Nap investor presentation september 22, 2011


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Nap investor presentation september 22, 2011

  1. 1. Investor September 2011 William J. BiggarPRESENTATION President & CEO
  2. 2. Forward LookingSTATEMENTSCertain information included in this presentation, including any information as to our future production,exploration, financial or operating performance and other statements that express managementsexpectations or estimates of future performance, constitute „forward-looking statements‟ within the meaningof the „safe harbor‟ provisions of the United States Private Securities Litigation Reform Act of 1995 andCanadian securities laws. The words „expect‟, „believe‟, „will‟, „intend‟, „estimate‟ and similar expressionsidentify forward-looking statements. Forward-looking statements, including future-oriented financialinformation, are necessarily based upon a number of estimates and assumptions that, while consideredreasonable by management, are inherently subject to significant business, economic and competitiveuncertainties, risks and contingencies, including the possibility that operations at the Lac des Iles and SleepingGiant mines may not proceed as planned, that other properties may not be successfully developed, and thatmetal prices, foreign exchange assumptions and operating costs may differ from management‟sexpectations. The Company cautions the reader that such forward-looking statements involve known andunknown risks, uncertainties and other factors that may cause the actual financial results, performance orachievements of North American Palladium to be materially different from the Company‟s estimated futureresults, performance or achievements expressed or implied by those forward-looking statements and that theforward-looking statements are not guarantees of future performance. For more details on these estimates,risks, assumptions and factors, see the Company‟s most recent Form 40-F/Annual Information Form on file withthe U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities. TheCompany disclaims any obligation to update or revise any forward-looking statements, whether as a result ofnew information, events or otherwise, except as expressly required by law. Readers are cautioned not to putundue reliance on these forward-looking statements.All dollar amounts in Canadian currency unless otherwise stated, all references to production refer to payableproduction, and all reference to tonnes refer to metric tonnes.U.S. investors are encouraged to refer to the “Cautionary Note to U.S. Investors Concerning Estimates ofMeasured, Indicated and Inferred Resources” in the appendix. 1
  3. 3. Investment CaseFOR NAP• Growth-oriented precious metals producer in mining-friendly jurisdictions: • LAC DES ILES, one of only two primary palladium mines in the world, transitioning into a long-life, low-cost operation • GOLD DIVISION provides foundation for growth• Robust pipeline of projects to increase palladium and gold production• Significant commitment to palladium and gold exploration• Experienced senior management and operating teams• Strong balance sheet, $142 M in working capital (including $71.2 M in cash) and no long-term debt** As at June 30, 2011 2
  4. 4. Diversified Precious MetalsPRODUCER LDI:  One of only two primary palladium mines in the world  Producing palladium since 1993  Transitioning into a long life, low cost mine  Significant exploration upside QUEBEC Sleeping Giant: ONTARIO VEZZA  Producing gold for over 20 years Gold Mine LAC DES ILES Palladium Mine SLEEPING GIANT  Growth potential at depth Gold Mine  Underutilized mill has potential to Timmins Val d‟Or serve NAP‟s nearby projects in Thunder Abitibi Bay Sudbury Montreal Vezza: Toronto  Currently being advanced to be “production ready” in Q1, 2012 3
