Nap investor presentation april 2014 updated

0

INVESTOR PRESENTATION

April 2014

1

Forward Looking

STATEMENTS Certain information included in this presentation 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. The words ‘expect’, ‘believe’, ‘will’, ‘intend’, ‘estimate’, ‘forecast’, and similar expressions identify forward-looking statements. Such statements include, without limitation, any information as to our future exploration, financial or operating performance, including: the Company's forward looking production guidance, projected capital expenditures, operating cost estimates, project timelines, mining and milling rates, the methods by which ore will be extracted, projected grades, mill recoveries, and other statements that express management's expectations or estimates of future performance. 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 presentation, which may prove to be incorrect, include, but are not limited to: metal prices assumptions, Canadian and U.S. dollar exchange rate assumptions, that there will be no significant disruptions affecting operations, that prices for key mining and construction supplies, including labour and transportation costs, will remain consistent with the Company's expectations, that the Company's current estimates of mineral reserves and resources are accurate, and that there are no material delays in the timing of ongoing development projects. The forward-looking statements are not guarantees of future performance. The Company cautions the reader that such forward-looking statements involve known and unknown risks that may cause the actual results to be materially

different from those expressed or implied by the forward-looking statements. Such risks include, but are not limited to: the possibility that metal prices, foreign exchange rates or operating costs may differ from management's expectations, uncertainty of mineral reserves and resources, inherent risks associated with mining and processing, the risk that the Lac des Iles mine may not perform as planned and that the Offset Zone and other properties may not be successfully developed, and uncertainty of the ability of the Company to obtain financing. For more details on the factors, assumptions and risks see the Company's most recent Form 40-F/Annual Information Form on file with the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities. 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.

All dollar amounts are in Canadian currency unless otherwise stated, all references to production refer to payable

production, and all reference to tonnes refer to metric tonnes.

U.S. investors are encouraged to refer to the “Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated and Inferred Resources” in the appendix.

2

NAP’s Investment

• Clear Growth Strategy to Increase Production & Lower Cash Costs NAP’s flagship LDI mine offers production growth with a decreasing cash cost profile and

expanding operating margins

• Leverage to Rising Palladium Prices As one of only two primary palladium producers in the world, NAP is uniquely positioned to benefit

from the positive supply & demand fundamentals (driven by constrained mine supply & rising

global vehicle production)

• Attractive PGM Investment Jurisdiction NAP operates in a stable political landscape, with low geopolitical risk and moderate cost

inflation compared to peers in South Africa and Russia

• Significant Development & Exploration Upside Excess mill and production shaft capacity, existing infrastructure & permits, gives NAP the potential

to convert exploration success into production and cash flow on an accelerated timeline

• Operational Expertise Reduces Operating Risk Experienced executive management team has a strong track record in mining operations

PROPOSITION

3

Market

STATISTICS

Information as at March 31, 2014, Thomson One. Shareholder ID based only on public filings.

SECURITY SYMBOLS NYSE MKT: PAL TSX: PDL, PDL.DB, PDL.DB.A

MARKET CAPITALIZATION US$88 Million

RECENT SHARE PRICE US$0.32

SHARES OUTSTANDING 273,992,149 M (issued & outstanding) (fully diluted)

52-WEEK HIGH/LOW US$1.95 / US$0.31

3-MONTH TRADING VOLUME NYSE MKT: 6.9 M / TSX: 1.5 M

ANALYST COVERAGE

1. CIBC, Leon Esterhuizen

2. Euro Pacific, Heiko Ihle

3. Mackie, Barry Allan

4. Macquarie, Daniel Greenspan

5. Raymond James, Alex Terentiew

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

4

Financial

POSITION

Liquidity & Capital Resources:

• $9.8 M in cash at Dec. 31, 2013

• Credit facility was fully utilized as at Dec. 31, 2013

• Closed $32 M financing in 7.5% convertible unsecured subordinated

debentures and associated warrants (Q1, 2014)

• Pro-forma cash position of $41.8 M

5

• Located north of Thunder Bay, Ontario, Canada

• One of only two primary palladium producers in the world

• Deposit is unique in the world:

- Strong palladium enrichment over significant widths vs. more typical PGE

reef-type deposits

- Offset Zone remains open at depth, to the west and south

• Established palladium producer since 1993

• Established infrastructure with excess capacity:

- 15,000 tpd mill & new 8,000 tpd shaft

• Increasing production & decreasing operating costs:

- Mining rate of ~3,000 tpd in H1/14, up to 5,000 tpd by YE

- Cash costs expected to decline to US$450 per ounce in Q4

• Development upside to leverage existing mine & mill infrastructure:

- Opportunity at depth, laterally & through new mining method

• Significant exploration upside identified on the LDI property

LDI Mine & Mill Complex

A WORLD CLASS ASSET

15,000 tpd mill capacity

8,000 tpd shaft capacity

6

LDI Operations

2013 PRODUCTION

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

Q1, 2013 Q2, 2013 Q3, 2013 Q4, 2013 FY 2013

Payable palladium produced 38,654 oz 35,428 oz 30,097 oz 30,979 oz 135,158 oz

Cash cost per ounce1 US$490 US$564 US$581 US$621 US$560

Tonnes of ore mined 540,694 433,580 542,917 576,478 2,093,669

From surface 295,038

@ 2.4 g/t 301,974

@ 2.1 g/t 334,820

@ 1.2 g/t 345,132

@ 0.98 g/t 1,276,964 @ 1.6 g/t

From underground 245,656

@ 4.1 g/t 131,606

@ 4.4 g/t 208,097

@ 4.5 g/t 231,346

@ 4.67 g/t 816,705

@ 4.4 g/t

Tonnes of ore milled 503,585 483,266 517,157 544,074 2,048,082

Avg. milled head grade 3.3 g/t Pd 3.1 g/t pd 2.5 g/t Pd 2.4 g/t Pd 2.8 g/t Pd

Palladium mill recovery 80.1% 80.7% 80.7% 81.5% 80.7%

Total cost per tonne milled C$57 C$53 C$42 C$55 C$52

7

Payable palladium produced 170,000 - 175,000 oz

Cash cost per ounce1 ~US$550/oz (expected to decline to

~$450/oz in Q4)

Tonnes of ore mined ~2.3 M

From Surface Stockpile ~1 M @ 1.0 g/t

From Underground ~1.3 M @ 4.2 g/t

Average milled head grade 3.0 g/t Pd

Palladium mill recovery ~82%

Total cost per tonne milled C$51 – C$55

Mining Rate ~3,000 tpd in 1H/14 & gradually

increase to ~5,000 tpd in 2H/14

Capital expenditure forecast ~$30 M

Exploration budget ~$4 M

LDI Operations

2014 TARGETS

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

8

LDI Mine Expansion

• Phase I of mine expansion completed in Q4, 2013:

– Currently transitioning from ramp haulage to

shaft hoisting (increasing shaft production)

– Targeting mining rate of ~3,000 tpd in H1/14, up to 5,000 tpd by YE

– Current focus on material flow

improvements

• Operations expected to benefit from increased mining rates & decreased operating costs through the utilization of the shaft

• Targeting to achieve steady-state production in

2014

• 2014 scoping study to define future growth potential (targeted for H2/14)

PLAN FOR GROWTH

ROBY ZONE

OPEN PIT

OFFSET ZONE

825-M

Level

Surface

990-M

Level

Shaft

The underground design schematic of the

underground mine, showing the deposit and

underground ramp infrastructure, looking east. Offset

Zone remains open to the west, south & at depth.

9

Future Growth Potential

UPSIDE

Mill Complex

Nameplate capacity: 15,000 tpd mill

Shaft Infrastructure

Nameplate capacity: 8,000 tpd mill

Robust Ore Body

Offset Zone remains open at depth, to the west and south

Opportunity to optimize the ore body & utilize existing infrastructure

Growth could potentially come from:

• Deeper Offset Zone (via shaft extension & new ore handling system)

• New bulk mining method (potential to significantly increase mining volumes)

• Lateral development (lateral targets near existing infrastructure)

• Surface exploration upside

10

New Mining Method

• Ore body suitable for lower cost bulk mining

– Potential for increased resources at a lower cut-

off grade

• Reviewing viability of changing mining method for certain LDI deposits:

– from long-hole stoping to higher volume bulk mining

– targeting increased mining volumes

• Engaged external engineering firm to assist with internal analysis

OPPORTUNITY

11

LDI Property

EXPLORATION UPSIDE

• LDI complex remains largely underexplored

• New lateral targets

are under review (near existing infrastructure)

• Multiple new targets identified (surface &

underground)

• Regional land package covers the most prospective mafic complexes in

the area

12

Investment

LEVERAGE TO RISING PALLADIUM PRICES

CLEAR STRATEGY TO INCREASE

PRODUCTION & LOWER CASH COSTS

ATTRACTIVE PGM INVESTMENT

JURSIDICTION

UPSIDE IN EXPLORATION & DEVELOPMENT

THESIS

13

Investment Case for PALLADIUM

14

Constrained

Small Market:

• Only ~6.5 M oz in annual mine production

(unlikely to increase meaningfully)

Highly Concentrated:

• 80% of mine supply derived from risky jurisdictions:

Russia & South Africa (mined as a by-product

metal)

Challenged Global Supply:

• Decreased production from Russia’s Norilsk Nickel

due to declining grades

• Anticipated closures of some South African mines,

where output is affected by political issues, labour

unrest & technical challenges

• Decreased sales from Russian stockpiles, a

historical overhang (believed to be depleted)

• Recycling insufficient to offset demand

The palladium market is forecasted to remain in a

deficit position for the foreseeable future

SUPPLY

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2008 2009 2010 2011 2012e 2013p 2014p 2015p

Other United States Canada South Africa Russia

NORTH AMERICA

RUSSIA

SOUTH AFRICA

36%

14% 44%

Sources: Johnson Matthey & CPM Group (excludes secondary supply)

15

Growing

• Strong demand from automotive sector

• Growth in demand driven by vehicle sales & environmental legislation in developing markets:

o Light vehicle production forecasted to increase by 4% annually

o Strong growth in light vehicle production driven by China (forecast ~31 M vehicles per year by 2018)

o More stringent emission control standards mandate the use of catalytic converters

DEMAND

Automotive (catalytic converters)

67%

Electronics

12%

5%

Dental

1%

Other

5%

Jewellery

5%

Chemical 4%

Investment

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

110,000

2011 2012 2013 2014 2015 2016 2017 2018

Global Light Vehicle Production Forecast:

(000’s)

Source: IHS Automotive, February 2012 1. Other includes: Japan, Korea, Middle East and Africa 2. BRIC Economies include: Greater China, South America and South Asia

16 Source: CPM Group, as at May 13, 2013

Investment

DEMAND

• Large increase in palladium investment demand

• Investment demand driven by supply/demand fundamentals for palladium --

constrained mine supply and growth in global vehicle production

Exchange Traded Funds' Physical Palladium Holdings

M oz. Pd. M oz. Pd.

0.0

0.5

1.0

1.5

2.0

2.5

0.0

0.5

1.0

1.5

2.0

2.5

20-Apr-07 20-Mar-08 20-Feb-09 20-Jan-10 20-Dec-10 20-Nov-11 20-Oct-12

SPPP-NYSE (Sprott)

Mitsubishi

SPAL-LSE Source

SPDM-LSE iShares

WITE-NYSE ETF Securities

GLTR-NYSE ETF Securities

Julius Baer

PALL - NYSE ETF Securities

MSL (Australia)

Palladium ZKB

PHPD LSE

17

Firm As of: 2014 2015 2016 2017

BMO Capital Markets 01-13-14 $750 $750 $800 $800

Scotia 01-09-14 $725 $725 $700 $650

CPM Group 01-08-14 $769 $830 $875 $908

Mitsui Precious Metals 01-08-14 $745 $780

CIBC World Markets 01-07-14 $800 $1,000 - -

Cormark 01-07-14 $750 $750 $750 $750

Macquarie 01-07-14 $785 $838 - -

Credit Suisse 01-06-14 $760 $840 $850 $850

Prestige Economics LLC 12-31-13 $745 $800 - -

Intesa Sanpaolo SpA 12-18-13 $800 $850 $875 -

TD Bank 12-02-13 $819 $831 - -

Societe Generale SA 11-26-13 $790 $850 $900 $950

ABN AMRO Bank NV 11-21-13 $650 $725 - -

Citigroup 11-18-13 $800 $925 $925 -

LBBW 11-07-13 $775 - - -

Standard Chartered Bank 11-04-13 $850 $800 $650 -

UBS 10-15-13 $825 $850 $825 $825

Raymond James 10-08-13 $750 $850 - -

Bank of America Merrill Lynch 09-27-13 $800 $850 $777 -

Deutsche Bank 09-25-13 $750 $850 $950 -

RBC Capital Markets 08-11-13 $850 $850 - -

Capital Economics 08-16-13 $850 - - -

CIMB Group Holdings 08-09-13 $850 $1,000 $708 $708

Barclays 07-12-13 $795 $900 - -

China International Capital 04-15-13 $800 - - -

Annual Average (US$/oz.) $786 $844 $824 $827

Pa

llad

ium

Pric

e F

ore

ca

sts

(US$

pe

r o

un

ce

)

18

Shareholder

INFORMATION

North American Palladium’s vision is to become a low cost, mid-tier precious metals company operating in

mining friendly jurisdictions. 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, and is currently completing a major expansion to increase production and reduce cash costs per

ounce.

Royal Bank Plaza, South Tower 200 Bay St., Suite 2350

Toronto, ON M5J 2J2

NYSE MKT– PAL

TSX – PDL, PDL.DB

www.nap.com

Investor Relations & Corporate Communications [email protected]

416-360-7374

Corporate Office:

Security Symbols:

Website:

Investor Relations:

19

Appendices &

FURTHER INFORMATION

20

Senior

EXECUTIVES

Phil du Toit – President & CEO Mr. du Toit is an accomplished mining executive with a proven track record for executing on his management mandates throughout his career.

