North Amercian Palladium Financing

North American Palladium Ltd. (NAP) has raised $220 million, plus more than $15 million pursuant to the exercise of the over-allotment, in a cross border offering of 23,157,895 common shares by way of a long form MJDS prospectus. NAP is Canada’s only primary producer of palladium and platinum and currently owns and operates a 2,400 tonne per day open pit mine and process plant at Lac des Iles near Thunder Bay, Ontario. The proceeds of the offering, together with a US$90 million project credit facility, are being used to expand the mining operation and increase the ore production rate to 15,000 tonnes per day. The total cost of the expansion is estimated to be $207.5 million. Completion of construction is scheduled for April, 2001, with full production targeted for June, 2001.

In connection with the financing, NAP completed a capital restructuring involving its principal shareholder, Kaiser-Francis Oil Company (KFOC). KFOC purchased more than 13 million common shares in the public offering (which required regulatory relief), the proceeds of which were used to repay NAP’s approximate US$89 million of indebtedness to KFOC. KFOC also owned 10 million Series A preferred shares which were converted into approximately 12.5 million common shares. The result is that NAP has no debt other than the project credit facility and no issued shares other than common shares.

NAP was advised in Canada by Smith Lyons, represented by Leslie Gord who was assisted by Corina Zatreanu, Ron Richler (tax), James Fisher (environmental) and Mary Batoff (part-time in-house counsel). The underwriters, led by BMO Nesbitt Burns Inc., was advised by a team from Osler, Hoskin & Harcourt LLP comprised of Dale Ponder, Robert Lando, Joel Feldberg and Camilla Mackenzie. US counsel for NAP were Christopher Cummings, Leslie McCallum and Ruchi Kaushal of Shearman & Sterling, while Kevin Keogh and Andrew Diaz-Matos of White & Case LLP provided US advice for the underwriters.