  5. 5. Market Statistics:A VERY LIQUID STOCK STOCK SYMBOLS (NYSE Amex / TSX) PAL / PDL MARKET CAPITALIZATION US $641 M SHARE PRICE US $3.95 SHARES/WARRANTS OUTSTANDING 162.4 M / 8.8 M 3-MONTH AVERAGE TRADING VOLUME (NYSE Amex / TSX) 3,006,211 / 541,705 Information as at Aug. 30, 2011, Thomson One. Series B warrants (TSX:PDL.WT.B) expire on Oct. 28, 2011, $6.50 exercise price. ANALYST COVERAGE: Bank of America Merrill Lynch Haywood Securities Scotia Capital Michael Parkin Chris Thompson Leily Omoumi Cormark Securities Macquarie Stifel Nicolaus Rajiv Chail Daniel Greenspan George Topping Credit Suisse Octagon Capital Alex Terentiew Annie Zhang GMP Securities RBC Capital Markets Andrew Mikitchook Leon Esterhuizen 4
  6. 6. FinancialSTRENGTH• $71 M in cash as at June 30, 2011• $60 M undrawn operating line (secured by accounts receivable)• No long-term debt• Unencumbered fixed assets give flexibility to raise long-term debt 5
  7. 7. Investment Case for PALLADIUM 6
  8. 8. Palladium Market:MINE SUPPLY RUSSIA NORTH AMERICA 40% 9% ONLY 6.8 M oz. ANNUAL PRODUCTION WORLDWIDE SOUTH AFRICA 42% Source: CPM Group, June 2011 Note: Other producing countries (9%) include Zimbabwe, Australia, Botswana, China, Serbia and Montenegro; Excludes secondary supply of 1.7 M oz. 7
  9. 9. Palladium Market:SUPPLY Constrained Mine Supply From Major Producers (000’s ounces) 3,500 Russia South Africa 3,000 2,500 2,000 1,500 1,000 500 0 2006 2007 2008 2009 2010 • Supply unable to match growth in demand • Russian state stockpiles believed to be at or near depletion Source: CPM Group, June 2011 8
  10. 10. Palladium Market:DEMAND 2010 Fabrication Demand: 7.5 M oz. Refining Dental Automotive 6% 10% Other 58% 3% Jewellery 7% Electronics 16%Source: CPM Group, June 2011 9
  11. 11. Palladium Market:DEMAND Global Light Vehicle Production – 5 Year Forecast (000‟s) 97M 100M 100,000 92M 88M Other1 90,000 84M 80,000 72M 75M Europe 70,000 60,000 North 50,000 America 40,000 30,000 BRIC 20,000 Economies2 10,000 0 2010 2011 2012 2013 2014 2015 2016 (Actual) Source: IHS Global Insight Automotive, June 2011 1. Other includes: Japan, Korea, Middle East and Africa 2. BRIC Economies include: Greater China, South America and South Asia • Majority of demand derived from automobile sector for autocatalysts • Strongest growth in regions outside of North America, Europe and Japan 10
  12. 12. Palladium Market:DEMAND Adoption of Stricter Emission Control Standards 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Europe Euro IV Euro V Euro VI Beijing Euro III Euro IV Euro V China Nationwide Euro II Euro III Euro IV Select Cities Euro III Euro IV India Nationwide Euro II Euro III Russia Euro I Euro II Euro III Euro IV Euro V USA Tier 2 and LEV II Brazil Prconve 3 Prconve 4 Prconve 5 Prconve 6 Japan Japan 05 Source: CPM Group, June 2011 • Emerging economies have adopted emission control standards that mandate the use of catalytic converters • Advancing to a higher level of emission controls results in higher PGM loadings in the catalytic converter • Tightening emission control regulations for heavy-duty trucks 11
  13. 13. Use of Palladium inCATALYTIC CONVERTERSGasoline Engines Hybrids & Other New Forms• Use +90% palladium (of total required • Neutral impact on PGM use PGM content) • Gasoline hybrids tend to use as much palladium as normal gasoline enginesDiesel Engines • Currently account for only 1% of global cars sales1• Historically used platinum due to technical requirements • Forecasted to be 14% of overall market by 20202• Currently use 25% palladium, with scope to increase to 50% due to advent of low sulphur diesel fuel Electric • No requirement for catalytic converters • Challenged by lack of infrastructure to recharge, high costs, long charging periods and short driving range • Forecasted to account for only 2% of global car sales by 20202 1. CPM Group, June 2010 2. Stefan Bratzel, director of the Centre of Automotive Management in Germany; as reported in Mitsui Global Precious Metals “Pole Position” Report, June 2010 12
  14. 14. Palladium Market:DEMAND Exchange Traded Funds Physical Palladium Holdings 2,500 SPAL-LSE Source SPDM-LSE iShares WITE-NYSE ETF Securities GLTR-NYSE ETF Securities 2,000 Julius Baer PALL - NYSE ETF SecuritiesOunces (000s) MSL (Australia) Palladium ZKB 1,500 PHPD LSE 1,000 500 0 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 • Increasing investment demand driven by perceived positive supply/demand fundamentals for palladium and automotive industry outlook Source: CPM Group, as at July 17, 2011 13
