Palladium and an Ontario mining success story – by Robert Mason (Canadian Mining Journal – March 2020)

ROBERT MASON is a Toronto-based partner and the head of mining in Canada at Norton Rose Fulbright.

Palladium has been making headlines of late with the scarce metal surging past gold to hit a record high, the rally in part driven by concerns over Russian and South African supplies. Just a few years ago, in February 2016, prices fell to as low as US$482 per oz.

Since that time, however, they have increased by almost 400% to sit today at about US$2,300 per oz. This is a remarkable increase over such a short period of time, due largely to growing demand from the automotive industry for use in emissions-reducing catalytic converters.

Canada produces little palladium, but it boasts an incredible success story. Thanks to the meteoric rise in palladium prices, the value of the Lac des Iles mine near Thunder Bay has increased many times over during the last three years, culminating in the project’s sale to Impala Platinum for $1 billion last fall.

The Lac des Iles platinum group metals (PGM) mine, previously owned by North American Palladium (NAP), has been in production for 25 years. In April 2015, NAP announced a significant recapitalization and restructuring transaction in the face of an unmanageable debt load.

At that time, palladium was trading at approximately US$765 per oz. NAP undertook a major underground mine expansion, transitioning from long-hole open stoping to the sublevel shrinkage mining method (SLS), which led to material increases in PGM production, revenue and earnings before interest, tax, depreciation and amortization.

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