North American Palladium (NAP) has announced it is to develop an underground mine at its Lac des Iles operations in Ontario following board approval for the project.

NAP already operates an open pit mine and mill at the site, which boasts a capacity of 15,000 tonnes per day.

Having analysed a full feasibility study, the company decided to proceed with the integrated open pit and underground mine strategy.

The study estimates that the underground mine contains 3,542,000 tonnes of proven and probable reserves, which contain approximately 6.62 grams of palladium per tonne at a cut-off grade of 4.5 grams per tonne.

In addition, the reserves also contain an estimated 0.40 grams of platinum, 0.34 grams of gold, 0.07 per cent copper, and 0.08 per cent nickel per tonne.

The integrated production plan for the expanded Lac des Iles mine outlines proposals for a seven year mine life at an average annual production rate of slightly over 300,000 ounces of palladium.

"The integrated open pit and underground mine project at Lac des Iles, which has all necessary approvals in place to commence construction, will increase our production profile at the Lac des Iles mine," NAP president and CEO, Andre Douchane, commented.

NAP explained that the first ore production is expected in the third quarter of 2005.