  15. 15. Palladium Market:INCREASING PRICE Recent performance of Palladium (US$/oz) Average Annual Price Forecast (US$/oz)$900.00 2011 2012$800.00 BNP Paribas $860 $990$700.00 CPM Group $849 $908$600.00 JP Morgan $838 $938$500.00 Credit Suisse $803 $1,000$400.00 Barclays $820 $850$300.00$200.00 UBS $800 $825$100.00 RBC Capital Markets $780 $850 $0.00 1/2/2008 1/2/2009 1/2/2010 1/2/2011 Historic High: US $1,090 (2001) Recent Price: US $760 (Sept. 5, 2011) Best performing metal of 2010 Sources: Thomson One and available equity research: NP Paribas (Mar. 10, 2011); CPM Group (Mar. 4, 2011); JP Morgan (May 10, 2011); Credit Suisse (Aug. 10, 2011); Barclays PLC (Mar. 24, 2011); UBS (Dec. 15, 2010); RBC Capital Markets (Sept. 6, 2011). 14
  16. 16. Palladium OperationsLAC DES ILES MINE 15
  17. 17. LDI:A WORLD CLASS MINE • One of only two primary palladium mines in the world • Open pit commenced operations in 1993 (now exhausted) • Underground mining from the Roby Zone (via ramp) began in 2006 • Total production of ~2.5 M oz of palladium (+ Pt, Au, Ni, Cu) since 1993 • Mine expansion underway with production from the Offset Zone (via shaft) targeted for Q4 2012 • 15,000 tpd underutilized mill • 200 employees 16 16
  18. 18. LDIDEPOSIT Scale: 500-metre squared blocks Open Pit (Exhausted) Roby Zone Mined via 5,000 LEVEL ramp access Offset Zone Commercial production via shaft targeted for Q4 2012 4,500 LEVEL N Offset Zone remains open at depth and along strike 17
  19. 19. LDI:OPERATING METRICS Q1 2011 Q2 2011 2011 Forecast Payable Palladium Production (oz) 30,661 46,971 145,000 - 155,000 Tonnes of Ore Mined 332,523 428,692 1,460,000 Avg. Head Grade Milled 3.85 g/t 4.98 g/t 4.2 g/t Palladium Mill Recovery 78.8% 83.15% 80% Cash Costs1 ($US/oz) $519 $335 $450 1. Total cash costs per ounce is a non-IFRS measure. For reconciliation of historical total cash costs per ounce to production costs, please refer to the Company‟s financial statements. Cash costs per ounce are presented net of byproduct credits and can be materially affected by changes in byproduct metal prices, as well as the Canadian/US dollar exchange rate. 18
  20. 20. LDI:MINE EXPANSION PLAN• Transitioning from mining via ramp to via shaft• High-volume, large scale bulk mining method• 2011 Capex: $175 M• Currently sinking a shaft to the 4,815 level (700 m from surface) SHAFT• Shaft is being sized for 7,000 tpd• Target shaft mining rate: – 3,500 tpd (Q4 2012) – 5,500 tpd (Q1 2015)• Once mining at 5,500 tpd: – Production is expected to exceed 250,000 oz/yr – Cash costs are expected to significantly decline 19
  21. 21. LDI:MINE EXPANSION IN PROGRESS Head Frame ConstructionFocus of 2011 Development Work:• Constructing the head frame, hoist room and electrical substation• Installing the service cage and production hoists (already purchased)• Completing the shaft raise bore & ventilation raise bore• Installing adequate ventilation at surface Hoist House & underground• Advancing the ramp towards the 4570 mine level• Developing the 4790 mine level in preparation for production 20
  22. 22. LDI Mine Expansion DEVELOPMENT MILESTONESActivity Status Surface engineering design work ~90% complete Surface construction activities ~70% complete Underground infrastructure design work ~75% complete Production shaft design work ~75% complete Production shaft pilot raise bore Completed Production shaft sinking Recently commenced 21 Ramp development Currently below 4765 level 21
  23. 23. LDI Mine Expansion:LOW EXECUTION RISK• Over 17 years of mining experience at LDI with a solid track record of underground development• Experienced 20-person development team on site overseeing all aspects of the expansion with the support of industry-leading contractors• Brownfield expansion vs. greenfield project • Utilizes existing Roby Zone development platform • Underutilized mill and tailings facilities in place • No long lead items • No capex currency risk (all expenditures are in C$) 22
