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

NORTH AMERICAN PALLADIUM

FOURTH QUARTER 2018 RESULTS

THE WORLD’S ONLY PURE PLAY PALLADIUM PRODUCER

TSX:PDL | OTC:PALDF

February 15, 2019

MANAGEMENT PARTICIPANTS

AGENDA

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1. 2018 Highlights 2. Production Update 3. Financial Update 4. Expansion and Exploration 5. Palladium Market 6. 2019 Outlook 7. Q&A

Jim Gallagher

President and Chief Executive Officer

Tim Hill

Vice President, Finance & Chief Financial Officer

David Peck

Vice President, Exploration

February 15, 2019 FOURTH QUARTER 2018 RESULTS

Disclaimers and Forward-Looking Information

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

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February 15, 2019 FOURTH QUARTER 2018 RESULTS

2018 HIGHLIGHTS

Health & Safety

• Lost Time Injury (LTI) Frequency – 0
• As of February 14, 496 days without an LTI
• Medical Treat Injury Frequency – 2.2

Sustained Profitability

• Adjusted EBITDA1 – $167.8 million
• Revenue – $396.8 million
• Net Income – $119.2 million

Production

• 237,461 ounces of payable palladium produced,

up 18% over 2017

• Average daily underground production –

6,263 tonnes per day (at a cost of $37/tonne mined)

• $6,720 tpd at $35/tonne mined in Q4 2018
• AISC1 – US$690 per ounce for the year

Record Palladium Prices

• US$1,270 / C$1,732 as of December 31, 2018

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February 15, 2019 FOURTH QUARTER 2018 RESULTS

• 1. Non-IFRS measure, please refer to Non-IFRS Measures

in the MD&A.

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2016 2017 2018

Average tonnes per day

UNDERGROUND PRODUCTION

Ounces produced

PAYABLE PALLADIUM

$C per tonne mined

UNDERGROUND MINING COST

$C per tonne milled

TOTAL SITE COST

2016 2017 2018 2016 2017 2018 2018 2016 2017

Financial Highlights

REVENUE

(C$ million) For the three months and year ended December 31, 2018

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PRODUCTION COST1

Q4 2017 Q1 2017 Q2 2016 Q1 2016 Q3 2016 Q4 2016 Q3 2017 Q2 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 2017 2016 2018 Q3 2017 Q4 2018 Q1 2016 Q1 2018 Q2 2016 Q3 2016 Q2 2017 Q3 2018 Q4 2016 Q1 2017 Q4 2017 Q2 2018 2016 2017 2018

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

(C$ per tonne milled) For the three months and year ended December 31, 2018

ADJUSTED EBITDA

(C$ million) For the three months and year ended December 31, 2018

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Q2 2017 Q2 2016 Q1 2016 Q3 2016 Q4 2016 Q3 2017 Q1 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 2016 2017 2018 Q1 2016 Q3 2017 Q2 2017 Q2 2016 Q4 2018 Q3 2016 Q4 2016 Q1 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 2017 2016 2018

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• 1. Non-IFRS measure, please refer to Non-IFRS Measures in the MD&A.
• 2. Includes one-time adjustment relating to the recognition of deferred tax assets.

(C$ million) For the three months and year ended December 31, 2018

NET INCOME (Loss) & COMPREHENSIVE INCOME (Loss)

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PALLADIUM REVENUE PER OUNCE SOLD1

(US$) For the year ended December 31, 2018

AISC1 PER PALLADIUM OUNCE PRODUCED

(US$) For the year ended December 31, 2018

2016 2018 2017 2016 2018 2017

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

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2016 2017 2018 2019 F 2019 F 2018 2016 2017

CAPITAL INVESTMENT

(C$ million) For the year ended December 31, 2018

EXPLORATION INVESTMENT

(C$ million) For the year ended December 31, 2018

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2016 2017 2018 2016 2017 2018

• 3. Cash and cash equivalents plus credit available through the Company’s credit facilities.

