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North American Palladium Releases Addtional Drilling Results from Sleeping Giant Mine

North American Palladium Ltd. (TSX:PDL)(NYSE Amex:PAL) today released additional drill results from its 2010 exploration program at the Company's gold division in the Abitibi region in Quebec.

During 2010, the Company decided to increase its drilling budgets on three projects, Flordin, Vezza and Discovery, following positive results received during the year. Drilling was increased from the original budget of 53,000 metres to 118,700 meters, resulting in a total of 563 underground and surface holes being drilled, at an approximate cost of $11 million.

Highlights:

  • Sleeping Giant mine gold zones extended at depth towards three new proposed mine levels;

  • New gold veins discovered through surface drilling near Sleeping Giant, east of current mine workings;

  • Vezza surface drilling extended ore zone continuity towards the east;

  • Flordin's open pit potential further evaluated through systematic definition drilling, which extended known gold zones east and west; and

  • Discovery's 1200E zone extended towards the east and to deeper levels.

"Positive results received to date from our 2010 gold exploration program confirm our belief that our wholly-owned gold assets provide us with a foundation to organically grow our gold division," said William J. Biggar, President and CEO. "As part of our strategy to increase production, we are currently expanding our Sleeping Giant mill to provide sufficient capacity to process ore from our other nearby projects."

Sleeping Giant Mine

The primary objective of the 2010 exploration program at Sleeping Giant was to define and extend zones within the current mine (including infill drilling to achieve greater certainty of the mine's grades), and at depth on the proposed three new mining levels. During 2010, 194 drill holes were completed at Sleeping Giant, totalling 38,000 metres.

Systematic drilling from underground stations has improved the Company's understanding of several previously-known zones and extended them to greater depth.

Highlights include:

  • Zone 20, with several results over 10 g/t Au including 22.8 g/t Au over minimum mining widths of 1.6 metres;

  • Zone 30W, with several intersections of grades approaching 35 g/t Au over mining widths of 1.8 metres;

  • Zone 785N, a new zone, with two intersections, one of which was 19.0 g/t Au over 4.4 metres; and

  • Zone 8N18, grading 7.7 g/t Au and more on mining widths of 1.6 metres.

Currently there are two drills testing the extensions of the zones to the proposed three new mining levels to prepare for development when the shaft deepening is completed in the second quarter of 2011.

Ongoing property-wide surface exploration surrounding Sleeping Giant has also identified significant new quartz veins marked by visible gold, east and south of the current mine workings. Drilling from surface includes 12 drill holes totalling 5,760 metres. The new gold veins report grades of 11.7 g/t Au and 12.3 g/t Au over 1 metre, which are comparable to grades at the mine. These new occurrences are located approximately 500 meters south of the formerly worked JD zones.

Vezza Project

Vezza is a surface and underground advanced-stage exploration project that is currently being progressed through exploration and development towards a production decision, expected by year-end. In 2010, NAP completed 74 drill holes from surface for a total of 12,105 metres. The surface drilling program confirmed both continuity and grade in the near surface, eastern extension of the deposit where only inferred resources currently exist.

In 2011, NAP will invest $26 million in underground exploration at Vezza aimed at demonstrating continuity and grade of mineral resources, previously estimated (NI 43-101 report, February 2010) to contain 1,517,000 tonnes of measured and indicated resources at an average grade of 5.9 g/t Au yielding 288,600 contained ounces, and an additional inferred resource of 754,000 tonnes grading 5.0 g/t Au for 121,500 contained ounces.

A bulk sample of up to 40,000 tonnes is also planned for 2011. The Company is currently dewatering the shaft and underground drifts to conduct underground diamond drilling. Results from the exploration and development work in 2011 will allow the Company to better evaluate the project before making a production decision. If a positive production decision is made, gold production could begin in the first quarter of 2012 from the expanded Sleeping Giant mill, at an expected rate of 39,000 ounces per year over a seven to nine year mine life.

Flordin Project

Located approximately 80 kilometres from Sleeping Giant, Flordin is another advanced exploration property. The Company believes that Flordin could have the potential to provide additional feed for the Sleeping Giant mill and is currently examining open pit scenarios. Using a 2 g/t Au cut-off, the 2009 NI 43-101 report estimated at that time that Flordin contained 679,000 tonnes of measured and indicated resources at an average grade of 4.25 g/t Au for 92,814 contained ounces and an additional inferred resource of 1,451,400 tonnes grading 3.63 g/t Au for 169,261 contained ounces.