  24. 24. LDI:NEW UNDERGROUND ZONES Roby Zone Offset Zone Cowboy Zone Offset Zone Cowboy Extension Outlaw Zone Zone Cross Section View Mineralization Trend Other Cowboy & Outlaw Zones discovered in 2009 Sheriff Zone Mineralization Plan View Trend Offset Zone Sheriff Zone discovered in 2010 New zones have potential to increase production 23
  25. 25. LDI:CONTINUING FOCUS ON EXPLORATIONGrowing Through the Drill BitSignificant 2011 Exploration Program*:• Budget: $8.8M• 32,000 m of drilling: – 25,000 m at LDI – 3,000 m at Legris Lake – 4,000 m at NAP‟s other nearby properties * Excludes 46,000 metres of expansion project drilling 24
  26. 26. LDI:EXPLORATION UPSIDE NEAR MINE +30,000-acre PGM land package North VT North Rim VT Rim Mineralized Trend North Pit LDI PROPERTY Target Legris Lake LDI Mine & Mill Legris Lake Sheriff LDI & Legris Lake cover the most Zone South Pit Target N prospective mafic complexes in the area• LDI represents a rare palladium-rich asset with excellent infrastructure• LDI complex has only been drilled in a 1km x 1km area & remains largely underexplored• Multiple targets identified for follow up exploration 25
  27. 27. LDI Exploration PotentialINDEPENDENT REVIEW• Independent exploration review of LDI property conducted by Revelation Geoscience, experts in PGE deposits• Key findings: – “Globally, there are few available advanced WE HAVE ONLY PGE exploration investment opportunities as SCRATCHED THE SURFACE attractive as LDI (technical quality risk, PGE focus).” – “Exploration opportunities at LDI are highly ranked in comparison to most advanced PGE properties on a global basis. Low overall risk given existing infrastructure and permitting. Clear path to expanding production.” – “Several areas on the Mine Block Intrusion have immediate potential for expanding the resource base. Offset Zone south extension, Cowboy, Outlaw & Sheriff zones. Good historical link between exploration spend and resource quality and size. Encouraged to continue with aggressive exploration.” 26
  28. 28. GoldOPERATIONS 27
  29. 29. Regional Portfolio80-KM LAND PACKAGE Vezza Discovery Cameron Shear JV Flordin Florence Sleeping Giant Dormex Harricana North Laflamme Total Reserves & Contained Tonnes Au (g/t) Resources Ounces Proven & Probable 191,000 8.4 52,000 Localisation. Measured & Indicated 6,397,000 4.1 846,000 Simplified Geology Map. Inferred 4,241,000 3.9 533,000 Potential to process +100,000 oz of Gold per Year 28
  30. 30. GoldSTRATEGY OBJECTIVE: Achieve scale through organic growth Anticipated STEPS Target Completion Result Deepen the Sleeping Giant Shaft completed in Q2 2011 Increased production & mine shaft by 200 m to allow for 1. & development of new profitability commencing Q1 development of 3 new mining levels levels commenced 2012 of higher grade ore With a positive production Complete the development decision, 39koz/yr of 2. Q4 2011 of the Vezza project production commencing Q1 2012 With a positive scoping study, Complete exploration drilling potential production 3. at Flordin and assess open pit Q4 2011 commencing in Q1 2014 at an potential and operating metrics annual rate to be determined Confirm annual production Advance permitting of Discovery potential of up to 40koz/yr and 4. Q4 2011 project and update scoping study related capital and operating metrics Capacity to increase to either Expand the Sleeping Giant 900 tpd 1,250 tpd or 1,750 tpd 5. mill capacity to process ore from 2012 depending on project other wholly-owned nearby projects development timelines 29
  31. 31. Sleeping GiantMINE• 2011 transition year while development at depth is completed• Operations and cost structure revised to focus on quality (grade) vs. quantity (tonnage) to improve profitability• 2011 gold production guidance: 15,000 – 20,000 oz.• 110 employees currently at mine & mill site 30
