NORTH AMERICAN PALLADIUM THE WORLD’S ONLY PURE PLAY PALLADIUM PRODUCER February 15, 2019 TSX:PDL | OTC:PALDF FOURTH QUARTER 2018 RESULTS
AGENDA MANAGEMENT PARTICIPANTS 1. 2018 Highlights Jim Gallagher President and 2. Production Update Chief Executive Officer 3. Financial Update 4. Expansion and Exploration Tim Hill Vice President, Finance & 5. Palladium Market Chief Financial Officer FOURTH QUARTER 2018 RESULTS 6. 2019 Outlook 7. Q&A David Peck Vice President, Exploration February 15, 2019 2
Disclaimers and Forward-Looking Information All dollar amounts shown are in Canadian dollars unless otherwise stated. FOURTH QUARTER 2018 RESULTS February 15, 2019 3
2018 HIGHLIGHTS Health & Safety • Lost Time Injury (LTI) Frequency – 0 • As of February 14, 496 days without an LTI • Medical Treat Injury Frequency – 2.2 Sustained Profitability Adjusted EBITDA 1 – $167.8 million • • Revenue – $396.8 million • Net Income – $119.2 million Production • 237,461 ounces of payable palladium produced, up 18% over 2017 • Average daily underground production – 6,263 tonnes per day (at a cost of $37/tonne mined) FOURTH QUARTER 2018 RESULTS • $6,720 tpd at $35/tonne mined in Q4 2018 AISC 1 – US$690 per ounce for the year • Record Palladium Prices • US$1,270 / C$1,732 as of December 31, 2018 1. Non-IFRS measure, please refer to Non-IFRS Measures February 15, 2019 4 in the MD&A.
TOTAL SITE UNDERGROUND PAYABLE UNDERGROUND PALLADIUM MINING COST COST PRODUCTION $C per tonne milled Average tonnes per day Ounces produced $C per tonne mined FOURTH QUARTER 2018 RESULTS 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 February 15, 2019 5
Financial Highlights
REVENUE (C$ million) For the three months and year ended December 31, 2018 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 2016 2017 2018 PRODUCTION COST 1 (C$ per tonne milled) For the three months and year ended December 31, 2018 FOURTH QUARTER 2018 RESULTS Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 2016 2017 2018 February 15, 2019 7 1. Non-IFRS measure, please refer to Non-IFRS Measures in the MD&A.
ADJUSTED EBITDA (C$ million) For the three months and year ended December 31, 2018 2016 2017 2018 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 NET INCOME (Loss) & COMPREHENSIVE INCOME (Loss) 2 (C$ million) For the three months and year ended December 31, 2018 2 FOURTH QUARTER 2018 RESULTS Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 2016 2017 2018 February 15, 2019 8 1. Non-IFRS measure, please refer to Non-IFRS Measures in the MD&A. 2. Includes one-time adjustment relating to the recognition of deferred tax assets.
AISC 1 PALLADIUM REVENUE PER PALLADIUM OUNCE PER OUNCE SOLD 1 PRODUCED (US$) For the year ended December 31, 2018 (US$) For the year ended December 31, 2018 FOURTH QUARTER 2018 RESULTS 2016 2017 2018 2016 2017 2018 February 15, 2019 9 1. Non-IFRS measure, please refer to Non-IFRS Measures in the MD&A.
EXPLORATION INVESTMENT CAPITAL INVESTMENT (C$ million) For the year ended December 31, 2018 (C$ million) For the year ended December 31, 2018 FOURTH QUARTER 2018 RESULTS 2016 2017 2018 2019 F 2016 2017 2018 2019 F February 15, 2019 10
TOTAL DEBT LIQUIDITY 3 (C$ million) For the year ended December 31, 2018 (C$ million) For the year ended December 31, 2018 FOURTH QUARTER 2018 RESULTS FOURTH QUARTER 2018 RESULTS 2016 2017 2018 2016 2017 2018 February 15, 2019 11 3. Cash and cash equivalents plus credit available through the Company’s credit facilities.
