Exhibit
1.4    KPMG LLP
  Telephone
  (416) 228-7000Chartered Accountants
  Fax
  (416) 228-7123Yonge Corporate Centre
  Internet
  www.kpmg.ca4100
  Yonge Street Suite 200Toronto
  ON M2P 2H3   AUDITORS REPORT ON
RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES  To the Board
of Directorsof North American Palladium Ltd.  On February 23,
2009, we reported on the consolidated balance
sheets of North American Palladium (the Company) as at December 31, 2008
and 2007 and the consolidated statements of operations, comprehensive loss and
deficit, cash flows and shareholders equity for each of the years in the three-year period ended December 31,
2008 which are included in the annual report on Form 40-F. In connection
with our audits of the aforementioned consolidated financial statements, we also have audited the related
supplemental note entitled Reconciliation to Accounting Principles
Generally Accepted in the United States included in the Form 40-F. This
supplemental note is the responsibility of the Companys management. Our
responsibility is to express an opinion on this supplemental note based on
our audits.  In our
opinion, such supplemental note, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.    Chartered Accountants, Licensed Public Accountants  Toronto,
Canada  February 23,
2009   KPMG LLP, a Canadian
limited liability partnership is the Canadian member firm of KPMG
International, a Swiss cooperative.


Reconciliation to Accounting
Principles Generally Accepted in the United States.  The Companys
consolidated financial statements for the three years ended December 31,
2008, 2007 and 2006 have been prepared in accordance with Canadian generally
accepted accounting principles (Canadian GAAP), which differ in some respects
from those in the United States. The following table presents amounts that
would have been reported had the Companys consolidated financial statements
been prepared on the basis of accounting principles generally accepted in the
United States (U.S. GAAP):  (Canadian funds in
thousands of dollars, except per share amounts)  2008
  
  2007
  
  2006Statements of
  loss and deficit:Loss under
  Canadian GAAP
  
  $
  (160,679
  )
  $
  (28,680
  )
  $
  (34,109
  )Capitalized
  interest (a)
  
  
  
  
  
  603Amortization of
  capitalized interest (a)
  
  (316
  )
  (493
  )
  (446
  )Derivative
  financial instruments (b)
  
  
  
  
  
  277Tax liability on
  flow-through financing (d)
  
  (407
  )
  (161
  )
  (143
  )Accretion
  expense relating to convertible notes (g)
  
  (298
  )
  (1,571
  )
  (255
  )Amortization of
  deferred financing costs (g)
  
  (387
  )
  (497
  )
  (353
  )Fair value
  adjustment on embedded derivatives and common share purchase warrants (g)
  
  182
  
  6,978
  
  15,148Loss and
  comprehensive loss under U.S. GAAP
  
  $
  (161,905
  )
  $
  (24,424
  )
  $
  (19,278
  )Basic and
  diluted loss per share under U.S. GAAP
  
  $
  (1.95
  )
  $
  (0.44
  )
  $
  (0.37
  )  1


2008
  
  2007Balance sheets:Current assets
  (b)
  
  $
  106,540
  
  $
  182,638Mining interests
  (a)
  
  32,573
  
  115,713Deferred
  financing costs (g)
  
  
  
  275Future tax
  liability (d)
  
  
  
  1,752Liabilities 
  current portion of convertible notes payable (g)
  
  
  
  25,706 embedded
  derivatives (g)
  
  
  
  209 common share
  purchase warrants (g)
  
  1,021
  
  995Common share
  capital and common share purchase warrants (c),(d),(g)
  
  485,273
  
  442,421Contributed
  surplus
  
  2,305
  
  1,673Deficit
  (c),(d),(g)
  
  $
  (370,768
  )
  $
  (208,863
  )  (a)Under
Canadian GAAP, the Company capitalizes interest on major projects where direct
indebtedness has occurred and commences amortization upon reaching commercial
production. Under U.S. GAAP, interest is capitalized as it arises from indebtedness
incurred, directly or indirectly, to finance development and construction
activities on assets that are not yet subject to amortization or depletion. For
2008, interest of $nil (2007 - $nil; 2006 - $603), respectively, has been
capitalized related to the investment in the underground development, which
reached commercial production during the first quarter of 2006.  Upon the underground mine reaching commercial
production, the Company commenced amortization of interest capitalized for the
underground development, in addition to the amortization of interest amounts
previously capitalized under U.S. GAAP.  (b)Under
U.S. GAAP, the Company has chosen not to designate its derivative financial
instruments as hedging instruments and thus they are carried on the balance
sheet at their fair value and any changes in fair value are being recorded to
earnings in the period of the change. 
The Company did not have any derivative financial instruments designated
as hedges under Canadian GAAP as at December 31, 2008 and 2007.  (c)Canadian
GAAP allows for the reduction of the stated capital of outstanding common
shares with a corresponding offset to deficit. This reclassification, which the
Company made in 1991, is not permitted by U.S. GAAP and would result in an
increase in both capital stock and deficit of $6,098 as at December 31,
2008 and 2007.  (d)Under
U.S. GAAP, the renunciation of tax deductions to holders of flow-through shares
is treated as a future tax expense rather than as a cost of issuing equity as
required by Canadian GAAP.  2


