<PAGE>
<TABLE>
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<S>                                                                             <C>
                                      SECURITIES AND EXCHANGE COMMISSION

                                            WASHINGTON, D.C. 20549

                                               _______________

                                                  FORM 40-F

     [ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

     [X]  ANNUAL REPORT PURSUANT TO SECTION 13(A) OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

          For the fiscal year ended December 31, 2003                         Commission File Number 0-20235

                                               _______________

                                        NORTH AMERICAN PALLADIUM LTD.
                            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            CANADA                                      1099                              NOT APPLICABLE
(PROVINCE OR OTHER JURISDICTION             (PRIMARY STANDARD INDUSTRIAL                 (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)            CLASSIFICATION CODE NUMBER)                IDENTIFICATION NO..)

                                           130 ADELAIDE STREET WEST
                                         SUITE 2116, TORONTO, ONTARIO
                                                   M5H 3P5
                                                (416) 360-7590
                  (ADDRESS AND TELEPHONE NUMBER OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)

                                            CT CORPORATION SYSTEM
                                              111 EIGHTH AVENUE
                                              NEW YORK, NY 10011
                                                (212) 894-8940
                           (NAME, ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER
                       (INCLUDING AREA CODE) OF AGENT FOR SERVICE IN THE UNITED STATES)

                        ______________________________________________________________

               Securities registered or to be registered pursuant to Section 12(b) of the Act.

                                                                    NAME OF EACH EXCHANGE ON WHICH
                   TITLE OF EACH CLASS                                       REGISTERED:
             -------------------------------                       --------------------------------
               COMMON SHARES, NO PAR VALUE                             AMERICAN STOCK EXCHANGE


               Securities registered or to be registered pursuant to Section 12(g) of the Act.

                                                     NONE

          Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

                                                     NONE

               For annual reports, indicate by check mark the information filed with this Form:

                    [X] Annual information form     [X] Audited annual financial statements

     Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as
of the close of the period covered by this annual report.

                                 THE REGISTRANT HAD 50,895,338 COMMON SHARES
                                     OUTSTANDING AS AT DECEMBER 31, 2003

     Indicate by check mark whether the Registrant by filing the information contained in this Form is also
thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange
Act of 1934 (the "Exchange Act"). If "Yes" is marked, indicate the filing number assigned to the registrant
in connection with such Rule.

                                 Yes          82-                             No    X
                                     -------      -------                        -------

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such filing requirements for the
past 90 days.

                                 Yes    X                                     No
                                     -------                                     -------
</TABLE>

<PAGE>

                    DOCUMENTS FILED UNDER COVER OF THIS FORM
                    ----------------------------------------

Document No. 1:     Renewal Annual Information Form for the year ended December
                    31, 2003, dated May 19, 2004.

Document No. 2:     Audited Comparative Consolidated Financial Statements for
                    the financial year ended December 31, 2003, prepared in
                    accordance with Canadian generally accepted accounting
                    principles, and reconciled to United States generally
                    accepted accounting principles in accordance with Item 18 of
                    Form 20-F, and the notes thereto.

Document No. 3:     Management's Discussion and Analysis of Financial Results
                    for the year ended December 31, 2003.

Document No.1, the Renewal Annual Information Form for the year ended December
31, 2003, dated May 19, 2004, is incorporated by reference into the Registration
statement on Form S-8 (333-13766), filed with the Securities and Exchange
Commission in July 2001 and Registration Statement on Form F-10 of the
Registrant, which was originally filed with the Securities and Exchange
Commission on April 7, 2004 (File No. 333-114261).


<PAGE>

                                                                  DOCUMENT NO. 1

<PAGE>


                          NORTH AMERICAN PALLADIUM LTD.




                         RENEWAL ANNUAL INFORMATION FORM




                      For the year ended December 31, 2003




                               Dated May 19, 2004

<PAGE>

                                TABLE OF CONTENTS


                                                                            PAGE

CORPORATE STRUCTURE...........................................................3
GENERAL DEVELOPMENT OF THE BUSINESS...........................................3
         Overview.............................................................3
         Palladium Sales Contract.............................................4
         Metal Forward Contracts..............................................6
         Royalty Agreement....................................................6
         Open Pit Lac des Iles Mine...........................................7
         Proposed Underground Lac des Iles Mine..............................15
SELECTED CONSOLIDATED FINANCIAL INFORMATION..................................23
MARKET FOR SECURITIES........................................................24
DIRECTORS AND OFFICERS.......................................................24
ADDITIONAL INFORMATION.......................................................27
GLOSSARY OF TERMS............................................................38

                             METRIC CONVERSION TABLE

  ------------------------------------- -- ----------------------------------
    IMPERIAL                                 METRIC
  ------------------------------------- -- ----------------------------------

  ------------------------------------- -- ----------------------------------
    1 troy ounce                             31.103 grams
  ------------------------------------- -- ----------------------------------
    1 ton, short                             0.907 tonnes
  ------------------------------------- -- ----------------------------------
    1 troy ounce per ton                     34.286 grams per tonne
  ------------------------------------- -- ----------------------------------
    1 foot                                   0.305 meters
  ------------------------------------- -- ----------------------------------
    1 mile                                   1.609 kilometers
  ------------------------------------- -- ----------------------------------
    1 acre                                   0.405 hectares
  ------------------------------------- -- ----------------------------------


All dollar amounts referred to herein are in Canadian dollars unless stated
otherwise.

Unless otherwise indicated, all financial information included herein has been
prepared in accordance with Canadian generally accepted accounting principles
("Canadian GAAP), which may differ from United States generally accepted
accounting principles ("U.S. GAAP"). See note 18 to the audited consolidated
financial statements for a reconciliation of financial results from Canadian
GAAP to U.S. GAAP.

Descriptions of mineral reserve and mineral resource estimates included herein
under Canadian standards may not be comparable to similar information made
public by U.S. companies subject to reporting and disclosure requirements of the
United States Securities and Exchange Commission. See "Mineral Reserve and
Resource Estimates - Note to U.S. Shareholders" herein.


                                       2
<PAGE>

                               CORPORATE STRUCTURE

North American Palladium Ltd. (the "Corporation") is the successor to Madeleine
Mines Ltd., a company incorporated under the QUEBEC MINING COMPANIES ACT by
letters patent dated February 2, 1968. In January 1992: (i) Madeleine Mines Ltd.
was amalgamated with a wholly owned Quebec subsidiary of 2750538 Canada Inc., a
company incorporated under the CANADA BUSINESS CORPORATIONS ACT by articles of
incorporation dated September 12, 1991; (ii) the amalgamated company was wound
up into 2750538 Canada Inc.; and (iii) 2750538 Canada Inc. changed its name to
"Madeleine Mines Ltd." By articles of amendment dated July 24, 1993, Madeleine
Mines Ltd. changed its name to "North American Palladium Ltd." The Corporation
has one operating subsidiary, Lac des Iles Mines Ltd., incorporated under the
CANADA BUSINESS CORPORATIONS ACT, and wholly owned by the Corporation. Unless
otherwise indicated, all references in this annual information form ("AIF") to
the "Corporation" include North American Palladium Ltd., together with its
wholly-owned subsidiary, Lac des Iles Mines Ltd.

The Corporation's registered office is at Suite 2116, 130 Adelaide Street West,
Toronto, Ontario M5H 3P5, telephone: (416) 360-7590, fax: (416) 360-7709. The
Corporation's mining operations are situated approximately 85 kilometers
northwest of Thunder Bay at Lac des Iles, in northern Ontario. The postal
address is P.O. Box 10547, Station P, Thunder Bay, Ontario P7B 6T9, telephone:
(807) 448-2000, fax: (807) 448-2001.

                       GENERAL DEVELOPMENT OF THE BUSINESS

The following description of the Corporation's business includes many geological
terms that may not be familiar to the reader. For a description of the meaning
of some of these terms, please see the "Glossary of Terms" included in this AIF.

                                    OVERVIEW

The Corporation owns and operates an open pit mine known as the Lac des Iles
Mine and processing plant with a design capacity of 15,000 tonnes per day. The
mining and processing operation produces by flotation a palladium rich
concentrate that also contains platinum, gold, copper and nickel. The
concentrate is delivered to the Sudbury operations of each of Falconbridge
Limited ("Falconbridge") and Inco Limited ("Inco") for smelting, and is further
processed at their respective European operations for refining.

In 1999, an extensive exploration program was completed on the Lac des Iles
property. Based on the outcome of the exploration program, in March 2000, the
Corporation commenced an expansion of the mining operations to increase the ore
processing rate from 2,400 tonnes per day to 15,000 tonnes per day. The
expansion involved the construction of a new concentrator at the mine site and
preparing for increased production from the open pit.

AGRA Simons Limited, an engineering, construction and technology company,
completed a detailed feasibility study, dated December 1999, together with an
updated version dated May 2000 (collectively the "AGRA Simons Feasibility
Study"), of the proposed expansion of the mining operation and concluded that
the proposed expansion project was technically feasible and economically viable.

In January 2000, the Corporation began equipment procurement and detailed
engineering and in March 2000 began site preparation. In the first quarter of
2001, the semi-autogenous grinding (SAG) mill and two ball mills arrived on site
and were assembled and tested. By March 2001, the warehouse, the maintenance
shop and the material handling facilities were operational. The new concentrator
was commissioned in June 2001. Initially, the new concentrator did not operate
at design capacity as a number


                                       3
<PAGE>

of modifications were required to improve production throughput and recoveries.
In the fourth quarter of 2001 the concentrator throughput and recoveries
improved as a result of these changes.

In 2002, certain modifications were made to the SAG mill circuit, including fine
crushing a portion of the SAG mill feed and, in August 2002, the mill achieved
its design rate of 15,000 tonnes per day. However, this rate was not sustained
for the remainder of the year because of the failure in late August 2002 of the
primary crusher, which processes ore before it reaches the SAG mill. Portable
third party contract crushers were installed to sustain the operation while the
primary crusher was repaired. The repairs were more difficult than anticipated
and the unit did not return to operation until early March 2003. As the
long-term reliability of the primary crusher was doubtful, a new primary crusher
was purchased and was put into operation in June 2003. The Corporation carries
property damage and business interruption insurance and has submitted a claim to
recover losses sustained by the crusher failure.

In 2003, total mine production amounted to 14.6 million tonnes or 39,895 tonnes
per day, containing 4.4 million tonnes of ore grading 2.48 grams of palladium
per tonne. Total mine production decreased from 46,793 tonnes per day in 2002 to
39,895 tonnes per day in 2003 as a result of continued crusher problems during
the first six months and longer haulage distances attributable to increased pit
depth and tailings dam construction.

Although mine production was lower in 2003, palladium production from the Lac
des Iles mill reached a new record of 288,703 ounces in 2003 as a result of
higher palladium feed grade and, particularly during the second half of the
year, higher mill throughput and mill operating time. Ore processed in 2003
totalled 5,159,730 tonnes or 14,136 tonnes per calendar day at an average
palladium head grade of 2.3 grams per tonne and an average palladium recovery of
75.5%. Other metal production in 2003 included 23,742 ounces of platinum, 23,536
ounces of gold, 7,142,674 pounds of copper and 4,070,785 pounds of nickel.

The improved mill performance resulted from the installation of the new primary
crusher and a number of other factors, including: using a contract secondary
crusher to provide fine ore to maximize mill throughput; a significant reduction
in the number of unscheduled shutdowns during 2003 which allowed for more
regular mill operations and increased metal recovery and operating time; and
improved maintenance planning and scheduling which resulted in increased mill
availability. In late December 2003, additional flotation cells from the old
mill were overhauled and commissioned as part of the second cleaner circuit
expansion. Optimization of these flotation cells continued in early 2004.

Several projects are planned for 2004 to further improve mill throughput and
reduce operating costs. The Corporation intends to install a secondary crusher
at an estimated capital cost of approximately $10 million and eliminate contract
crushing. Additional ore processing control systems will be installed in both
the grinding and flotation circuits to permit better sampling of concentrate
grade and quality, and concentrator reagents will be optimized.

Reference is made to the section entitled "Mining Operations" for further
information about the Corporation's operations.

                            PALLADIUM SALES CONTRACT

On February 4, 2000, the Corporation entered into a palladium sales contract
(the "Palladium Sales Contract") with a major automotive manufacturer (the
"Automotive Manufacturer"), whereby the Corporation has hedged the price of 100%
of the palladium it is entitled to receive from its smelter customers. Under the
Palladium Sales Contract, the Automotive Manufacturer purchases all of the
refined palladium that the Corporation is entitled to receive from the smelters.
The actual amount


                                       4
<PAGE>

purchased depends on how much palladium is delivered, less the amount due under
a royalty agreement with the Sheridan Platinum Group Inc. and John Patrick
Sheridan. See "Royalty Agreement".

The Palladium Sales Contract provides that the Automotive Manufacturer can
accept or refuse delivery of the Corporation's production exceeding 35,000
ounces in any month. The delivery points for palladium under the Palladium Sales
Contract are the European refineries of Falconbridge and Inco. See "Smelting and
Refining Agreements".

The price of the palladium under the Palladium Sales Contract is the average
monthly London Metal Exchange afternoon fixing price minus a modest specified
discount. However, the price for palladium cannot be (i) less than US$325 per
ounce for all production delivered in each month under the Palladium Sales
Contract, or (ii) higher than US$550 per ounce for half of the production
delivered in each month. There is no upper price limit for the other half of the
production under the Palladium Sales Contract.

The term of the Palladium Sales Contract ends on June 30, 2005. Either party may
terminate the Palladium Sales Contract in the event of the insolvency,
bankruptcy or appointment of a receiver for the other party or the breach by the
other party of a material term of the Palladium Sales Contract if the breach is
not cured within 10 business days of notice of the default by the other party.
The Corporation will be entitled to terminate the Palladium Sales Contract if
the Automotive Manufacturer:

     (a)  acquires or agrees to acquire from the Corporation or any other
          person, any of the Corporation's business, assets, or securities,
          directly or indirectly, or any option to acquire any of the foregoing;

     (b)  proposes to enter into, directly or indirectly, any business
          combination involving the Corporation or any subsidiary, or to
          purchase, directly or indirectly, a material portion of the
          Corporation's assets or the assets of any subsidiary;

     (c)  makes any proposal or request to the Corporation or any of its
          officers or directors relating to any action referred to in paragraph
          (a) or (b) above or to any modification or waiver of the Corporation's
          rights to terminate the contract;

     (d)  makes or participates in, directly or indirectly, any "solicitation"
          of "proxies" (as those terms are used in the proxy rules under the
          United States Securities Exchange Act of 1934, as amended (the
          "Exchange Act")) to vote or seek to advise or influence any person
          with respect to the voting of any of the Corporation's voting
          securities;

     (e)  forms, joins or in any way participates in a "group" (within the
          meaning of Section 13(d)(3) of the Exchange Act) with respect to any
          of the Corporation's voting securities;

     (f)  acts alone or with others to seek to control or influence the
          Corporation's management, board of directors or policies; or

     (g)  advises, assists or enters into discussions, negotiations,
          arrangements or understandings with any other person with respect to
          any of the matters listed above (unless required by law) or takes any
          other action which might reasonably be expected to result in any such
          public disclosure.


                                       5
<PAGE>

In addition, the Palladium Sales Contract contains "force majeure" provisions
that allow for the suspension of the Palladium Sales Contract upon the
occurrence of certain events, such as acts of nature, that are beyond the
control of a contracting party and that limit the party's ability to perform its
obligations under the contract. The definition of "force majeure" in the
contract includes such things as:

     o    explosions, fires, floods or breakdowns or damage to the mine or
          related equipment;
     o    failure of plant or equipment to operate according to plans or
          specifications not caused by the Corporation's negligence;
     o    strikes, labour disputes or lockouts;
     o    unavoidable accidents;
     o    uncontrollable delays in transportation or non-availability of any
          adequate means of transportation;
     o    the effect of governmental regulations or requirements (expressly
          including inability to obtain or amend necessary governmental
          approvals, licenses or permits on reasonably acceptable terms);
     o    power shortages;
     o    court orders; and
     o    acts or failures to act of government agencies or regulatory bodies
          and inability to obtain timely refining despite commercially
          reasonable efforts of appropriate quantity of materials necessary to
          produce the required amounts of metal.

The Palladium Sales Contract provides that once the cause of any suspension has
been removed, the parties are to resume normal performance within a reasonable
period of time. Economic conditions such as market situations that result in
prices lower or higher than those provided for in the Palladium Sales Contract
are not considered events that entitle a party to suspend the contract. The
Palladium Sales Contract also provides that the Automotive Manufacturer will not
be excused by any "force majeure" event from making timely payment for metal
delivered prior to notice being given of the suspending event. Neither party
will be required against its will to adjust any labor dispute or to question the
validity of or refrain from going to court to test the validity of any
governmental order, regulation or statute or to refrain from pursuing its legal
or equitable remedies against any third party.

                             METAL FORWARD CONTRACTS

The Corporation enters into forward commodity sales contracts from time to time
to hedge the effect of changes in certain metal prices on the Corporation's
revenues. At March 31, 2004, the Corporation had forward sales contracts for
14,000 ounces of platinum at a weighted-average estimated price of US$763 per
ounce, 810 tonnes of nickel at a weighted-average estimated price of US$12,500
per tonne (US$5.67 per pound) and 1,800 tonnes of copper at a weighted-average
estimated price of US$2,548 per tonne (US$1.16 per pound).

                                ROYALTY AGREEMENT

On August 31, 1994, the Corporation entered into a royalty agreement with The
Sheridan Platinum Group Inc. and John Patrick Sheridan (together referred to as
the "Sheridan Group"). Under the agreement, the Corporation was obligated to pay
to the Sheridan Group a royalty equal to (i) 3% of "net cash proceeds" received
from concentrates and other products produced at the Lac des Iles Mine from May
1, 1994 through December 31, 2000, and (ii) 5% of "net cash proceeds" received
from concentrates and other products produced at the Lac des Iles Mine
commencing January 2001. The term "net cash proceeds" is defined in the royalty
agreement generally as the net proceeds of sale receivable by Lac des Iles Mines
Ltd. from the production and sale of concentrates from the Lac des Iles Mine,
after deducting the costs of


                                       6
<PAGE>

sampling, assaying, transporting and insuring the concentrate; smelter,
processing and refining charges and penalties (excluding Lac des Iles Mines
Ltd.'s own processing costs) and all applicable taxes and royalties that must be
paid in respect of the mining operations. Under the royalty agreement, the
Sheridan Group may elect, and has elected, to receive payment of the royalty in
kind in respect of palladium and platinum, rather than in cash, and in respect
of other metals, the Sheridan Group has elected to receive cash. All mining
operations at the Lac des Iles Mine are on the mining leases and are covered by
the royalty agreement.

