NORTH AMERICAN PALLADIUM THE WORLDS ONLY PURE PLAY PALLADIUM PRODUCER - - PowerPoint PPT Presentation

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NORTH AMERICAN PALLADIUM THE WORLDS ONLY PURE PLAY PALLADIUM PRODUCER - - PowerPoint PPT Presentation

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NORTH AMERICAN PALLADIUM THE WORLDS ONLY PURE PLAY PALLADIUM PRODUCER TSX:PDL | OTC:PALDF May ay 3, 2019 FIRST QUARTER 2019 MANAGEMENT AGENDA PARTICIPANTS Jim Gal allagher lagher President and Chief Executive Officer 1. Q1 Highlights

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SLIDE 1

NORTH AMERICAN PALLADIUM

FIRST QUARTER 2019

THE WORLD’S ONLY PURE PLAY PALLADIUM PRODUCER

TSX:PDL | OTC:PALDF May ay 3, 2019

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SLIDE 2

MANAGEMENT PARTICIPANTS

AGENDA

2

1. Q1 Highlights 2. Operation Update 3. Financial Update 4. Exploration 5. Market Activity 6. Dividend 7. Q&A

Jim Gal allagher lagher

President and Chief Executive Officer

Tim Hil ill

Vice President, Finance & Chief Financial Officer

Davi avid Pec eck

Vice President, Exploration

Friday, May 3, 2019 QUARTERLY RESULTS

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SLIDE 3

Dis isclai claimer mers and d Forward-Looking Looking Informati

  • rmation
  • n

All dollar amounts shown are in Canadian dollars unless otherwise stated.

3

Friday, May 3, 2019 QUARTERLY RESULTS

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SLIDE 4

Q1 1 HI HIGH GHLI LIGH GHTS

Health lth & Safety ty

  • LTI-free quarter and 1.5 TRIF (2018 Industry Average is 3.8)

Prod

  • duct

uction ion

  • Average daily underground production – 6,755 tonnes

at a cost of $38/tonne mined

  • 52,698 ounces of payable palladium produced
  • Mine expansion on track
  • Mill recovery – 82.4%
  • Mill throughput below expectations

Sustain ained ed Profit itab ability ility

  • Revenue – $128.3 million
  • Net income – $29.5 million
  • Cash provided from Operations - $75.8 million
  • Free cash flow1 - $46.9 million
  • Debt – $0
  • Quarterly dividend increased to $0.10

Explo plorat ation ion

  • Very positive developments

4

Friday, May 3, 2019

  • 1. Non-IFRS measure.

QUARTERLY RESULTS

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SLIDE 5

MINE NE EXP XPANSION NSION

  • Underground ramping up to 12,000 tpd by 2021
  • 2019 – A year of development:
  • Total metres of development in Q1 2019; 28%

increa ease over Q1 2018

  • Ramped up to 30.5m/day in March – 75% higher

igher than 2018 annual average

  • Moved 8,570 tpd underground (ore + waste) in March

– 23% higher igher than 2018 annual average

  • Scope of expansion project extends significantly

beyond just mine activity

5

Friday, May 3, 2019 QUARTERLY RESULTS

New dry facility Camp expansion Water treatment plant upgrade Ventilation system upgrade

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SLIDE 6

Friday, May 3, 2019

6

Average tonnes per day & average grade

UNDER ERGR GROUN OUND D PRODUCTION ODUCTION

Ounces produced

PAYAB ABLE LE PALLAD LADIUM IUM

QUARTERLY RESULTS

3.3 g/t Q1 2018 3.2 g/t Q1 2019 6,327 6,755 Q1 2018 Q1 2019

SHERIF ERIFF F PIT RGO GO

2019 Guidance: 220,000- 235,000

Q1 2019 Q1 2018 0.9 g/t 0.8 g/t 3,922 2,683

Average tonnes per day & average grade Average tonnes per day & average grade

2.4 g/t Q1 2019 Q1 2018 1.3 g/t 1,422 22

Q1 1 PRODU ODUCTIO CTION N HI HIGH GHLIGHT LIGHTS

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SLIDE 7

MILL LL PERFORMANC RFORMANCE E

  • Average throughput 8,984 tpd vs 12,000 tpd target
  • Challen

enge ges: s:

  • Two conveyer belt failures
  • Major work on primary and secondary crushers
  • Fines from SLS underground
  • Mitigat

ation: n:

  • Organizational changes
  • Renewed focus on preventative maintenance
  • Design changes to crushing and conveying
  • Opportun

unity ty:

  • High ratio of fines presents an opportunity for a potential increase in

total throughput above 12,000 tpd

7

Friday, May 3, 2019 QUARTERLY RESULTS

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SLIDE 8

Q1 Fi Q1 Fina nancial Highl ncial Highlight ights

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SLIDE 9

Friday, May 3, 2019

9

QUARTERLY RESULTS

STRONG ONG BA BALA LANCE CE SH SHEET

Net t Debt bt

(C$ mill llion ion – Total al debt less Cash) h)

Liqu quidi dity ty

(C$ mill llion) ion)