(e)U.S.
GAAP requires that amounts totaling 5% or more of current liabilities be
identified separately. As at December 31, 2008, these amounts were as
follows: trade payables and accruals - $11,215 (2007 - $15,494); other accruals
- $2,782 (2007 - $5,263).  (f)U.S.
GAAP does not permit the disclosure of subtotal of cash from operations before
changes in non-cash working capital.  (g)
Under Canadian GAAP, the components of the convertible notes payable must be
bifurcated and accounted for separately as debt and equity instruments. The
attached warrants are separable from the convertible notes and are accounted
for as an equity instrument. The Company allocated the gross proceeds received
to the debt and equity components of the notes and the warrants on a relative
fair value basis. The Series I proceeds received were allocated as
follows; US$20,558 to the debt, US$8,808 to the equity component and US$5,634
to the warrants. The Series II proceeds were allocated as follows:
US$9,578 to the debt, US$2,312 to the equity component and US$1,610 to the
warrants. Issuance costs of $2,364 were allocated pro-rata to the debt ($1,398)
and equity components ($589) and to the associated warrants ($377) on a
relative fair value basis. The issuance costs related to the debt components
are being amortized over the respective terms of the convertible notes on an
effective yield basis (Series I- 42%; Series II- 28%).In addition, a liability
(the Equity Premium) was recognized for the holders option to receive common
shares, in lieu of cash, at a 10% discount to the five day weighted trading
price for interest and principal payments.The Company will be required to accrete the carrying value of the
convertible notes and the Equity Premium such that at each installment payment
date, the carrying value of the notes and the Equity Premium will be equal to
the face value of the notes and the liability related to the Equity Premium. For
the year ended December 31, 2008, the
Company recorded accretion expense of $3,372 (2007 - $12,947) of which $815
(2007 - $3,245) represented the accretion relating to the Equity Premium which
was included in the carrying value of the convertible notes payable.  The convertible notes were fully
repaid on December 1, 2008.  Under U.S. GAAP, an
embedded derivative included in a debt arrangement for which the economic
characteristics and risks are not clearly and closely related to the economic
characteristics of the debt host contract must be measured at fair value and
presented as a liability. Changes in fair value of the embedded derivatives are
recorded in the consolidated statements of loss and deficit at each reporting
date. Embedded derivatives that meet the criteria for bifurcation from the
convertible notes payable and that are measured at fair value consist of the
holders conversion right, the Companys contingent conversion option and the
holders contingent redemption and conversion rights in the event of a change
in control or an event of default. Under Canadian GAAP, there is no requirement
to identify and measure the other embedded derivatives.  Under U.S. GAAP, the
common share warrants are presented as a liability and subsequent changes in
fair value are recorded in the consolidated statements of loss and deficit at
each reporting date.  3


Under U.S. GAAP the
Company allocated the residual amount of the gross proceeds received to the
convertible notes payable after the separate fair value measurement of the
warrants and embedded derivatives. The Company allocated the Series I
proceeds as follows: US$18,504 to the debt, US$10,060 to the embedded
derivatives and US$6,436 to the warrants. The Company allocated the Series II
proceeds as follows: US$9,952 to the debt, US$2,092 to the embedded derivatives
and US$1,456 to the warrants.  All of the issuance costs
related to the convertible note issuances are recognized as deferred financing
costs under U.S. GAAP and are amortized to the consolidated statements of loss
and deficit using the effective yield basis over the respective terms of the
notes. The Series I notes and Series II note carry an effective yield
of 49% and 25%, respectively.  Differences in U.S. GAAP
and Canadian GAAP result from the initial allocation differences and the
subsequent accretion expenses, amortization of deferred financing costs and
from the fair value re-measurement of the warrant and embedded derivatives as
liabilities each reporting period under U.S.GAAP.  Adoption of new United States
accounting pronouncements  FASB Interpretation No.48
Accounting for Uncertainty in Income Taxes  an interpretation of FASB
Statement 109 (FIN 48) was issued in June 2006. FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in an enterprises
financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return. FIN 48 also
provides guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition requirements. The adoption
of FIN 48 on January 1, 2007 had no material impact on the consolidated
financial statements of the Company.  Statement of
Financial Accounting Standards No. 157, Fair Value Measurement (SFAS
157) was issued September 2006. 
The Statement provides guidance for using fair value to measure assets
and liabilities.  The Statement also
expands disclosures about the extent to which companies measure assets and
liabilities at fair value, the information used to measure fair value, and the
effect of fair value measurement on earnings. This Statement applies under
other accounting pronouncements that require or permit fair value
measurements.  This Statement does not
expand the use of fair value measurements in any new circumstances.  Under this Statement, fair value refers to
the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants in the market
in which the entity transacts.  SFAS 157
is effective for the Company for fair value measurements and disclosures made
by the Company in its fiscal year beginning on January 1, 2008.The
adoption of SFAS 157 on January 1, 2008 had no material impact on the
consolidated financial statements of the Company.  4