                           OPEN PIT LAC DES ILES MINE

The Lac des Iles Mine property consists of four mining leases from the
Government of Ontario numbered 104108 to 104111, inclusive, comprising 85 single
unit mining claims and covering an aggregate of 1,465 hectares. The mining
leases are dated August 16, 1985 and are set to expire on August 31, 2006. If an
application is made within 90 days of expiry of the leases, and the terms and
conditions of the leases have been complied with, the leases are renewable for a
further term of 21 years. In addition to the mining leases, the Corporation
holds mining claims covering approximately 13,876 hectares within a 52 kilometer
radius of the Lac des Iles Mine.

LOCATION AND ACCESS

The Lac des Iles Mine and surrounding property are located approximately 85
kilometers northwest of the city of Thunder Bay, Ontario. Paved road access is
provided by Ontario Provincial Highway 527, followed by 15 kilometers of an all
weather gravel road, maintained by the Corporation. Approximately 82% of the
employees reside in the Thunder Bay area.

The property, at an elevation of 490 meters above sea level, is within the
Canadian Shield, characterized by low, undulating hills and numerous lakes.
Daytime temperatures range from 10(degree)C to 25(degree)C in the summer and
from minus 25(degree)C to minus 10(degree)C in the winter.

Thunder Bay, with a population of 117,500, is serviced by road, air, rail and
ocean-going vessels. The city is located at the head of the St. Lawrence Seaway.
All the services required by the mining operations are available in the city.

REGIONAL GEOLOGY

The Lac des Iles area is underlain by Archean-age rocks of the Superior Province
of the Canadian Shield which are overlain and intruded by rocks of the
Proterozoic-age Southern Province. The Superior Province can be subdivided into
areas of plutonic, granite-greenstone, metasedimentary and gneissic rocks. The
Southern Province consists of a blanket of sedimentary rocks extensively
intruded by gabbroic magma.

In the Archean, mafic to ultramafic intrusions scattered throughout northwestern
Ontario host, or have the potential to host, platinum group metal
mineralization. Platinum group metal mineralization of Proterozoic age is also
known to occur in northwestern Ontario.

In the Lac des Iles area, the Lac des Iles Intrusive Complex is one of many
platinum group metal-bearing, mafic to ultramafic, intrusions that define a
circular feature (of speculative origin) with a diameter of 30 kilometers. The
30-square kilometer Lac des Iles Intrusive Complex consists of three separate
magma chambers partially separated by tonalite septum. The ultramafic North Lac
des Iles Intrusive Complex is centered on Lac des Iles (the lake). The gabbroic
Mine Block Intrusion and Camp Lake Intrusion occur south of Lac des Iles. The
Camp Lake Intrusion is a relatively homogeneous hornblende gabbro and


                                       7
<PAGE>

contains minor base metal sulphides and platinum group metals. The Mine Block
Intrusion to the north is complex in structure, texture and composition, and
contains abundant platinum group metal mineralization. The most significant
zones of platinum group metal mineralization are in the Mine Block Intrusion and
are the Roby, Twilight and Baker zones. The Roby and Twilight zones are the only
defined areas of mineralization on the Lac des Iles property.

MINE BLOCK INTRUSION GEOLOGY

The Roby zone is a breccia zone, currently measuring 950 meters long, 815 meters
wide and 1,000 meters deep, and remains open to the west, southeast and at
depth. Platinum group metal mineralization is associated with pyroxenite,
gabbronorite and gabbro in areas that have been invaded and brecciated by
copper-nickel-platinum group metal bearing melanogabbro, which also generated
abundant pegmatitic gabbro. The ore typically contains from a trace to 5%
pyrrhotite, chalcopyrite, pyrite and pentlandite. The platinum group metals
include vysotskite, isomerticite, kotulskite, sperrylite, merenskyite and
palladium arsenide. Similar breccia mineralization occurs at other locations
within the intrusive complex.

The Roby zone contains two distinct types of mineralization separated by a zone
of sheared and mineralized pyroxenite that trends north-northwest. North of the
shear zone, the North Roby ore is hosted by varitextured gabbro and gabbronorite
that strikes northeast and dips to the east-southeast variably at 45 to 60
degrees. This mineralization tends to be sulphide-poor. Southwest of the shear
zone the breccia ore (the "Breccia Ore") is hosted by a heterolithic gabbro
breccia with abundant pegmatitic and varitextured gabbro. From the pyroxenite
contact, the grades diminish gradually to the west. This zone typically contains
2%-5% sulphides. The pyroxenite is well mineralized and contains high grade ore
associated with intense talc alteration. The Main High Grade Zone occurs at the
eastern boundary of the central portion of the Roby Zone and extends below the
economic limits of the Roby pit. This near vertical planar zone has a strike
length exceeding 350 metres with thickness averaging 12 metres and is ideal for
exploitation by underground mining. It is continuous to a depth of 675 metres
where it is truncated and offset to the west by a fault. Below this fault, the
Offset High Grade zone has been traced to a depth of 905 metres, over a strike
length of 300 metres, and remains open.

The Twilight zone lies 50 to 70 meters east of the east boundary of the Roby
zone. Previously, minor amounts of historical surface sampling and diamond
drilling in this area had indicated the potential for low-grade mineralization.
In 1999, overburden was removed and sampling, mapping and drilling were carried
out, with positive results. Subsequent diamond drilling has delineated a
mineralized zone 150 meters wide, 200 meters long and 200 meters deep which is
included in the reserve.

The Baker zone is located one kilometer east of the Roby zone. In 1999, four
diamond drill holes totaling 1,075 meters tested the northeastern continuity of
the zone, following up 16 holes drilled in the fall of 1998. Drilling at
50-meter spacing has delineated additional mineralization that will require
closer spaced drilling for proper evaluation. The Creek zone, located less than
two kilometers east of the Roby zone, is also an area of interest. In 2001,
additional overburden was removed from the Baker and Creek zones in an effort to
improve the definition of the surface dimensions and the geological controls
related to mineralization.

MINING OPERATIONS

The Corporation mines ore and waste using conventional hydraulic 23 cubic meter
and 19 cubic meter shovels, 190 tonne trucks, 229 millimeter blast hole drills
and a fleet of conventional ancillary equipment. Mine waste is stockpiled
outside of design pit limits.


                                       8
<PAGE>

In 2003, total production from the Lac des Iles open pit amounted to 14.6
million tonnes or 39,895 tonnes per day of ore and waste combined compared to
17.1 million tonnes or 46,793 tonnes per day in 2002. The decrease in mine
production was a result of continued crusher problems during the first six
months and longer haulage distances attributable to increased pit depth and
tailings dam construction. Ore production for 2003 totaled 4.4 million tonnes
grading 2.48 grams per tonne of palladium compared to 7.3 million tonnes grading
1.49 grams of palladium per tonne in 2002. At the end of 2003, the broken ore
stockpile consisted of 2.1 million tonnes grading 1.57 grams per tonne palladium
containing 107,000 ounces of palladium compared to 8.7 million tonnes grading
1.16 grams of palladium per tonne containing 323,000 ounces of palladium at the
end of 2002.

The following table sets forth information concerning the production from the
Lac des Iles Mine for each of the five years ended December 31, 2003:

<TABLE>
<CAPTION>
<S>                                       <C>             <C>             <C>             <C>             <C>
------------------------------------- -------------- --------------- --------------- --------------- ---------------
                Year                      2003            2002            2001            2000            1999
------------------------------------- -------------- --------------- --------------- --------------- ---------------
Ore Tonnes Mined                          4,396,847       7,250,963       5,768,157       2,689,634       1,271,816
------------------------------------- -------------- --------------- --------------- --------------- ---------------
Waste Tonnes Mined                       10,164,806       9,828,552      19,174,635       7,508,117       4,115,159
------------------------------------- -------------- --------------- --------------- --------------- ---------------
Total Tonnes Mined                       14,561,653      17,079,515      24,942,792      10,197,751       5,386,975
------------------------------------- -------------- --------------- --------------- --------------- ---------------
Stripping Ratio                              2.31:1          1.36:1          3.32:1          2.79:1          3.23:1
------------------------------------- -------------- --------------- --------------- --------------- ---------------
Average Daily Production                     39,895          46,793          68,336          27,939          14,758
------------------------------------- -------------- --------------- --------------- --------------- ---------------
</TABLE>

PROCESSING

The concentrator facility used at the expanded mine has a design capacity of
15,000 tonnes per day. In the third quarter of 2002, a structural failure
occurred in the lower frame of the primary crusher, necessitating its shutdown
and impacting mill throughput. Portable third party contract crushers were
installed to minimize the loss of palladium production during the shutdown
period. The primary crusher resumed operation in early March 2003. As the
long-term reliability of the primary crusher was doubtful, a new primary crusher
was purchased and was put into operation in June 2003. The Corporation carries
property damage and business interruption insurance and has submitted a claim to
recover losses sustained by the crusher failure.

Ore is crushed in a gyratory crusher and conveyed to a coarse ore stockpile. A
portion of the coarse ore is crushed in a cone crusher and the finer material
blended with the coarse ore as it is fed to the SAG mill. The ore is ground to a
nominal P80 (the size of an opening through which 80% of the product will pass)
of 74 microns in a conventional semi-autogenous mill/ball mill/pebble crusher
(SABC) circuit. The ground ore feeds a flotation circuit that is comprised of
rougher/scavengers, four stages of cleaning and includes a regrind circuit. The
flotation circuit in the old concentrator is currently connected to the new
concentrator to provide additional cleaner flotation capacity. The final
concentrate is thickened and dewatered using two pressure filters. Tailings are
contained in the existing tailings impoundment facility which is required to be
expanded on an annual basis, for the life of the mine.

The concentrator processed 5,159,730 tonnes of ore or 14,136 tonnes per calendar
day in 2003 at an average palladium head grade of 2.3 grams per tonne and an
average palladium recovery of 75.5%. The concentrator throughput was 4,851,621
tonnes of ore in 2002 at an average palladium grade of 1.91 grams per tonne and
an average palladium recovery of 73.8%. The Corporation produced 288,703 ounces
and


                                       9
<PAGE>

219,325 ounces of palladium in 2003 and 2002, respectively. Although mine
production was lower in 2003, palladium production reached a record high as a
result of higher palladium feed grade and, particularly during the second half
of the year, higher mill throughput and mill operating time.

The average grade of palladium milled was 2.3 g/t in 2003, 1.91 g/t in 2002 and
2.14 g/t in 2001. Production costs per tonne of ore milled were $20.09 in 2003,
$20.74 in 2002 and $29.35 in 2001. Cash costs, which include direct and indirect
operating costs, smelting, refining, transportation and sales costs, royalties,
and property taxes, plus credits for by-products, were US$175 per ounce in 2003,
US$264 per ounce in 2002 and US$340 per ounce in 2001. The improvement in the
unit cash costs was achieved by a 32% increase in palladium production to
288,703 ounces in 2003 compared to 219,325 ounces in 2002 combined with higher
revenue from by-product metals.

The improved mill performance resulted from the installation of the new primary
crusher and a number of other factors, including: using a contract secondary
crusher to provide fine ore to maximize mill throughput; a significant reduction
in the number of unscheduled shutdowns during 2003 which allowed for more
regular mill operations and increased metal recovery and operating time; and
improved maintenance planning and scheduling which resulted in increased mill
availability. In late December 2003, additional flotation cells from the old
mill were overhauled and commissioned as part of the second cleaner circuit
expansion. Optimization of these flotation cells continued in early 2004.

Several projects are planned for 2004 to further improve mill throughput and
reduce operating costs. The Corporation intends to install a secondary crusher
at an estimated capital cost of approximately $10 million and eliminate contract
crushing. Additional ore processing control systems will be installed in both
the grinding and flotation circuits to permit better sampling of concentrate
grade and quality, and concentrator reagents will be optimized.

The concentrator produces a palladium rich concentrate that is shipped off-site
for final processing. See "Smelting and Refining Agreements".

<TABLE>
<CAPTION>
               Milled        Concentrate      Palladium       Platinum        Gold         Copper         Nickel
   Year       (tonnes)        (tonnes)        (troy ozs)     (troy ozs)    (troy ozs)       (lbs)          (lbs)
---------------------------------------------------------------------------------------------------------------------
<S>            <C>               <C>             <C>             <C>          <C>        <C>               <C>
2003           5,159,730         36,869          288,703         23,742       23,536     7,142,674         4,070,785
2002           4,851,621         27,179          219,325         19,180       16,030     5,295,486         2,763,654
2001           2,662,240         21,697          123,281         10,073        9,603     3,123,763         1,595,179
2000             893,017         14,271           95,116          6,074        6,035     1,362,266         1,035,485
1999             894,168         10,286           64,441          4,744        4,888     1,377,464           973,817
</TABLE>

FACILITIES AND INFRASTRUCTURE

The mining operation includes, in addition to the concentrator, an assay
laboratory, a warehouse, electrical shop, a three bay truck shop to service the
larger haul trucks, an operations camp, a water treatment plant, a propane
storage facility, a fuel storage area and an electrical substation. Power is
delivered to the site by a 65 kilometer power line, which ties directly into the
northwestern Ontario power grid.

The present tailings management facility ("TMF") has been operating since 1990.
Until 1998, the dams were primarily constructed as water retaining dams,
comprising rock fill, filters and glacial till or high density polyethylene
facing. In 1998 and 1999, dams at the north end of the facility were raised
using rock fill and tailings. Further TMF expansion commenced in 2000 to store
the tailings produced over the


                                       10
<PAGE>

12 year mine life contemplated in the AGRA Simons Feasibility Study. The dams
have been raised and are constructed of non-reactive rock fill, filters and
geotextile. The TMF is a stable impoundment, where erosion is minimized, runoff
is managed, water is returned to the concentrator as needed and excess water is
stored until it can be treated and released. The design of the expanded
operation provides for closure and reclamation of the facility.

2003 EXPLORATION

In 2003, diamond drilling at the Lac des Iles Mine (19 holes aggregating 6,011
metres) was carried out southeast of the Roby Zone pit in an effort to discover
additional near-surface bulk mineable mineralization. In addition, several deep
holes were drilled to the southwest side of the Roby pit. One hole intersected
the possible southern extension of the Offset High Grade Zone, 180 metres south
of previous drilling. Finally, one hole was drilled to test a magnetotelleurics
anomaly to try and identify a massive sulphide body at depth. No significant
sulphides were encountered at the target depth however, a previously unknown
zone of palladium mineralization was encountered higher up in the hole.

CURRENT EXPLORATION

Exploration for 2004 will include both resource development and grass roots
programs. The greatest potential for expanding resources remains within the
immediate Lac des Iles area. Consequently, core drilling will be conducted on
the southeast and southwest extensions of the Roby zone. The Corporation will
also continue grass roots exploration on recently acquired properties located
within 100 kilometres of the mine.

OTHER PROPERTIES

In 2003, the Corporation continued to pursue new properties beyond the Lac des
Iles Mine, with a focus on those with established base and precious metals
resources.

The Corporation has an option to acquire a 60% interest in the Roaring River
property located 60 kilometres north of Lac des Iles. The 5,404 hectare Roaring
River property contains a large complex mafic intrusion, similar to the Lac des
Iles intrusion.

Exploration at Roaring River is handicapped by extensive overburden cover, the
few bedrock exposures that have been observed on the property were found to
exhibit features similar to that seen within the Roby Zone. Prospecting
discovered numerous large boulders containing elevated base metal and PGE
values. The bedrock source of the boulders remains undiscovered but is believed
to be proximal to the mineralized float.

The exploration program in 2003 consisted of geological mapping, soil sampling,
and ground geophysical surveys. A diamond drill program, to test the postulated
source area(s) for the mineralized boulders, is planned for the second quarter
of 2004.

In December 2003, the Corporation entered into an option and joint venture
agreement with Inco relating to Inco's Haines and Conacher properties, located
approximately 80 kilometres southwest of Thunder Bay, which surround Inco's
former Shebandowan mine and are contiguous with the Corporation's Haines
property. Combined with the Corporation's options on two adjacent properties,
the Shebandowan Lake project in the Haines and Conacher districts now covers
approximately 7,000 hectares.


                                       11
<PAGE>

The Corporation's original option on the Haines property was based on the
discovery of palladium mineralization contained in the matrix of a magmatic
breccia similar to that found at the Lac des Iles Mine. Another similarity to
the Lac des Iles Mine is the widespread occurrence of palladium associated with
pegmatitic pyroxenite and gabbro. In addition, nickel and copper-bearing massive
sulphide bodies were discovered on the property in the 1960s in a structure that
also controls the location of the Shebandowan mine, to the immediate east.
Mapping and sampling and overburden stripping by the Corporation during 2003
resulted in the discovery of similar mineralization as well as several unrelated
styles of gold mineralization. In 2004 the combined Shebandowan Lake properties
will be subject to an airbourne geophysical survey and diamond drilling to test
priority targets.

DRILLING AND ASSAYING

All hole collars have been surveyed using known mine survey stations. Since 1995
all holes have been surveyed downhole either with a Tropari instrument or the
Reflex Maxibor, a light log method that is not affected by magnetism. Core
recovery is excellent throughout the deposit and is reported to average close to
100%. The loss of core is nominal, occurring occasionally when a drill hole
intersects a fault.

The drillers deliver the core daily to the core logging facilities in a secure
wooden building where the geologists measure and photograph the core, then take
RQD measurements and specific gravity samples every 30 meters. The core is then
logged and marked for sampling. The drill procedures, core handling and logging
are in compliance with accepted industry standards and accepted industry
practices.

Split core is assayed by Accurassay Laboratories Ltd. of Thunder Bay. Precious
metals values are determined by fire assay followed by atomic absorbtion finish
and base metal values by atomic absorbtion. Pulverized rock standards are
inserted at every thirtieth sample, a blank split core sample is inserted every
twentieth sample, and for every twentieth sample, two subsamples of the coarse
crush reject are sent to one independent laboratory (ALS Chemex or Lakefield
Research), and the minesite laboratory.

MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES

The resource and reserve model developed by the Corporation utilizes the
classification system and definitions set forth in National Instrument 43-101
Standards Of Disclosure For Mineral Projects ("National Instrument 43-101")
which classifies resources into measured, indicated and inferred confidence
categories and classifies reserves as proven and probable. The standards applied
by the Corporation conform to the definitions adopted by the Canadian Institute
of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources
and Reserves - Definitions and Guidelines adopted by the CIM Council on August
20, 2000.

Mr. Chris Turek, P.Eng., former Mine Superintendent, Mr. Douglas Kim, P. Geo.,
Technical Services Manager, and Mr. Clay Craig, P. Eng., Chief Engineer prepared
the reserve and resource estimates for the open pit mine. Mr. Turek is a former
employee, and Messrs. Kim and Craig are employees of the Corporation and each is
a qualified person under National Instrument 43-101.

Resources are inclusive of reserves. Reserves are presently defined on a
palladium-only basis. The deposit is polymetallic by nature, with economically
recoverable credits for platinum, gold, copper, nickel and cobalt. The majority
of revenue is derived from palladium averaging about 67% of revenues in 2003.
Geochemical and statistical correlations between the metals are sufficiently
robust that grade control based on palladium only, corrected for by-products, is
sufficient for making economic decisions.


                                       12
<PAGE>

The reserve estimates are diluted and based upon a cut off grade of 1.1 grams of
palladium per tonne for the open-pit mine, assuming a long-term palladium metal
price of US$325 per troy ounce.

NOTE TO U.S. SHAREHOLDERS

The Corporation is required under Canadian law (National Instrument 43-101) to
report mineral reserves and resources using the classification system set out in
the CIM standards. These guidelines establish definitions for the reporting of
exploration information, mineral resources and mineral reserves in Canada. These
definitions have not been adopted for use in the United States by the Securities
and Exchange Commission (the "SEC").

The CIM definitions of proven and probable reserves are substantially similar to
the definitions of proven and probable reserves as set out Industry Guide No. 7
under the U.S. Securities Act of 1933, as amended. In addition, Canadian law
requires disclosure of mineral resources be classified as measured, indicated
and inferred resources if such resources are material to the company. While the
terms "mineral resource", "measured mineral resource", "indicated mineral
resource" and "inferred mineral resource" are recognized by Canadian securities
regulators, they are not defined terms under the standards in the United States.
As such, the information contained in this AIF (and in particular the sections
entitled "Reserves" and "Resources") concerning descriptions of mineralization
and resources under Canadian standards may not be comparable to similar
information made public by U.S. companies subject to reporting and disclosure
requirements of the SEC. "Indicated mineral resource" and "inferred mineral
resource" have a great amount of uncertainty as to their existence and a great
uncertainty as to their economic and legal feasibility. It cannot be assumed
that all or any part of an "indicated mineral resource" or "inferred mineral
resource" will ever be upgraded to a higher category. Investors are cautioned
not to assume that all or any part of the mineralization classified in these
categories will ever be reclassified as reserves.

RESERVES

The following table sets forth the estimated open pit reserves at the Lac des
Iles Mine as at December 31, 2003:

<TABLE>
<CAPTION>
   RESERVES       TONNES      PALLADIUM    PLATINUM       GOLD        COPPER      NICKEL      PALLADIUM    PLATINUM
                   (000)        (G/T)        (G/T)        (G/T)        (%)          (%)       (000 OZ.)    (000 OZ.)
----------------------------------------------------------------------------------------------------------------------
<S>               <C>           <C>          <C>          <C>          <C>         <C>          <C>             <C>
Proven            25,812        1.72         0.19         0.14         0.06        0.08         1,428           161
Probable          10,391        2.14         0.23         0.16         0.07        0.08          715             76
----------------------------------------------------------------------------------------------------------------------
Total             36,203        1.84         0.20         0.15         0.06        0.08         2,143           237
======================================================================================================================
</TABLE>

A basic dilution strategy is applied on a selective basis to the reserve model.
With the higher grade Roby High Grade and gabbronorite rock types, grades are
diluted by 10%. Within the other ore-bearing rock units, material is diluted by
10% with the diluting material assumed at a 0.4 g/t palladium grade (the average
grade of the surrounding waste material). Mining recovery in all cases is
assumed at 90%.

See "Note to U.S. Shareholders".

                                       13
<PAGE>

RESOURCES

The following table sets forth the estimated open pit resources at the Lac des
Iles Mine as at December 31, 2003:

<TABLE>
<CAPTION>

  RESOURCES       TONNES     PALLADIUM     PLATINUM      GOLD        COPPER      NICKEL      PALLADIUM    PLATINUM
                  (000)        (G/T)        (G/T)        (G/T)        (%)          (%)       (000 OZ.)    (000 OZ.)
---------------------------------------------------------------------------------------------------------------------
<S>               <C>           <C>          <C>         <C>          <C>         <C>          <C>           <C>
Measured          33,839        1.73         0.20        0.14         0.06        0.08         1,880         215
Indicated         16,103        1.97         0.22        0.15         0.07        0.08         1,020         113
---------------------------------------------------------------------------------------------------------------------
Total             49,942        1.81         0.20        0.14         0.06        0.08         2,900         328
=====================================================================================================================
Inferred           110          1.49         0.17        0.11         0.06        0.07           5            1
=====================================================================================================================
</TABLE>

1.   THE RESOURCES ARE INCLUSIVE OF RESERVES. The resources were estimated using
     a cut-off grade of 1.1 grams of palladium per tonne. The cutoff grade used
     in the resource estimates reflect the current estimated life-of-mine costs
     of mining and processing, in conjunction with smelting and transportation
     costs consistent with current contracts. The metal ounces listed in the
     table above are on a contained basis without adjustment for processing or
     smelting recoveries. Resources which are not reserves do not have
     demonstrated economic viability.

See "Note to U.S. Shareholders".

SMELTING AND REFINING AGREEMENTS

The Corporation's agreements with Falconbridge and Inco provide for the sale of
the Corporation's concentrates produced at the Lac des Iles Mine and,
ultimately, the smelting and refining of the principal metals contained in the
concentrates.

The agreement with Falconbridge ends on March 31, 2006. Under the agreement,
Falconbridge purchases the Corporation's concentrates and, will settle in cash
or, at the Corporation's discretion, make available to the Corporation the
refined palladium, platinum and gold at Falconbridge's refining facilities in
Kristiansand, Norway. In certain circumstances, such as default of performance,
insolvency or ceasing to carry on business, the agreement can be terminated by
the party not in default, insolvent or ceasing to carry on business. The
agreement can be suspended in the event of a force majeure.

The agreement with Inco ends on August 31, 2005. Under the terms of the
agreement, Inco purchases the Corporation's concentrates and will settle in cash
or, at the Corporation's discretion, make available to the Corporation the
refined palladium and platinum at Inco's Acton Refinery in London, England. The
agreement can be terminated by either party on 12 months' notice and suspended
in the event of a force majeure.

ENVIRONMENTAL MATTERS

The expanded operations at the Lac des Iles Mine involved numerous amendments to
existing approvals, as well as new approvals pursuant to various provincial
statutes relating to environmental matters. The Ontario Water Resources Act
required amendments to the existing permit to take water, a certificate of
approval for domestic (human) subsurface sewage disposal, and a certificate of
approval for industrial sewage that includes expansion of the tailings facility.
The amendments and approvals under the Ontario Water Resources Act were
obtained. The Corporation received approval for an amendment to the certificate
for industrial sewage to permit the new effluent treatment plant and increase
effluent discharge volume. The Corporation obtained the permit required for the
tailings facility under the Ontario Lakes and Rivers Improvement Act because of
the expanded area of the tailings pond. The Corporation obtained a certificate
of approval for air emissions for the site required under the Ontario
Environmental Protection Act.


                                       14
<PAGE>

In connection with the expanded operations, the Corporation amended the existing
closure plan under the Ontario Mining Act, which includes an increase in the
amount of financial assurance as required by the Ministry of Northern
Development and Mines ("MNDM"). The closure plan and financial assurance
agreement was submitted to the MNDM in April 2001. Under this agreement, the
Corporation will provide financial assurance of $7.8 million payable in
installments of $100,000 per month over six years. As at March 31, 2004, the
Corporation had approximately $5 million on deposit with the MNDM. The closure
plan and financial assurance were accepted on June 21, 2001.

The Corporation has designed the expanded operations so as not to infringe on
any navigable waters or fish habitat. Consequently, management believes no
federal approvals or permits are required pursuant to either the Navigable
Waters Protection Act or the Fisheries Act. In addition, because of the absence
of federal approvals, an environmental assessment under the Canadian
Environmental Assessment Act should not be necessary. However, in the event that
production increases beyond 15,000 tonnes per day, federal permits may be
necessary which would trigger an environmental assessment which may be in the
form of a comprehensive study.

Turbid water escaped from the South Starter dam of the TMF on four occasions in
2002. In each instance the Corporation notified the Ministry of the Environment
and commenced remedial action immediately, including stopping the source of the
leak, recovering turbid water to the extent possible and weekly monitoring of
possible effects on the environment. The cause of the seepage was identified and
remedied. The Ministry of the Environment reviewed the matter and no action was
taken by the Ministry of the Environment.

On October 7, 2003, the Corporation commenced a controlled discharge from the
TMF pursuant to the Corporation's certificate of approval issued by the Ministry
of the Environment. Samples of the effluent were taken as required by applicable
laws and regulations. In late November 2003, the Corporation received the
results from the sample analysis which showed that the effluent failed one acute
lethality test for Rainbow Trout and Daphnia Magna (water flea). The Corporation
ceased discharging effluent immediately and notified the Ministry of the
Environment. The Corporation has concluded that the failure of the effluent to
pass the acute lethality test resulted not from the composition of the effluent,
but from a reagent that was used in the clarification process. The reagent in
question has been replaced with a new reagent that has successfully met all
authorization limits set out in the applicable regulation and passed acute
lethality testing.

                     PROPOSED UNDERGROUND LAC DES ILES MINE

On January 31, 2003, RPA was commissioned to prepare a pre-feasibility study
(the "RPA Pre-Feasibility Study") for establishing an underground mine in the
Roby High Grade Zone below the existing Roby open pit operation (the "Roby
Pit"). The purpose of the Pre-Feasibility Study was to demonstrate the economic
viability of a palladium underground mining operation below the existing open
pit; provide a cost effective underground development plan and schedule; and
provide operating and capital cost estimates to a feasibility study level for
both contractor and owner operated scenarios. The Pre-Feasibility Study was
completed on July 31, 2003.

In October 2003, an independent contractor was retained to review the
Pre-Feasibility Study and to prepare a request for proposal ("RFP") for a
feasibility study for the underground mine (the "Project"). The RFP was issued
on October 24, 2003 and the mandate was awarded to RPA in November 2003.

The feasibility study prepared by RPA is dated February 27, 2004 and titled
"Feasibility Study for Underground Mining at the Lac des Iles Mine" (the "RPA
Feasibility Study"). In completing the Feasibility Study, RPA used its own
senior staff, together with Itasca Consulting Canada Inc. for


                                       15
<PAGE>

geomechanics assessment and McIntosh Engineering Ltd. for design and drafting
services for electrical design.

All of the technical information (including financial information) contained in
this AIF relating to the Project has been taken from the Feasibility Study. A
technical report, prepared by Graham G. Clow, P. Eng and David W. Rennie, P. Eng
of RPA, incorporating certain information from the Feasibility Study has been
filed on SEDAR. Messrs. Clow and Rennie are employees of RPA, have confirmed
their independence to the Corporation and are qualified persons under National
Instrument 43-101. Messrs. Clow and Rennie prepared the reserve and resource
estimates for the proposed underground mine at the Roby High Grade Zone.

RESOURCES AND RESERVES

The underground portion of the Roby deposit is a continuation to depth of the
Roby High Grade Zone that forms the core of the Roby Pit reserves. The
underground deposit lies below the ultimate pit bottom of the Roby Pit at an
elevation of 209 metres above sea level, and extends to a depth of 170 metres
below sea level, for a total dip length of 444 metres.

The following table sets forth the underground resources for the Roby Deposit as
estimated by RPA in the RPA Feasibility Study:

<TABLE>
<CAPTION>

RESOURCE CATEGORY                        TONNES      PALLADIUM       PLATINUM       GOLD        COPPER       NICKEL
                                         (000)         (G/T)          (G/T)         (G/T)         (%)         (%)
--------------------------------------------------------------------------------------------------------------------
<S>                                      <C>            <C>            <C>          <C>          <C>          <C>
Indicated                                4,496          7.35           0.43         0.35         0.07         0.08

Inferred                                   -             -              -             -            -           -
</TABLE>

1.   The resource categories follow the definitions contained in National
     Instrument 43-101. The resources are inclusive of reserves.
2.   Resources are calculated at a cutoff grade of 4.5 grams per tonne for
     palladium (5.0 grams per tonne palladium equivalent) and an average
     long-term palladium price of US$325 per ounce.
3.   Resources are estimated to commence at an elevation of 209 metres above sea
     level, the ultimate pit bottom of the Roby Pit.

The sub-vertical deposit strikes in a northerly direction over a maximum length
of 440 metres. It pinches out to the north and south, and is wider towards the
south. Thickness ranges from 2 metres to 34 metres and averages 11 metres. The
highest grades are generally in the thicker mineralized areas to the south and
above 30 metres below sea level. The zone is continuous along strike and dip and
appears to be quite repetitive and predictable from level to level.

                                       16
<PAGE>

A nominal target of 2,000 tonnes of ore per day from underground was chosen by
RPA as the most appropriate rate for both the size of the deposit and the
allowable time for pre-production development. This target rate is referred to
in the RPA Feasibility Study as the "Base Case". RPA identified several
constraints in assessing access alternatives and coordinating the underground
operations with the open pit. RPA concluded that ramp access from within the
open pit would be the most economical alternative. RPA recommends that the
portal be located in the pit wall, and ore be hauled in 60 tonne trucks directly
from the mine to a stockpile area near the surface crusher.

In general, ground conditions are expected to be very good, based on
observations in the open pit, from drill core, and from geomechanics testwork.
This will favour large open spans, and reasonable mineral resource recoveries
should be attainable without the need for backfill. The chosen mining method for
the RPA Feasibility Study is sublevel retreat longitudinal longhole stoping with
no fill. The mining block interval is 70 metres floor to floor including a 15
metre to 25 metre sill pillar below each haulage level. Stopes will be 45 metres
to 55 metres high by the width of the orebody.

The RPA Feasibility Study states that, initially, mining will be concentrated in
the southern half of the underground mine, where orebody thickness and grades
are highest. Stopes will be mined retreating from the north and south
extremities towards a 50 metre wide main rib pillar situated at the centroid of
the mineral deposit. A single 15 metre wide side rib pillar will be left on the
north side for added stability. Up to four stopes will be in operation at any
one time.

Average stope dilution has been calculated by the RPA Feasibility Study at 15%
by adding an amount of hangingwall and footwall to the resource tonnage. Drift
dilution has been calculated as 35%, giving a total mining dilution of 16%.
Mining limits will be assay cut offs, and dilution will carry mineral grades
estimated at 1.10 grams of palladium per tonne. Design extraction is estimated
by the RPA Feasibility Study to be 83% of the resources, with unrecovered ore
tied up mostly in the crown pillar (20 metres) and the sill pillars.

The following table sets forth the underground reserves for the deposit as
estimated by RPA in the RPA Feasibility Study:

<TABLE>
<CAPTION>

RESERVES                       TONNES      PALLADIUM      PLATINUM         GOLD           COPPER           NICKEL
                                (000)        (G/T)         (G/T)          (G/T)             (%)             (%)
----------------------------------------------------------------------------------------------------------------------
<S>                             <C>           <C>           <C>            <C>             <C>              <C>
Probable
   Stopes                       2,218         6.69          0.40           0.33            0.06             0.08
   Drifts                         225         5.72          0.35           0.27            0.05             0.07
   Recoverable Pillars          1,098         6.67          0.41           0.36            0.07             0.09
----------------------------------------------------------------------------------------------------------------------
Total Probable                  3,542         6.62          0.40           0.34            0.07             0.08
======================================================================================================================
</TABLE>

1.   The reserve categories follow the definitions contained in National
     Instrument 43-101.
2.   Reserves were calculated at a cutoff grade of 4.5 grams per tonne for
     palladium (5.0 grams per tonne palladium equivalent) and an average
     long-term palladium price of US$325 per ounce.
3.   Reserves were estimated to commence at an elevation of 209 metres above sea
     level, the ultimate pit bottom of the Roby Pit plan.
4.   Dilution was estimated to average 16%.
5.   Extraction was designed to be 83% of the resource.

Mobile equipment for the mine is expected to include two electric hydraulic
drill jumbos, one longhole drill, one emulsion truck, three 8 cubic yard
scooptrams, and three 60 tonne trucks, along with other service and support
equipment. Total intake ventilation for the mine is designed to be 425,000 cubic
feet per minute. There will be one intake ventilation raise/secondary egress
situated outside the ultimate open pit limits and air will exhaust up the main
ramp.

                                       17
<PAGE>

The Corporation has carried out metallurgical test work on the underground ore
and has determined that no modifications are required to process a blend of
underground and open pit ore. For purposes of the RPA Feasibility Study, the
Corporation advised RPA that the palladium recovery of underground ore was
expected to be higher (+80%) than that being achieved on the open pit ore in the
mill (75% to 80%).

Based on the RPA Feasibility Study, at full complement there will be an
underground workforce of 70 hourly and 11 management and technical staff. Hourly
employees will work two ten-hour shifts per day on a two week on/one week off
rotation. Contractors will be retained during the pre-production period to
install the ventilation raise. During the mine life, there will be an ongoing
contractor presence for infill diamond drilling. A contract crew will continue
to extend the ventilation raise into production as lower levels of the mine are
reached.

Permitting and approvals requirements are expected by RPA to be minimal, as the
underground mine will be an extension of the much larger and higher impact open
pit operations. The Corporation does not anticipate any environmental issues or
aboriginal or local opposition to the development of the underground mine.
Changes to services such as potable water and sewage systems will be suitably
permitted.

CAPITAL COSTS

The following table sets forth the estimated capital costs of the Project (in
constant 2004 dollars) as set forth in the RPA Feasibility Study.

                                                               COST
                                                            (CDN$000S)
                                                            ----------
       Mine development                                        15,855
       Buildings                                                4,582
       Engineering, procurement and                             1,431
         construction management
       Indirect costs                                           1,380
       Owner's costs                                            9,937
       Contingency                                              2,755
                                                            ---------
       Sub-total                                               35,940

       Capitalized operating costs                                947
       Less pre-production development revenue                (6,530)
                                                            ---------
       Total                                                  $30,358

The capital cost estimate covers a 16-month pre-production period and includes
all costs for the development of the underground mine based upon 2,000 tonnes
ore per day for its 4.7 year mine life.