  32. 32. Sleeping Giant:ECONOMICS TO IMPROVE AT DEPTH• 2011 mining focused on the areas around the 975 m elevation & above• Completed deepening the mine shaft by 200 m to 1175 m to gain access to 3 new higher grade mining levels• Development of new mining levels commenced• Expect to produce from the new mining levels at the start of 2012 resulting in higher production and lower cash costs per ounce 200 m Deepening Longitudinal Section All depth references are in metres 31
  33. 33. Sleeping Giant:UNDERUTILIZED CENTRAL MILLStrategic Asset• Ability to serve NAP‟s other gold projects in Abitibi region• 900 tpd mill currently operating at ½ capacity• Mill capacity to be expanded to1,250 tpd or 1,750 tpd• Completion deferred into 2012 to give flexibility to do a one-step expansion to 1,750 tpd depending on other project development timelines• In 2011, the Company will spend ~$2 M on the expansion, which includes: – refurbishing rod mill & jaw crusher – detailed engineering work – geotechnical tests – building & foundation designs – receiving the required construction permits – materials procurement 32
  34. 34. Vezza Gold ProjectDEVELOPMENT• 85 km by paved road to SG mill• Advanced-stage project: – Extensive historic drilling (82,000 m) – Permitted & power at site – Hoist & 3-compartment shaft – 4 underground levels down to a depth of 741 m – Surface & pollution control infrastructure in Production Potential: 39,000 oz/yr place Mining Rate: 750 tpd – Dewatering of the shaft (741 m from surface) Mine Life: 9 years & the four existing underground drifts completed• 2011 exploration & development expenditures $32M – To be reduced by estimated pre-production revenue of $9M• Being advanced to be “production ready” in Q1 2012 33
  35. 35. Vezza Gold ProjectDEVELOPMENTRecent Highlights: Secured key personnel and awarded development contract to Promec Completed dewatering and underground rehabilitation (incl. refurbishing 5 levels) Completed +12,000 m of surface and underground diamond drilling to date Significant progress in surface and underground construction work Refined mining plan based on recently completed studies of crown pillars, rock mechanics, and metallurgical tests 40,000-tonne bulk sample planned for Q4, 2011 34
  36. 36. Other Gold Properties:GROWTH POTENTIAL 2011 Trucking Au Production Project Resources* Exploration Distance to Potential Program SG Mill Measured & Indicated: 162,035 oz Au (1.80 g/t) TBD FLORDIN 4,500 m 70 Km Inferred: (potential open pit) 97,651 oz Au (1.59 g/t) Measured & Indicated: 237,000 oz Au (5.74 g/t) 44,000 oz /yr DISCOVERY 8,000 m 80 Km Inferred: (over 4 yrs) 294,000 oz Au (5.93 g/t) TBD DORMEX TBD 2,400 m Adjacent (potential fold of Sleeping Giant) Potential to produce over 100,000 oz per year from expanded Sleeping Giant mill * See Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated and Inferred Resources. Report sources can be found in the appendix. 35
  37. 37. 2011 GoldEXPLORATION• 70-km land package surrounding Sleeping Giant mill• Budget: $9.1 M for 49,000 m of drilling • 26,500 m at Sleeping Giant • 22,500 m at NAP‟s other gold properties Vezza Discovery Cameron Shear JV Florence Flordin Harricana North Dormex Sleeping Giant Mine & Mill Laflamme Abitibi region, Quebec, Canada 36
  38. 38. NAP 2011PRIORITIES Priority Status Progressing the LDI mine expansion In Progress Completing the LDI resource update (Q2) Done Updating the LDI mine expansion plan (Q3) In Progress Completing the shaft deepening at Sleeping Giant (Q2) Done Advancing the Vezza gold project towards a production In Progress decision (year-end) Continuing exploration programs aimed at increasing In Progress reserves and resources at LDI and in the gold division 37
  40. 40. ShareholderINFORMATIONNorth American Palladium‟s vision is to build a mid-tier diversified precious metals company operating in miningfriendly jurisdictions. Highly leveraged to palladium, the Company is also building its exposure to gold, and isfocused on investing in its current operations to grow its production of palladium and gold. NAP‟s experiencedmanagement and technical teams have a significant commitment to exploration and are dedicated tobuilding shareholder value. Corporate Office: Royal Bank Plaza, South Tower 200 Bay St., Suite 2350 Toronto, ON M5J 2J2 Stock Symbols: NYSE Amex – PAL TSX – PDL, PDL.WT.B Website: Investor Relations: Camilla Bartosiewicz Manager, Investor Relations & Corporate Communications 416-360-7590 ext. 7226 39
