EX-99.3 4 exhibit99-3.htm NEWS RELEASE DATED NOVEMBER 5TH, 2014 Exhibit 99.3

Exhibit 99.3


NEWS RELEASE

 

North American Palladium Announces Third Quarter 2014 Results

Revenues increased by 39% compared to same period last year

All figures are in Canadian dollars except where noted.

Toronto, Ontario, November 5, 2014 – North American Palladium Ltd. (“NAP” or the “Company”) (TSX: PDL) (NYSE MKT: PAL) today announced the operating, development, and financial results for the third quarter ended September 30, 2014 (“Q3”).

“Taking a view on the progress from 2013 to where we are today, we are pleased with what has been achieved during construction in 2013, commissioning and production build up in 2014 and the related financings,” said Phil du Toit, President and Chief Executive Officer. “Although the third quarter presented challenges on grade due to mining sequence, equipment availability and the unfortunate incident of a mine fatality, the fourth quarter is off to a good start and we remain on track to meet our longer-term objectives.”

“The exploration results so far in 2014 are very encouraging. We will keep the market apprised of progress,” added Mr. du Toit.

“Management continues to implement a number of strategic initiatives to help achieve the production ramp up,” said Jim Gallagher, Chief Operating Officer. “On October 1, 2014 we began a trial implementation of a full-time mill run compared to our previous 16 day batch process. This initiative, plus improvements to the underground ore handling system, aided by an end of September underground ore stockpile of several days production, has resulted in October production of approximately 20,000 ounces of payable palladium.”

“With these positive October results and the continuing underground ramp up which saw September and October average approximately 3,800 tonnes per day, with a number of days achieving more than 4,500 tonnes per day, we expect to be at or marginally below the lower end of our guidance of 170,000 payable palladium ounces for 2014,” added Mr. Gallagher.

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Cumulative Pd Ounces Year to Date


Q3 2014 Results Summary

  • Sold 36,430 ounces of payable palladium at a cash cost per ounce(1) of US$589. Year to date cash cost per ounce is US$527.

  • Revenue of $46.4 million was an increase of $13.1 million or 39% compared to the same period in 2013 due to more favorable exchange rates, higher palladium ounces sold and higher palladium prices.

  • Adjusted EBITDA(1) of $8.3 million for the quarter and $28.5 million year to date.

  • Realized palladium selling price of US$860 per ounce, giving a palladium operating margin of US$271 per ounce, or US$9.9 million. Palladium prices remain strong, with the November 4, 2014 price at US$786 per ounce.

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Year-To-Date Trends

The following table includes quarterly results for the first three quarters of 2014 and year to date results versus full year guidance for 2014 to help demonstrate some of the key trends in the business.

                          For the three months ended           
    March 31     June 30     September 30   2014   2014  
      2014      2014      2014     Year to date     Guidance  
Palladium production – payable oz   42,641     39,222     32,560   114,423   170,000  
US$ cash cost per palladium oz sold US$492 US$510 US$589 US$527   US$550  
Surface mining – tonnes 254,294 243,041 270,860 768,195   1,000,000  
Underground mining – tonnes 275,845 263,904 304,804 844,553   1,300,000  
Underground mining – tonnes per day 3,065 2,900 3,313 3,094   3,562  
Milling – palladium head grade (g/t) 3.3 3.1 2.4 2.9   3.0  
Milling – palladium recovery 84.5% 83.6% 80.7% 83.1% 82.0%
Adjusted EBITDA ($000s) $9,743 $10,444 $8,287   28,474   n.a.  

Financial Results(2)

Revenue for the third quarter was $46.4 million compared to $33.3 million in the third quarter of 2013. The increase in revenue was primarily due to favourable exchange rate movements, higher realized prices for palladium, greater palladium ounces sold, and higher volumes of platinum, gold, nickel and copper. During the third quarter, the Company realized a palladium selling price of US$860 per ounce.

