By IAN ROSS
Construction was underway in May on the next leg of development at Canada’s only primary producing platinum group metals (PGM) mine.
Last month, contractors from Talpa Mining of Val D’Or, Que. were building a portal in the wall of North American Palladium’s open pit to kick off a $40-million expansion of the Lac des Iles Mine in northwestern Ontario.
“We have a hole in the ground basically,” says André Douchane, North American Palladium president and CEO, who will spend the next year watching his operating team drive a decline ramp down 2,000 feet below the main pit to access an underground ore body of 720,000 tonnes.
It is the first stage in a project that will eventually add 80 new salaried positions to the 275-member workforce. The total $55-million project costs include $10 million in mill upgrades to install a secondary crusher at their 15,000-tonnes-per-day processing mill. It will reduce their costs by $2 ton per tonne milled. Another $15 million is earmarked to lease underground equipment.
The underground mine, which is directly below the main pit, is part of a high-grade zone. The company anticipates ore being mined at 6.6 grams per tonne of palladium along with some platinum, gold, nickel, copper and cobalt.
Further down, the company has another off-set high-grade zone suspected of being a similar size, and plans to use these underground workings as a staging area to explore deeper.
While additional contractors will be hired to install ventilation, Douchane says the company will recruit its own employees to do most of the expansion in-house.
The Lac des Iles open pit, 85 kilometres northwest of Thunder Bay is one of two primary PGM mines in North America, the other being the Stillwater Mine in Nye, Montana.
Beginning production in 1993, it is one of the largest open pit palladium reserves in the world, occupying about five per cent of global production.
Despite volatile metal prices in May, due to reports of the Chinese economy slowing down, Douchane believes palladium prices should stabilize at $350 (US)/ounce and anticipates global markets will widen with new applications for PGMs in fuel cells and jewelry, as well as increasing government and consumer demand for stricter air quality controls on automotive emissions.
“We see an expanding market for an extremely rare metal.”
Douchane says all of North American’s metal mined in Thunder Bay is destined for a “major automotive company.”
Pending any new exploration finds, Douchane does not expect the expansion will lengthen the mine’s life beyond its estimated seven years, but should boost mine production and lower their costs.
Besides their underground high-grade zone, North American has some nearby exploration properties at Roaring River and an Inco joint venture on their Shebandowan Project.
“This is a world-class mine and the typically the best way to find another mine is around a world-class mine,” says Douchane.
The company has set aside $3 million for 2004 in their exploration budget to do preliminary drilling based on some encouraging targets from their ground geophysics work.
Ontario Geological Survey geologist Mike Cosec characterizes the Sudbury region’s PGM exploration boom as one of the highest levels experienced in 50 years, with the value of claims staked in 2002 reaching $11.6 million.