$165.5 Q1 2018 $20.7 Q1 2019 +$1 $144.8 .8 Cash Credit

Curre rrent t Ratio tio

(Curr rrent nt Assets ts / Curre rent nt Liabili abiliti ties)

Q1 2018 Q1 2019

Debt bt/Equ /Equity ty Ratio tio

(Total Liabilities / Shareholders’ Equity)

Q1 2019 Q1 2018 Q1 2018 Q1 2019

  • $1

$100 00.4 .4

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SLIDE 10

Friday, May 3, 2019

10

QUARTERLY RESULTS

SI SIGNI GNIFICANT FICANT CASH SH GE GENERA ERATION TION

Pa Palladi adium um Sold d

(payab able le ounces es)

Pa Palladi adium um Reve venue e pe per r Ounce ce Sold ld 1

(US$ per ounce ce sold)

Revenue venue

(C$ millio ion) n)

Cash sh Flow from m Ope perati ations

  • ns

(C$ millio ion) n)

  • 1. Non-IFRS measure, please refer to Non-IFRS Measures in the MD&A.

Q1 2018 Q1 2019 +51% 1% Q1 2018 Q1 2019 +1% 1% Q1 2018 Q1 2019 +48 48% Q1 2018 Q1 2019 +$6 $62.3 .3

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SLIDE 11

Friday, May 3, 2019

11

QUARTERLY RESULTS

COS OST STRUCTU UCTURE RE

Production Costs

(C$ per tonne ne mille led) d)

Q1 2018 Q1 2019 +34 34%

Under ergr ground Costs

(C$ per tonne mined)

Q1 2018 Q1 2019

  • 3%

3%

AISC SC1

1

(US$ S$ per ounce nce produc duced) d)

Q1 2018 Q1 2019 +30 30%

  • 1. Non-IFRS measure, please refer to Non-IFRS Measures in the MD&A.

AISC Variance $210

  • Less by-product revenue
  • Increased royalty – 5% of NSR
  • Increased production costs; milling

issues and expansion

  • Less ounces produced
  • Increased sustaining capital; u/g dev.,

TMF & site expansion

  • Weaker CAD
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SLIDE 12

Friday, May 3, 2019

12

QUARTERLY RESULTS

FINANC NCIAL IAL RESU SULTS

Net Income

(C$ mill llion) ion)

Adjusted EBITDA

(C$ mill llion) ion)

Capital l Investment

(C$ mill llion) ion)

Exploration Expenditures

(C$ mill llion) ion)

  • 1. Non-IFRS measure, please refer to Non-IFRS Measures in the MD&A.

Q1 2018 Q1 2019 +$3 $33.2 .2 Q1 2019 Q1 2018 +$2 $24.9 .9 Q1 2019 Q1 2018 +20 20% Q1 2018 Q1 2019 +74% 4%

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SLIDE 13

Ex Explo ploration ation

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SLIDE 14

EXP XPLORA LORATION TION RESU SULTS

Lac des Iles

  • Three new underground zones delineated
  • Enhanced potential to expand resources
  • New exploration drift in progress
  • Surface drilling ongoing, new results coming

Sunday Lake

  • #1 opportunity in our blue sky portfolio
  • Potential for a large deposit has improved

Regional Program

  • Geophysical screening program continues

Expanding resource potential at Lac des Iles and new discoveries at Sunday Lake

14

Q1 2019 Investor Call Exploration Friday, May 3, 2019

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SLIDE 15

LAC DES ES ILES ES UNDERGR ERGROUND UND EX EXPLORA RATION TION

C Zone Targe get: Exp xpansi sion

  • n
  • Initial results suggest the C Zone in the Offset

Block splits into two divergent trends: 1) a persistent north-south trend that parallels the Offset Zone Deposit and 2) a south-west trend that has significant strike length potential and is open in most directions. Assays pending.

New Zones Added, Drilling Program Expanded

15

Q1 2019 Investor Call Exploration Friday, May 3, 2019

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SLIDE 16

B series ies and and the Myster ery Zone

  • Three discrete satellite zones of palladium mineralization

referred to as the B1 to B3 zones, were identified within a few tens of metres of previous or planned mining areas in the Offset block.

  • The upper parts of the B2 and B3 zones are already in the

mining plan. Whereas their lower extensions as well as the

  • ther B zones required additional drilling.
  • The Mystery Zone is an isolated area of Pd mineralization

located on the eastern side of mining area in Offset Block.

  • Recent drilling and geological modelling suggest that the

Mystery Zone is likely a much larger area of mineralization than previously believed and could connect to the surface of the Twilight Zone in the southeast extension of the Roby pit.

