Reserve and Resource and LOM Update MARCH 21, 2014
Forward Looking STATEMENTS Certain information included in this news release constitutes 'forward-looking statements' within the meaning of the 'safe harbor' provisions of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities laws. The words 'expect', 'believe', 'will', ‘target’, ‘forecast’, ‘anticipate’, ‘plan’, 'guidance', and similar expressions identify f orward- looking statements. Such statements include, without limitation, any information as to our future financial or operating performance, including: the Company's forward looking production guidance, projected capital expenditures, operating cost estimates, project timelines, mining and milling rates, projected grades, mill recoveries, and other statements that express management's expectations or estimates of future performance. Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions contained in this news release, which may prove to be incorrect, include, but are not limited to: that metal prices will be consistent with the Company's expectations, that the exchange rate between the Canadian dollar and the United States dollar will be consistent with the Company's expectations, that there will be no significant disruptions or delays affecting operations or development projects, including the LDI mine expansion, that production and cash cost per ounce will meet expectations, that prices for key mining and construction supplies, including labour and transportation costs, will remain consistent with the Company's expectations, and that the Company's current estimates of mineral reserves and resources are accurate. The forward-looking statements are not guarantees of future performance. The Company cautions the reader that such forward-looking statements involve known and unknown risks that may cause the actual results to be materially different from those expressed or implied by the forward-looking statements. Such risks include, but are not limited to: the possibility that metal prices, foreign exchange rates, operating costs, production or cash cost per ounce may differ from management's expectations, inherent risks associated with mining and processing, the risk that the Lac des Iles mine may not perform as planned and that the Offset Zone and other properties may not be successfully developed, the possibility of construction and commissioning delays, the possibility of project cost overruns, uncertainty of mineral reserves and resources, and uncertainty of the ability of the Company to obtain financing. For more details on the factors, assumptions and risks see the Company's most recent Form 40-F/Annual Information Form on file with the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities. The Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise, except as expressly required by 1 law. Readers are cautioned not to put undue reliance on these forward-looking statements. All dollar amounts in Canadian currency unless otherwise stated, all references to production refer to payable production, and all reference to tonnes refer to metric tonnes.
2014 RESERVE AND RESOURCE HIGHLIGHTS • Total R+R of 5.2M ounces of contained Pd, an increase of 24% above Jan. 2013 technical report • Underground reserve accounts for 9.2M tonnes at diluted grade of 3.9 g/t Pd • Total reserve increased by 140,000 oz of contained Pd to 1.3M oz • Total resources increased by 860,000 oz of contained Pd to total of 3.9M oz • Current mine life extended by one year to 2019 • Annual production will peak at more than 200,000 oz • Total mined reserve of 1.1M payable Pd oz, an increase of 34% from 2013 • Management focus on advancing work to potentially extend LOM through successful conversion of resources into reserves 2
2014 YEAR TO DATE OPERATIONS UPDATE • Palladium production and operating costs ahead of guidance in January and February • Several large stopes in production cycle and significant broken ore inventory • Tonnage mined per plan and grade above guidance • Mill recoveries ahead of plan year to date • Short-term ore handling solutions in place, on track for permanent measures in H2 2014 • Making progress towards goal of higher mine production rates and lower unit costs by year end 3