Mine development includes all rockwork and support with productivities
calculated from base data (for example, for each face, the number of holes
required, powder factors assigned, manpower for operating each item of equipment
and other costs). It also includes all stationary and electrical equipment.
Major mobile equipment will be leased and phased in during pre-production as it
is required. Equipment leases are currently scheduled to be expensed as an
operating cost during production. Smaller equipment such as mine service
vehicles and the shuttle bus will be purchased outright.

Indirect costs include items such as plant commissioning, first fills for
consumables, freight and insurance.

Owner's costs cover all pre-production labour, including recruitment, equipment
leases and diamond drilling.

Contingencies have been estimated at 10% for development, 10% for equipment, and
10% for services and owner's costs. Contingencies are not applied to indirect
costs and to some small items of equipment. The average contingency for the
Project is 8%.


                                       18
<PAGE>

Closure costs related to the overall underground site are assumed to be minimal.
These include removal of underground equipment and services, and capping of the
ventilation raises. Costs are expected to be recovered from the salvage value of
equipment.

During pre-production, approximately 100,000 tonnes of ore will be produced,
generating revenue of $6.5 million. It was assumed for evaluation purposes that
this was in addition to and does not replace open pit feed.

Sustaining capital is estimated at $5.3 million during the mine life, covering
ventilation raise extension, major equipment rebuilds in 2008 and equipment
lease residuals. Main ramp development after startup was included in operating
costs.

OPERATING COSTS

The operating cost estimate for the underground mine covers a 4.7 year mine life
from September 2005 to June 2010 and were estimated in detail from a zero base.

The average total unit cash operating cost over the mine life is estimated by
RPA to be $39.79 per tonne milled, or $152 per ounce of palladium (net of
by-product credits). This includes mining, ore haul, milling, power, equipment
leases, and general and administrative costs.

PROJECT RISK

According to the RPA Feasibility Study, this is a relatively low risk mine
project. The underground mine is being developed beneath an existing open pit
where the surface infrastructure is in place, including crusher and
concentrator. Resources and reserves have been estimated in accordance with the
requirements of National Instrument 43-101 from an extensive database built up
over five years. The underground mineral deposit lies within the same competent
rocks as in the overlying open pit, and ground conditions are expected to be
good. Development and production plans have been prepared from a zero base using
known operating and productivity specifications. Costing has been derived from
firm quotations from equipment suppliers and contractors.

Geomechanics testwork has indicated that large openings created with longhole
retreat mining need to be supported by a recoverable central main rib pillar and
a side rib pillar to minimize the chance of major ground falls in the later
stages of mining. It is expected that 83% of the reserves will be recoverable
using this method, where the majority of the non-recoverable ore will be in
thin, lower grade pillars.

                                       19
<PAGE>

CASH FLOW ANALYSIS

A pre-tax cash flow projection was generated by RPA from the life of mine
capital and operating cost data prepared from the parameters set forth in the
Feasibility Study. The following table summarizes the key economic criteria used
by RPA to prepare the cash flow projection:

     REVENUE

     o    2,000 tonnes per day mining from underground (720,000 tonnes per
          year), for a total daily mill throughput of 16,500 tonnes per day
          including open pit production
     o    metal price assumptions:
               Palladium:       US$325 per ounce
               Platinum:        US$700 per ounce
               Gold:            US$375 per ounce
               Copper:          US$0.90 per pound
               Nickel:          US$5.50 per pound
     o    metallurgy as per the Corporation's 2004 budget and current operating
          experience
     o    palladium metal recovery 83%
     o    net smelter returns based on existing terms with Inco and Falconbridge
     o    revenue is recognized at the time of production
     o    exchange rate US$l: Cdn$1.33
     o    5% net smelter return royalty payable to the Sheridan Group

     COSTS
     o    pre-production period 16 months (commencing May 1, 2004)
     o    mine life of 4.7 years (commencing September 2005)
     o    production plan as set out in the RPA Feasibility Study
     o    mine life capital totals Cdn$36.7 million, net of pre-production
          revenue
     o    the average operating cost over the mine life is Cdn$39.79 per tonne
          milled

The economic analysis was carried out by RPA assuming operations are on a stand
alone basis where underground production is considered incremental to the
higher-output ongoing open pit operation. Some costs, such as indirect costs,
currently are wholly absorbed by open pit mining. A more complete economic
assessment of the impact of underground mining will require analysis of cash
flow projections both for the total open pit and underground, and for the open
pit alone.

According to the RPA Feasibility Study (and based on the economic criteria set
out above), for the underground mine on a stand-alone basis, the undiscounted
pre-tax cash flow for the Base Case totals $92.0 million over the mine life, and
simple payback occurs by the first quarter of 2007 (15 months).

The unit operating cost is estimated by RPA to be US$152 per ounce of palladium,
net of by-product credits. The mine life capital unit cost is estimated to be
US$48 per ounce, for a total cash cost of US$200 per ounce of palladium. Average
annual palladium production from underground during operation is estimated to be
118,000 ounces per year.

The net present value for the base case pre-tax model was calculated by RPA
using a 10% discount rate, based on constant 2004 dollars and a relatively short
mine life (4.7 years). According to RPA, introducing inflation/deflation
criteria to the model would make little difference to the figures.

Over recent years, Canadian mining companies have used discount rates between
12% and 15% for project evaluation of Canadian greenfield projects. Projects in
other countries are likely to be discounted at higher rates, to reflect an added
risk element. An incremental project to a Canadian-based existing profitable
mining operation can be expected to carry a lower risk premium. As a result, RPA
considered a 10% discount rate for the Project as appropriate for project
evaluation purposes.

                                       20
<PAGE>

The following table sets forth the net present value based upon discount rates
of 5%, 10% and 15%, and exchange rates and prices listed above under "Revenue":

                                                      DISCOUNT RATE
                                            -----------------------------------
                                                5%          10%         15%
                                                --          ---         ---
          Net present value (Cdn$000)         $69,151     $52,195     $39,437
          Internal rate of return (IRR)         58%

On February 27, 2004 the United States dollar exchange rate was $0.75 per
Cdn$1.00 and the closing metal prices on that day pertinent to the Project were
as follows:

          Palladium:        US$235 per ounce
          Platinum:         US$895 per ounce
          Gold:             US$394 per ounce
          Copper:           US$1.35 per pound
          Nickel:           US$6.69 per pound

Using these prices and exchange rate, the undiscounted pre-tax cash flow for the
Base Case totals $41.3 million and the net present value at 10% is estimated by
RPA to be $18.8 million. The unit operating cost is estimated to be US$129 per
ounce of palladium, net of by-product credits. The mine life capital unit cost
is estimated to be US$50 per ounce, for a total estimated cash cost of US$179
per ounce of palladium.

SENSITIVITY ANALYSIS

The following table sets forth RPA's analysis of the sensitivity of the Project
to specified variables:

<TABLE>
<CAPTION>
<S>                          <C>                <C>                   <C>                        <C>
                                                                                                  % CHANGE FROM BASE
ITEM                              UNIT             BASE CASE VALUE        VALUE AT NPV=O(1)            CASE(1)
----------------------------------------------------------------------------------------------------------------------
Palladium price                US$ per oz               US$325                  US$216                    -33
Operating cost               Cdn$ per tonne           Cdn$39.79               Cdn$62.23                   +56
Capital cost                     Cdn$000              Cdn$36,700              Cdn$93,900                 +156
Exchange rate                   US$:Cdn$               US$0.75                 US$0.99                    +32
Pd Head grade                    g/t Pd                  6.62                    4.33                     -35
Extraction                     Tonnes 000               3,542            18 months production
</TABLE>

(1)  For each value, all other Base Case values remain constant.


                                       21
<PAGE>

According to the RPA Feasibility Study, the Project is most sensitive to
external economic criteria related to the palladium price (spot price and the
Canadian/United States dollar exchange rate). Any further rise in the Canadian
dollar will have a direct impact on Project viability since costs are almost
entirely in Canadian dollars and revenues are in United States dollars. The
major Project risk will arise if there is a combination of significant weakening
of the U.S. dollar combined with a prolonged period of lower palladium spot
prices. Based on the palladium price at the date of the RPA Feasibility Study,
the Project is less robust, but still has a positive net present value. The RPA
Feasibility Study sets out the following additional Project sensitivities:

     o    PALLADIUM HEAD GRADE. Head grade should not change significantly from
          the estimates used in the RPA Feasibility Study unless there is
          increased dilution, perhaps caused by unforeseen poor ground
          conditions. Geomechanics testwork and the experience of open pit
          ground conditions suggest that this is unlikely, especially during
          primary stope extraction. Should grades fall through increased
          dilution in the pillar recovery stage, there will be the option to
          leave broken ore in the drawpoints.

     o    EXTRACTION. The Base Case undiscounted payback period is 15 months
          from production start up. This is the point at which production could
          cease and the mine would be in a nominal breakeven situation in terms
          of Base Case assumptions.

     o    CAPITAL AND OPERATING COSTS. These costs have been calculated from a
          zero base using firm price quotations and known manpower and equipment
          productivities. Capital costs are estimated to an accuracy of
          +15%/-10%. The Project is not particularly sensitive to capital cost
          overruns. Rises in consumable costs (fuel and power) could increase
          unit operating costs. It is unlikely such cost rises would seriously
          endanger Project viability unless they were combined with adverse
          changes in other variables such as exchange rates and palladium price.

The Project has a rapid simple payback of 15 months, which, according to the RPA
Feasibility Study, minimizes the chance for adverse changes in underlying
fundamental variables to have a significant effect on overall Project viability.

CONCLUSIONS AND RECOMMENDATIONS

According to the RPA Feasibility Study, in RPA's opinion the Project is a
relatively low risk operation from a technical viewpoint. The underground mine
will lie down dip and directly beneath the open pit mine, which has been in
operation since 1993. Metallurgical response is predictable and proper
environmental controls are in place. Site infrastructure is well established,
and permitting for an underground operation has been discussed with the relevant
ministries, with no difficulties being foreseen. Provision of services such as
power, water and sewage are incremental to those existing for the open pit mine.
In RPA's opinion, the key risks to the Project lie in two areas:

     o    A decline in the palladium price to approximately US$216 per ounce
          results in a breakeven discounted cash flow. The Project is somewhat
          sensitive to nickel and platinum prices as well. A decline in the
          nickel price to approximately US$4.00 per pound and platinum to
          approximately US$500 per ounce would result in a break even discounted
          cash flow at the palladium price of US$235 as of the date of the RPA
          Feasibility Study.

     o    Extraction of the ore without fill presents some risk, which
          geomechanical modelling shows should be manageable. In RPA's opinion,
          the investment in backfill is not warranted at present palladium
          prices.

The current schedule calls for work to commence in May 2004. RPA believes it is
unlikely that an acceptable crew and equipment can be acquired by that time and,
accordingly, RPA recommends that the Corporation retain a contractor to carry
out the initial phase of portal development and decline development to the first
ventilation raise bypass.

Based upon the price forecast used in the analysis, RPA has recommended that the
Corporation proceed with the development of the underground mine.


                                       22
<PAGE>

                   SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following financial information is in Canadian funds in thousands of dollars
except per share amounts.

<TABLE>
<CAPTION>
                                                         As at or for the year ended December 31
                                                2003                      2002                      2001
                                      ------------------------------------------------------------------------------
<S>                                             <C>                     <C>                       <C>
Total assets                                       393,692                 415,923                   417,766
Total long-term liabilities                         40,561                  86,889                   118,237
Shareholders' equity                               299,955                 260,071                   244,112
Revenue from metal sales                           192,141                 176,773                   121,496
Net earnings                                        38,378                  15,082                     7,188
Net earnings per share
 - basic                                              0.76                    0.30                      0.14
 - diluted                                            0.75                    0.30                      0.14
Dividends                                                -                       -                         -
</TABLE>

The Corporation has not paid any dividends to date on its common shares. In
addition, the payment of dividends on the common shares is restricted under the
Corporation's credit facilities with a Canadian chartered bank and with
Kaiser-Francis Oil Company. Accordingly, it is not anticipated that the
Corporation will pay any dividends on its common shares in the near future. The
actual timing, payment and amount of any dividends will be determined by the
board of directors from time to time based upon, among other things, cash flow,
results of operations and financial condition, the need for funds to finance
ongoing operations and such other business considerations as the board of
directors may consider relevant.


                                       23
<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS


Reference is made to "Management's Discussion and Analysis of Financial Results"
on pages 16 through 20 of the 2003 Annual Report to shareholders, which pages
are incorporated herein by reference.

Selected consolidated financial information for the last eight quarters ended
December 31, 2003 (in thousands of dollars except per share amounts) is set
forth below:

<TABLE>
<CAPTION>
                         Dec 31      Sept 30    June 30        Mar 31       Dec 31      Sept 30      June 30    Mar 31
                          2003         2003       2003          2003         2002         2002         2002       2002
------------------------------------------------------------------------------------------------------------------------
<S>                      <C>          <C>        <C>           <C>          <C>          <C>          <C>        <C>
Revenue                  59,805       42,585     44,631        45,120       43,904       46,547       41,745     44,577
Net income (loss)        16,092        3,535     10,361         8,390      (1,579)        2,894        7,521      6,246
Net income
 per share
 - basic                   0.32         0.07       0.20          0.17       (0.03)         0.06         0.15       0.12
 - diluted                 0.31         0.07       0.20          0.17       (0.03)         0.06         0.15       0.12
</TABLE>

                              MARKET FOR SECURITIES

The common shares are listed on the Toronto Stock Exchange under the symbol
"PDL" and on the American Stock Exchange under the symbol "PAL".

                             DIRECTORS AND OFFICERS

<TABLE>
<CAPTION>
<S>                                           <C>                                   <C>
--------------------------------------------- ------------------------------------- --------------------------------
            NAME AND POSITION(S)
         HELD WITH THE CORPORATION                    PRINCIPAL OCCUPATION                  DIRECTOR SINCE
--------------------------------------------- ------------------------------------- --------------------------------
Michael P. Amsden, P.Eng.(2) (3)(4)           Retired senior mining executive       April 1995
Chairman
Oakville, Ontario
--------------------------------------------- ------------------------------------- --------------------------------
Steven R. Berlin, C.P.A.(1) (2)(6)            Vice President and Co-Chief           February 2001
Director                                      Financial Officer, Kaiser-Francis
Tulsa, Oklahoma                               Oil Company
--------------------------------------------- ------------------------------------- --------------------------------
Andre J. Douchane(4)                          Officer of the Corporation            April 2003
Director, President and Chief Executive
Officer
Toronto, Ontario
--------------------------------------------- ------------------------------------- --------------------------------
Louis J. Fox, J.D.(3)(5)(6)                   Private Businessman; Consultant       June 2000
Director
Fort Lauderdale, Florida
--------------------------------------------- ------------------------------------- --------------------------------
A.M. (Sandy) Laird, P.Eng.(3) (4)(5)          Retired senior mining executive       June 2000
Director
Vancouver, British Columbia
--------------------------------------------- ------------------------------------- --------------------------------
</TABLE>


                                       24
<PAGE>
<TABLE>
<CAPTION>
<S>                                           <C>                                   <C>
--------------------------------------------- ------------------------------------- --------------------------------
            NAME AND POSITION(S)
         HELD WITH THE CORPORATION                    PRINCIPAL OCCUPATION                  DIRECTOR SINCE
--------------------------------------------- ------------------------------------- --------------------------------
Richard H. Sutcliffe, Ph.D.(1)(2)(4)          President and Chief Executive         January 1999
Director                                      Officer, Patricia Mining Corp. and
Ancaster, Ontario                             URSA Major Minerals Incorporated,
                                              each a natural resource company
--------------------------------------------- ------------------------------------- --------------------------------
Gregory J. Van Staveren, C.A., C.M.A.,        Strategic Financial Consultant        February 2003
C.P.A.(1)(5)(6)
Director
Toronto, Ontario
--------------------------------------------- ------------------------------------- --------------------------------
George D. Faught, C.A.                        Officer of the Corporation
Vice President Finance and Chief Financial
Officer
Toronto, Ontario
--------------------------------------------- ------------------------------------- --------------------------------
Ray J. Mason, B.Sc.                           Officer of the Corporation
General Manager
Thunder Bay, Ontario
--------------------------------------------- ------------------------------------- --------------------------------
Bruce W. Mackie                               Officer of the Corporation
Vice President, Exploration and Corporate
Development
Oakville, Ontario
--------------------------------------------- ------------------------------------- --------------------------------
Douglas H. Bache                              Officer of the Corporation
Treasurer
Burlington, Ontario
--------------------------------------------- ------------------------------------- --------------------------------
Michael C. Thompson, F.C.C.A.                 Officer of the Corporation
Manager Administration
Thunder Bay, Ontario
--------------------------------------------- ------------------------------------- --------------------------------
Mary D. Batoff, LL.B.                         Consultant
Secretary and General Counsel
Toronto, Ontario
--------------------------------------------- ------------------------------------- --------------------------------
</TABLE>

(1)  Member of the Audit Committee
(2)  Member of the Compensation Committee
(3)  Member of the Nominating Committee
(4)  Member of the Technical Committee
(5)  Member of the Corporate Governance Committee
(6)  Member of the Hedging Committee

The term of office for each director expires at each annual meeting of
shareholders.

Each director or officer listed above has held the same principal occupation
during the past five years except as described below:

Mr. Berlin has been the Vice President and Co. Chief Financial Officer of
Kaiser-Francis Oil Company ("Kaiser-Francis"), the Corporation's principal
shareholder, since February 1999 on a part-time basis and since


                                       25
<PAGE>

September 1999 on a full-time basis. From November 1999 until January 30, 2004,
he was also Chief Financial Officer and Treasurer of PetroCorp Incorporated.
Prior to September 1999, Mr. Berlin was on the faculty of the University of
Tulsa.

Mr. Douchane was President of Management Inc., a management consulting firm.
Prior to April 2002, he was President and Chief Operating Officer of Chief
Consolidated Mining Co. and prior to June 2001 he was Vice-President Operations
of Franco-Nevada Mining Corp., a mining and metals royalty company.

Mr. Van Staveren, prior to September 2001, was Vice President Finance and Chief
Financial Officer of Martinrea International, formerly Royal Laser Tech
Corporation, a metal fabrication company.

