The president and chief executive of North American Palladium (NAP) says that he is confident of continuing high demand for platinum group metals.

Andre Douchane's comments come as the firm targets a $40 million expansion at Canada's only primary producing platinum group metals mine in the Lac des Iles Mine in northwestern Ontario.

Mr Douchane, who is anticipating first production from the new expansion starting in September 2005, said he had confidence in the pgm market.

While some observers have put question marks next to the robustness of the Chinese economy - which has been a key factor in driving pgm demand - Douchane said he expects the applications of pgms to widen, taking in fuel cells, jewellery, and stricter emissions controls.

"We see an expanding market for an extremely rare metal," he told the Northern Ontario Business.

North American Palladium has set aside $3 million for 2004 in their exploration budget.