North American Palladium Formalizes Agreements with Gold Fields and INCO and Provides an Exploration Update

Trading Symbol TSX - PDL AMEX - PAL 


TORONTO, June 20  /PRNewswire-FirstCall/ -- North American Palladium Ltd. ("NAP") and Gold Fields Limited ("Gold Fields") have formalized an agreement (the "Agreement") entitling NAP to earn a 50% interest in the Arctic Platinum Project ("APP") and up to a 60% interest in certain circumstances. The project has been extensively explored by Gold Fields since 2000 as part of a joint venture with Outokumpu Oyj. Following Outokumpu's decision to divest its mining operations, Gold Fields acquired Outokumpu's 49% share in APP in September 2003. On October 18, 2005 NAP and Gold Fields announced a letter of intent to form a joint venture on the Arctic Platinum Project.

Arctic Platinum Project

The APP covers several advanced stage exploration properties including the Konttijarvi and Ahmavaara Open Pit Projects (collectively the "Suhanko Project") that were the subject of a feasibility study completed by Gold Fields in 2005. Also included are the nearby Narkaus (SK Reef) and the Penikat (SJ Reef) Projects, both of which are believed to host significant platinum group and base metal mineralization associated with large, layered mafic complexes. The project is located approximately 60 km south of the town of Rovaniemi, the capital of Lapland and a major regional centre with excellent infrastructure. The port of Kemi on the Gulf of Bothnia is located 120 km south-west of Rovaniemi.

For 2006, NAP plans to re-evaluate the Suhanko Project at higher cut-off grades and explore other opportunities to improve project economics. NAP has contracted Aker Kvaerner ASA to complete the APP re-scoping study and P&E Mining Consultants Inc. to conduct the open pit designs and optimization. Since February 2006, three drill rigs have been mobilized to initiate a definition/delineation drill program on the SK Reef/Narkaus Project. Drilling to the end of May 2006 at the Narkaus Project has totalled 30 holes for 6,600 meters with a further 33 holes for some 8,000 metres expected to be completed by the third quarter. Metallurgical test work is being conducted by SGS Lakefield Research to examine different processing options in an attempt to improve metal recoveries and reduce operating costs. The results are expected to be incorporated in an updated mineral resource estimate which is scheduled for completion in early to mid 2007.

The mining lease and environmental and water permits for the Suhanko Project were approved by the Northern Finland Permitting Authority earlier this year.

In accordance with the terms of the Agreement, NAP has budgeted $7.5 million for a re-scoping study and exploration program towards a $5.0 million feasibility study to be completed on or before August 31, 2008.

Offset High Grade Zone (Lac des Iles)

NAP has approved a $3.3 million dollar budget for 2006 to better define and upgrade a portion of the known inferred resource of the Offset High Grade Zone at the Lac des Iles Mine in Ontario.

To date in 2006, five (5) wedged holes totalling 4,054 meters have been completed. The wedged holes are designed as part of an infill drill program to upgrade a portion of the known Inferred resource into the Indicated Category as well as to gain a better understanding of the geometry and distribution of the higher grade material within the central portion of the Offset High Grade Zone. Three additional wedges, to be completed by the end of July, are planned after which the Company will undertake an updated resource estimate.

The following is a summary of the final assay results received from the Offset High Grade Zone:

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                     (metres)            (grams per tonne)          %
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                              Inter-  Palla-
  Hole ID    From     To        val    dium  Platinum   Gold  Nickel Copper
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  05-006W1  1021.35  1096.00   74.65   7.231   0.465   0.622   0.145  0.153
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  incl      1024.00  1064.00   40.00  10.375   0.648   0.968   0.210  0.223
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  05-006W2  abandoned
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  05-006W3  1043.70  1069.00   25.30   7.606   0.557   0.645   0.161  0.123
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  incl      1053.00  1066.00   13.00  10.244   0.658   0.724   0.155  0.103
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  05-016W1   986.60   995.00    8.40   6.268   0.518   0.794   0.230  0.349
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  and       1012.75  1060.00   47.25   5.083   0.339   0.400   0.181  0.217
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  incl      1024.00  1038.20   14.20   8.600   0.424   0.250   0.090  0.159
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  and       1083.00  1094.00   11.00   7.337   0.384   0.222   0.055  0.081
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  05-016W2   965.75   975.15    9.40   9.560   0.669   0.769   0.273  0.269
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  and        982.00   994.00   12.00   5.381   0.373   0.322   0.090  0.217
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  05-016W3  1021.00  1071.00   50.00   6.446   0.465   0.360   0.096  0.077
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  incl      1021.00  1048.00   27.00   8.198   0.585   0.387   0.100  0.072
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  incl      1021.00  1033.00   12.00  10.197   0.690   0.338   0.091  0.069
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  Note: True widths are estimated to be 60-70% of the above drilled widths.



It is still anticipated that by the fourth quarter of 2006, the underground development will be sufficiently advanced to allow for the process of upgrading and delineation of the known mineral resource within the Offset High Grade Zone to be carried out more quickly and cost effectively from underground rather than from the current surface drilling program.

Shakespeare, Porter Baldwin

In April 2006, URSA Major Minerals Incorporated (URSA Major) announced the completion of an option and joint venture agreement with NAP on URSA Major's mining claims in Porter, Baldwin and adjacent townships (Porter- Baldwin property). NAP has been granted an option to acquire a 50% undivided interest in URSA's 100% owned, adjoining Porter Baldwin Property by funding $1.0 million of exploration expenditures over a three year period. NAP is to fund $300,000 in the first twelve months. The Porter Baldwin Property covers over 19,000 acres and extends over 15 km from the Shakespeare deposit towards the Sudbury Intrusive Complex, including several grass roots Ni-Cu prospects.

The Shakespeare Deposit is hosted by the Shakespeare Intrusive Complex, part of the 2.2 Ga year old Nipissing Gabbro Suite that occurs along the southern margin of the Canadian Shield in central Ontario. The Nipissing Intrusives are known to host or be associated with magmatic and/or hydrothermal related Ni, Cu and PGE prospects of which the Shakespeare Deposit is the most economically significant.

Shebandowan

NAP continues its exploration activities on INCO Limited's ("INCO") Haines and Conacher properties, located approximately 80 km southwest of Thunder Bay and the subject of an option joint venture agreement with INCO.

The Haines and Conacher properties surround INCO's former Shebandowan mine. Recently, an amendment to the option and joint venture agreement added the Shebandowan mine to the property package. In order to earn a 50% interest in the property, the Company must make cash payments of $200,000 and incur exploration expenditures of $3,000,000 on or before March 30, 2008. To date the Company has spent $575,000 in exploration on the property and made payments of $75,000. Under certain conditions, INCO retains a back-in right to increase its interest by an additional 10%.

NAP is currently drilling 2,500 metres over 15 holes to test the strike extension of the past producing Shebandowan Mine, west of the Number 1 Shaft. The exploration targets are known for komatite-hosted, "Kambalda-style" Ni-Cu- PGE deposits, similar to that found at the past producing Shebandowan Mine and in a series of Ni, Cu occurrences located west of the Number 1 Shaft. Results from a drill program carried out in late 2005 around the historic "D Zone", located 1500 metres west of the Number 1 Shaft, include 4.55 metres of 3.00% Ni, 0.90% Cu, 0.062% Co and 2.33 grams per tonne 2 PGM plus Au from hole SP-05-005 (see press release dated March 2, 2006).

Tyko

In January 2005, NAP entered into an option agreement to earn a 100% interest (subject to a Net Smelter Return Royalty) on the Tyko Property located approximately 30 kilometres southeast of Manitouwadge, Ontario.