Mr. Faught was the Chief Financial Officer of William Resources Inc., a natural
resource company, prior to November 1999.

Mr. Mason was resident manager of Wabush Mines, Labrador prior to July 2001, and
previously held senior positions with a number of mines in Canada.

Mr. Mackie was an independent consultant providing services to junior mining
companies prior to February 2004. Prior to 2002 he was the senior
geologist/analyst for Battle Mountain Canada Ltd., a gold and silver mining
company.

Mr. Bache was Director, Strategic Planning and Corporate Development of Inco
Limited ("Inco"), a nickel mining and processing company. Prior to October 2002
he was Assistant Comptroller, Financial Planning and Analysis of Inco and prior
to July 2001 he was Assistant Treasurer of Inco.

Mr. Thompson was a consultant prior to June 2000 and prior to January 2000 was
general manager of Riverside Grain Products, a starch manufacturing company.

Ms. Batoff was the Corporate Secretary of William Resources Inc., a natural
resource company, prior to July 1999.

Mr. Berlin is the nominee of Kaiser-Francis, the Corporation's principal
shareholder, which has advised the Corporation that it intends to vote the
common shares which it owns in favour of his re-election as a director.

The number of common shares beneficially owned, directly or indirectly, or over
which control or direction is exercised, by all directors and senior officers of
the Corporation is 77,793, less than 1% of the common shares issued and
outstanding.

There are potential conflicts to which the directors of the Corporation are
subject in connection with the business and operations of the Corporation. The
individuals concerned shall be governed in any conflicts or potential conflicts
by applicable law. As of the date hereof, the following directors of the
Corporation hold positions with other companies that explore for or produce
platinum group metals or have other business interests which may potentially
conflict with the interests of the Corporation.

Dr. Sutcliffe is the President and Chief Executive Officer of Ursa Major
Minerals Incorporated ("Ursa Major") and Patricia Mining Corp. ("Patricia
Mining"). Ursa Major has active base and precious metal exploration projects in
Wyoming, U.S.A. and the Sudbury area of Ontario, Canada. Patricia Mining has
active gold exploration and mining interests in the Wawa area of Ontario,
Canada. Patricia Mining has a 2% net smelter return royalty on six mining claims
acquired by the Corporation from Patricia Mining.


                                       26
<PAGE>

Mr. Fox is a director of SouthernEra Resources Ltd. ("SouthernEra"), a company
listed on the Toronto Stock Exchange and Messina Limited, a South African
company listed on the Johannesburg Stock Exchange. SouthernEra owns a 70.4%
interest in Messina Limited which, in turn, owns 100% of Messina Platinum Mines
Limited, a platinum group metals producer in South Africa. SouthernEra's
reported production is from the Messina mine in South Africa.

                             ADDITIONAL INFORMATION

SHARE CAPITAL

The authorized share capital of the Corporation consists of an unlimited number
of special shares, issuable in series and an unlimited number of common shares.
There are no special shares outstanding.

The special shares may be issued in series. The Corporation's directors may, by
resolution, fix the number of shares in, the designation of, and determine the
rights, privileges, restrictions and conditions attaching to, each series of
special shares. The special shares of each series rank on a parity with the
special shares of any other series in respect of dividends or the return of
capital. The holders of special shares are entitled to receive, in priority to
the holders of common shares and the shares of any other class ranking junior to
the special shares, as and when declared by the directors, dividends in the
amounts specified or determinable in accordance with the provisions of the
series of which such special shares form a part. In the event of the
liquidation, dissolution or winding-up of this company, whether voluntary or
involuntary, before any amount is paid to the holders of common shares or shares
of any other class ranking junior to the special shares, the holders of special
shares shall be entitled to receive, to the extent provided for with respect to
such series, an amount equal to the price at which such shares were issued, such
premium, if any, as has been provided for with respect to such series, and all
unpaid cumulative dividends or declared and unpaid non-cumulative dividends. The
special shares of any series may also be given such other preferences over the
common shares and any other class of shares ranking junior to the special shares
as may be determined in the case of such series. The holders of special shares
are not entitled to vote separately as a class and the holders of any series of
special shares are not entitled to vote separately as a series except as
required by the CANADA BUSINESS CORPORATIONS ACT.

Each common share entitles the shareholder to one vote at all meetings of
shareholders other than meetings at which only the holders of another class or
series of shares are entitled to vote. Each common share entitles the holder
thereof, subject to the prior rights of the holders of the special shares, to
receive any dividends declared by the board of directors and the remaining
property of the Corporation upon dissolution.

LEGAL PROCEEDINGS

The Corporation, along with J. Patrick Sheridan, Minerales De Copan and two
other individuals, are defendants in an action brought by Cambridge Resources
Corp. ("Cambridge"), in the Superior Court of Justice (Ontario). In its amended
statement of claim dated September 27, 1991 Cambridge claims damages in the
amount of $20 million, punitive and exemplary damages in the amount of $5
million, a declaration that the defendants hold any interest in an unidentified
mining concession located in Honduras, about forty miles southeast of
Tegucigalpa (defined therein as the "Mining Property") on constructive trust for
Cambridge, a mandatory order requiring the defendants to deliver up all
proceeds, equity interest, security or debenture interest in whatever form
relating to the Mining Property, pre-judgment and post-judgment interest and
costs. The Corporation filed a statement of defense dated February 7, 1992 which
states, among other things, that the Mining Property was previously known to one
of the individual defendants to be of insufficient quality to merit commercial
development and that, accordingly, the Corporation had declined to proceed any
further with the investigation or purchase of the


                                       27
<PAGE>

Mining Property. Partial discoveries of certain of the parties were conducted on
October 6, 7 and 8, 1993. There have been no further proceedings in the action.
No provision in the financial statements has been made in respect of any
possible loss from the action as management believes that the Corporation has a
valid defense and the Sheridan Group has indemnified the Corporation.

Claims of wrongful dismissal totaling $0.4 million have been made against the
Corporation by former employees. Discoveries of the parties commenced in
December 2003 and were adjourned; no dates have been set to continue
discoveries. No provision has been made in the financial statements, as
management believes that the Corporation has valid defenses to these claims.

Stock options in respect of an aggregate of 29,000 common shares may be held by
employees of Minerales De Copan. The Corporation has been indemnified by the
Sheridan Group for losses in connection with these options.

From time to time, the Corporation is involved in other litigation,
investigations or proceedings related to claims arising out of its operations in
the ordinary course of business. In the opinion of the Corporation's management,
these claims and lawsuits in the aggregate, even if adversely settled, will not
have a material effect on the consolidated financial statements of the
Corporation.

RISK FACTORS

The Corporation's securities are subject to the following risks. If any of the
risks occur, the Corporation's business, operating results and financial
condition could be materially adversely affected, the trading price of the
common shares could decline and all or part of any investment may be lost.

THE CORPORATION CANNOT ASSURE THAT IT WILL MEET ITS GOALS FOR PRODUCTION AND
OPERATING COSTS AND IF IT DOES NOT, ITS OPERATING RESULTS WILL BE ADVERSELY
AFFECTED.

Planned production levels and operating costs are estimated based on the
Corporation's experience in operating its mine and the RPA Feasibility Study.
These estimates are subject to numerous uncertainties, many of which are beyond
the Corporation's control. The Corporation cannot make assurances that its
actual production levels will not be substantially lower than its estimates or
that its operating costs will not be materially higher than anticipated.

IF RESERVE ESTIMATES ARE NOT ACCURATE, PRODUCTION MAY BE LESS THAN ESTIMATED
WHICH WOULD ADVERSELY AFFECT THE CORPORATION'S FINANCIAL CONDITION AND RESULT OF
OPERATIONS.

Reserve estimates are imprecise and depend on geological analysis based partly
on statistical inferences drawn from drilling, which may prove unreliable, and
assumptions about operating costs and metal prices. The Corporation cannot be
certain that the reserve estimates are accurate and cannot guarantee that it
will recover the indicated quantities of metals. Future production could differ
dramatically from such estimates for the following reasons:

     o    mineralization or formations at the mine could be different from those
          predicted by drilling, sampling and similar examinations;
     o    declines in the market price of palladium may render the mining of
          some or all of the reserves uneconomic; and
     o    the grade of ore may vary significantly from time to time and the
          Corporation cannot give any assurances that any particular quantity of
          metal will be recovered from the reserves.


                                       28
<PAGE>

The occurrence of any of these events may cause the Corporation to adjust the
reserve estimates or change its mining plans, which could negatively affect the
Corporation's financial condition and results of operation. Moreover, short-term
factors, such as the need for additional development of the ore body or the
processing of new or different grades, may impair its profitability in any
particular accounting period.

THE RISKS AND HAZARDS ASSOCIATED WITH MINING AND PROCESSING MAY INCREASE COSTS
AND REDUCE PROFITABILITY IN THE FUTURE.

Mining and processing operations involve many risks and hazards, including among
others:

     o    environmental hazards;
     o    mining and industrial accidents;
     o    metallurgical and other processing problems;
     o    unusual and unexpected rock formations;
     o    pit slope failures;
     o    flooding and periodic interruptions due to inclement or hazardous
          weather conditions or other acts of nature;
     o    mechanical equipment and facility performance problems; and
     o    unavailability of materials, equipment and personnel.

These risks could result in:

     o    damage to, or destruction of, the Corporation's properties or
          production facilities;
     o    personal injury or death;
     o    environmental damage;
     o    delays in mining;
     o    increased production costs;
     o    asset write downs;
     o    monetary losses; and
     o    possible legal liability.

The Corporation cannot be certain that its insurance will cover the risks
associated with mining or that it will be able to maintain insurance to cover
these risks at affordable premiums. The Corporation might also become subject to
liability for pollution or other hazards against which it cannot insure or
against which the Corporation may elect not to insure because of premium costs
or other reasons. Losses from such events may increase costs and decrease
profitability.

IF THE CORPORATION FAILS TO DEVELOP ITS UNDERGROUND MINING OPERATIONS AT A
REASONABLE COST, OR AT ALL, OR TO ACHIEVE PROJECTED PRODUCTION LEVELS FOR ITS
UNDERGROUND MINING OPERATIONS, ITS ABILITY TO GENERATE REVENUE AND PROFITS WILL
BE ADVERSELY AFFECTED.

The Corporation's future prospects will be negatively affected if the
underground mine fails to achieve projected production levels. Due to the
complexity and uncertainty involved in developing an underground mine, it is
difficult to provide reliable time and cost estimates for completion. Unforeseen
conditions or developments could arise during the development and construction
of the underground mine which could delay or prevent its completion or
substantially increase the cost of such project, adversely affecting the
Corporation's ability to generate revenue and profits. These events may include,
among others:


                                       29
<PAGE>

     o    delays or difficulties in obtaining required permits;
     o    shortages of equipment, materials or labor;
     o    delays in delivery of equipment or materials;
     o    labor disruptions;
     o    local or political opposition;
     o    adverse weather conditions or natural disasters;
     o    unanticipated increases in costs of labor, supplies and equipment;
     o    accidents; and
     o    unforeseen engineering, design, environmental or geological problems.

THE CORPORATION MAY EXPERIENCE HIGHER COSTS AND LOWER REVENUES THAN ESTIMATED IN
THE RPA FEASIBILITY STUDY DUE TO UNEXPECTED PROBLEMS AND DELAYS.

New mining operations often experience unexpected problems during the
development and start-up phases and such problems can result in substantial
delays in reaching commercial production. Delays in construction or reaching
commercial production in connection with the Corporation's development of its
underground mine would increase its operating costs and delay revenue growth.

IF THE COSTS OF COMPLETING THE UNDERGROUND MINE ARE GREATER THAN ANTICIPATED,
THE CORPORATION MAY NEED TO OBTAIN ADDITIONAL FUNDS WHICH MAY NOT BE AVAILABLE
ON FAVOURABLE TERMS OR AT ALL.

The costs of developing the underground mine are subject to many uncertainties
which may cause such costs to be higher than anticipated. In such event, the
Corporation may need to obtain additional capital to pursue its mining plan.
There is no assurance that the Corporation will be able to obtain such capital
on favourable terms, if at all. If additional capital is raised by incurring
debt, the Corporation will be obligated to make greater interest payments which
will reduce funds available for the mining operations. If capital is raised
through the sale of equity securities, shareholders may experience substantial
dilution. If the Corporation is unable to raise additional funds when and if
required, it may have to delay or abandon its development of the underground
mine or restrict its operations.

FUTURE EXPLORATION AT LAC DES ILES MINE OR ELSEWHERE MAY NOT RESULT IN INCREASED
RESERVES, WHICH WOULD PREVENT THE CORPORATION FROM SUSTAINING ITS TARGETED
PRODUCTION LEVELS.

The RPA Feasibility Study contains reserve estimates based on exploration to
date. The Corporation conducts exploration programs at and surrounding the Lac
des Iles Mine with the objective of increasing reserves. Mineral exploration
involves significant risks over a substantial period of time, which even a
combination of careful evaluation, experience and knowledge may not eliminate.
Even if the Corporation discovers a valuable deposit of minerals, it may be
several years before production is possible and during that time it may become
economically unfeasible to produce those minerals. There is no assurance that
current or future exploration programs will result in any new economically
viable mining operations or yield new reserves to replace and expand current
reserves at the Lac des Iles Mine. In the event that new reserves are not
discovered, the Corporation may not be able to sustain production beyond 2010.

THE CORPORATION FACES STRONG COMPETITION FROM OTHER MINING COMPANIES FOR THE
ACQUISITION OF NEW PROPERTIES.

Mines have limited lives and, as a result, the Corporation continually seeks to
replace and expand its reserves through the acquisition of new properties. In
addition, there is a limited supply of desirable mineral lands available in
areas where the Corporation would consider conducting exploration and/or
production activities. Because the Corporation faces strong competition for new
properties from other


                                       30
<PAGE>

mining companies, some of which have greater financial resources than it, the
Corporation may be unable to acquire attractive new mining properties on terms
acceptable to it.

THE CORPORATION DEPENDS ON A SINGLE MINE TO GENERATE REVENUES AND, IF MINING
OPERATIONS ARE INTERRUPTED, THE CORPORATION'S BUSINESS WILL SUFFER.

All of the Corporation's revenues are derived from its mining operations at the
Lac des Iles Mine, which is the Corporation's only mine and the only place it
has reserves. If there is an interruption in operations at the Lac des Iles
Mine, or if the Corporation can no longer extract ore from this mine for any
reason, the Corporation's business will suffer significantly. In addition, any
adverse condition affecting mining conditions at the Lac des Iles Mine could
have a material adverse effect on the Corporation's financial performance and
results of operations until such time as the condition is remedied.

THE CORPORATION DEPENDS ON A SINGLE PALLADIUM SALES CONTRACT TO GENERATE MOST OF
ITS REVENUES AND REDUCE ITS EXPOSURE TO FLUCTUATIONS OF THE PRICE OF PALLADIUM
AND, IF THIS CONTRACT IS SUSPENDED OR TERMINATED, THE CORPORATION MAY NOT BE
ABLE TO FIND OTHER PURCHASERS FOR ITS PALLADIUM ON SIMILAR TERMS OR AT ALL.

Pursuant to the Palladium Sales Contract with the Automotive Manufacturer, the
Corporation has committed to sell all of the refined palladium it is entitled to
receive from the smelters to the Automotive Manufacturer until June 30, 2005. As
of May 2001, the Palladium Sales Contract was no longer subject to an automatic
contractual right of renewal. The Palladium Sales Contract allows the Automotive
Manufacturer to terminate the Palladium Sales Contract if the Corporation
breaches a material term and it does not remedy the breach within ten business
days of receiving notice of such breach. In addition, the contract contains
"force majeure" provisions that allows the Automotive Manufacturer to suspend
its obligations to purchase palladium upon the occurrence of certain events,
such as acts of nature, that are beyond the control of the Automotive
Manufacturer and that limit its ability to make such purchases. If the Palladium
Sales Contract is suspended or terminated, the Corporation may not be able to
find other purchasers for its palladium on similar terms or at all, and the
Corporation's business could suffer significantly.

IN CERTAIN CIRCUMSTANCES THE PALLADIUM SALES CONTRACT MAY LIMIT THE
CORPORATION'S ABILITY TO GENERATE REVENUES.

Future revenues from production of palladium will be governed by the Palladium
Sales Contract. The prices the Corporation receives under that contract are
based on a specified discount from the average monthly London Metal Exchange
prices, subject to a maximum price of US$550 per ounce for 50% of the production
delivered each month. Therefore, if the price of palladium rises above US$550,
with respect to half of the production the Corporation will not be able to
charge a price that reflects market value. In such event, the Corporation's
ability to generate revenues will be limited by the Palladium Sales Contract.

IF THE PALLADIUM SALES CONTRACT IS TERMINATED, THE CORPORATION WILL BE IN
DEFAULT OF ITS CREDIT FACILITIES.

The Corporation will be in default of its credit facilities if the Palladium
Sales Contract is terminated. The Corporation may not have sufficient cash
reserves to make increased payments required under its credit facilities if it
is in default and will be required to incur further debt or raise capital in the
markets by issuing additional shares, which could cause a decline in the price
of its common shares and may involve substantial dilution. Such additional funds
may not be available on favourable terms or at all.


                                       31
<PAGE>

THE CORPORATION IS DEPENDENT ON THIRD PARTIES FOR SMELTING AND REFINING ITS
PALLADIUM AND IF THEY ARE UNABLE TO ACCOMMODATE THE CORPORATION'S SMELTING AND
REFINING REQUIREMENTS OR THE EXISTING CONTRACTS ARE TERMINATED OR NOT RENEWED
THE CORPORATION'S ABILITY TO GENERATE REVENUES COULD BE HARMED.

The Corporation has smelter agreements with Inco and Falconbridge which provide
for the smelting and refining of the principal metals contained in the
concentrates produced at Lac des Iles Mine. The existing agreements with Inco
and Falconbridge end on August 31, 2005 and March 31, 2006, respectively and do
not provide for automatic renewal or additional terms at the expiry of the
initial term. The agreement with Inco can be terminated by either party on 12
months' notice. The agreement with Falconbridge can be terminated in certain
circumstances, such as default of performance. The inability to renew one or
both of these agreements under similar terms or the termination of either of the
agreements could have a material adverse affect on the Corporation's financial
performance and results of operations until such time as alternative smelting
and refining arrangements can be made or alternative purchasers of the
Corporation's concentrates can be found.