He brings significant project management expertise to the CEO role, developed during his 37 years of global experience in the mining industry

which included senior roles for some of the world's leading mining companies, and the successful development of multiple large capital

projects. Recently, Mr. du Toit served as Executive Vice President and Head of Mining Projects and Exploration for ArcelorMittal, the world's

leading integrated steel and mining company, where he was responsible for mining strategy, exploration, project and business development.

His experience also includes serving as interim CEO of Baffinland Iron Mines Corp., as well as having held various senior management positions

for Vale, Diavik Diamond Mines (a subsidiary of Rio Tinto plc), Voest Alpine Inc., and Gencor Ltd. He holds a Bachelor of Science degree in Civil

Engineering from the University of Pretoria in South Africa.

Dave Langille – Chief Financial Officer Mr. Langille is a seasoned finance executive with over 26 years of international public company experience. He brings a wealth of international

financial expertise to NAP, notably a solid track record of optimizing operations to improve operating margins, along with merger and

acquisition experience, and raising capital through a broad range of capital market products. Most recently, Mr. Langille served as the CFO

and Vice President, Finance of Breakwater Resources Ltd. Prior to this, he served in senior financial positions for various public companies,

including Lindsey Morden Group Inc., Capital Environmental Resource Inc., Cott Corporation, and TVX Gold Inc. Mr. Langille received an

Honours Bachelor of Business Administration from Wilfrid Laurier University in Waterloo, Ontario, Canada in 1985, and has been a member of the

Institute of Chartered Accounts of Ontario and the Society of Management Accountants of Ontario since 1987.

David Peck – Head of Exploration Dr. Peck is a Professional Geoscientist with nearly 30 years of exploration and research experience specializing in magmatic Ni-Cu-PGE ore

deposits. Dr. Peck holds global recognition as an expert in PGE exploration after serving as a senior technical and strategic consultant to

several public and private companies and having worked on exploration and mining projects in more than a dozen countries. He was directly

involved in several significant magmatic Ni-Cu-PGE discoveries in Canada and overseas. Prior to joining NAP, Dr. Peck served as President and

Senior Technical and Strategic Consultant at Revelation Geoscience Ltd., and prior to this, he served as Global Nickel Commodity Leader at

Anglo American plc, a Senior Geologist for Falconbridge Ltd., a Senior Mineral Deposits Geologist with the Manitoba Geological Survey, held

various academic roles in Canadian universities, and was the technical lead on a multi-year mineral potential study funded by the Ontario

Geological Survey. He has authored numerous public publications addressing his area of specialization.

Jim Gallagher – Chief Operating Officer Mr. Gallagher is a seasoned mining executive with over 30 years of experience in a series of roles spanning operations, projects, engineering, technology and consulting. For the last seven years, Mr. Gallagher served as Global Director of Mining at Hatch Ltd., with a mandate to build

the firm’s global underground capability, where he led the firm’s global mining group involved in transitioning projects to normal operations.

Prior to Hatch, the foundational part of his experience came from his 24-year career at Falconbridge in a variety of operations and project

management roles, most of which were based in Northern Ontario. Mr. Gallagher also has a track record for identifying improvement

opportunities and building out technical capabilities. Mr. Gallagher holds a Bachelor of Mining Engineering degree from Laurentian University in

Canada.

21

Board of

DIRECTORS

C. David A. Comba – Retired Mining Executive (Director since 2006) Mr. Comba was first appointed to the Board of Directors of the Company in March 2006. He has over four decades of experience as an

exploration advocate and senior mining executive. As Chief Exploration Geologist of Falconbridge Limited in Sudbury, Ontario, he led the

team that discovered the high-grade footwall deposit that allowed the Thayer Lindsley mine to go into production. Prior to its takeover by

Kinross Gold Corporation, Mr. Comba was Vice-President, Exploration of Falconbridge Gold Corporation. Following the takeover, he became President and Chief Executive Officer of Pentland Firth Venture Ltd., a Kinross-controlled junior gold exploration company listed on

the TSX. Pentland’s work added the first couple of million ounce resource to the Hammond Reef property Atikokan, ON. Mr. Comba was

Director of Issues Management with the Prospectors and Developers Association of Canada from 1998 to 2005, during which time he led

the successful lobby effort for the re-introduction of enhanced or “super” flow-through shares. Mr. Comba has Bachelor’s and Master’s

degrees in geology from Queen’s University in Kingston, Ontario.