  41. 41. Appendices &FURTHER INFORMATION 40
  42. 42. SeniorMANAGEMENT William J. Biggar – President and CEO An accomplished businessman with extensive experience in mining and in a broad range of industries. Mr. Biggar has held senior positions with Barrick Gold Corporation, Horsham Corporation and Magna International. He also has over 12 years of experience as an investment banker and private equity investor. A Chartered Accountant, he holds Master of Business Administration and Bachelor of Commerce (with distinction) degrees from the University of Toronto. Greg Struble – Vice President and COO A mine engineer with over 30 years of experience in underground mining. Most recently, he served as Executive Vice President and COO of Stillwater Mining Company, where he was responsible for two underground palladium mines as well as smelter and refinery operations. Prior to this, he worked as underground project manager for Barrick Gold‟s Cortez Hills Joint Venture. Mr. Struble has also worked internationally at a number of large gold mines. Michel Bouchard – Vice President, Exploration and Development Mr. Bouchard has been involved in exploration, development, and operations in the mining industry for the past 25 years. He is credited with contributing to the discovery of the Bouchard Hebert Mine in northwest Quebec. Previously Mr. Bouchard held senior positions with Audrey Resources, Lyon Lake Mines and SOQUEM. Mr. Bouchard was formerly President and CEO of Cadiscor Resources Inc. Jeff Swinoga – Vice President, Finance and CFO Eighteen years of experience in the resource, mining and finance industries. Mr. Swinoga has held CFO positions with HudBay Minerals and MagIndustries, and was Director, Treasury Finance of Barrick Gold Corporation for seven years. A Chartered Accountant, he also has an MBA from University of Toronto and an honours economics degree from University of Western Ontario. Trent Mell – Vice President, Corporate Development and General Counsel Mr. Mell has previously worked at the corporate head offices of Barrick Gold Corporation and Sherritt International. Prior to joining the mining industry, Mr. Mell worked with Stikeman Elliott LLP, where he practiced securities law. Mr. Mell has published papers on NI 43-101, and holds a B.A., a B.C.L. (with distinction) and a LL.B. (with distinction), all from McGill University, as well as a Masters degree in Securities Law from Osgoode Hall Law School. 41
  43. 43. Cautionary Note to U.S. Investors ConcerningMINERAL RESERVES AND MINERAL RESOURCE• Mineral reserves and mineral resources have been calculated in accordance with National Instrument 43-101 as required by Canadian securities regulatory authorities. For United States reporting purposes, Industry Guide 7, (under the Securities and Exchange Act of 1934), as interpreted by Staff of the Securities Exchange Commission (SEC), applies different standards in order to classify mineralization as a reserve. In addition, while the terms “measured”, “indicated” and “inferred” mineral resources are required pursuant to National Instrument 43-101, the U.S. Securities and Exchange Commission does not recognize such terms. Canadian standards differ significantly from the requirements of the SEC, and mineral resource information contained herein is not comparable to similar information regarding mineral reserves disclosed in accordance with the requirements of the U.S. Securities and Exchange Commission. U.S. investors should understand that “inferred” mineral resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. In addition, U.S. investors are cautioned not to assume that any part or all of NAPs mineral resources constitute or will be converted into reserves. For a more detailed description of the key assumptions, parameters and methods used in calculating NAP‟s mineral reserves and mineral resources, see NAP‟s most recent Annual Information Form/Form 40-F on file with Canadian provincial securities regulatory authorities and the SEC.• Michel Bouchard, P. Geo, Vice President, Exploration & Development, for North American Palladium Ltd., is the Qualified Person who supervised the preparation of the technical data in this presentation.• Please refer to North American Palladium‟s Annual Information Form for the year ended December 31, 2010 and applicable technical reports available on, and for further information. 42