THE CORPORATION'S VULNERABILITY TO CHANGES IN METAL PRICES MAY CAUSE ITS COMMON
SHARE PRICE TO BE VOLATILE AND MAY AFFECT THE SUCCESS OF THE PROJECT.

The Corporation's primary source of revenue is the sale of palladium. In fiscal
2003, sales of palladium accounted for approximately 67% of the Corporation's
revenues. Historically, changes in the market price of palladium have
significantly impacted the Corporation's profitability and common share price.
Notwithstanding the Palladium Sales Contract, market prices will continue to
significantly impact profitability and may cause wide fluctuations in the market
price for the Corporation's common shares. In addition, according to the RPA
Feasibility Study the Project is most sensitive to external economic criteria
related to the palladium price. At the current palladium price, the Project has
a positive net present value. However, a major Project risk will arise if there
is a significant weakening of the U.S. dollar combined with a prolonged period
of lower palladium prices. See "Proposed Underground Lac des Iles Mine". Many
factors beyond the Corporation's control influence the market price of
palladium. These factors include:

     o    global supply and demand;
     o    availability and costs of metal substitutes;
     o    speculative activities;
     o    international political and economic conditions; and
     o    production levels and costs in other platinum group metal-producing
          countries, particularly Russia and South Africa.

Economic and political events in Russia could result in declining market prices.
If Russia disposes of substantial amounts of palladium, platinum, rhodium,
ruthenium, osmium and iridium, which are referred to as platinum group metals,
from stockpiles or otherwise, the increased supply could reduce the market
prices of palladium and platinum and adversely affect the Corporation's
profitability and common share price. Political instability in Russia and its
economic problems make Russian stockpiles difficult to predict and the risk of
sales from stockpiles more significant.

SINCE THE CORPORATION'S REVENUES ARE IN UNITED STATES DOLLARS AND EXPENDITURES
ARE IN CANADIAN DOLLARS, THE CORPORATION IS SUBJECT TO FLUCTUATIONS IN EXCHANGE
RATES BETWEEN THE UNITED STATES AND CANADIAN DOLLARS.

Currency fluctuations may affect cash flow since the Corporation's production
currently is sold, and under the Palladium Sales Contract will continue to be
sold, in United States dollars, whereas the Corporation's administration,
operating and exploration costs are incurred in Canadian dollars.


                                       32
<PAGE>

Significant long term fluctuations in relative currency values could adversely
affect the Corporation's results of operations. In particular, the Corporation
may be adversely affected by a significant strengthening of the Canadian dollar
against the United States dollar. In addition, according to the RPA Feasibility
Study the Project is sensitive to fluctuations in the exchange rate. A major
Project risk will arise if there is a significant weakening of the U.S. dollar
combined with a prolonged period of lower palladium spot prices.

THE CORPORATION IS SUBJECT TO EXTENSIVE ENVIRONMENTAL LEGISLATION AND THE COSTS
OF COMPLYING WITH THESE REGULATIONS MAY BE SIGNIFICANT.

Environmental legislation relating to land, air and water affects nearly all
aspects of the Corporation's operations. This legislation requires the
Corporation to obtain various operating licenses and also imposes standards and
controls on activities relating to the exploration, development and production
of palladium and associated metals. The cost of obtaining operating licenses and
abiding by standards and controls on its activities may be significant. Further,
if the Corporation fails to obtain or maintain such operating licenses or
breaches such standards or controls imposed on its activities, it may not be
able to continue its operations in its usual manner, or at all, or the
Corporation may be subject to fines or other claims for remediation which may
have a material adverse impact on its operations or financial results.

The Corporation will be responsible for all costs of closure and reclamation at
the Lac des Iles Mine. Under applicable environmental legislation, the
Corporation had to establish a trust fund to prepare for closure and
reclamation. The current amended mine closure plan requires $7.8 million for
clean-up and restoration of the mine site. The trust fund, maintained by the
Ontario Ministry of Northern Development and Mines, is designed to collect $7.8
million through instalments of $100,000 per month. The money in the trust fund
will become available to the Corporation when the mine closure is completed. At
March 31, 2004, approximately $5.0 million was on deposit in the trust fund.
Development of the underground mine pursuant to the RPA Feasibility Study will
require an amendment to the existing closure plan and will result in an increase
in the amount of financial assurance required by the Ontario Ministry of
Northern Development and Mines. The actual amount needed for the closure of the
Lac des Iles Mine may be materially more than the original estimate. Recent
changes in the Province of Ontario mining regulations may require the
Corporation to provide a letter of credit or other financial instrument as
security for the closure of the Lac des Iles Mine.

CHANGES IN ENVIRONMENTAL LEGISLATION COULD INCREASE THE COSTS OF COMPLYING WITH
APPLICABLE REGULATIONS AND REDUCE LEVELS OF PRODUCTION.

Changes in environmental laws, new information on existing environmental
conditions or other events may increase future compliance expenditures or
otherwise have a negative effect on the Corporation's financial condition and
results of operations. In addition to existing requirements, it is expected that
other environmental regulations will likely be implemented in the future with
the objective of further protecting human health and the environment. Some of
the issues currently under review by environmental agencies include reducing or
stabilizing air emissions, mine reclamation and restoration, and water quality.
Other changes in environmental legislation could have a negative effect on
production levels, product demand, product quality and methods of production and
distribution. The complexity and breadth of these issues make it difficult for
the Corporation to predict their impact. The Corporation anticipates capital
expenditures and operating expenses will increase as a result of compliance with
the introduction of new and more stringent environmental regulations. Failure to
comply with environmental legislation may result in the issuance of clean up
orders, imposition of penalties, liability for related damages and the loss of
operating permits. The Corporation cannot make assurances that it will at all
future times be in compliance with all federal and provincial environmental
regulations or that steps to bring the


                                       33
<PAGE>

Corporation into compliance would not have a negative effect on its financial
condition and results of operations.

COMPLIANCE WITH CURRENT AND FUTURE GOVERNMENT REGULATIONS MAY CAUSE THE
CORPORATION TO INCUR SIGNIFICANT COSTS AND SLOW ITS GROWTH.

The Corporation's activities are subject to extensive Canadian federal and
provincial laws and regulations governing matters relating to mine safety,
occupational health, labor standards, prospecting, exploration, production,
exports and taxes. Compliance with these and other laws and regulations could
require the Corporation to make significant capital outlays which may slow its
growth by diverting its financial resources. The enactment of new adverse
regulations or regulatory requirements or more stringent enforcement of current
regulations or regulatory requirements may increase costs, which could have a
harmful effect on the Corporation. The Corporation cannot make assurances that
it will be able to adapt to these regulatory developments on a timely or cost
effective basis. Violations of these regulations and regulatory requirements
could lead to substantial fines, penalties or other sanctions.

THE CORPORATION IS REQUIRED TO OBTAIN AND RENEW GOVERNMENTAL PERMITS IN ORDER TO
CONDUCT MINING OPERATIONS, WHICH IS OFTEN A COSTLY AND TIME-CONSUMING PROCESS.

In the ordinary course of business, the Corporation is required to obtain and
renew governmental permits for the operation and expansion of existing
operations or for the commencement of new operations. Obtaining or renewing the
necessary governmental permits is a complex and time-consuming process. The
duration and success of our efforts to obtain and renew permits are contingent
upon many variables not within our control including the interpretation of
applicable requirements implemented by the permitting authority. The Corporation
may not be able to obtain or renew permits that are necessary to its operations,
or the cost to obtain or renew permits may exceed what the Corporation expects.
Any unexpected delays or costs associated with the permitting process could
delay the development or impede the operation of a mine, which could adversely
affect the Corporation's revenues and future growth.

THE CORPORATION FACES COMPETITION WITH OTHER LARGER SUPPLIERS OF PLATINUM GROUP
METALS AND FROM POTENTIAL NEW SOURCES OF PLATINUM GROUP METALS.

The Corporation competes with other suppliers of platinum group metals, some of
which are significantly larger than it is and have access to greater mineral
reserves and financial resources than it does. In addition, new mines may open
which would increase supply of palladium and platinum. Furthermore, in certain
industrialized countries an industry has developed for the recovery of platinum
group metals from scrap sources, mostly from spent automobile and industrial
catalysts. The Corporation may not be successful in competing with these
existing and emerging platinum group metal producers.

THE DEVELOPMENT OF NEW TECHNOLOGY OR NEW ALLOYS COULD REDUCE THE DEMAND FOR
PALLADIUM AND PLATINUM.

The development of a substitute alloy or synthetic material which has catalytic
characteristics similar to platinum group metals would result in a decrease in
demand for palladium and platinum. Furthermore the development by the automobile
industry of automobiles that do not use catalytic converters could reduce the
demand for palladium and platinum. Demand might also be reduced by manufacturers
in such industries as automobiles, electronics and dentistry finding substitutes
for palladium. The dentistry and electronics industries have already experienced
advances in new technology which use base metals as a substitute for palladium
in certain component parts. High prices for palladium would create an incentive
for the development of substitutes. Any such developments could have a material
adverse effect on the Corporation's financial condition and results of
operations.


                                       34
<PAGE>

IF THE CORPORATION LOSES KEY PERSONNEL OR IS UNABLE TO ATTRACT AND RETAIN
ADDITIONAL PERSONNEL, THE CORPORATION'S MINING OPERATIONS AND PROSPECTS COULD BE
HARMED.

The Corporation is dependent upon the services of a small number of members of
senior management including Andre J. Douchane, the President and Chief Executive
Officer, and George D. Faught, the Chief Financial Officer. The Corporation's
current mining operations, its successful development of the underground mine
and its future prospects depends on the experience and knowledge of these
individuals. The loss of one or more of these individuals could have a material
adverse affect on the Corporation's mining operations.

THE MINING LEASES CONSTITUTING THE LAC DES ILES MINE EXPIRE IN 2006 AND MAY NOT
BE RENEWED.

The Lac des Iles Mine consists of four mining leases issued by the Government of
Ontario. The mining leases are dated August 16, 1985 and have a 21 year term,
which is the term of all mining leases granted by the Government of Ontario.
These leases expire on August 31, 2006 and are renewable for a further term of
21 years if the terms and conditions of the leases have been complied with. If
the leases expire and are not renewed, the Corporation will not be able to
continue its mining operations.

THE CORPORATION'S CREDIT FACILITIES HAVE EVENTS OF DEFAULT, SOME OF WHICH ARE
BEYOND THE CORPORATION'S CONTROL.

The Corporation has borrowed funds under its credit facilities to finance its
operations. The credit facilities contain certain events of default, some of
which are beyond the Corporation's control, the occurrence of which could
require the Corporation to pay back immediately all amounts borrowed under the
credit facilities. The death of George B. Kaiser, the principal shareholder of
the Kaiser-Francis Oil Company and a lender under one of the Corporation's
credit facilities, constitutes such an event of default. If the Corporation is
required to pay back immediately all amounts borrowed under either or both of
its credit facilities, it may be necessary to obtain additional financing which
may not be available on terms acceptable to the Corporation, if at all.

THE CORPORATION'S PRINCIPAL SHAREHOLDER HAS THE ABILITY TO DIRECT THE
CORPORATION'S AFFAIRS AND BUSINESS AND, BECAUSE IT OWNS APPROXIMATELY 51% OF THE
COMMON SHARES, THIRD PARTIES MAY BE DETERRED FROM ACQUIRING THE CORPORATION.

To the best of the Corporation's knowledge, Kaiser-Francis Oil Company, a
privately-held oil and gas company based in Tulsa, Oklahoma, owns common shares,
representing approximately 51% of the total number of common shares outstanding
as of March 31, 2004. Kaiser-Francis Oil Company therefore has the ability to
direct the affairs and business of the Corporation. This concentration of
ownership may have the effect of delaying or preventing a change in control of
the Corporation, which may deprive the Corporation's shareholders of a control
premium that might otherwise be realized in connection with an acquisition of
the Corporation.

THE CORPORATION'S HEDGING ACTIVITIES OR ITS DECISION NOT TO HEDGE COULD EXPOSE
IT TO LOSSES.

From time to time, the Corporation engages in hedging activities in connection
with the metals it produces, such as forward sales contracts and commodity put
and call option contracts, to partially offset the risk of declines in metal
prices on its operating results. While these hedging activities may protect the
Corporation against low metal prices, they may also limit the price it can
receive on hedged products. As a result, the Corporation may be prevented from
realizing possible revenues in the event that the market price of a metal
exceeds the price stated in a forward sale or call option contract. In addition,
the


                                       35
<PAGE>

Corporation may experience losses if a counterparty fails to purchase under a
contract when the contract price exceeds the spot price of a commodity.

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This renewal annual information form contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements are necessarily made based on estimates and
assumptions made by North American Palladium Ltd. in light of its experience and
perception of historical trends, current conditions and expected future
developments, as well as other factors it believes are appropriate in the
circumstances. These estimates and assumptions are inherently subject to
significant business, economic and competitive uncertainties, many of which,
with respect to future events, are subject to change. These uncertainties and
contingencies can affect actual results and could cause actual results to differ
materially from those expressed or implied in any forward-looking statements
made by North American Palladium Ltd., or on its behalf.

In particular, the words "expect," "anticipate," "estimate," "may," "will,"
"should," "intend," "believe," "target," "budget," "plan," "projection" and
similar expressions are intended to identify forward-looking statements. In
light of the risks and uncertainties inherent in all forward-looking statements,
the inclusion or incorporation by reference of forward-looking statements in
this renewal annual information form should not be considered as a
representation by North American Palladium Ltd. or any other person that its
objectives or plans will be achieved. Numerous factors could cause North
American Palladium Ltd.'s actual results to differ materially from those in the
forward-looking statements, including the following, which are discussed in
greater detail under the "Risk Factors" section herein:

     o    inability to meet production or operating cost goals;
     o    inaccurate resource and reserve estimates;
     o    inherent risks associated with mining and processing operations;
     o    failure to successfully develop the underground mining operations or
          to achieve projected production levels;
     o    unexpected problems and delays in the construction of the underground
          mining operations;
     o    inability to obtain additional funding for operations, if required;
     o    failure of the exploration program to increase reserves;
     o    interruption of operations at the Lac des Iles Mine;
     o    termination or suspension of the palladium sales contract;
     o    termination or failure to renew smelting agreements;
     o    volatility in metal prices;
     o    changes in the United States/Canadian dollar exchange rate;
     o    costs of complying with current and future environmental regulation;
     o    costs of complying with other current and future governmental
          regulation;
     o    competition from other suppliers of platinum group metals;
     o    development of new technology leading to reduced demand for palladium;
     o    loss of key personnel;
     o    failure to renew mining leases;
     o    defaults under credit facilities; and
     o    hedging activities.

These factors should be considered carefully, and readers should not place undue
reliance on North American Palladium Ltd.'s forward-looking statements. North
American Palladium Ltd. undertakes no obligation to release publicly the results
of any future revisions it may make to forward-looking


                                       36
<PAGE>

statements to reflect events or circumstances after the date of this renewal
annual information form or to reflect the occurrence of unanticipated events,
except as required by law.

OTHER INFORMATION

The Corporation will provide to any person, upon a request to the Secretary of
the Corporation, the following information:

     (a)  When the securities of the Company are in the course of a distribution
          pursuant to a short form prospectus or a preliminary short form
          prospectus, which has been filed in respect of a proposed distribution
          of securities:

          (i)   one copy of the latest Annual Information Form, together with
                one copy of any document, or the pertinent pages of any
                document, incorporated therein by reference;

          (ii)  one copy of the comparative financial statements of the
                Corporation for its most recently completed financial year
                together with the accompanying report of the auditor and one
                copy of any interim financial statements of the Corporation
                subsequent to the financial statements for its most recently
                completed financial year;

          (iii) one copy of the proxy circular of the Corporation in respect of
                its most recent annual meeting of shareholders which involved
                the election of directors; and

          (iv)  one copy of any other documents that are incorporated by
                reference into the AIF and are not required to be provided under
                paragraphs (i) to (iii) above; or

     (b)  At any other time, one copy of any other documents referred to in
          paragraphs (a)(i), (ii) and (iii) above, provided that the Corporation
          may require payment of a reasonable charge if the request is made by a
          person or company that is not a security holder of the Corporation.

Additional information, including directors' and officers' remuneration and
indebtedness, principal holders of the Corporation's securities and options to
purchase securities, is contained in the Corporation's Management Information
Circular and Proxy Statement dated May 10, 2004. As well, additional financial
information is provided in the Corporation's 2003 Annual Report.


                                       37
<PAGE>

                                GLOSSARY OF TERMS

The following is a glossary of certain terms used in this document.

"BALL MILL" means a rotary grinding mill which uses metal balls to reduce ore to
a fine particle size.

"BRECCIA" means a textural description of a rock which is composed of angular
rock fragments.

"CATALYST" is a substance which, when present in small amounts, modifies the
rate or efficiency of a chemical reaction of other substances without being
consumed in the process.

"CATALYTIC CONVERTER" means a pollution control device, fitted to the exhaust
systems of vehicles powered by internal combustion engines. This device contains
platinum, palladium and sometimes rhodium, which assist in the conversion
(oxidation) of carbon monoxide and hydrocarbons into carbon dioxide and water.

"CONCENTRATE" means a product containing the valuable metal and from which most
of the waste material in the ore has been removed.

"CONCENTRATOR OR PROCESS PLANT" means a plant or facility which processes ore
brought from the mine and removes most of the valuable mineral or metal from the
ore and discards most of the barren portion of the ore as tailings.

"CUT-OFF GRADE" is determined by the following formula parameters: estimates
over the relevant period of mining costs, ore treatment costs, general and
administrative costs, refining costs, royalty expenses, process and refining
recovery rates and PGMs prices.

"COMMON SHARES" means the common shares of North American Palladium Ltd.

"CORPORATION" means North American Palladium Ltd.

"DIAMOND DRILL HOLES" means rotary drilling using diamond impregnated bits to
produce a solid continuous core sample of the underlying rock.

"FEASIBILITY STUDY" means a program to establish whether a mineral deposit can
be successfully mined considering technical and economic parameters.

"FLOTATION CIRCUIT" means a series of flotation tanks or cells which recover
metal by means of floatation. Floatation is a milling process by which some
mineral particles are induced to float and others to sink. The valuable minerals
are thereby concentrated and separated from the worthless waste.

"GABBRO" means a dark, course-grained intrusive rock usually composed of angular
rock fragments.

"GABBRONORITE" means a type of gabbro which contains the mafic minerals
clinopyroxene (Ca-Mg rich silicate) and orthopyroxene (Mg-rich silicate).

