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North American Palladium's CEO Discusses Q2 2012 Results - Earnings Call Transcript

The LDI mine expansion continues to be our number one priority at NAP. Through an investment of CAD65 million in the first half of this year, we achieved a number of important development milestones and are nearing a stage of substantial completion on much of the surface work required to support the expansion. Above all, we remain on target to begin commissioning the shafts by year-end. And the commissioning of the shaft continues to be our primary focus as it will enable us to expand our output and lower our cost profile starting next year.

Now as you may have seen yesterday, we also released the results of our updated reserve and resource statement as of March 31, 2012 for LDI to reflect the results from our 2011 and Q1 2012 infill drill program. Recall that the objective of the infill drill program was to upgrade the resource model in support of ongoing development and mine planning. And I’m pleased to say that we accomplished this objective, as the results substantially upgraded categories, particularly the measured category, thereby giving the increased confidence in the resource estimates.

The new resource model provides a foundation for effective long-term mine planning that is critical to the successful ramp-up of mining operations in the Offset Zone deposit, while at the same time highlighting the tremendous opportunity to significantly expand resources from new underground drilling platforms that will become available next year after the shaft is commissioned.

And with respect to converting some of the Offset Zone resources into reserves, the estimation is currently in progress and is expected to be completed prior to year-end, following completion of our updated mining plan.

Now turning briefly to our gold business, now that we have all of the permits at Vezza, and with the development well advanced, we’ve recently announced that now is the appropriate time to explore divestiture opportunities and, ultimately, exit the gold business. While we continue to believe in Vezza’s cash generation potential, we believe we can build an enhanced shareholder value by focusing exclusively on our palladium assets and their growth potential.

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