The Tyko Property is comprised of 20 claims totalling over 4,100 hectares and covers several grass roots Ni, Cu, and PGE prospects (including the Tyko and RJ) associated with the Tyko Intrusive, a relatively small (less than 25 sq km) body consisting of variably serpentinized peridotite, pyroxenite and medium to coarse grained gabbro.

In March of 2006, two drill holes were completed to test the main Tyko showing. Three more holes were drilled to test the area of the RJ showing. A total of 711 metres of drilling was completed on the property. Assay intercepts included 12.8m of 0.76% Ni, 0.375% Cu and 0.977% Ni, 0.625% Cu over 20 metres from hole TK-06-006.

Future work planned for the property in 2006 will include additional mapping and prospecting.

Bird River and Lynn Lake

In order for the Company to concentrate its efforts on more advanced exploration projects, NAP has elected not to renew its option beyond March 30, 2006 on Gossan Resources Limited's ("Gossan") Bird River Sill property or its option on Rare Earth Metal Corp.'s ("Rare Earth") Lynn Lake Gabbros property beyond May 30, 2006. NAP wishes to acknowledge both Gossan and Rare Earth for the opportunity to work with their teams over the option period.

Split core from the Lac des Iles Mine and the Shebandowan Mine exploration programs is assayed by an independent lab, Accurassay Laboratories Ltd. of Thunder Bay. Precious metal values are determined by fire assay with a lead collection followed by atomic absorption finish and base metals are treated with a multi-acid digest with an atomic absorption finish.

Bruce Mackie, M.Sc., P. Geol. Vice President of Exploration, is the designated Qualified Person for the Company's exploration projects and has reviewed the content of this release.

North American Palladium's Annual Shareholder's Meeting will be held on Wednesday, June 21, 2006 at 10:00am at the Toronto Stock Exchange Gallery, Exchange Tower, 130 King Street W., Toronto. We look forward to seeing you there.

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North American Palladium's Lac des Iles Mine is Canada's only primary producer of platinum group metals and is one of the largest open pit, bulk mineable palladium reserves in the world. Palladium's catalytic qualities are expected to play an increasing role in the automotive and purification industries in response to global environmental solutions, in fuel cell technology for alternative energy sources while continuing to have widespread application in the dental, electronics, chemical and jewellery sectors. The Company also generates substantial revenue from by-product platinum, nickel, gold and copper and is actively exploring projects in Canada and Finland.

Forward-Looking Statements - Certain statements included in this news release are forward-looking statements which are made pursuant to the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. They include estimates and statements that describe the Company's future plans, objectives and goals, including words to the effect that the Company or management expects a stated condition or result to occur. When used herein, words such as "plan", "expect", "attempt", "scheduled", "budget", "will", "anticipate", "continue", and other similar expressions are intended to identify forward-looking statements. In making the forward-looking statements in this news release, the Company has applied several material assumptions, including but not limited to, the assumption that a portion of the Offset High Grade zone will be upgraded to an indicated mineral resource as a result of continued exploration. Any forward-looking statements in this news release involve inherent risks and uncertainties and are subject to factors, many of which are beyond our control, which may cause actual results or performance to differ materially from those currently anticipated in such statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include among others metal price volatility, economic and political events affecting metal supply and demand, variation in mineralization and geological or technical problems. For a more comprehensive review of risk factors, please refer to the Company's most recent Annual Report under "Management's Discussion and Analysis of Financial Results" and Annual Information Form under "Risk Factors" on file with the U.S. Securities and Exchange Commission and Canada provincial securities regulatory authorities. The Company disclaims any obligation to update or revise any forward-looking statements whether as a result of new information, events or otherwise. Readers are cautioned not to put undue reliance on these forward-looking statements. 

DATASOURCE: North American Palladium Ltd.



CONTACT: North American Palladium Ltd. - Jim Excell, President & CEO,

Tel: [phone]; Bruce Mackie, Vice President, Exploration, Tel:

[phone]; Donna Yoshimatsu, Director, Investor Relations, Tel:

[phone]; Shanda Theaker, Manager, Investor Relations, Tel:

[phone]

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