TOTAL DEBT

(C$ million) For the year ended December 31, 2018

LIQUIDITY3

(C$ million) For the year ended December 31, 2018

FOURTH QUARTER 2018 RESULTS FOURTH QUARTER 2018 RESULTS

QUARTERLY DIVIDEND

• $0.03 per share
• Common shareholders of record on

March 1, 2019

• Payable March 15, 2019

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February 15, 2019 FOURTH QUARTER 2018 RESULTS

Mine Expansion

UNDERGROUND PRODUCTION

(tonnes mined per day)

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2018 A 2022 2023 2024 2019 2020 2021 2025 2026 2027

PALLADIUM PRODUCTION

(payable ounces) 2023 2025 2020 2026 2022 2021 2024 2027 2018 A

ROBY PIT EXPANSION DEVELOPMENT

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All Other Near-Surface Development Roby Sub-level Cave Development

Isometric View Looking Southeast

Historical Development and Stopes

New Fresh Air Raise

Roby NE Extension Roby Central Roby Southwest Floor Roby South Sheriff South

Exploration

EXPLORATION: MULTIPLE HIGH-QUALITY, UNDERGROUND TARGETS

Offset Block

• Seven high-potential targets:
• B1, B2 and B3 Zones
• C Zone (in the footwall to Offset Zone)
• Sheriff South extension
• Mystery Zone
• Offset Northeast Domain

Camp Lake Block

• New exploration drift will be used for drilling into the

large Camp Lake target area

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February 15, 2019 FOURTH QUARTER 2018 RESULTS

EXPLORATION: SEVERAL SURFACE TARGETS CLOSE TO SITE

Creek Zone

• Top-ranked target based on 2018 drilling

results and new geophysical data New Geophysical Targets

• Several new targets defined from fall 2018

surveys; additional targets expected from data not yet received or modeled Baker Zone

• Planning to follow up on encouraging drilling

results from 2018 and 2013

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February 15, 2019 FOURTH QUARTER 2018 RESULTS

REGIONAL EXPLORATION:

Sunday Lake

• New geophysical targets generated in Q4
• Focus is on discovering high grade massive

sulfide mineralization

• Phase 2 drilling commenced in January

Greenfields Properties

• Re-ranked exploration target areas in Q4
• Just started work on the same suite of

geophysical surveys that were done at LDI

• Focus is on discovering another Roby-

Offset Zone type of deposit, near surface Discovering new feed for the Lac des Iles Mill

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February 15, 2019 FOURTH QUARTER 2018 RESULTS

Palladium Market

PALLADIUM PRICES CONTINUE TO RISE

January 2009 – February 2019

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FOURTH QUARTER 2018 RESULTS

Currently around US$1,400

PALLADIUM DEMAND ON THE RISE

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Growth of SUV market share; increase in engine size Lower diesel sales, replaced with gasoline engines in Europe Heightened emissions standards worldwide (e.g. Real Driving Emissions (RDE) testing) Sustained global automobile sales Growth of hybrid vehicle market worldwide

FOURTH QUARTER 2018 RESULTS

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Worldwide Harmonized Light Vehicle Test Procedure Real Driving Emissions

Image source: https://www.continental-automotive.com

HEIGHTENED EMISSIONS STANDARDS:

Real Driving Emissions (RDE) test being added to existing lab-based emissions test in Europe and China in 2019

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PALLADIUM SUPPLY IN DEFICIT, DUE TO:

Source: Metals Focus Report 2018

Primary Production

• 1. INELASTIC SUPPLY
• 2. JURISDICTIONAL RISK

Source: S&P Global Market Intelligence, Metals Focus 2018

High-Risk Jurisdiction Low-Risk Jurisdiction FOURTH QUARTER 2018 RESULTS

(Source: Norilsk Nickel Presentation (November 2017) and consensus estimates.)

PALLADIUM SUPPLY IN DEFICIT, DUE TO:

• 3. ON-GROUND INVENTORY DEPLETION

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OUTLOOK

• Strong palladium price
• Solid operation performance
• Mine expansion
• Dedicated team

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2019 GUIDANCE

The Company expects production of 220,000 - 235,000

• unces of payable

palladium at an AISC of US$785 - US$815 per ounce.

February 15, 2019 FOURTH QUARTER 2018 RESULTS

Jim Gallagher

President & CEO 416-360-7492 jgallagher@nap.com

Investor Relations

416-360-7590 ext. 7226 ir@nap.com

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