North American Palladium (NAP) has released a performance and exploration update today, reporting a decrease in palladium production.

The Canadian miner saw palladium production drop from 91,261 ounces in the first quarter of 2004 to 52,572 ounces in the first quarter of this year.

Throughout the first quarter by-product metals production included 5,382 ounces of platinum, with low ore grades and mill availability affecting results.

However, ball mill bearing failures which occurred during the period have now been resolved and the mill is said to be operating effectively. The mill processed 1,156,322 tonnes of ore during the quarter, an average 12,848 tonnes per day.

The company's Lac des Iles Mine is Canada's only primary producer of pgm and is one of the largest open pit bulk mineable palladium reserves in the world.

Bruce W Mackie, vice president, exploration and business development, explained that extension work and a deep drilling campaign meant the company now has a "very large area" to start exploring for more higher grade material.

"I am also extremely pleased that the board has approved an additional $2.5 million to continue drilling the Offset High Grade Zone throughout 2005," he added.

Exploration teams will now continue to focus on expanding mineral resources and conduct advanced drill testing.