TORONTO (miningweekly.com) – Precious-metals producer North American Palladium (NAP) is working on a scoping study to develop the new Offset zone at its Lac des Iles (LDI) palladium mine, in northern Ontario, and expects to complete the study in the third quarter of this year.

The company restarted the LDI mine in April, after operations were halted in late 2008 because of low palladium prices.

NAP is currently mining the underground Roby zone, and expects to produce an annualised 140 000 oz/y of palladium for around two years.

Full production was achieved at the mine on May 1, CEO William Biggar said on Thursday at the company's annual shareholders meeting.

Once the Roby zone is mined out, NAP plans to move to the new Offset zone, the fault displaced extension of the Roby underground zone, below it and about 250 m to the west.

“And the Offset zone is the real growth driver at LDI, with the potential to almost double our production and add up to ten years of life at LDI,” Biggar commented.

Once production gets under way, NAP estimates output from the Offset zone could be some 250 000 oz/y of palladium, at costs “significantly” lower than the $350/oz forecast from Roby.

The company plans to install a 5 000-t/d raise-bore shaft to the surface, and is also looking at a high-volume bulk mining method called 'super shrinkage', which will contribute to the lower costs.

“This will make NAP a very low cost producer of palladium,” Biggar said.

Besides the detailed scoping study, the company has also already begun some development work on the Offset zone, and is currently building a $16-million, 1 500-m ramp, 200 m below the Roby zone.

The ramp will be completed by the end of this year and will provide access for deeper drilling, as well as a platform for the installation of the raise-bore shaft to surface.

A resource update for the Offset zone is also under way, and will be used in the scoping study.

GOLD

NAP also operates the Sleeping Giant gold mine, in Quebec, which it acquired by buying Cadiscor Resources last year.

The company restarted the mine and poured the first gold in October 2009, achieving commercial production as of January 1 this year.

Production will reach a rate of 50 000 oz/y of gold once the mill achieves steady state operations around midyear.

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