QUARTERLY DIVIDEND • $0.03 per share • Common shareholders of record on March 1, 2019 • Payable March 15, 2019 FOURTH QUARTER 2018 RESULTS February 15, 2019 12
Mine Expansion
UNDERGROUND PRODUCTION (tonnes mined per day) 2018 A 2019 2020 2021 2022 2023 2024 2025 2026 2027 PALLADIUM FOURTH QUARTER 2018 RESULTS PRODUCTION (payable ounces) 2018 A 2020 2021 2022 2023 2024 2025 2026 2027 February 15, 2019 14
ROBY PIT EXPANSION DEVELOPMENT Sheriff South New Fresh Air Raise Roby Roby NE South Roby Extension Southwest Floor FOURTH QUARTER 2018 RESULTS Roby Central Isometric View Looking Southeast Roby Sub-level Cave Development All Other Near-Surface Development Historical Development and Stopes February 15, 2019 15
Exploration
EXPLORATION: MULTIPLE HIGH-QUALITY, UNDERGROUND TARGETS Offset Block • Seven high-potential targets: • B1, B2 and B3 Zones • C Zone (in the footwall to Offset Zone) • Sheriff South extension • Mystery Zone • Offset Northeast Domain FOURTH QUARTER 2018 RESULTS Camp Lake Block • New exploration drift will be used for drilling into the large Camp Lake target area February 15, 2019 17
EXPLORATION: SEVERAL SURFACE TARGETS CLOSE TO SITE Creek Zone • Top-ranked target based on 2018 drilling results and new geophysical data New Geophysical Targets • Several new targets defined from fall 2018 surveys; additional targets expected from data not yet received or modeled Baker Zone FOURTH QUARTER 2018 RESULTS • Planning to follow up on encouraging drilling results from 2018 and 2013 February 15, 2019 18
REGIONAL EXPLORATION: Discovering new feed for the Lac des Iles Mill Sunday Lake • New geophysical targets generated in Q4 • Focus is on discovering high grade massive sulfide mineralization • Phase 2 drilling commenced in January Greenfields Properties • Re-ranked exploration target areas in Q4 FOURTH QUARTER 2018 RESULTS • Just started work on the same suite of geophysical surveys that were done at LDI • Focus is on discovering another Roby- Offset Zone type of deposit, near surface February 15, 2019 19
Palladium Market
PALLADIUM PRICES CONTINUE TO RISE January 2009 – February 2019 Currently around US$1,400 FOURTH QUARTER 2018 RESULTS February 15, 2019 21
PALLADIUM DEMAND ON THE RISE Growth of hybrid vehicle market worldwide Lower diesel sales, replaced with gasoline engines in Europe Growth of SUV market share; increase in engine size FOURTH QUARTER 2018 RESULTS Sustained global automobile sales Heightened emissions standards worldwide (e.g. Real Driving Emissions (RDE) testing) February 15, 2019 22
HEIGHTENED EMISSIONS STANDARDS: Real Driving Emissions (RDE) test being added to existing lab-based emissions test in Europe and China in 2019 Worldwide Harmonized Light Vehicle Test Procedure Real Driving Emissions FOURTH QUARTER 2018 RESULTS Image source: https://www.continental-automotive.com February 15, 2019 23
PALLADIUM SUPPLY IN DEFICIT, DUE TO: 1. INELASTIC SUPPLY 2. JURISDICTIONAL RISK Primary Production FOURTH QUARTER 2018 RESULTS High-Risk Jurisdiction Low-Risk Jurisdiction Source: Metals Focus Report 2018 Source: S&P Global Market Intelligence, Metals Focus 2018 February 15, 2019 24
PALLADIUM SUPPLY IN DEFICIT, DUE TO: 3. ON-GROUND INVENTORY DEPLETION FOURTH QUARTER 2018 RESULTS February 15, 2019 25 (Source: Norilsk Nickel Presentation (November 2017) and consensus estimates.)
OUTLOOK 2019 GUIDANCE • Strong palladium price • Solid operation performance The Company • Mine expansion expects production of • Dedicated team 220,000 - 235,000 ounces of payable palladium at an AISC of FOURTH QUARTER 2018 RESULTS US $ 785 - US $ 815 per ounce. February 15, 2019 26
Questions? Click “Call Me” link on the left side of the screen Jim Gallagher President & CEO 416-360-7492 jgallagher@nap.com FOURTH QUARTER 2018 RESULTS Investor Relations 416-360-7590 ext. 7226 ir@nap.com February 15, 2019 27
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