Adjusted EBITDA(1) (which excludes interest expenses and other costs, depreciation and amortization, exploration, foreign exchange gains and losses and mine restoration costs net of insurance recoveries) was $8.3 million in the third quarter of 2014, compared to $3.2 million in the third quarter of last year. For the nine months ended September 30, 2014, Adjusted EBITDA(1) was $28.5 million compared to $12.0 million in the prior year.

During the quarter, the Company incurred $23.5 million of non-cash expenses consisting of $8.0 million of foreign exchange losses, $8.6 million of depreciation, amortization and accretion and $7.0 million of interest expense and other costs. These non-cash expenses contributed to a net loss for the quarter of $18.8 million or $0.05 per share compared to a net loss of $5.3 million or $0.03 per share in the same quarter last year. The increase in the net loss is primarily due to increased foreign exchange losses, production costs and interest expense and other costs partially offset by the impact of higher revenues.

At the end of the quarter, the Company had $11.8 million in cash and availability under the credit facility of $1.2 million.

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  Q3 2014 Conference Call & Webcast Details  
     
  Date: Wednesday, November 5, 2014  
  Time: 8:30 a.m. ET  
  Webcast: www.nap.com  
  Live Call: 1-866-229-4144 or 1-416-216-4169 (PIN: 8347411, followed by # sign)  
  Replay: 1-888-843-7419 or 1-630-652-3042 (PIN: 8347411, followed by # sign)  
     
  The conference call replay will be available for 90 days after the live event. An archived audio webcast of the call will also be posted to NAP’s website.  
     

About North American Palladium

NAP is an established precious metals producer that has been operating its Lac des Iles mine ("LDI") located in Ontario, Canada since 1993. LDI is one of only two primary producers of palladium in the world, offering investors exposure to palladium. The Company's shares trade on the NYSE MKT under the symbol PAL and on the TSX under the symbol PDL.

For further information please contact:

John Vincic
Investor Relations
Telephone: 416-360-7374
Email: jvincic@nap.com

(1) Non-IFRS measure. Please refer to Non-IFRS Measures in the MD&A.

(2) NAP’s unaudited condensed interim consolidated financial statements for the third quarter ended September 30, 2014 are available in the Appendix of this news release. These financial statements should be read in conjunction with the notes and management’s discussion and analysis available at www.nap.com, www.sedar.com and www.sec.gov.

Cautionary Statement on Forward Looking Information

Certain information contained in this news release constitutes 'forward-looking statements' within the meaning of the 'safe harbor' provisions of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities laws. All statements other than statements of historical fact are forward-looking statements. The words ‘will', ‘expect’, 'would', 'could', 'estimate' and similar expressions identify forward-looking statements. Forward-looking statements in this news release include, without limitation: information pertaining to the Company's strategy, plans or future financial or operating performance, such as the ramp-up at the Company’s LDI mine, timelines, production plans, projected expenditures, operating cost estimates, proposed mining methods, expected mining rates and other statements that express management's expectations or estimates of future performance. The Company cautions the reader that such forward-looking statements involve known and unknown risk factors that may cause the actual results to be materially different from those expressed or implied by the forward-looking statements. Such risk factors include, but are not limited to: the risk that the Company may not be able to obtain sufficient financing to fund capital expenditures required to continue the LDI mine expansion at depth, the risk that the Company will not be able to meet its financial obligations as they become due, the possibility that metal prices and foreign exchange rates may fluctuate, inherent risks associated with development, exploration,

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mining and processing including risks to tailings capacity, ground conditions, environmental hazards, uncertainty of mineral reserves and resources, the possibility that the LDI mine may not perform as planned, changes in legislation, regulations or political and economic developments in Canada and abroad, risks related to employee relations and the availability of skilled labour, litigation, and the risks associated with obtaining necessary licenses and permits. For more details on these and other risk factors see the Company's most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities.

Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions contained in this news release, which may prove to be incorrect, include, but are not limited to: that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business, that metal prices and exchange rates between the Canadian and United States dollar will be consistent with the Company's expectations, that there will be no material delays affecting operations or the timing of ongoing development projects, including the LDI mine ramp-up, that prices for key mining and construction supplies, including labour costs, will remain consistent with the Company's expectations and that the Company’s current estimates of mineral reserves and resources are accurate. The forward-looking statements are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise, except as expressly required by law. Readers are cautioned not to put undue reliance on these forward-looking statements.

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Condensed Interim Consolidated Balance Sheets
(expressed in thousands of Canadian dollars)
(unaudited)

    September 30     December 31  
    2014     2013  
ASSETS            
Current Assets            
Cash and cash equivalents $ 11,792   $ 9,793  
Accounts receivable   52,536     38,556  
Inventories   14,827     14,239  
Other assets   1,094     6,968  
Total Current Assets   80,249     69,556  
Non-current Assets            
Mining interests   446,792     456,239  
Total Non-current Assets   446,792     456,239  
Total Assets $ 527,041   $ 525,795  
LIABILITIES AND SHAREHOLDERS’ EQUITY            
Current Liabilities            
Accounts payable and accrued liabilities $ 18,342   $ 48,797  
Credit facility   25,114     17,834  
Current portion of obligations under finance leases   3,210     2,988  
Current portion of long-term debt   7,704     173,656  
Current derivative liability   1,098     492  
Total Current Liabilities   55,468     243,767  
Non-current Liabilities            
Income taxes payable   125     1,286  
Asset retirement obligation   15,347     13,638  
Obligations under finance leases   8,405     8,744  
Long-term debt   212,490     35,864  
Total Non-current Liabilities   236,367     59,532  
Shareholders’ Equity            
Common share capital and purchase warrants   866,108     798,411  
Stock options and related surplus   9,554     9,128  
Equity component of convertible debentures, net of issue costs   6,931     6,931  
Contributed surplus   8,873     8,873  
Deficit   (656,260 )   (600,847 )
Total Shareholders’ Equity   235,206     222,496  
Total Liabilities and Shareholders’ Equity $ 527,041   $ 525,795  

 

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Condensed Interim Consolidated Statements of Operations and Comprehensive Loss
(expressed in thousands of Canadian dollars, except share and per share amounts)
(unaudited)

    Three months ended     Nine months ended  
          September 30           September 30  
    2014     2013     2014     2013  
Revenue $ 46,441   $ 33,348   $ 145,674   $ 113,651  
                         
Mining operating expenses                        
Production costs   30,116     21,663     90,206     76,305  
Smelting, refining and freight costs   4,007     2,922     12,320     10,130  
Royalty expense   1,761     1,464     6,019     4,865  
Depreciation and amortization   6,894     6,144     25,436     19,233  
Loss (gain) on disposal of equipment   150     (24 )   1,370     1,030  
Total mining operating expenses   42,928     32,169     135,351     111,563  
Income from mining operations   3,513     1,179     10,323     2,088  
                                     