In 2010, the Company initiated a major drill program to increase mineral resources. A series of 212 drill holes totalling 25,720 metres were completed from surface to 100 metres at depth. Drilling was designed to increase confidence in mineral resources and extend zones both east and west from previous mineral resource estimates. Logging and sampling are still pending on approximately half of these holes.

Highlights of the exploration results include:

  • New drill spacing of 30 by 30 metres will allow most resources to be updated into indicated or measured categories in a new resource estimate, expected in the second quarter of 2011 once all information is received and integrated into a geological model.

  • Systematic drilling has provided detailed information on Flordin's open-pit potential. Numerous steeply-dipping gold-bearing zones are present over an area of 100 to 150 metres wide and approximately 4 kilometres long.

  • Drilling has extended known gold-bearing zones laterally and identified several new zones, immediately south of historical resources.

  • A portion of the Flordin deposit has been exposed on surface by enlarging an outcropping area (overburden on this deposit averages 1 metre thick) to provide a bulk sample that will be processed as soon as permitting can be completed.

  • Samples of the gold zones and of waste rock have been sent to a specialized lab for ore sorting tests. Ore sorting, if successful, would reduce tonnage being trucked to the Sleeping Giant mill, and achieve better grade control.

Discovery Project

Located approximately 70 kilometres from the Sleeping Giant mill, Discovery is an advanced exploration property. In 2010, 40 drill holes totalling 25,495 metres were completed, two-thirds of which have now been logged and analyses received. Drilling was aimed at extending the 1200E zone, which was not considered in the 2008 Scoping Study, which considered the west gold zones only.

Highlights include:

  • Drilling the eastern extension of the 1200E zone has revealed new gold zones at depth and followed known zones deeper and eastward;

  • Numerous, steeply-dipping gold-bearing zones have been followed to 700 metres at depth from surface. Presence of visible gold has been observed in seven holes; and

  • An updated estimate of resources will be prepared once all data have been received and integrated into a geological model, expected in the second quarter of 2011.

Analyses greater than 3 g/t Au and intervals with visible gold are reported with a visual of the gold-bearing zones. Visible gold complicates estimates of grade; however visual gold is considered a strongly encouraging observation in a deposit.

Based on a 2008 scoping study, Discovery can potentially produce 44,000 ounces of gold per year for four years. In 2011, the Company intends to update the scoping study to incorporate additional drilling and current gold prices.

Dormex Project

The Dormex project is located adjacent to the Sleeping Giant mine and mill, and is believed to have potential gold targets similar to Sleeping Giant. This property is covered by an average 10 meters of overburden.

In 2010, the Company completed a major reverse circulation drill program of 3,064 meters in order to better delineate overburden gold anomalies already known on the property. Most results are not yet available.

An aggressive exploration program including ground and airborne geophysics was completed in late 2010. The Company drilled nine conventional holes for a total of 4,206 metres. Logging and analysis of the 2010 work is ongoing and is expected to influence the 2011 drilling program once all new information is interpreted and integrated.

Cameron Shear & Laflamme Joint-Venture Projects

In 2010, 11 drill holes totalling 3,567 metres were completed at Cameron Shear and seven drill holes totalling 2,569 metres were completed at Laflamme. Core logging and sampling for analysis are ongoing at both projects. Drilling on a number of geophysical targets has improved the Company's understanding of both early-stage properties, although economic intersections have not yet been encountered at this time.

2011 Gold Exploration

The Company's $9.1-million gold exploration program has commenced, and 49,000 metres of drilling is planned, comprised as follows:

Technical Information and Qualified Person

The assay analyses performed during NAP's drill programs are subject to a rigorous quality assurance and quality control (QA/QC) program that conforms to industry best practices as outlined by the CIM and NI 43-101. This includes the use of independent third party laboratories and the use of professionally prepared standards and blanks and analysis of sample duplicates with a second independent laboratory. The Company's exploration team designed and executed the drilling program under the supervision of Tyson C. Birkett, PhD, Eng., Director of Exploration for Quebec, a Qualified Person as defined by NI 43- 101, who has reviewed and approved the content of this news release.

Source: North American Palladium Ltd.

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