Welcome!

News Feed Item

North American Palladium Provides Update on Proposed Financing

TORONTO, ONTARIO -- (Marketwired) -- 01/28/14 --

All figures are in Canadian dollars except where noted.

North American Palladium Ltd. ("NAP" or the "Company") (TSX:PDL)(NYSE MKT:PAL) is pleased to provide an update on its previously announced proposed public offering of securities (the "Offering"), including an amendment to the terms and expected closing schedule. The Company also highlighted some recent developments that are described in the prospectus supplement that was filed today, which includes preliminary and unaudited financial information for the year ended December 31, 2013 currently available to NAP as of the date of the final prospectus supplement.

Financing Update

The Company has amended the terms of its previously announced proposed Offering of up to $75 million principal amount of 7.5% convertible unsecured subordinated debentures in two tranches (including warrants). The amendments include, among other things, an increase in the size of the first tranche of the Offering from $30 million to up to $32 million (with the second tranche targeted to raise up to $43 million); the addition of warrants to the first tranche; and the inclusion of full ratchet/anti-dilution provisions in the warrants in both tranches and the second tranche debentures (subject to TSX, NYSE MKT and disinterested shareholder approval).

There can be no assurance that the Offering will close when anticipated or at all, or that the terms will not change.

The anticipated conversion price of the C$32 million first tranche convertible debentures is C$0.724, and the expected exercise price of the first tranche warrants (the exercise of which remains subject to disinterested shareholder approval) is C$0.869 (both of which are subject to adjustment under certain circumstances).

It is anticipated that the first tranche will close on or around January 30, 2014. As required by the TSX, the second tranche of the Offering (as well as the exercise of the warrants issued in the first tranche) is subject to disinterested shareholder approval. The Company expects to hold a shareholder meeting on or around March 18, 2014, or on such other date as the Company determines. The completion of each tranche of the Offering is subject to the approval of the TSX, NYSE MKT, all other necessary regulatory approvals and the settlement of definitive documentation, among other conditions. If approved by shareholders, the Company expects to close the second tranche of the Offering on or around March 30, 2014.

The Company has filed a final base shelf prospectus and a final prospectus supplement with the securities regulatory authorities in each of the provinces of Canada and a prospectus supplement and registration statement (including a base prospectus) and a final prospectus supplement with the U.S. Securities and Exchange Commission ("SEC") for the Offering. The offering in Canada will be made only by the base shelf prospectus and the final prospectus supplement. Before you invest, you should read the base shelf prospectus, the registration statement and the prospectus supplement and other documents the Company has filed with the securities regulatory authorities in Canada and the SEC for more complete information about the Company and this Offering. You may get these documents for free by visiting SEDAR at www.sedar.com or EDGAR at www.sec.gov. Alternatively, the lead agent (Edgecrest Capital Corporation) can arrange to send you the Offering documents if you so request by calling toll-free 1 (877) 257-7366 at 70 York Street, Suite 1500, Toronto, Ontario, M5J 1S9.

Recent Developments

The Company also wishes to highlight the following recent developments which are discussed in the final prospectus supplement, mainly pertaining to the Company's operations and financial condition.

On a preliminary and unaudited basis, and subject to change, based on the information currently available to NAP as of the date of the final prospectus supplement, the Company anticipates the following results for the 2013 fiscal year end:


--  Capital expenditures are expected to total approximately $116 million
    (excluding capitalized interest), of which approximately $92 million was
    spent on the LDI Phase I of the mine expansion, approximately $17
    million on the tailings management facility, and approximately $7
    million on other capital expenditures; 
    
--  Production is expected to total approximately 135,000 ounces of payable
    palladium for fiscal 2013, at a cash cost per ounce of approximately
    US$560 (net of by-product revenue); 
    
--  Excluding the effect of the term debt becoming classified as a current
    liability (described below), the working capital deficit as at December
    31, 2013 is expected to be approximately $2 million, which incorporates
    approximately $49 million in accounts payable, $18 million under the
    credit facility and $9 million in cash and cash equivalents.  However,
    the $179 million term debt became classified as a current liability
    under IFRS as at December 31, 2013 as a result of a construction lien
    that was placed on the LDI mine and, accordingly, the working capital
    deficit is expected to be approximately $181 million as at December 31,
    2013. The Company has obtained formal waivers and the initial event of
    default has been cured; 
    
--  $30 million of the Company's US$60 million credit facility was available
    and fully utilized as at December 31, 2013; and 
    
--  NAP previously disclosed that it expected to record a non-cash loss of
    approximately $14.5 million in the fourth quarter of 2013 related to the
    accounting treatment of the amendment to the Brookfield debt. However,
    due to a review of the accounting requirements, the Company no longer
    expects to incur this loss. 