"GRADE" means a particular quantity of ore or mineral relative to other
constituents, in a specified quantity of rock.

"HEAD GRADE" means the quantity of valuable mineral or metal contained in each
ton of ore delivered to the concentrator.


                                       38
<PAGE>

"INDICATED MINERAL RESOURCE" means that part of a mineral resource for which
quantity, grade or quality, densities, shape and physical characteristics, can
be estimated with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate is based on
detailed and reliable exploration and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough for geological and grade
continuity to be reasonably assumed. See "Note to U.S. Shareholders".

"INFERRED MINERAL RESOURCE" means that part of a mineral resource for which
quantity and grade or quality can be estimated on the basis of geological
evidence and limited sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on limited information
and sampling gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes. See "Note to U.S.
Shareholders".

"INTRUSION/INTRUSIVE" means a mass of igneous rock that was injected and
solidified within the earth's crust.

"IRIDIUM" means hard, brittle, silver-white platinum group metal used for pen
tips, jewelery, resistance wiring, electronic contacts and electrodes.

"MAFIC ROCKS" means rocks composed of 40 to 90% mafic minerals. (PGM deposits
are usually hosted in mafic and untramafic intrusive rocks).

"MEASURED MINERAL RESOURCE" means that part of a mineral resource for which
quantity, grade or quality, densities, shape, physical characteristics are so
well established that they can be estimated with confidence sufficient to allow
the appropriate application of technical and economic parameters, to support
production planning and evaluation of the economic viability of the deposit. The
estimate is based on detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes that are spaced closely
enough to confirm both geological and grade continuity. See "Note to U.S.
Shareholders".

"MINERAL RESERVE" means the economically mineable part of a measured or
indicated resource demonstrated by at least a preliminary feasibility study.
This study must include adequate information on mining, processing,
metallurgical, economic and other relevant factors that demonstrate, at the time
of reporting, that economic extraction can be justified. A mineral reserve
includes diluting materials and allowances for losses that may occur when the
material is mined. See "Note to U.S. Shareholders".

"MINERAL RESOURCE" means a concentration or occurrence of natural, solid,
inorganic or fossilized organic material in or on the Earth's crust in such form
and quantity and of such a grade or quality that it has reasonable prospects for
economic extraction. The location, quantity, grade, geological characteristics
and continuity of a mineral resource are known, estimated or interpreted from
specific geological evidence and knowledge. See "Note to U.S. Shareholders".

"MINERALIZATION" means the concentration of metals and their chemical compounds
within a body of rock.

"NET SMELTER RETURN ROYALTY" means a royalty based on the gross proceeds
received from the sale of minerals less the cost of smelting, refining, freight
and other related costs.

"OPEN PIT" means a mine worked at the surface.


                                       39
<PAGE>

"ORE" means a mixture of valuable and worthless minerals from which at least one
of the minerals can be mined and processed at an economic profit.

"OSMIUM" means a rare, hard white metal.

"OUNCE" or "OZ." is a unit of weight measure. In the precious metals industry a
troy ounce is equal to one-twelfth part of a pound or 31.103 grams.

"OVERBURDEN" means unconsolidated material that overlies a mineral deposit and
must be removed prior to mining.

"PALLADIUM" means a white, ductile, malleable precious metal that does not
tarnish at normal temperatures. Wide applications range from electronics,
dentistry, jewelry and automotive catalytic converters.

"PGMS" means "PLATINUM GROUP METALS". Platinum Group Metals include platinum,
palladium, rhodium, ruthenium, osmium and iridium. All PGMs have catalytic
qualities and resist corrosion and are chemically inert over a wide range of
temperatures.

"PLUNGE" means the inclination of a geological structure, especially a fold
axis, measured by its departure from the horizon also known as pitch or rake.

"PROBABLE MINERAL RESERVE" means the economically mineable part of an indicated,
and in some circumstances a measured mineral resource demonstrated by at least a
preliminary feasibility study. This study must include adequate information on
mining, processing, metallurgical, economic, and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can be
justified. See "Note to U.S. Shareholders".

"PROFESSIONAL ASSOCIATION", for the purposes of the definition of a Qualified
Person below, means a self-regulatory organization of engineers, geoscientists
or both engineers and geoscientists that

     (a)  has been given authority or recognition by statute;

     (b)  admits members primarily on the basis of their academic qualifications
          and experience;

     (c)  requires compliance with the professional standards of competence and
          ethics established by the organization; and

     (d)  has disciplinary powers, including the power to suspend or expel a
          member.

"PROVEN MINERAL RESERVE" means the economically mineable part of a measured
mineral resource demonstrated by at least a preliminary feasibility study. This
study must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of reporting,
that economic extraction is justified. See "Note to U.S. Shareholders".

"PYROXENITE" means an ultramafic rock which predominantly contains the mafic
mineral pyroxene (Mg-rich silicate).

"QUALIFIED PERSON" means an individual who

     (a)  is an engineer or geoscientist with at least five years of experience
          in mineral exploration, mine development or operation or mineral
          project assessment, or any combination of these;


                                       40
<PAGE>

     (b)  has experience relevant to the subject matter of the mineral project
          and the technical report; and

     (c)  is a member in good standing of a professional association.

"RHODIUM" means a silver-white metal of the platinum family resistant to
tarnishing and used as an electrode posit, or alloyed with platinum to
manufacture thermocouples.

"SAG MILL" means a semi-autogenous grinding mill. A SAG mill is one in which
steel balls are added to the mill charge to supplement the grinding capabilities
of the larger pieces of ore.

"STRIP RATIO" means the ratio of units of waste material required to be removed
to facilitate the mining of one unit of economic material.

"TAILINGS" means that portion of the ore which remains after the valuable
minerals have been extracted.

"TAILINGS IMPOUNDMENT" means a containment area constructed to hold tailings.

"TON" means a short ton, equivalent to 2,000 pounds.

"TONNE" means a metric measure consisting of 2,204.6 pounds or 1,000 kilograms.

"TOTAL CASH COSTS" means all cash costs incurred and expensed at the minesite,
plus treatment charges, shipping and marketing costs, net of by-product credits.

"ULTRAMAFIC" means rocks composed of greater than 90% mafic minerals. (PGM
deposits are usually hosted in mafic and ultramafic intrusive rocks.)

"WASTE" means barren rock in a mine, or mineralized material that is too low in
grade to be mined and milled at a profit.


                                       41
<PAGE>

                                                                  DOCUMENT NO. 2

<PAGE>

NORTH AMERICAN PALLADIUM LTD.
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The accompanying consolidated financial statements have been prepared by
management in accordance with Canadian generally accepted accounting principles.
Financial statements are not precise since they include certain amounts based on
estimates and judgments. When alternative methods exist, management has chosen
those it deems most appropriate in the circumstances in order to ensure that the
consolidated financial statements are presented fairly, in all material
respects, in accordance with generally accepted accounting principles. The
financial information presented elsewhere in the annual report is consistent
with that in the consolidated financial statements.

The Company maintains adequate systems of internal accounting and administrative
controls. Such systems are designed to provide reasonable assurance that the
Company's assets are appropriately accounted for and adequately safeguarded and
that the financial information is relevant and reliable.

The Board of Directors of the Company is responsible for ensuring that
management fulfills its responsibilities for financial reporting, and is
ultimately responsible for reviewing and approving the consolidated financial
statements and the accompanying management's discussion and analysis. The Board
carries out this responsibility principally through its Audit Committee.

The Audit Committee is appointed by the Board and all of its members are
non-management directors. The Audit Committee meets periodically with management
and the external auditors to discuss internal controls, auditing matters and
financial reporting issues, and to satisfy itself that each party is properly
discharging its responsibilities. The Audit Committee also reviews the
consolidated financial statements, management's discussion and analysis, the
external auditors' report, examines the fees and expenses for audit services,
and considers the engagement or reappointment of the external auditors. The
Audit Committee reports its findings to the Board for its consideration when
approving the consolidated financial statements for issuance to the
shareholders. Ernst & Young LLP, the external auditors, have full and free
access to the Audit Committee.

Toronto, Canada
February 20, 2004


"ANDRE J. DOUCHANE"                        "GEORGE D. FAUGHT"
-------------------------------------      -------------------------------------
ANDRE J. DOUCHANE                          GEORGE D. FAUGHT
President and CEO                          Vice President Finance, and CFO




--------------------------------------------------------------------------------
                                      -1-
<PAGE>

Auditors' Report

TO THE SHAREHOLDERS OF NORTH AMERICAN PALLADIUM LTD.

       We have audited the consolidated balance sheets of North American
Palladium Ltd. as at December 31, 2003 and 2002 and the consolidated statements
of earnings and deficit and cash flows for each of the years in the three-year
period ended December 31, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

       We conducted our audits in accordance with Canadian generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.

       In our opinion, these consolidated financial statements present fairly,
in all material respects, the financial position of the Company as at December
31, 2003 and 2002 and the results of its operations and its cash flows for each
of the years in the three-year period ended December 31, 2003 in accordance with
Canadian generally accepted accounting principles.

       As described in note 3(b) to the consolidated financial statements, the
Company has changed its accounting policies for asset retirement obligations
effective January 1, 2003 and has restated its provision for mine closure costs,
mining interests and mine closure obligation.


       "Ernst & Young" (signed)
       Chartered Accountants

       Toronto, Canada,
       February 20, 2004.




--------------------------------------------------------------------------------
                                      -2-
<PAGE>
<TABLE>
<CAPTION>

                                             NORTH AMERICAN PALLADIUM LTD.
                                              CONSOLIDATED BALANCE SHEETS
                                        (Canadian funds in thousands of dollars)


                                                                                              December 31
                                                                                       2003                2002
                                                                                  ----------------    ----------------
                                                                                                          Restated,
                                                                                                          Note 3(b)
<S>                                                                           <C>                  <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents                                                     $         11,950     $        11,536
Short-term investments                                                                   1,813               5,127
Concentrate awaiting settlement, net - Note 4                                           94,610              85,312
Inventories - Note 5                                                                     9,141               7,414
Crushed and broken ore stockpiles                                                        6,251               9,157
Future tax asset - Note 16                                                                  84               4,868
Accounts receivable and other assets                                                     1,387               1,683
                                                                                  ----------------    ----------------
                                                                                       125,236             125,097

Mining interests, net - Note 6                                                         247,116             266,075
Mine closure deposit - Note 7                                                            4,733               3,470
Deferred financing costs                                                                 1,290               2,080
Crushed and broken ore stockpiles                                                        5,983               7,983
Future tax asset - Note 16                                                               9,334              11,218
                                                                                  ----------------    ----------------
                                                                              $        393,692     $       415,923
                                                                                  ----------------    ----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities                                      $         16,041     $        14,813
Taxes payable                                                                            1,311               1,940
Future tax liability - Note 16                                                             216                   -
Current portion of obligations under capital leases - Note 8                             1,070               1,127
Current portion of project term loan - Note 9                                           34,538              51,083
                                                                                  ----------------    ----------------
                                                                                        53,176              68,963

Mine closure obligation - Note 3(b)                                                      7,300               7,019
Obligations under capital leases - Note 8                                                1,015               1,024
Project term loan - Note 9                                                               7,272              51,083
Kaiser-Francis credit facility - Note 10                                                14,866              18,163
Future tax liability - Note 16                                                          10,108               9,600
                                                                                  ----------------    ----------------
                                                                                        93,737             155,852
SHAREHOLDERS' EQUITY
Capital stock - Note 12                                                                313,489             311,983
Deficit                                                                                (13,534)            (51,912)
                                                                                  ----------------    ----------------
Total shareholders' equity                                                             299,955             260,071
                                                                                  ----------------    ----------------
                                                                              $        393,692     $       415,923
                                                                                  ----------------    ----------------
Commitments - Note 13
Contingencies - Note 15

See accompanying notes
On Behalf of the Board
"MICHAEL P. AMSDEN" (SIGNED)                                    "GREG VAN STAVEREN" (SIGNED)
---------------------------------------------------------       ------------------------------------------------------
MICHAEL P. AMSDEN                                               GREG VAN STAVEREN
Director                                                        Director
</TABLE>



--------------------------------------------------------------------------------
                                       -3-
<PAGE>
<TABLE>
<CAPTION>

                                             NORTH AMERICAN PALLADIUM LTD.
                                    CONSOLIDATED STATEMENTS OF EARNINGS AND DEFICIT
                      (Canadian funds in thousands of dollars, except share and per share amounts)


                                                                             Year ended December 31
                                                                    2003                2002                2001
                                                               ----------------    ---------------     ---------------
                                                                                     Restated,           Restated,
                                                                                     Note 3(b)           Note 3(b)
<S>                                                         <C>                 <C>                <C>
REVENUE FROM METAL SALES - Note 14                          $      192,141      $       176,773    $        121,496
Deduct: smelter treatment, refining and freight costs              (19,048)             (16,909)            (11,140)
                                                               ----------------    ---------------     ---------------
Net revenue from mining operations                                 173,093              159,864             110,356
                                                               ----------------    ---------------     ---------------
OPERATING EXPENSES
Production costs including overhead                                103,654              100,599              66,405
Amortization - Note 6(b)                                            28,590               20,190              11,515
Administrative expenses                                              3,788                4,212               4,112
Provision for mine closure costs - Note 3(b)                           921                  587                 637
Write-down of mining interests - Note 6(d)                           2,315                   --               4,636
                                                               ----------------    ---------------     ---------------
Total operating expenses                                           139,268              125,588              87,305
                                                               ----------------    ---------------     ---------------

INCOME FROM MINING OPERATIONS                                       33,825               34,276              23,051
                                                               ----------------    ---------------     ---------------
OTHER INCOME (EXPENSES)
Interest income                                                        474                  663               1,560
Loss on disposal of capital assets                                    (788)                 (99)                (14)
Interest                                                               (17)                (433)               (226)
Interest on long-term debt - Notes 9 and 10                         (3,158)              (5,405)             (3,406)
Exploration expense                                                 (1,942)                (850)               (927)
Foreign exchange gain (loss)                                        18,138                  792              (6,765)
                                                               ----------------    ---------------     ---------------
Total other income (expenses)                                       12,707               (5,332)             (9,778)
                                                               ----------------    ---------------     ---------------

INCOME BEFORE INCOME TAXES                                          46,532               28,944              13,273
Provision for income taxes - Note 16                                 8,154               13,862               6,085
                                                               ----------------    ---------------     ---------------
NET INCOME FOR THE YEAR                                             38,378               15,082               7,188

Deficit, beginning of year                                         (51,912)             (66,994)            (74,182)
                                                               ----------------    ---------------     ---------------
Deficit, end of year                                        $      (13,534)     $       (51,912)   $        (66,994)
                                                               ----------------    ---------------     ---------------

Net income per share                                        $         0.76      $          0.30    $           0.14
                                                               ----------------    ---------------     ---------------

Diluted net income per share - Note 12(b)                   $         0.75      $          0.30    $           0.14
                                                               ----------------    ---------------     ---------------
Weighted average number of shares outstanding - basic           50,763,566           50,544,634          50,375,690
                                                               ----------------    ---------------     ---------------
Weighted average number of shares outstanding - diluted -
      Note 12(b)                                                50,832,904           50,593,508          50,543,134
                                                               ----------------    ---------------     ---------------
</TABLE>

See accompanying notes


--------------------------------------------------------------------------------
                                       -4-
<PAGE>
<TABLE>
<CAPTION>

                                             NORTH AMERICAN PALLADIUM LTD.
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        (Canadian funds in thousands of dollars)


                                                                             Year ended December 31
                                                                    2003                2002                2001
                                                               ---------------     ---------------     ---------------
                                                                                     Restated,           Restated,
                                                                                     Note 3(b)           Note 3(b)
<S>                                                         <C>                <C>                 <C>
CASH PROVIDED BY (USED IN)
OPERATIONS
Net income for the year                                     $        38,378    $         15,082    $          7,188
Operating items not involving cash
    Future income tax expense                                         7,392              13,046               4,428
    Amortization                                                     28,590              20,190              11,515
    Accrued interest on mine closure deposit                            (63)                (38)               (102)
    Write-down of mining interests                                    2,315                  --               4,636
    Foreign exchange loss (gain)                                    (18,519)             (1,494)              6,037
    Loss on disposal of capital assets                                  788                  99                  14
    Provision for mine closure costs                                    921                 587                 637
                                                               ---------------     ---------------     ---------------
                                                                     59,802              47,472              34,353

Changes in non-cash working capital - Note 17(a)                     (5,235)             (5,369)            (31,410)
                                                               ---------------     ---------------     ---------------
                                                                     54,567              42,103               2,943
                                                               ---------------     ---------------     ---------------
FINANCING ACTIVITIES
Repayment of project term loan                                      (45,134)            (33,233)             (6,724)
Issuance of common shares                                             1,506               1,199               1,950
Mine closure deposit                                                 (1,200)             (1,200)             (1,100)
Obligations under capital leases                                     (1,046)             (1,419)             (1,043)
Notes payable - Kaiser-Francis Oil Company                               --              10,372               7,819
Deferred financing costs                                                 --                  --                (276)
Increase in project term loan                                            --                  --              78,513
                                                               ---------------     ---------------     ---------------
                                                                    (45,874)            (24,281)             79,139
                                                               ---------------     ---------------     ---------------
INVESTING ACTIVITIES
Short-term investments                                                3,314                (128)             35,453
Additions to plant and equipment                                    (10,711)             (5,579)           (116,704)
Mining claims, exploration and development costs                       (996)             (2,867)             (3,590)
Proceeds on disposal of plant and equipment                             114                 513                  31
                                                               ---------------     ---------------     ---------------
                                                                     (8,279)             (8,061)            (84,810)
                                                               ---------------     ---------------     ---------------

Increase (decrease) in cash and cash equivalents                        414               9,761              (2,728)
Cash and cash equivalents, beginning of year                         11,536               1,775               4,503
                                                               ---------------     ---------------     ---------------
Cash and cash equivalents, end of year                      $        11,950    $         11,536    $          1,775
                                                               ---------------     ---------------     ---------------
</TABLE>

See accompanying notes


--------------------------------------------------------------------------------
                                       -5-
<PAGE>

                          NORTH AMERICAN PALLADIUM LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              for the years ended December 31, 2003, 2002 and 2001
                    (Canadian funds in thousands of dollars)

1.     NATURE OF OPERATIONS AND BASIS OF PRESENTATION

       North American Palladium Ltd. ("NAP" or "the Company") is a Canadian
company in the business of exploring and mining Platinum Group Metals ("PGMs")
and certain base and precious metals. Its principal asset is the Lac des Iles
mine located in the Thunder Bay District in Ontario. The Company operates in one
geographical area, Canada, and in one operating segment, mining.