In February 2007, the FASB issued FASB
Statement No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities.  This statement permits entities the option to
measure financial instruments at fair value, thereby achieving an offsetting
effect for accounting purposes for certain changes in fair value of certain
related assets and liabilities without having to apply hedge accounting. This
statement is effective for the Company beginning January 1, 2008.The
adoption of FASB Statement No. 159 on January 1, 2008 had no material
impact on the consolidated financial statements of the Company.  Impact of recently issued United States accounting
pronouncements  SFAS 141R
BusinessCombinations  In December 2007, the FASB
issued a revised standard on accounting for business combinations. The standard
is converged with proposals issued by the AcSB and IASB on this subject. The
major changes to accounting for business combinations are summarized as
follows:  ·All
business acquisitions would be measured at fair value  ·The
existing definition of a business would be expanded  ·Pre-acquisition
contingencies would be measured at fair value  ·Most
acquisition-related costs would be recognized as expenses as incurred (they
would no longer be part of the purchase consideration)  ·Obligations
for contingent consideration would be measured and recognized at fair value at
acquisition date (would no longer need to wait until contingency is settled)  ·Liabilities
associated with restructuring or exit activities be recognized only if they
meet the recognition criteria of SFAS 146, Accounting
for Costs Associated with Exit or Disposal Activities, as of the
acquisition date.  ·Non-controlling
interests would be measured at fair value at the date of acquisition (i.e.,
100% of the assets and liabilities would be measured at fair value even when an
acquisition is less than 100%)  ·Goodwill,
if any, arising on a business combination reflects the excess of the fair value
of the acquiree, as a whole, over the net amount of the recognized identifiable
assets acquired and liabilities assumed. Goodwill is allocated to the acquirer
and the non-controlling interest  ·In
accounting for business combinations achieved in stages, commonly called step
acquisitions, the acquirer is to re-measure its non-controlling equity
investment in the acquiree at fair value as of the acquisition date and
recognize any unrealized gain or loss in income.  The statement is effective for
business combinations occurring in the first annual reporting period beginning
on or after December 15, 2008 and is to be applied prospectively. The
Company will be impacted by this new standard upon future acquisitions, if any.  5


SFAS 160, Noncontrolling Interests in Consolidated Financial
Statements  In December 2007, the FASB
issued a revised standard on accounting for non-controlling interests and
transactions with non-controlling interest holders in consolidated financial
statements. The standard is converged with proposals issued by the AcSB and
IASB on this subject.  This statement specifies that
non-controlling interests are to be treated as a separate component of equity,
not as a liability or other item outside of equity.  Because non-controlling interests are an
element of equity, increases and decreases in the parents ownership interest
that leave control intact are accounted for as capital transactions rather than
as a step acquisition or dilution gains or losses.  The carrying amount of the non-controlling
interests is adjusted to reflect the change in ownership interests, and any
difference between the amount by which the non-controlling interests are adjusted and
the fair value of the consideration paid or received is recognized directly in
equity attributable to the controlling interest.  This standard requires net income
and comprehensive income to be displayed for both the controlling and the
non-controlling interests. Additional required disclosures and reconciliations
include a separate schedule that shows the effects of any transactions with the
non-controlling interests on the equity attributable to the controlling
interest. The statement is effective for
periods beginning on or after December 15, 2008 and is to be applied
prospectively. SFAS 160 will be applied prospectively to all non-controlling
interests.  The Company will be impacted by this
new standard upon acquisitions or other transactions, if any, that will result
in the creation of minority interest.  6