Steven R. Berlin – Retired Financial Executive (Director since 2001) Mr. Berlin was appointed to the Board of Directors of the Company in February 2001, and is also a director of Orchids Paper Products, an

AMEX listed company. At the end of 2005, Mr. Berlin retired from his position as Vice-President of Kaiser Francis Oil Company (KFOC) where

he worked part-time for two years following four years full-time as Vice-President and Chief Financial Officer. Prior to joining KFOC, Mr. Berlin taught at the University of Tulsa for three years where he also served a year as acting associate Dean of the College of Business and acting

Director of the School of Accounting. Before joining the University of Tulsa, Mr. Berlin spent 25 years with Citgo Petroleum Corporation, where

he retired as Senior VP Finance and Administration and Chief Financial Officer. Mr. Berlin has a bachelor’s degree from Duquesne University,

an MBA from the University of Wisconsin Madison and has completed the Executive Management program at Stanford University.

Robert J. Quinn – Chairman (Director since 2006) Mr. Quinn was first appointed to the Board of Directors of the Company in June 2006. A founding partner of the Houston mining

transactional law firm Quinn & Brooks LLP, Mr. Quinn has over 30 years of legal and management experience, including as Vice President

and General Counsel for Battle Mountain Gold Company. He has extensive experience in M&A transactions, corporate governance, public

disclosure, governmental affairs, environmental law and land management. Mr. Quinn has a Bachelor of Science in Business Administration

from the University of Denver, a Juris Doctorate degree from the University of Denver College of Law and has completed two years of

graduate work in mineral economics at the Colorado School of Mines.

22

Greg J. Van Staveren – Strategic Financial Consultant (Director since 2003) Mr. Van Staveren was appointed to the Board of Directors of the Company in February 2003. Since September 2001, Mr. Van Staveren has

been the President of Strategic Financial Services, a private company providing business advisory services. During this period he has sat on

the board of a number of publicly traded companies. Mr. Van Staveren is a Chartered Accountant and a Certified Public Accountant

and holds a Bachelor of Math (Honours) degree from the University of Waterloo. From February 1998 until September 2001, Mr. Van

Staveren was the Chief Financial Officer of MartinRea International Inc (MRE-TSX), and prior to that he was a partner in the mining group of

KPMG, which he joined in 1980, and where he provided accounting, and advisory services to his clients.

William J. Weymark – President, Weymark Engineering Ltd. (Director since 2007) Appointed to the Board of Directors of the Company in January 2007, Mr. Weymark is President of Weymark Engineering Ltd., a Company providing consulting services to businesses in the private equity, construction and resource sector. He is also a director of the VGH & UBC

Hospital Foundation Board, and several private companies. Mr. Weymark is also a Member of the Industry Advisory Committee for the

Norman B. Keevil Institute of Mining Engineering at the University of British Columbia. Until June 2007, Mr. Weymark was President and CEO of

Vancouver Wharves/BCR Marine, a transportation firm located on the west coast of British Columbia. Prior to joining Vancouver Wharves in

1991, Mr. Weymark spent 14 years in the mining industry throughout western Canada working on the start-up and operation of several

mines. Mr. Weymark is a Professional Engineer and holds a Bachelor of Applied Science in Mining and Mineral Process Engineering from the

University of British Columbia and is a graduate of the Institute of Corporate Directors’, Directors Education Program.

Board of

DIRECTORS (CON’T)

Andre Douchane – President and Chief Executive Officer, Mahdia Gold Corp. (Director since 2003) Mr. Douchane is a seasoned mining executive with over 40 years of experience in the mining industry with a solid track record of

successfully bringing development projects into production. He was appointed to the Company’s Board of Directors in April 2003, and

served as the President and CEO until January 2006. He has held senior positions with several precious and base metal international mining

companies including CEO of THEMAC Resources, President and CEO of Starfield Resources Inc., President and COO of Chief Consolidated

Mining Co., and Vice President, Operations of Franco and Euro-Nevada (Newmont Mining Corporation). He holds a Bachelor’s degree in

Mining Engineering from the New Mexico Institute of Mining and Technology and is a graduate of the Executive Business Program at the

Kellogg School of Business in Toronto.

23

Cautionary Note to U.S. Investors Concerning

• Mineral reserves and mineral resources have been calculated in accordance with National Instrument

43-101 as required by Canadian securities regulatory authorities. For United States reporting purposes,

Industry Guide 7, (under the Securities and Exchange Act of 1934), as interpreted by Staff of the Securities

Exchange Commission (SEC), applies different standards in order to classify mineralization as a reserve. In

addition, while the terms “measured”, “indicated” and “inferred” mineral resources are required pursuant

to National Instrument 43-101, the U.S. Securities and Exchange Commission does not recognize such

terms. Canadian standards differ significantly from the requirements of the SEC, and mineral resource

information contained herein is not comparable to similar information regarding mineral reserves

disclosed in accordance with the requirements of the U.S. Securities and Exchange Commission. U.S.

investors should understand that “inferred” mineral resources have a great amount of uncertainty as to

their existence and great uncertainty as to their economic and legal feasibility. In addition, U.S. investors

are cautioned not to assume that any part or all of NAP's mineral resources constitute or will be

converted into reserves. For a more detailed description of the key assumptions, parameters and

methods used in calculating NAP’s mineral reserves and mineral resources, see NAP’s most recent Annual

Information Form/Form 40-F on file with Canadian provincial securities regulatory authorities and the SEC.