To date in January, operations continue to make good progress ramping up production, with underground mining currently averaging approximately 3,125 tonnes per day (consistent with the Company's operating guidance).

Looking ahead to 2014, before working capital changes, the Company expects to generate positive cash flow from operations at LDI. After including working capital changes in 2014, the expected cash flow from operations is expected to be negative, primarily as a result of an expected decrease in accounts payable as the Company transitions away from intensive construction activity and an expected increase in accounts receivable as production ramps up. The Company is required to begin paying cash interest on the Brookfield debt before the end of the second quarter of 2015, which would reduce interest rates to 15% per annum from the current 19% annual rate.

As a result of the Company's ongoing review of its development strategy, management currently believes that continued development of the LDI mine at depth will be critical to satisfying NAP's financial obligations and for its long-term profitability. As per the 2014 guidance, the Company intends to conduct more diamond drilling at depth and commission technical studies to determine the economic viability and capital costs related to pursuing the Phase II expansion. The technical studies will investigate deepening the shaft and developing the mine at depth, the potential of alternative mining methods, and several lateral development opportunities. Based on management's preliminary internal review and estimates to date, it is apparent that significant additional capital expenditures will be required to expand the mine at depth, and that additional financing will be required starting in 2015 (even if the Offering of both tranches of securities are completed for aggregate proceeds of $70 million).

Although the Company believes that the proceeds of the proposed Offering would be sufficient to fund the Company's activities for the next 12 months (assuming that both tranches are completed for proceeds of not less than $70 million), there can be no assurance that such financings will be completed in a timely manner, or that alternative financing will be available on acceptable terms, if at all. Failure to obtain necessary financing in the near future may force NAP to pursue strategic alternatives, which may include, among other things, a recapitalization of its debt.

About North American Palladium

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, offering investors leverage to the rising price of palladium. The Company's shares trade on the NYSE MKT under the symbol PAL and on the TSX under the symbol PDL.

Cautionary Statement on Forward-Looking Information

Certain information contained in this news release 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. All statements other than statements of historical fact are forward-looking statements. The words 'will', 'expect', 'would', 'could', 'estimate' and similar expressions identify forward-looking statements. Forward-looking statements in this news release include, without limitation: the use of proceeds, information pertaining to the Company's strategy, plans or future financial or operating performance, such as the Company's LDI mine expansion, timelines, production plans, projected expenditures, operating cost estimates and other statements that express management's expectations or estimates of future performance. The Company cautions the reader that such forward-looking statements involve known and unknown risk factors that may cause the actual results to be materially different from those expressed or implied by the forward-looking statements. Such risk factors include, but are not limited to: the risk that the Offering may not be completed, the risk that the Company may not be able to obtain sufficient financing to fund its current needs including for operating expenditures and for capital expenditures required to continue the LDI mine expansion, the risk that the Company will not be able to meet its financial obligations as they become due, the possibility that metal prices and foreign exchange rates may fluctuate, inherent risks associated with exploration, mining and processing, the possibility that the LDI mine may not perform as planned, and risks related to the availability of skilled labour. For more details on these and other risk factors see the Company's prospectus supplement relating to the Offering on file with the SEC and Canadian provincial securities regulatory authorities.

