VANCOUVER (miningweekly.com) – Pure play palladium producer North American Palladium (NAP) has signed a definitive option agreement with project generator Transition Metals and its joint venture (JV) partner Impala Platinum (Implats) to earn up to a 75% stake in the Sunday Lake project, located near Thunder Bay, Ontario.

The property, which is currently held by Transition, through its subsidiary HTX Minerals, and Implats, gives NAP the right to acquire a 75% interest in the Sunday Lake project by completing work commitments totalling C$4.5-million and making cash payments of C$3.5-milllion over a five-year period.

“The Sunday Lake property rounds out our portfolio of early-stage to advanced exploration opportunities within our strategic exploration area of interest extending over a radius of 50 km from our Lac des Iles mill," stated NAP president and CEO Jim Gallagher in a press release on Wednesday.

The property occurs within the emerging Mid-Continental Rift base and precious metals camp.

Recent discoveries in the district include Panoramic Resources' Thunder Bay North project, in Ontario, which holds compliant indicated resources of 8.46-million tonnes grading 2.09 g/t platinum, palladium and gold; and Lundin Mining's Eagle mine, in Michigan, which holds reserves of 3.72-million tonnes grading 2.5% nickel and 2.2% copper. Rio Tinto also owns the Tamarack deposit, in Minnesota, with indicated resources of 3.75-million grading 1.81% nickel, 1% copper and 0.85 g/t platinum-group metals (PGMs), as well as an inferred resources of 3.38-million tonnes grading 1.63% nickel, 0.94% copper and 0.67 g/t PGMs. 

The Sunday Lake project is geologically similar to these important deposits for which Transition Metals has a 25% free carried interest until the completion of a feasibility study.

Under terms of the agreement, NAP will be required to complete exploration in three stages. NAP will earn a 51% controlling interest in the property by completing C$1.5-million of exploration expenditures and making cash payments of C$75 000 to Transition Metals and C$675 000 to Implats within a two-year period.

NAP may increase its interest from 51% to 65% by completing a further C$2.5-million of exploration expenditures and making further cash payments of C$125 000 to Transition Metals and C$1.13-million to Implats within a two-year period.

Finally, NAP can further increase its interest from 65% to 75% by completing a further C$500 000 of exploration expenditures and making final cash payments of C$150 000 to Transition Metals and C$1.35-million to Implats within a one-year period.

The Sunday Lake PGMs/copper/nickel project is located 25 km north of Thunder Bay, in Jacques Township and about 95 km south of NAP's producing Lac des Iles mine that has reported reserves (proven and probable) of 38.5-million tonnes grading 2.25 g/t palladium, as well as a fully integrated mill complex capable of processing 15 000 t/d.

The Sunday Lake property covers a 3.5 km diameter circular reversely-polarised magnetic anomaly associated with a large buried mafic-ultramafic intrusion interpreted to be Proterozoic in age. In November 2015, Transition reported the best intersection to date on the property from SL-15-013 that intersected 42.9 m grading 3.43 g/t combined PGMs, including 10.1 m grading 5.61 g/t PGM, close to true width.

"Late last year, our board of directors approved a comprehensive exploration strategy that will potentially deliver timely resource additions on our Lac des Iles mine property and our substantial greenfields property portfolio. Following the recently announced increases in our mineral reserves and life-of-mine production plan at Lac des Iles, NAP is now well positioned to execute on this strategy," Gallagher added.