TORONTO (miningweekly.com) – Toronto-based North American Palladium plans to acquire gold assets or gold companies, as part of its strategy to build itself into a mid-tier precious-metals company “with multiple mines”, president and CEO Bill Biggar said on Wednesday.

NAP's flagship asset is the Lac Des Iles mine, in Thunder Bay, Ontario, which was put on care-and-maintenance in October, but which the company plans to restart as a smaller, higher-grade operation as soon as palladium prices start recovering.

“The objective is to position NAP as an attractive investment vehicle for investors seeking exposure to multiple precious metals while minimising currency and political risks, Biggar said on a conference call.

At Lac Des Illes, palladium prices would probably need to recover to around $300/oz for the firm to consider reopening the mine, “although it is a bit of a moving target”, he said.

The firm closed the loss-making mine temporarily, to conserve cash after palladium and platinum prices plunged.

Prices for palladium, like platinum, fell sharply last year, from $475/oz in June to end the year below $190/oz. Palladium was trading at $198/oz on Wednesday afternoon.

NAP is developing a plan to restart operations at LDI, probably at a throughput rate of around 3 300 t/d, compared with the plant's current capacity of 15 000 t/d, said operations vice-president David Passfield.

The firm does not currently expect to resume openpit mining at the mine, but will probably process around 3 300 t/d of underground ore and 800 to 900 t/d of high-grade ore from stockpiles.

“This allows for a relatively quick start-up of the mine - we envisage a range of two to three months - with minimal capital requirements for the mill and the mine,” Passfield said.

When operations resume, the firm will likely only operate one of the two ball mills at LDI, and run the plant on a reduced schedule.

There is still some higher-grade ore left in the pit, but this can be accessed from the underground workings, or be selectively mined in the future if prices are high enough.

Although processing costs would be around the same levels as before the closure in 2008, the real benefit to the bottom line would be from the higher-grade ore, Biggar said.

“We think we would be able to make a decent margin at $300/oz palladium prices,” he commented.

The company is also working on a prefeasibility study for a second underground zone – the Offset zone – at LDI, and has an extensive drilling programme under way.

The idea is that, once the current Roby zone is depleted in around two years, mining will progress seamlessly into the Offset area, Biggar said.

At that point, the company would need to modify the LDI mill, to process what are expected to be even lower tonnages and higher grades.

A preliminary assessment in May last year estimated that the Offset zone could be mined for up to ten years, and may yield an annual production of 250 000 oz of palladium, 16 000 oz of platinum, 17 000 oz of gold, 2-million pounds of nickel and 4-million pounds of copper.

However, the firm has since increased the indicated resource at the zone, and grades are expected to improve as a result of the current exploration programme.

The prefeasibility report is scheduled for completion by midyear.

NAP posted a fourth-quarter net loss of C$112,4-million, compared with a loss of C$11,1-million a year earlier, after recording a C$90-million noncash impairment charge on its investment in LDI.

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