Canadian precious metals miner North American Palladium (NAP) has revised down its annual production forecast off the back of weather conditions, manpower constraints and a refocus on development activities.

The firm scaled back its palladium production guidance for 2011 by 12 per cent to between 145,000 oz and 155,000 oz.

Announcing its results for the first quarter of the year, NAP said the reduction comes as it transfers focus from production to development.

Its main Lac des Iles (LDI) mine produced 30,661 oz of palladium over the period, at a cash cost of US$519 (£317) per ounce.

The LDI mill processed 337,846 ts of ore with average palladium head grade at 3.85g/t and a palladium recovery of 78.8 per cent.

NAP said it is making "significant progress" with expansion of the mine, which it explained is the firm's "number one priority".

Q1 underground production at LDI was "essentially on plan", said president and chief executive officer William J Biggar.

"However, weather conditions and manpower constraints adversely affected stockpile production," he added.

Mr Biggar continued: "During the quarter, we made significant progress in our development activities - which are integral to our future growth.

"The $270 million [£165 million] expansion of the LDI mine is our number one priority at NAP to increase future production and lower cash costs per ounce."

He explained that the decision to change the company's emphasis to development over production was a "strategic" move.

The 12 per cent decrease in production is "more than justified" by the benefits of pushing ahead with the project to achieve commercial production from the new shaft in the fourth quarter of 2012, Mr Biggar added.

NAP will update its LDI expansion plans in the third quarter of 2011 to take into account updated reserve and resource calculations, more current metal price assumptions, and new seismic information that may impact stope design.

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UPDATE 1-N.American Palladium Q1 loss narrows; cuts FY output view (10/05/11) 

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