• Please refer to North American Palladium’s most current Annual Information Form and applicable

technical reports available on www.sedar.com, www.sec.gov and www.nap.com for further information.

MINERAL RESERVES AND MINERAL RESOURCE

http://www.sedar.com/

http://www.sec.gov/

http://www.nap.com/

24

LDI Palladium Mine

RESERVES & RESOURCES

See accompanying Notes on the last page.

The Company has completed an update to its LDI mineral reserves and resources. The effective date for the new reserve and resource estimates, shown in Table 1, is December 31, 2013. The new estimates exclude material mined up until the effective date. The resource estimates provided in Table 1 were prepared by NAP Qualified Persons in accordance with NI 43-101 guidelines. The reserve estimates provided in Table 1 were prepared by qualified persons from Tetra Tech, also in accordance with NI 43-101 guidelines. A detailed discussion of the resource and reserve estimates presented in Table 1 will be contained in a NI 43-101 technical report containing an updated pre-feasibility study for the Lac des Iles mine. This report is expected to be filed on SEDAR on or before March 31, 2014. The following discussion provides summary information for the new resource and reserve estimates for LDI with reference to Table 1.

TABLE 1: Mineral reserve and mineral resource estimates for the Lac des Iles mine property effective December 31st, 2013.


NEAR SURFACE RESERVES

Category/Source Pd Cut-Off Tonnes Pd Pt Au Ni Cu

Pd Contained

Proven (g/t) (000's) (g/t) (g/t) (g/t) (%) (%) (000's oz) Low-Grade Stockpile (RGO) 0.95 4,876 0.97 0.12 0.08 0.06 0.03 152

Roby Zone Open Pit 1.09 716 1.31 0.16 0.13 0.07 0.06 30

Total Proven - 5,592 1.01 0.13 0.09 0.06 0.03 182

Probable

Roby Zone Open Pit 1.09 293 1.39 0.18 0.15 0.08 0.07 13

Total Reserve - 5,885 1.03 0.13 0.09 0.06 0.04 195

25

LDI Palladium Mine



NEAR-SURFACE RESOURCES


Pd Contained

Measured (g/t) (000's) (g/t) (g/t) (g/t) (%) (%) (000's oz) Low-Grade Stockpile (RGO) 0.95 7,679 0.97 0.12 0.08 0.06 0.03 239

Roby Zone Pit Expansion 1.00 10,476 1.60 0.21 0.12 0.07 0.05 539

Sheriff Zone 1.50 1,725 2.06 0.21 0.11 0.06 0.07 114

North VT Rim 1.00 437 2.03 0.12 0.03 0.03 0.01 28

Total Measured - 20,317 1.41 0.17 0.10 0.07 0.04 921

Indicated

Roby Zone Pit Expansion 1.00 5,393 1.53 0.21 0.11 0.07 0.05 265

Sheriff Zone 1.50 35 1.74 0.20 0.14 0.07 0.09 2

North VT Rim 1.00 14 1.75 0.12 0.03 0.03 0.01 1

Total Indicated 5,442 1.53 0.21 0.11 0.07 0.05 268

Total Measured + Indicated - 25,759 1.44 0.18 0.10 0.07 0.04 1,189

UNDERGROUND RESERVES - HANGINGWALL ZONES


Pd Contained

Proven (g/t) (000's) (g/t) (g/t) (g/t) (%) (%) (000's oz) Offset Hangingwall Zone 2.60 4,499 4.06 0.28 0.28 0.11 0.08 587

Roby Hangingwall Zone 2.40 847 3.51 0.23 0.20 0.05 0.04 96

Total Proven - 5,346 3.97 0.27 0.27 0.10 0.07 683

Probable

Offset Hangingwall Zone 2.60 3,564 3.82 0.27 0.27 0.10 0.09 438

Roby Hangingwall Zone 2.40 251 3.17 0.22 0.18 0.05 0.04 26

Total Probable 3,815 3.78 0.27 0.26 0.10 0.09 463

Total Reserve - 9,161 3.89 0.27 0.27 0.10 0.08 1,146

26

LDI Palladium Mine



UNDERGROUND RESOURCES - HANGINGWALL ZONES

Category/Source Pd Cut-Off Tonnes Pd Pt Au Ni Cu Pd Contained

Measured (g/t) (000's) (g/t) (g/t) (g/t) (%) (%) (000's oz)


