THUNDER BAY – MINING – North American Palladium Ltd. (“NAP” or the “Company”) (TSX:PDL)(OTC PINK:PALDF) announced that, due to persistent high water levels in containment ponds, milling operations at its Lac des Iles (“LDI”) mine remain suspended and, after consultation with the relevant government ministries, LDI has commenced a controlled release of water into the environment in order to restore the water balance.

Controlled Release of Water Underway

A portion of the water being discharged is being processed through the on-site water clarification plant and two additional water treatment plants which have been set up and are operational. Monitoring stations have been set up downstream from the water release point to measure water quality. The released water contains higher than permitted levels of suspended solids, and aluminum and iron.

“Our top priorities are to lower water levels in the containment ponds to ensure there is no risk to the integrity of the structures, mitigate the potential environmental impacts, return to normal water levels and permitted discharge levels from the ponds, and restart the LDI processing facility,” said Phil du Toit, President and CEO.

“We are taking significant steps and precautions to ensure that we mitigate any potential environmental impact from the controlled release,” added Mr. du Toit. “Throughout this entire process we have kept relevant government ministries, First Nations groups and other stakeholders informed of our mitigation plans. We appreciate their input and ongoing support.”

The Company’s action plan to reduce and mitigate potential downstream impact of the release includes the following:

• Extensive monitoring and sampling of the receiving watershed;
• Experts have been engaged to monitor the receiving water bodies and to advise on dam integrity and overall mitigation plans;
• “Check dams” to slow the flow of water; and
• Silt fencing in place on the in and out flows of each receiving body of water.

LDI expects to resume milling operations once the water balance is stabilized and restored to normal operating levels. As previously reported, underground operations have not been affected by the temporary suspension of milling operations. In May, underground production averaged more than 5,000 tonnes per day, an LDI record, and there is currently a stockpile of approximately 110,000 tonnes of high grade crushed ore ready for processing.

The suspension of milling operations and controlled release of water has had no impact on employment levels at LDI and no layoffs are currently being considered.

The temporary shut-down of milling operations has had an adverse impact on the Company’s short-term liquidity and the Company is in discussions with its lenders regarding securing additional liquidity.