices had improved by around 23% since the start of this year, to $226/oz and the price had gained further by Friday, to $241/oz.

However, the company will need to see palladium in the $300/oz range on a sustained basis before making a decision to restart operations, Biggar said.

In the meantime, NAP is spending C$7-million on drilling at the offset zone, with the aim of upgrading resources from the indicated category into probable reserves, as well as discovering new ounces.

The drill results will be integrated into a prefeasibility study on the offset zone, which the company is hoping will show that the existing Roby underground mine and the offset zone together support another 12 years of underground mining at LDI, Biggar said.

Shares in the company slid 7,2% on Friday, to C$2,98 apiece by 15:05 in Toronto.

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