North American Palladium has released its results for the three months ending March 31st, revealing a significant improvement in palladium production.

The first quarter results showed that the firm produced 1,348,779 tonnes of ore, or an average of 14,822 tonnes per day, with a palladium grade of 2.72 g/t, producing 91,261 ounces of palladium at a recovery rate of 77.3 per cent.

This compares favourably with the same period in 2003, when the mill produced 58,791 ounces of palladium at a recovery rate of 76.9 per cent - with the firm attributing its new success to increased palladium head grades and improved mill throughput.

Production costs, meanwhile, stood at $24,998,000 during the first quarter of 2004, a dip from the $28,219,000 spent during the first quarter 2003.

In addition, the firm reported increased production of platinum, gold, nickel and copper, but it said that strike action at its Falconbridge operations in Sudbury had had an impact.

North American Palladium said it was unable to ship all of the concentrate produced in the quarter at the Falconbridge site, which resulted in 1,314 tonnes of concentrate being held in inventory at the end of the quarter, containing 9,863 ounces of palladium and other by-product metals. In total this represented around 11 per cent of first quarter palladium production, but the company said the stocks would be recognized as revenue from metal sales in the second quarter 2004 when it is received at the smelter.

Andre Douchane, President and CEO said the firm was now seeking to develop mines such as the Sudbury operation, "strengthening our existing operation and using various initiatives to expand our business beyond the Lac des Iles mine".

The price of palladium was singled out by the board as the chief reason for concern, particularly as the pgm accounts for nearly two thirds of its revenue.

However, demand for the metal was expected to remain high, with news of a new diesel catalyst technology which may permit the use of palladium instead of platinum, potentially boosting sales.