Lac des Iles Mine

Location: Toronto, Canada.

Products: PGE Deposits.

By product: Gold. Platinum, silver, nickel, and copper.

Owner: North American Palladium Ltd.

GEOLOGICAL SETTING AND MINERALIZATION

The Property is underlain by mafic to ultramafic rocks of the Lac des Iles Intrusive Complex in the Wabigoon Subprovince of the Canadian Shield. The LDI-IC is an irregularly-shaped Neoarchean-age mafic-ultramafic intrusive body having maximum dimensions of approximately 9 km in the north-south direction and approximately 4 km in the east-west direction. The complex incorporates three discrete intrusive bodies viz.:

The North Lac des Iles Intrusion (NLDI) characterized by a series of relatively flatlying and nested ultramafic bodies with subordinate mafic rocks.

The Mine Block Intrusion (MBI), host to all of the stated Lac des Iles mineral reserves and resources (refer to Sections 14.0 and 15.0).

The South Lac des Iles Intrusion (SLDI), a predominantly mafic (gabbroic) intrusion having many similarities to the MBI in terms of rock types and textures. To date, NAP’s exploration activities have been focused on the MBI. The MBI is a small, teardrop-shaped mafic complex with maximum dimensions of 3 km by 1.5 km and having an elongation in an east-northeast direction. The MBI consists of gabbroic (noritic) rocks having highly-variable plagioclase: pyroxene proportions, textures, and structures. The MBI was emplaced into predominantly intermediate composition orthogneiss basement rocks. The MBI is intersected by a series of brittle to ductile faults and shear zones, some of which appear to control the distribution of higher-grade palladium mineralization. A major north-trending shear zone appears to have cut the western end of the MBI and is spatially associated with the development of high-grade palladium mineralization. Textural and mineralogical variability is greatest in the outer margins of the MBI, especially along the well documented western and northern margins that host most of the known palladium resources. Commonly observed textures in the noritic marginal units of the MBI include equigranular, fine- to coarse-grained (seriate textured), porphyritic, pegmatitic, and varitextured. Platinum-group element and copper-nickel sulphide mineralization in the MBI is found in a variety of structural and geological settings but in general is characterized by the presence of small amounts (e.g., typically less than 2%) of fine- to medium-grained disseminated iron-copper-nickel sulphides within broadly stratabound zones of platinum group elements (PGE) and gold enrichment.

The mineralization is commonly associated with varitextured gabbroic rocks; coarse-grained noritic rocks; and local, intensive zones of amphibolitization, chloritization and shearing. An important, distinguishing characteristic of the MBI mineralization relative to other PGE deposits is the consistently high palladium:platinum ratio, commonly averaging 10:1 or higher. Sulphide mineral assemblages are dominated by pyrite with lesser pyrrhotite, chalcopyrite, pentlandite, and millerite.

MINERAL RESERVE ESTIMATE

The mineral reserves were estimated by applying wireframe models depicting stope and pillar shapes to the underground geological block models provided by NAP. NAP aslo provided a separate, more historical geological block model for open pit evaluations, as well as RGO stockpile resource information that was used to estimate the amount of the stockpiled resource material that would be recovered during the LOM time period and accordingly be brought into the reserves. For the underground models, a mineral resource envelope was established with a 1.0 g/t palladium resource grade and a block size of 5 m by 5 m by 5 m. For the open pit block model, NAP used a 2003 block model that had a block size for pit evaluations of 15 m by 15 m by 8 m. Tetra Tech’s senior geologist reviewed and validated each of NAPs submitted block models, prior to use.