Indicated


Total Measured + Indicated 2.50 5,652 4.25 0.30 0.29 0.12 0.09 773

Inferred

Offset Hangingwall Zone 2.50 5,942 3.75 0.23 0.23 0.10 0.09

UNDERGROUND RESOURCES - FOOTWALL ZONES

Category/Source Pd Cut-Off Tonnes Pd Pt Au Ni Cu Pd Contained

Measured (g/t) (000's) (g/t) (g/t) (g/t) (%) (%) (000's oz)

Offset Footwall Zone 1.50 11,011 2.24 0.23 0.16 0.08 0.06 793

Roby Footwall Zone 1.50 4,159 2.43 0.21 0.18 0.06 0.05 325

Total Measured 1.50 15,170 2.29 0.22 0.17 0.07 0.06 1,118

Indicated

Offset Footwall Zone 1.50 8,810 2.12 0.22 0.16 0.08 0.07 600

Roby Footwall Zone 1.50 2,341 2.34 0.20 0.17 0.06 0.05 176

Total Indicated 1.50 11,151 2.17 0.22 0.16 0.08 0.07 777

Total Measured + Indicated 1.50 26,321 2.24 0.22 0.16 0.08 0.07 1,895

Inferred

Offset Footwall Zone 1.50 9,530 2.16 0.15 0.12 0.06 0.05

Roby Footwall Zone 1.50 248 2.43 0.18 0.08 0.03 0.02

Total Inferred 1.50 9,778 2.17 0.15 0.12 0.06 0.05

27

LDI Palladium Mine



COMBINED RESERVES AND RESOURCES - ALL SOURCES

Category/Source Tonnes Pd Pt Au Ni Cu Pd Contained

Sub-Category (000's) (g/t) (g/t) (g/t) (%) (%) (000's oz)

Total Proven + Probable 15,046 2.77 0.21 0.20 0.08 0.06 1,341

Total Measured + Indicated 57,732 2.08 0.21 0.15 0.08 0.06 3,857

Total Inferred 15,720 2.77 0.18 0.16 0.07 0.07

28

LDI Reserves & Resources

Notes

1. Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may

be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.

2. Palladium ounces are stated as contained ounces. Disclosure of contained ounces is permitted under Canadian regulations; however,

the US Securities and Exchange Commission (SEC) generally permits resources to be reported only as in place tonnage and grade.

3. Resources listed in Table 1.1 are exclusive of reserves. Resources and reserves reflect depletion from mining activities to December 31,

2013.

4. Tonnages are rounded to nearest '000 tonnes. Palladium, platinum and gold grades are rounded to nearest 0.01 g/t. Nickel and

copper grades are rounded to nearest 0.01%. Rounded numbers used to calculate contained palladium (oz) and average resource

and reserve tonnage and grades.

5. All reserve and resource estimates were prepared in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral

Projects (NI 43-101) and the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) classification system. US investors should refer

to the Annual Information Form for an overview on how Canadian Standards differ significantly from US requirements.

6. The mineral resource for the Offset hangingwall and footwall zones was estimated as of December 31, 2013 by Denis Decharte P.Eng,

an employee of North American Palladium Ltd. (NAP) and a qualified person (QP) under NI 43-101. The mineral resource calculation

uses a minimum 2.5 g/t palladium resource block cut-off for the hangingwall zone and a minimum 1.5 g/t palladium resource block cut-

off for the footwall zone. The mineral resource estimate is based on the combination of geological modeling, geostatistics, and

conventional block modelling (5 m by 5 m by 5 m blocks). 1 m composite intervals were used with a grade capping at 30 g/t for

palladium and 3 g/t for gold. Grade capping was determined not to be necessary for others metals. The Offset Zone resource models

used the ordinary kriging (OK) grade interpolation method within a 3DI block model with mineralized zones defined by wireframe solids.

The mineral resource is exclusive of mineral reserve and mined-out material as of December 31, 2013.

7. The mineral resource for the Roby footwall zone was estimated as of December 31, 2013 by Denis Decharte P.Eng, an employee of NAP

and a QP under NI 43-101. The mineral resource calculation uses a minimum 1.5 g/t palladium resource block cut-off. The mineral

resource estimate is based on the combination of geological modeling, geostatistics, and conventional block modelling (5 m by 5 m by

5 m blocks). Grade capping was determined not to be necessary, however influence of composite intervals with palladium grade

higher than 50 g/t were limited in space. The Roby Zone resource models used the OK grade interpolation method within a 3DI block

model with mineralized zones defined by wireframe solids. The mineral resource is exclusive of mineral reserve and mined-out material

as of December 31, 2013.

