North American Palladium (NAP) announced they’re taking offers for its Lac des Iles mine in northwestern Ontario.
The base metal miner announced it’s launching a “review of strategic alternatives,” including selling the company. To the board of directors, it’s all about maximizing shareholder value.
“While the board remains confident in the company’s long-term strategic plan,” said a Feb. 21 news release, “it is open to exploring all strategic alternatives that are in the best interests of the company and its stakeholders.”
No timetable’s been set to carry out this process, there are no guarantees a transaction will even happen, and the board won’t be commenting further unless they approve a transaction.
The Lac Des Illes mine is the company’s only operating asset. It’s located 85 kilometres from Thunder Bay.
Last year was a productive and profitable year for NAP.
The mine produced 201,592 ounces for the year, a 35 per cent increase from the 149,563 ounces produced last year. The all-inclusive sustaining cost was US$694 per ounce for 2017, compared to $701 in 2016.
NAP president-CEO Jim Gallagher, said “2017 was a year in which the Lac des Iles mine began to demonstrate its full potential. We met and exceeded the targeted underground production rate of 6,000 tonnes per day, ahead of the original 2017 production plan.”
The mill returned to full-time operations during the fourth quarter and exceeded its 2017 guidance of 180,000 to 190,000 ounces.
When combined with strong palladium prices, earnings amounted to more than $30 million with an adjusted EBITDA of more than $86 million.
Mine production for 2018 is anticipated between 230,000 and 240,000 ounces of palladium, at a decreasing average US$640 to US$660 per ounce.
Gallagher said 2018 “will be the first full year where the true value of the Lac des Iles mine will be demonstrated.”
The company said the palladium market has been operating in a deficit for several years.
The price of the base metal finally caught up to demand as palladium was the best performing metal in 2017, surging by 56 per cent.
It finished at just under US$1,100 per ounce at year’s end. Much of the demand was driven by an increase in global autocatalyst consumption.
