North American Palladium (NAP) says it expects to see "modest" production growth from its flagship Lac des Iles (LDI) palladium mine in Canada in 2012.

Payable palladium output from the mine will increase to between 150,000 and 160,000 oz this year from 146,000 oz in 2011, the firm said in an update.

NAP also said it will undertake 70,000 metres of palladium exploration drilling in 2012 to expand reserves and resources and identify new targets.

"We expect modest growth in palladium production in 2012, a year in which our top priority is the completion of phase one of the LDI mine expansion with the commissioning of the new shaft by year-end," stated William J Biggar, president and chief executive officer.

"This will enable us, starting in 2013, to reduce our cash costs per ounce while allowing us to increase production."

NAP said underground mining is expected to average 2,600 tonnes per day in 2012, with ore sourced from the Roby Zone as well as the upper part of the Offset Zone.

Underground ore is forecast to have an average head grade of 5.3 g/t and surface ore 1.9 g/t.

Overall, the firm expects to mill approximately 1.8 to two million tonnes of underground and surface ore at an average palladium head grade of 3.7 g/t, with a mill recovery of 78 per cent.

NAP was keen to stress that 2012 will remain a "transitional phase" for LDI as expansion work continues.

A new shaft will allow NAP to increase the underground mining rate at the mine to 3,500 t/d at the beginning of 2013.

Production will be gradually ramped up during 2013 and 2014 to 5,500 t/d in 2015, by which time the firm expects production to exceed 250,000 palladium ounces.

"I am very pleased with the significant progress made in 2011 on our mine expansion development activities," commented Greg Struble, vice-president and chief operating officer.

"During 2012 we will continue to make major investments in our mines, in exploration, and in our people and I am confident that we have the right team and processes in place to achieve our objectives."

More details of the 2011 production figures will be provided when the company releases its year-end results in February.

Source:

North American Palladium Announces 2012 Guidance on Production, Capital Expenditures and Exploration Budgets (17/01/12)

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