NOTES

29


8. Mineral resource estimates for the near-surface portion of the western part of the North VT Rim Zone (west and east deep zones) at the

Lac des Iles Mine Property was prepared by Chris Roney, P.Geo., a QP and a private consultant to the Company. This resource estimate

was based on a 1.0 g/t palladium cut-off grade. The North VT Rim Zone mineral resources were estimated from drilling completed to

April 15, 2013. The mineral resource uses a minimum 1.0 g/t palladium resource block cut-off. The mineral resource estimate is based on

the combination of geological modeling, geostatistics, and conventional block modeling (5 m by 5 m by 5 m blocks). The North VT Rim

resource models used the inverse distance squared (ID2) grade interpolation method. North American Palladium Ltd. 1-4 1496780200-

REP-R0002-01 Technical Report for Lac des Iles Mine, Ontario Incorporating Prefeasibility Study for Life of Mine Plan.

9. Mineral resource estimates for the low-grade stockpile (RGO) was prepared by David N. Penna, P.Geo., an employee of Lac des Iles

Mines Ltd. and a QP within the meaning of NI 43-101.

10. As with mineral resources, the estimate of mineral reserves may be materially affected by environmental, permitting, legal, t itle,

taxation, socio-political, marketing, or other relevant issues. The mineral reserves were estimated from geological block models

provided by Denis Decharte P.Eng. and from RGO stockpile resource information provided by Dave Penna, P. Geo., employees of NAP

and QPs under NI 43-101. The geological block models reflect updates that are based upon diamond drilling completed after March

31, 2012 and before December 31, 2013.

11. Mineral resources for the Sheriff Zone are based on estimates originally provided in the Company’s September 5, 2013 press re lease.

12. The mineral reserves were estimated by William Richard McBride, P.Eng. of Tetra Tech and Wenchang Ni, P.Eng. of Tetra Tech; with input

by Dave Penna, P. Geo., an employee of NAP and QPs under NI 43-101 on allocation of indirect mining costs and John Cooney, P. Eng.,

an employee of NAP and QP under NI 43-101 on the use of the Lac Des Isle Mine 2014 budget for unit cost determinations; and with

additional input by Cam McKinnon, P.Eng. of Tetra Tech on recoveries; and Philip Bridson, P.Eng. of Tetra Tech on metal prices and

exchange rate, independent QPs within the meaning of NI 43-101.

13. Reserves were estimated to the 1065 Mine Level (4,435 m elevation), a maximum depth of 1,072.5 m.

14. The following metal price assumptions were used for reserves estimation: US$700/oz palladium, US$1,453/oz platinum, US$1,320/oz gold,

US$6.47/lb nickel, and US$3.26/lb copper. A Cdn$/US$ exchange rate of Cdn$1.00 = US$0.95 was also applied.

NOTES

30


15. An average production rate of 5,272 t/d was used to determine the reserves. The following recoveries were used in the assumptions to

determine the reserves: 86.3% palladium, 80.3% platinum, 80.4% gold, 38.8% nickel, and 88.7% copper. The effective date of NAP’s Lac

des Iles Mine resource models for the Offset Zone and for the Roby Zone, as prepared by NAP’s Denis Decharte P.Eng., is December 31,

2013 and as a result of “mining depletion” the user of this reserve information should ensure that this is based upon the most recent

resource estimate for the Property.

16. It should also be noted that the mineral reserve estimate for the Offset Zone as provided in 2013 as part of the technical report labeled

“Technical Report Lac des Iles Mine, Ontario, Incorporating Prefeasibility Study Offset Zone Phase I, effective January 31, 2013” reflected

a different mining method with a different set of economic circumstances that thereby lead to that January 2013 reserve estimate in

that prior report to be non-applicable to the unconsolidated fill mining method demonstrated as being viable by this prefeasibility study

work. It should be further noted that “mining depletion” during 2013 is not accounted for in the reserves, as in place underground mining

developments were removed from the resource model prepared by NAP’s Denis Decharte P.Eng., and thereby from the reserve

numbers; and a 0% mining recovery was applied to known mined-out stopes. The projected top down, long-hole with unconsolidated fill

mining method, its potential production profile and the plans referred to in this prefeasibility study are preliminary in nature and

additional technical studies will need to be completed in order to prove out their viability. There is no certainty that this mining method

will be realized or that the production capabilities as represented will be realized. A mine production decision that is made without a

feasibility study carries additional potential risks which include but are not limited to the lack of details pertaining to geotechnical and

ventilation field study inputs for mine design, ore handling upgrades and their impact on mining schedules, metallurgical flow sheets

and process plant designs that in themselves may require additional economic analysis and internal studies to ensure satisfactory

operational conditions and decisions regarding future targeted production. Numbers may not add due to rounding.

NOTES