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 news release, which may prove to be incorrect, include, but are not limited to: that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business, that metal prices and exchange rates between the Canadian and United States dollar will be consistent with the Company's expectations, that there will be no material delays affecting operations or the timing of ongoing development projects, including commissioning the shaft, and that prices for key mining and construction supplies will remain consistent with the Company's expectations. The forward-looking statements are not guarantees of future performance. 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.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
The cloud competition for database hosts is fierce. How do you evaluate a cloud provider for your database platform? In his session at 18th Cloud Expo, Chris Presley, a Solutions Architect at Pythian, will give users a checklist of considerations when choosing a provider. Chris Presley is a Solutions Architect at Pythian. He loves order – making him a premier Microsoft SQL Server expert. Not only has he programmed and administered SQL Server, but he has also shared his expertise and passion w...
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...
SYS-CON Events announced today that FalconStor Software® Inc., a 15-year innovator of software-defined storage solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. FalconStor Software®, Inc. (NASDAQ: FALC) is a leading software-defined storage company offering a converged, hardware-agnostic, software-defined storage and data services platform. Its flagship solution FreeStor®, utilizes a horizonta...
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 ad...
SYS-CON Events announced today that (ISC)²® (“ISC-squared”) will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Two leading non-profits focused on cloud and information security, (ISC)² and Cloud Security Alliance (CSA), developed the Certified Cloud Security Professional (CCSP) certification to address the increased demand for cloud security expertise due to rapid growth in cloud. Recently named “The Next...
The Art of DevOps provides a fun overview to help teams understand DevOps. Written in the style of the famous 6th century Chinese manuscript “The Art of War,” this eBook describes DevOps in the form of a mission to continuously deliver assets to the operational battlegrounds safely, securely, and quickly. It’s a fun read with valuable insights.
SYS-CON Events announced today that Alert Logic, Inc., the leading provider of Security-as-a-Service solutions for the cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Alert Logic, Inc., provides Security-as-a-Service for on-premises, cloud, and hybrid infrastructures, delivering deep security insight and continuous protection for customers at a lower cost than traditional security solutions. Ful...
The Quantified Economy represents the total global addressable market (TAM) for IoT that, according to a recent IDC report, will grow to an unprecedented $1.3 trillion by 2019. With this the third wave of the Internet-global proliferation of connected devices, appliances and sensors is poised to take off in 2016. In his session at @ThingsExpo, David McLauchlan, CEO and co-founder of Buddy Platform, will discuss how the ability to access and analyze the massive volume of streaming data from mil...
Join us at Cloud Expo | @ThingsExpo 2016 – June 7-9 at the Javits Center in New York City and November 1-3 at the Santa Clara Convention Center in Santa Clara, CA – and deliver your unique message in a way that is striking and unforgettable by taking advantage of SYS-CON's unmatched high-impact, result-driven event / media packages.
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management...
WebSocket is effectively a persistent and fat pipe that is compatible with a standard web infrastructure; a "TCP for the Web." If you think of WebSocket in this light, there are other more hugely interesting applications of WebSocket than just simply sending data to a browser. In his session at 18th Cloud Expo, Frank Greco, Director of Technology for Kaazing Corporation, will compare other modern web connectivity methods such as HTTP/2, HTTP Streaming, Server-Sent Events and new W3C event APIs ...
With an estimated 50 billion devices connected to the Internet by 2020, several industries will begin to expand their capabilities for retaining end point data at the edge to better utilize the range of data types and sheer volume of M2M data generated by the Internet of Things. In his session at @ThingsExpo, Don DeLoach, CEO and President of Infobright, will discuss the infrastructures businesses will need to implement to handle this explosion of data by providing specific use cases for filte...
SYS-CON Events announced today that Avere Systems, a leading provider of enterprise storage for the hybrid cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Avere delivers a more modern architectural approach to storage that doesn’t require the overprovisioning of storage capacity to achieve performance, overspending on expensive storage media for inactive data or the overbuilding of data centers ...
SYS-CON Events announced today that Pythian, a global IT services company specializing in helping companies adopt disruptive technologies to optimize revenue-generating systems, has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. Founded in 1997, Pythian is a global IT services company that helps companies compete by adopting disruptive technologies such as cloud, Big Data, advanced analytics, and DevO...
In most cases, it is convenient to have some human interaction with a web (micro-)service, no matter how small it is. A traditional approach would be to create an HTTP interface, where user requests will be dispatched and HTML/CSS pages must be served. This approach is indeed very traditional for a web site, but not really convenient for a web service, which is not intended to be good looking, 24x7 up and running and UX-optimized. Instead, talking to a web service in a chat-bot mode would be muc...