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TORONTO (miningweekly.com) – Toronto-based North American Palladium (NAP) on Tuesday said it planned to boost its payable palladium production to between 170 000 oz and 175 000 oz, while dropping its capital investment budget to $30-million and its exploration budget to $4-million.
The TSX-listed miner said it expected underground production to gradually increase throughout the year from about 3 000 t/d in the first half of the year, up to 5 000 t/d by the end of 2014, and that it planned to commission a preliminary economic assessment study to define future growth potential at its Lac des Iles (LDI) mine, located in north-western Ontario, by optimising the Offset Zone resources and several alternative, supplemental development opportunities that could leverage the capacity of existing infrastructure.
Looking ahead to 2014, our operating focus will be on consolidating the growth investments from our past to establish steady-state operations with the new shaft at LDI. Production through the shaft is gradually increasing, enabling us to target over 170 000 oz of payable palladium production in 2014 at a significantly reduced capital expenditure programme of under $30-million.
“As we increase underground production, we expect that a decrease in operating costs will follow, further positioning LDI for enhanced operating margins,” NAP president and CEO Phil du Toit said in a statement.
He added that the company’s ability to proceed with its plans was contingent on securing additional funding, which the company was working on securing.
“The fundamentals of our asset base remain robust, offering good upside to deliver future production growth in a market where the demand exceeds supply. As part of our long-term objective of becoming a low cost mid-tier palladium producer, in 2014 we also plan to determine the most optimal plan for future organic growth so that we can optimise the resources and leverage the historical investments in site infrastructure,” he said.
Further, NAP also is bullish on palladium, saying it expected the price to remain strong through 2014.
“With palladium ending 2013 as one the best-performing commodities (averaging $723/oz for the year), most metals forecasters agree that the strong performance will continue into 2014 as global car sales are estimated to rise by 4.8%. Although price forecasts vary by institution, the average consensus price is approximately $815 for 2014, driven by the resilient industrial demand from the automotive sector and the inability of global mine supply to meet demand.”
The company’s TSX-listed stock closed down 5.21% at C$0.91 apiece.