Offset Satellites

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LAC DES ES ILES ES UNDERGR ERGROUND UND EX EXPLORA RATION TION

Q1 2019 Investor Call Exploration Friday, May 3, 2019

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SLIDE 17

LAC DES S ILES S SU SURFACE CE EXPLORA LORATION TION

New Geophy hysical sical Targe gets ts

  • Final targets emerging from 2018/19

geophysical programs

Exp xpanded ed Dril ill Program am

  • Plan to drill over 30 km this year based
  • n recent success

Three ee Pd Pd Zones (so (so far)

  • Distinct mineralized trends found at

Creek Zone, below and south of historical Baker Zone and along the North Rim of the complex Near Surface Resource Potential

17

Q1 2019 Investor Call Exploration Friday, May 3, 2019

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SLIDE 18

SU SUNDAY Y LA LAKE KE

2019 Drilli lling ng Progr

  • gram

am

  • Completed 7,300 metres in 6 holes in ~3 months and expanded the PGM zone to

cover nearly the full strike length and width of the intrusion

Highligh lights ts

  • Big Re

Red Target returned best results to date on the property with first two holes in the western target area:

 SL-19-026: 41.2 metres with 3.22 g/t Pt, 2.08 g/t Pd and 0.21 g/t Au (5.51 g/t 3E) with 0.57% Cu and 0.19% Ni. Includes 15.8 metre of 9.11 g/t 3E with 0.88% Cu and a 8.30 metre sub- interval of 13 g/t 3E, 1.23% Cu.

 SL-19-029: 275m step out from hole 26 intersected 32.0 metres with 3.35 g/t 3E, including 8.17 metres of 5.44 g/t 3E and 0.51% Cu.

  • Encouraging results from the central part of intrusion

 SL-19-025: 14.80 metres with 2.33 g/t 3E and 0.29% Cu including 2.30 metres with 4.11 g/t 3E and 0.48% Cu and 1.60 metres with 5.18 g/t 3E and 0.70% Cu.  SL-19-030: 20.61 metres with 1.87 g/t 3E, including a higher-grade sub-interval of 5.50 metres with 3.67 g/t 3E and 0.83% Cu.

PGM Zone expanded, best ever drill results reported

18

Big Red

Q1 2019 Investor Call Exploration Friday, May 3, 2019

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SLIDE 19

SU SUNDAY Y LA LAKE KE

Many ny targe gets ts remain ain to to be be tested

  • New drilling results warrant additional testing of

geophysical anomalies

  • Additional geophysics also warranted
  • Extension drilling recommended around recent,

higher-grade intersections

  • After completing this work, a decision will be taken
  • n whether or not to proceed to an initial resource

delineation program Future plans

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Q1 2019 Investor Call Exploration Friday, May 3, 2019

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SLIDE 20

Ma Marke ket t Act Activi ivity ty

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SLIDE 21

Q1 1 MARKETING KETING

Friday, May 3, 2019

21

QUARTERLY RESULTS

  • Multiple desk presentations
  • Road shows: Toronto, Montreal, New York, Boston,

London

  • Conferences: PDAC, BMO and Zurich
  • Media interviews: BNN, The Globe and Mail,

Bloomberg, Kitco, Northern Miner (and others)

  • NAP Investor Day Toronto (March 26)
  • Analyst LDI Site Tour (March 27)
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SLIDE 22

BROOK BROOKFIELD FIELD SE SECOND ONDARY ARY OF OFFERING FERING

  • Sold 5,770,000 shares at $13.00/share
  • Bought deal with a consortium of Canadian banks

led by BMO and RBC

  • Reduced ownership from 91% to 81%
  • Brookfield pleased with transaction outcome:
  • Increased market liquidity – at a price that should allow

good upside for investors

  • Helped provide shareholder diversity
  • Raised NAP profile to broader global audience
  • Brookfield will be back to the market in the future –

potentially larger transaction, no specific timeline

Friday, May 3, 2019

22

QUARTERLY RESULTS

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SLIDE 23

MARKET KET VOL OLITILIT ITILITY Y

Friday, May 3, 2019

23

QUARTERLY RESULTS

Momentum- based trading & shorting Secondary Offering NAP 2018 Annual Earnings Release

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SLIDE 24

CUR URRENT RENT COVERA VERAGE GE

Friday, May 3, 2019

24

QUARTERLY RESULTS

Fir irm Analyst Val aluation

Derek Macpherson

  • Feb. 18, 2019 - $23.50
  • Apr. 30, 2019 - $23.50
  • Following Analyst Site Tour in March; additional coverage expected
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SLIDE 25

PALL LLADIUM DIUM FUN UNDAMENT AMENTAL ALS: S: STILL LL STRONG ONG

Friday, May 3, 2019

25

QUARTERLY RESULTS

Growth th of Hybrid vehicl cle marke ket worldwide wide Lower r diesel sales, s, replaced ced with gasoline ne engines es in Europe Growth th of SUV marke ket share, e, increa ease se in engine e size Platinum num not like kely y to substitu tute e palladium um in catalytic ytic conver ertors s Heightene ned emiss ssion

  • ns

s standards s worldwid wide

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SLIDE 26

Q1 1 DIVIDEND VIDEND

  • Confidence in future cash generation – surplus to

business requirements

  • Increase $0.10 per share (from $0.03)
  • Common shareholders of record on June 1, 2019

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Friday, May 3, 2019

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SLIDE 27

QUE UESTIONS TIONS: :

Click “Call Me” link on left side

  • f th

the sc scre reen en

Friday, May 3, 2019

27

QUARTERLY RESULTS