TORONTO (miningweekly.com) – New York- and Toronto-listed North American Palladium (NAP) on Monday said it would delay commercial development at its Vezza gold mine, in northern Quebec, as a result of higher-than-expected dilution in ore grades and a slower mine ramp-up.
The project, located in the Abitibi region of Quebec, had received the final production permit at the end of the second quarter and had started mining the initial stoping panels.
However, as a result of management revising the mine’s development plans, commercial production had now been pushed to year-end from the planned start of production in the third quarter.
The company said it was also exploring options to divest from the project.
"While we continue to believe in Vezza's cash generation potential, we believe we can build better shareholder value by focusing on palladium," CEO William Biggar said in a statement.
NAP said the daily mining rate is ramping up slower than expected owing to longer stope preparation times, prompting the company to start a revision process to optimise its mining techniques based on the early stoping results, to reduce dilution and stope preparation times.
Capital expenditure plans were also being reviewed, but were not expected to differ substantially from the $20-million budgeted for the year.
Acquired from Agnico-Eagle Mines in 2010, for $10-million, a National Instrument 43-101 report filed during February 2010 stated the project held about 288 000 oz of gold in the measured and indicated categories and 121 000 oz of gold in the inferred category.
Further, the company’s flagship Lac des Iles palladium mine, in Ontario, delivered stable results in the second quarter, and mine expansion development work remained on schedule for shaft commissioning by the end of the year.
NAP said it expected to meet or exceed the higher end of its outlook of producing 150 000 oz to 160 000 oz of palladium.
Early on Monday, shares of the company traded at C$2.11 on the TSX.