Other expenses                        
Exploration   2,566     3,874     5,225     10,906  
General and administration   2,120     2,920     7,285     8,019  
Interest and other income   (1,524 )   (214 )   (3,924 )   (1,746 )
Interest expense and other costs   10,245     2,536     39,229     5,720  
Financing costs   (915 )   677     7,469     3,076  
Loss on extinguishment of long-term debt   -     -     -     11,035  
Foreign exchange loss (gain)   9,811     (3,290 )   10,452     2,027  
Total other expenses   22,303     6,503     65,736     39,037  
Loss from continuing operations before taxes   (18,790 )   (5,324 )   (55,413 )   (36,949 )
Income and mining tax recovery   -     -     -     -  
Loss and comprehensive loss from continuing operations for the period $ (18,790 ) $ (5,324 ) $ (55,413 ) $ (36,949 )
Income and comprehensive income from discontinued operations for the period   -     -     -     2,509  
Loss and comprehensive loss for the period $ (18,790 ) $ (5,324 ) $ (55,413 ) $ (34,440 )
Loss per share                        
Basic $ (0.05 ) $ (0.03 ) $ (0.17 ) $ (0.19 )
Diluted $ (0.05 ) $ (0.03 ) $ (0.17 ) $ (0.19 )
Loss from continuing operations per share                        
Basic $ (0.05 ) $ (0.03 ) $ (0.17 ) $ (0.20 )
Diluted $ (0.05 ) $ (0.03 ) $ (0.17 ) $ (0.20 )
Income from discontinued operations per share                        
Basic $ -   $ -   $ -   $ 0.01  
Diluted $ -   $ -   $ -   $ 0.01  
Weighted average number of shares outstanding                        
Basic   384,432,246     194,555,425     322,842,483     183,904,755  
Diluted   384,432,246     194,555,425     322,842,483     183,927,098  

 

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Condensed Interim Consolidated Statements of Cash Flows
(expressed in thousands of Canadian dollars)
(unaudited)

    Three months ended September     Nine months ended  
          30           September 30  
    2014     2013     2014     2013  
Cash provided by (used in)                        
Operations                        
Loss from continuing operations for the period $ (18,790 ) $ (5,324 ) $ (55,413 ) $ (36,949 )
Operating items not involving cash                        

Depreciation and amortization

   6,894     6,144     25,436     19,233  

Accretion expense

   1,711     970     1,272     2,869  

Loss on extinguishment of debt

   -     -     -     11,035  

Share-based compensation and employee benefits

   549     498     1,572     973  

Unrealized foreign exchange loss (gain)

   7,953     (1,892 )   8,539     2,011  

Loss on disposal of equipment

   150     2,004     1,370     3,058  

Interest expense and other

   6,953     55     32,920     23  

Financing costs

   (915 )   -     7,469     -  
    4,505     2,455     23,165     2,253  
Changes in non-cash working capital   3,519     (433 )   (35,697 )   85  
    8,024     2,022     (12,532 )   2,338  
Financing Activities                        
Issuance of common shares and warrants, net of issue costs   -     9,478     (38 )   19,091  
Issuance of convertible debentures, net of issue costs   (239 )   -     61,204     -  
Credit facility   (569 )   (7,241 )   5,538     6,951  
Repayment of senior secured notes   -     -     -     (79,200 )
Settlement of palladium warrants   -     (1,747 )   -     (1,747 )
Net proceeds of senior secured term loan   -     -     -     131,941  
Repayment of obligations under finance leases   (930 )   (595 )   (2,616 )   (2,168 )
Interest paid   (32,203 )   (1,982 )   (33,768 )   (7,889 )
Other financing costs   (779 )   -     (1,674 )   -  
    (34,720 )   (2,087 )   28,646     66,979  
Investing Activities                        
Additions to mining interests, net   (5,817 )   (26,885 )   (14,274 )   (92,758 )
Proceeds on disposal of mining interests, net   -     175     159     1,165  
    (5,817 )   (26,710 )   (14,115 )   (91,593 )
Increase (decrease) in cash from continuing operations   (32,513 )   (26,775 )   1,999     (22,276 )
Net cash provided by discontinued operations   -     -     -     20,142  
Increase (decrease) in cash   (32,513 )   (26,775 )   1,999     (2,134 )
Cash and cash equivalents, beginning of period   44,305     44,809     9,793     20,168  
Cash and cash equivalents, end of period $ 11,792   $ 18,034   $ 11,792   $ 18,034  
Cash and cash equivalents consisting of:                        
Cash $ 11,792   $ 18,034   $ 11,792   $ 18,034  
Short-term investments   -     -     -     -  
  $ 11,792   $ 18,034   $ 11,792   $ 18,034  
Foreign exchange included in cash balance $ 558   $ 211   $ 558   $ 211  

 

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