  44. 44. LDI MineMINERAL RESERVES & RESOURCESRoby Zone: May 31, 2010 & Offset Zone: December 31, 2010 Tonnes Pd Pt Au Ni Cu Pd (000’s) (g/t) (g/t) (g/t) (%) (%) (000’s oz) RESERVES PROVEN - Roby Zone1,3 283 7.40 0.42 0.36 0.08 0.08 67 PROBABLE - Roby Zone1,3 637 5.10 0.39 0.33 0.09 0.08 105 Total Proven & Probable 920 5.81 0.40 0.34 0.08 0.08 172 RESOURCES MEASURED Offset Zone1,2 2,500 5.62 0.36 0.33 0.12 0.09 452 Open Pit1,3 3,722 1.99 0.23 0.17 0.07 0.08 238 Stockpile1,3 508 2.21 0.20 0.18 0.07 0.05 36 Total Measured 6,730 3.36 0.28 0.23 0.09 0.08 726 INDICATED Offset Zone1,2 11,955 5.24 0.36 0.32 0.12 0.10 2,016 Roby Zone1,3 3,144 7.62 0.44 0.33 0.08 0.06 770 Open Pit1,3 2,565 2.20 0.24 0.18 0.07 0.08 181 Stockpile1,3 13,365 0.970 0.12 0.08 0.06 0.03 417 Total Indicated 31,029 3.40 0.26 0.21 0.09 0.06 3,384 Total Measured & Indicated 37,759 3.39 0.26 0.21 0.09 0.06 4,110 INFERRED Offset Zone1,2 3,071 4.80 0.34 0.22 0.08 0.07 474 See Notes on the next page. 43
  45. 45. LDI MineMINERAL RESERVES & RESOURCESNOTES:1.Prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum classification system.2.The mineral resource estimate for the Offset Zone was prepared by Antoine Yassa, P.Geo. and Eugene Puritch, P.Eng. of P&E Mining Consultants Inc. both Independent Qualified Persons within the meaning of NI 43-101. The mineral resource calculation uses a minimum 3.5 g/t Pd resource block cut-off, Assays were capped at various levels depending on metal grade distributions. Resources were estimated to the 4070 Mine Level (-930 m elevation), a maximum depth of 1,430 m. The following metal price assumptions were used: US$475/oz palladium, US$1,500/oz platinum, US$1,100/oz gold, US$9.00/lb nickel, and US$3.00/lb copper. A US$/Cdn$ exchange rate of US$0.95 = CDN$1.00 was also applied.3.The mineral reserve and resource estimate for the Roby Zone, open pit and and stockpiles were estimated as of June 30, 2010 by Scott Wilson RPA and updated by David Penna, P.Geo., an employee of the Company and a Qualified Person under 43-101 to: (i) to reflect additions to mineral reserves in the Roby Zone as a result of a lower cut-off palladium grade and higher palladium price in the Roby Zone; (ii) depletion from production up to May 31, 2011, and (iii) mineral reserves from the crown pillar (supported by an internal engineering report). The following cut-off grades were used: (i) 1.8 g/t PdEq for the Roby open pit, within an optimized pit shell run below the current pit survey; (ii) 1.9 g/t PdEq for the mine stockpiles; and (iii) 5.8 g/t PdEq for the underground Roby Zone. These cut-off grades were determined under the assumption that production would take place at a rate of 14,000 tpd. Metal price assumptions of US$350/oz palladium, US$1,400/oz platinum, US$850/oz gold, US$6.50/lb nickel, and US$2.00/lb copper were used in the estimation of cut-off grade. A US$/Cdn$ exchange rate of 1.11 was also applied.4.Palladium ounces are stated as contained ounces. Disclosure of contained ounces is permitted under Canadian regulations; however, the SEC generally permits resources to be reported only as in place tonnage and grade. Since the closure of the open pit operations, metallurgical recoveries at the LDI mine have been approximately 80.8% for palladium, 74.2% for platinum and 77.2% for gold.5.Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. The quantity and grade of reported inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred resources as an Indicated or Measured mineral resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured mineral resource category.6.The resource estimate was prepared by constructing 3D wireframes containing 37.9 million tonnes of mineralization with Gemcom software and using inverse distance squared (1/d2) grade interpolation on capped composited assays. 44