2014 LIFE OF MINE OVERVIEW • The January 2013 Technical Report considered the mining of the LDI offset zone only • the 2014 report has been an extensive and all encompassing review of all geological information and mineral inventory at the LDI site and included: • New geological block models rigorously tested for potential economic extraction to support inclusion as resources, completed by LDI resource geologists with review by Tetra Tech • A mine plan, at a PFS level, completed by Tetra Tech with review and input from LDI to convert resources to reserves – The main changes in the mining plan are: • The Offset zone reserve is now down to 1065 L from 990 L previously • Remnant material in the Roby zone including higher grade sill pillars and large lower grade bulk stopes • Inclusion of the low grade stockpile on surface 4 • A final salvage mining of the pit
2014 LIFE OF MINE HIGHLIGHTS • Life of Mine is end of 2018 for underground and 2019 with Open Pit • Underground mine increases to 5000 tpd and total payable Pd increases to approx. 200,000 oz per year up from 140,000 in the 2013 report. • 1.1 million Payable ounces of Pd produced an increase of 140,000 ounces from 2013, despite mining depletion. • Annual mill throughput, including low grade blended material is expected to be 2.6M tonnes. • A large open stope blast hole method with waste for fill remains the mining method as has been successfully done at LDI for several years. • Total site capital of $143M 5
LIFE OF MINE ECONOMIC SUMMARY Lac Des Iles LOM Economics Current Prices Study Prices (US$770 Pd) (US$700 Pd) Gross Revenue $1,400 M $1,220 M Operating Margin $476 M $336 M Post Tax Cash Flow $362 M $195 M NPV @ 5% $324 M $173 M Cash Cost US$/oz $421 $441 • Mine economics are most affected by: • Foreign exchange rate • Palladium price 6
CAPITAL REQUIREMENTS FOR 2014 • Underground development • Ventilation system upgrade at depth • TMF expansion to meet LOM requirements • Normal equipment fleet replacement, surface and underground 7
LDI OPTIMIZATION OPPORTUNITIES • Longer mill runs with additional RGO (low grade stockpile) • Mining of Tailings – Requires engineering and technical solutions and capital investment. Studies to be completed. • Future Mining of the low grade footwall resource – May be economic at higher production rates and metal prices – All infrastructure in place to mine the higher grade HW zone. • Deepen the shaft to exploit resources at depth – Requires additional drilling and resource conversion – Potential for higher mining volumes at lower unit costs 8
PLAN FOR THE PHASE 2 PROJECT • Advancing the Phase 2 Shaft Deepening project in a structured and rigorous process is critical: – Best business case for NAP, with higher production at lower cost – Realizing the potential of one of the best Palladium projects – Building value for shareholders • Scoping studies for shaft deepening and TMF to be completed by mid year • Enhanced diamond drilling program approved pending financing • A PFS level study to start by year-end 9
2014 RESERVE AND RESOURCE ESTIMATES Net Change in Total Reserves and Resources in Terms of Contained Palladium Contained Pd (M oz) Increase Category Current R&R Previous R&R Pd (M oz) (%) M&IND Resources 3.86 3.00 0.86 28 P&P Reserves 1.34 1.20 0.14 12 Reserves and Resources* 5.20 4.20 1.00 24 *Excludes Inferred Resources ** Numbers may differ than those in the press release due to rounding 10
2014 RESERVE AND RESOURCE ESTIMATES Summary of the 2014 Resource and Reserve Estimate for the Lac des Iles Mine Property Source Zone Category Tonnes (000’s) Pd (g/t) Pd (k oz contained) Near Surface All 2P Reserves 5,885 1.03 195 Near Surface All Resources 26,030 1.44 1,205 Underground Hangingwall 2P Reserves 9,161 3.89 1,146 Underground Hangingwall Resources* 5,651 4.25 773 Underground Footwall 2P Reserves nil - - Underground Footwall Resources 26,322 2.24 1,894 Underground Roby & Offset Inferred 15,720 2.77 1,400 11 TOTALS All Sources Reserves & 73,050 2.22 5,213 Resources*
CHANGES TO LDI RESERVE AND RESOURCE ESTIMATES: INTRODUCING HANGINGWALL AND FOOTWALL ZONES • A new resource and reserve Cross Section, Looking North classification has been adopted • Roby and Offset zones are now subdivided into separate hangingwall and footwall zones • Previously the footwall and hangingwall resources were combined • Adding 26 million tonnes of M&IND resources grading ~2.2 g/t from the two underground footwall zones 12
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