  46. 46. Sleeping Giant MineMINERAL RESERVES & RESOURCESDecember 31, 2010 Au Au Type Tonnes (g/t) (Contained Oz.) RESERVES Proven 36,800 7.7 9,100 Probable 154,200 8.6 42,600 Proven & Probable 191,000 8.4 51,700 RESOURCES Measured 15,400 5.9 2,900 Indicated 589,500 6.5 123,000 Measured & Indicated 604,900 6.5 125,800 Inferred 146,000 8.2 38,700 NOTES: 1. The mineral reserve and mineral resource estimate for the Sleeping Giant mine was prepared by Mr. Vincent Jourdain, P.Eng., Ph.D, Donald Trudel, P.Geo. and Marc-André Lavergne P.Eng., qualified persons under NI 43-101. 2. Mineral resources are exclusive of mineral reserves. 3. Mineral Resources are estimated at varying cut-off grades depending on the type of mining method contemplated. 4. This updated mineral resource estimate assumes a long-term gold price of US $1,100. 5. CIM definitions were followed for Mineral Resources. See Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated and Inferred Resources. 45
  47. 47. Vezza ProjectMINERAL RESOURCESDecember 31, 2010 Au Au Type Tonnes (g/t) (Contained Oz.) RESOURCES Measured 190,000 6.1 37,100 Indicated 1,524,000 5.8 283,800 Total Measured & Indicated 1,714,000 5.8 320,900 Inferred 633,000 5.0 102,100 NOTES : 1. This updated mineral resource estimate was prepared as of April 11, 2011 by M. Bernard Salmon, B.Sc., Eng., an independent Qualified Person within the meaning of NI 43-101. 2. CIM definitions were followed for the estimation of Mineral Resources. 3. Mineral Resources are estimated at a cut-off grade of 3 g/t, using an average long-term gold price of US$1,200 per ounce and a US$/C$ exchange rate of 1:1. 4. Minimum mining width of two metres was used. 5. Totals may not represent the sum of the parts due to rounding. 6. See Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated and Inferred Resources. 46
  48. 48. Flordin PropertyMINERAL RESOURCESMarch 14, 2011 Au Au Type Tonnes (g/t) (Contained Oz.) RESOURCES Measured 116,200 3.25 12,133 Indicated 2,679,600 1.74 149,902 Total Measured & Indicated 2,795,800 1.80 162,035 Inferred 1,915,700 1.59 97,651 NOTES: 1. This updated mineral resource estimate for a potential open pit mining method was prepared as of March 14, 2011 by Mr. Pierre-Luc Richard, B.Sc., Geo. of InnovExplo Inc., an independent qualified person under NI 43-101, using a cut-off grade of 0.5 g/t and 3 metre minimum width. 2. CIM definitions were followed for the estimation of mineral resources. 3. See Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated and Inferred Resources. 47
  49. 49. Discovery ProjectMINERAL RESOURCESAugust 1, 2008 Au Au (Contained Type Tonnes (g/t) ounces) RESERVES Measured 3,000 8.95 900 Indicated 1,279,000 5.74 236,000 Inferred 1,546,000 5.93 294,000 NOTES: 1. Source: NI 43-101 Technical Report, August 1, 2008 2. The mineral resource estimate for the Discovery Project was prepared by Mr, Carl Pelletier, B.Sc., P.Geo. of InnovExplo, an independent qualified person under NI 43-101, assuming a gold price of U.S.$850 in the first 5 years, and U.S.$750 thereafter. Applied varying cut-off grades depending on the type of mining method contemplated. 3. The effective date of the estimate is June 17, 2008. 4. This estimate conforms with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101). U.S. investors should refer to the company‟s most recent 40F/Annual Information Form for an overview on how Canadian standards differ significantly from U.S. requirements. Mineral Resources, having demonstrated economic viability, are not Mineral Reserves. For further information, please refer to the report titled “Technical Report on the Scoping Study and Mineral Resource Estimate for the Discovery Project (according to Regulation 43-101 and Form 43-101F1) dated August 1, 2008 and prepared by InnovExplo Inc. It is filed on under Cadiscor Resources Inc. 48