       The Company's financial position and operating results are directly
affected by the market price of the PGMs in relation to the Company's production
costs. The prices of PGMs and by-product metals (palladium, platinum, gold,
copper and nickel) fluctuate widely and are affected by numerous factors beyond
the Company's control. The Company is under long-term contracts with two
smelting firms for the sale of its concentrates. During 2000 the Company entered
into a long-term palladium sales agreement, which expires on June 30, 2005, with
a major automotive manufacturer to hedge the sale of all of its palladium
production (note 13(a)).

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       These consolidated financial statements have been prepared in accordance
with Canadian generally accepted accounting principles and, except as discussed
in note 18, conform in all material respects with United States generally
accepted accounting principles. The more significant accounting policies are
summarized as follows:

       BASIS OF CONSOLIDATION
       These consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, Lac des Iles Mines Ltd. ("LDI").

       REVENUE AND CONCENTRATE AWAITING SETTLEMENT
       All revenue, including by-product metals is recognized net of royalties
upon the delivery of concentrate to the third-party smelter. Concentrate
awaiting settlement at the smelter is recorded at net realizable value less
estimated smelting, refining and transportation costs. Final prices for
concentrate awaiting settlement are determined up to seven months after delivery
to the smelter. Revaluations of net realizable value are included in revenue at
each reporting period and are adjusted for the effects of the sales contracts
with the smelters and hedging instruments. Although the Company sold its metals
during 2003 to a limited number of customers, the Company is not economically
dependent upon them as there are other markets throughout the world for the
Company's metals.

       DERIVATIVE FINANCIAL INSTRUMENTS
       The Company enters into forward commodity sales contracts from time to
time to hedge the effect of changes in the prices of metals it produces on the
Company's revenues (notes 13(a), (c) and (d)). Gains and losses on derivative
financial instruments used to mitigate metal price risk are recognized in
revenue from metal sales (note 14) when the hedged transaction occurs.

       From time to time the Company enters into foreign exchange forward sales
contracts to manage the effect of fluctuations in the value of committed U.S.
dollar denominated revenues.

--------------------------------------------------------------------------------
                                      -6-
<PAGE>

For those forward exchange contracts designated by the Company as hedges, a gain
or loss is recognized in metal sales when the hedged transaction occurs. Those
foreign exchange forward sales contracts not designated by the Company as hedges
are marked to market as at the balance sheet date and the resultant gains or
losses are included in earnings for the period. The fair value of the Company's
derivative financial instruments is determined based on forward prices supplied
by knowledgeable, independent third parties.

       The Company uses electricity swap contracts to hedge the effects of price
fluctuations in its electricity purchase requirements in Ontario (note 13(e).
The net swap settlements are recognized in the same period as the hedged
transaction.

       The Company does not hold financial instruments or derivative financial
instruments for trading purposes. Cash flows arising in respect of hedging
transactions are recognized under cash flows from operating activities.

       The Company does not consider the credit risk associated with its
financial instruments to be significant. Foreign currency contracts and
commodity hedge contracts are maintained with credit-worthy counter-parties, and
the Company does not anticipate that any counter-party will fail to meet its
obligations.

       CONCENTRATE, CRUSHED AND BROKEN ORE STOCKPILES AND SUPPLIES INVENTORIES
       Concentrate and crushed and broken ore stockpiles are valued at the lower
of average production cost and net realizable value. Average production cost
does not include an allocation of the amortization of production related assets.
Crushed and broken ore stockpiles represent course ore that has been extracted
from the mine and is available for further processing. Stockpile tonnages are
verified by periodic surveys. The crushed and broken ore stockpiles contain a
minimum grade of 1.1 grams of palladium per tonne, which is the cut-off grade
used to determine mineral reserves and resources. The amount of stockpiled ore
that is not expected to be processed within one year is shown as a long-term
asset. Supplies inventory is valued at the lower of average direct acquisition
cost and replacement cost.

       MINING INTERESTS
       Plant and equipment are recorded at cost with amortization generally
provided either on the unit-of-production method over the proven and probable
reserves to which they relate or on a straight-line method over their estimated
useful lives of seven years.

       The Company leases certain equipment under capital leases. These leases
are capitalized based on the lower of fair market value and the present value of
future minimum lease payments. The corresponding liabilities are recorded as
obligations under capital leases. This equipment is being amortized on the same
basis as described above.

       Mining leases and claims and royalty interests are recorded at cost and
are amortized on the unit-of-production method over the proven and probable
reserves.

       Exploration and development costs relating to properties are charged to
earnings in the year in which they are incurred. When it is determined that a
mining property can be economically developed as a result of established proven
and probable reserves, future development and exploration expenditures are
capitalized. Determination as to reserve potential is based on the results of
feasibility studies, which indicate whether production from a property is
economically feasible. Initial feasibility studies are optimized once drilling
has confirmed the shape, grades and continuity of the mineralization. Upon
commencement of the commercial production of a development project these costs
are amortized using the unit-of-production method over the proven and probable
reserves. Deferred expenditures, net of salvage values, relating to a property
that is abandoned or considered uneconomic for the foreseeable future are
written off.

--------------------------------------------------------------------------------
                                      -7-
<PAGE>

       Each year, the Company reviews mining plans for the remaining life of
each property. Significant changes in the mine plan can occur as a result of
mining experience, new discoveries, changes in mining methods and rates, process
changes, investments in new equipment and technology and other factors. Based on
year-end ore reserves and the current mine plan, the Company reviews annually
its accounting estimates and makes adjustments accordingly.

       The Company assesses long-lived assets for recoverability whenever
indicators of impairment exist. When the carrying value of a long-lived asset is
less than its net recoverable value as determined on an undiscounted basis, an
impairment loss is recognized to the extent that its fair value, measured as the
discounted cash flows over the life of the asset. Future cash flows are
estimated based on quantities of recoverable minerals, expected palladium and
other commodity prices (considering current and historical prices, price trends
and related factors), production levels and cash costs of production and
capital, all based on detailed engineering life-of-mine plans. The term
"recoverable minerals" refers to the estimated amount of palladium and other
commodities that will be obtained from proven and probable reserves after taking
into account losses during ore processing and treatment. Assumptions underlying
future cash flow estimates are subject to risk and uncertainty.

       ASSET RETIREMENT OBLIGATIONS
       Asset retirement obligations are recognized when incurred and recorded as
liabilities at fair value. The amount of the liability is subject to
re-measurement at each reporting period. The liability is accreted over time
through periodic charges to earnings. In addition, the asset retirement cost is
capitalized as part of mining interests and amortized over the estimated life of
the mine. In determining the estimated obligation and asset, the total
undiscounted cash flows estimated were approximately $5.8 million to $9.8
million, the majority of which is to be paid at the end of the mine life. The
estimated asset retirement obligation may change materially based on future
changes in operations, costs of reclamation and closure activities, and
regulatory requirements.

       STOCK-BASED COMPENSATION PLAN
       The Company has a stock-based compensation plan, which is described in
note 12(a). Effective January 1, 2003, the Company prospectively adopted the
fair value method of accounting for stock-based compensation in accordance with
the recommendations issued by The Canadian Institute of Chartered Accountants
("CICA"). For options granted from January 1, 2002 to December 31, 2002, the
Company elected to not recognize compensation expense when stock options are
issued to employees. Any consideration paid by employees on exercise of stock
options or purchase of stock is credited to share capital.

       TRANSLATION OF FOREIGN CURRENCY
       Transactions recorded in United States dollars have been translated into
Canadian dollars as follows:

       1.     Monetary items at the rate prevailing at the consolidated balance
              sheet dates;
       2.     Non-monetary items at the historical exchange rate; and
       3.     Revenue and expenses at the actual rate in effect during the
              applicable accounting period.

       All resulting foreign exchange gains and losses are recorded in the
consolidated statements of earnings and deficit.

--------------------------------------------------------------------------------
                                      -8-
<PAGE>

       INCOME TAXES
       The Company follows the liability method of tax allocation for accounting
for income taxes. Under the liability method of tax allocation, future tax
assets and liabilities are determined based on differences between the financial
reporting and tax bases of assets and liabilities and are measured using the
substantively enacted tax rates and laws that will be in effect when the
differences are expected to reverse. The effect on future tax liabilities and
assets of a change in tax rates is recognized in income in the period that the
change occurs.

       CASH AND CASH EQUIVALENTS
       Cash and cash equivalents include cash on account, demand deposits and
short-term investments with original maturities of three months or less and are
stated at cost. Cash and cash equivalents at December 31, 2003 include cash
equivalents of nil (2002 - $4,738).

       FAIR VALUE OF FINANCIAL INSTRUMENTS
       The carrying amounts of all financial instruments on the balance sheet
approximate fair value due to their short-term maturities or variable interest
rates.

       USE OF ESTIMATES
       The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and that also affect the reported amounts of revenues and expenses
during the reported year. Actual results could differ from those estimates.

3.     CHANGES IN ACCOUNTING POLICIES

       (a)    Stock-based compensation

              Effective January 1, 2003, the Company changed its method of
              accounting for stock options from the intrinsic value method to
              one that recognizes as an expense the cost of stock-based
              compensation based on the estimated fair value of new stock
              options granted to employees and directors. The fair value of each
              stock option granted is estimated on the date of the grant using
              the Black-Scholes option-pricing model. As a result of this change
              in accounting policy, which was applied prospectively, an expense
              of $138 was recorded in 2003 to reflect the fair value of stock
              options granted to employees and directors in 2003.

       (b)    Asset retirement obligations

              Effective January 1, 2003, the Company adopted a new accounting
              standard of the Canadian Institute of Chartered Accountants
              ("CICA") for asset retirement obligations which harmonizes the
              accounting with Generally Accepted Accounting Principles in the
              U.S. This standard significantly changed the method of accounting
              for future site restoration costs. Under this new standard, asset
              retirement obligations are recognized when incurred and recorded
              as liabilities at fair value. The amount of the liability is
              subject to re-measurement at each reporting period. The liability
              is accreted over time through periodic charges to earnings. In
              addition, the asset retirement cost is capitalized as part of the
              asset's carrying value and amortized over the estimated life of
              the mine. This change in accounting policy was applied

--------------------------------------------------------------------------------
                                      -9-
<PAGE>

              retroactively and, accordingly, the consolidated financial
              statements of prior periods were restated. As a result of this
              change, certain balance sheet accounts as of December 31, 2002
              were restated as follows: mining interests increased by $6,489 and
              the mine closure obligation increased to $7,019. An expense of
              $921 was recorded in 2003 for accretion of the mine closure
              obligation and amortization for asset retirements. This accounting
              policy change increased the provision for mine closure costs by
              $53 in 2002 (reduced net income per share - nil) and $322 in 2001
              (reduced net income per share - $0.01).

4.     CONCENTRATE AWAITING SETTLEMENT

       Concentrate awaiting settlement is comprised of:

<TABLE>
<CAPTION>
                                                                      2003                 2002
                                                                ----------------      --------------
<S>                                                         <C>                  <C>
       Concentrate awaiting settlement, gross               $         104,880    $         92,533
       Refining and smelter treatment charges                         (10,270)             (7,221)

                                                                ----------------      --------------
       Concentrate awaiting settlement, net                 $          94,610    $         85,312
                                                                ----------------      --------------
</TABLE>

       The gross value of concentrate awaiting settlement represents the value
of all PGMs and base metals from production shipped to and received by the
third-party smelters between June and December 2003, including 147,570 ounces of
palladium (2002 - between July and December 2002, including 93,619 ounces of
palladium).

       All of the concentrate awaiting settlement is from two domestic customers
at December 31, 2003 (2002 - two domestic customers). No reserves for doubtful
accounts have been established. In the opinion of management, full realization
will occur on all such receivables.

5.    INVENTORIES

      Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                      2003                 2002
                                                                ----------------      --------------
<S>                                                         <C>                  <C>
      Concentrate                                           $           1,669     $           670
      Supplies                                                          7,472               6,744
                                                                ----------------      --------------
                                                            $           9,141    $          7,414
                                                                ----------------      --------------
</TABLE>




--------------------------------------------------------------------------------
                                      -10-
<PAGE>

6.     MINING INTERESTS

       (a)    Mining interests are comprised of the following:

<TABLE>
<CAPTION>
                                                                                            2003               2002
                                                                                        -------------     --------------
<S>                                                                                  <C>              <C>
       Plant and equipment, at cost                                                  $     322,966    $       313,405
       Accumulated amortization                                                            108,972             82,718
                                                                                        -------------     --------------
                                                                                           213,994            230,687
                                                                                        -------------     --------------

       Equipment under capital lease, at cost                                                3,758              3,299
       Accumulated amortization                                                              1,056                311
                                                                                        -------------     --------------
                                                                                             2,702              2,988
                                                                                        -------------     --------------

       Mining leases and claims, royalty interest, exploration and
       development, at cost                                                                 82,353             81,357
       Accumulated amortization                                                             51,933             48,957
                                                                                        -------------     --------------
                                                                                            30,420             32,400
                                                                                        -------------     --------------
       Mining interests, net                                                         $     247,116    $       266,075
                                                                                        -------------     --------------
</TABLE>

       (b)    Amortization expense is comprised of:

<TABLE>
<CAPTION>
                                                                             2003            2002             2001
                                                                         ------------    -----------    ---------------
<S>                                                                 <C>              <C>            <C>
       Capital assets (including plant and equipment, and            $        24,746  $      17,505  $        10,268
         equipment under capital lease)

       Mining leases and claims, royalty interest, exploration and
         development costs                                                     3,054          1,895              852
       Deferred financing costs                                                  790            790              395
                                                                         ------------    -----------    ---------------
                                                                     $        28,590  $      20,190  $        11,515
                                                                         ------------    -----------    ---------------
</TABLE>

       (c)    During 2003, the Company capitalized interest of nil (2002 - nil;
              2001 - $3,190).

       (d)    The Company recorded a write-down of $2,315 in 2003 pertaining to
              the retirement of a damaged primary crusher and $4,636 in 2001
              when plant and equipment was removed from service with the
              commissioning of the new mill.

7.     MINE CLOSURE PLAN

       The Company, in conjunction with the Ontario Ministry of Northern
Development and Mines (the "Ministry"), has established a trust fund (the
"Fund") pursuant to the Company's mine closure plan. The mine closure plan calls
for a total amount of $7,802 to be accumulated in the Fund in order to allow for
the eventual clean-up and restoration of the mine site.

       Commencing in February 2001, the Fund, controlled by the Ministry,
started to accumulate through monthly deposits of $100. At December 31, 2003,
the Company had $4,733 (2002 - $3,470) on deposit with the Ministry including
accrued interest of $203. The funds on deposit bear interest at current
short-term deposit rates and will be returned to the Company once the mine
closure is completed.

--------------------------------------------------------------------------------
                                      -11-
<PAGE>

8.     LEASE OBLIGATIONS

       The following is a schedule of future minimum lease payments under
capital leases together with the present value of the net minimum lease
payments:

<TABLE>
<CAPTION>
                                                                                       2003                 2002
                                                                                  ----------------      --------------
<S>    <C>                                                                    <C>                  <C>
       2003                                                                   $              -     $         1,226
       2004                                                                              1,098                 465
       2005                                                                                620                 613
       2006                                                                                257                   -
       2007                                                                                171                   -
                                                                                  ----------------      --------------
       Total minimum lease payments                                                      2,146               2,304


       Amounts representing interest rates from 3.62 % - 7.7%                               61                 153
                                                                                  ----------------      --------------
       Present value of minimum lease payments                                $          2,085     $         2,151
       Less current portion                                                   $          1,070     $         1,127
                                                                                  ----------------      --------------
       Long-term liabilities                                                  $          1,015     $         1,024
                                                                                  ----------------      --------------
</TABLE>

9.     PROJECT TERM LOAN

       On June 27, 2000, the Company received a US$90,000 non-revolving term
credit facility, which was amended on July 11, 2002. The credit facility
financed part of the capital costs, working capital and interest during
construction of the expansion project. Outstanding loans bear interest or
stamping fees based upon banker's acceptances or LIBOR rates plus a margin of 1
3/4%.

       In return for granting the loan the lender received a secured interest in
all of the Company's existing and future assets. In addition, the lender
received an assignment of all material agreements including the palladium sales
contract (note 13(a)) and a pledge of the shares of LDI.

       Kaiser-Francis Oil Company ("Kaiser-Francis"), the majority shareholder
of the Company, and its shareholders have guaranteed the Company's obligations
under the credit facility in return for a fee of 0.5% per annum of amounts drawn
under the loan facility. Amounts paid to Kaiser-Francis in connection with this
guarantee were $338 (2002 - $605; 2001 - $531).

       Amounts drawn under the credit facility are required to be repaid in
quarterly installments. At December 31, 2003, there were five remaining
installment payments as follows: US$7,031 for each of the first three quarters
of 2004 and US$5,625 for the last quarter of 2004 and the first quarter of 2005.
The final maturity date of the credit facility is March 31, 2005.

       The Company has the right to prepay any amount outstanding under the
credit facility, without penalty, and in some circumstances may be required to
make prepayments equal to the amount of insurance proceeds received in
connection with a major loss or 66% of excess cash flow, which is defined as
cash flow less payments of principal and interest and payments to the debt
service reserve amount.

       The credit facility includes customary representations, warranties and
covenants, including a covenant by the Company not to pay dividends or make any
other payment to shareholders while the loan is outstanding. The credit facility
also provides for customary events of default, including default of performance
under a material agreement or debt, as well as if a party other than
Kaiser-Francis acquires more than 40% of the Company, or upon the death of Mr.
Kaiser the controlling shareholder of Kaiser-Francis.

--------------------------------------------------------------------------------
                                      -12-
<PAGE>

10.    KAISER-FRANCIS CREDIT FACILITY

       On December 13, 2001, the Company entered into a US$20,000 non-revolving
credit facility with Kaiser-Francis. The loan was used to finance the Company's
working capital requirements. The loan bears interest based upon the 30-day
LIBOR rate plus 2.25%. The final maturity date of the loan is May 31, 2005.
Amounts not drawn under the loan are subject to a standby fee payable quarterly
at 0.125% per annum. The Company paid on closing a commitment fee of 0.75% of
the total commitment (US$150). In connection with the loan, the Company has
granted Kaiser-Francis security interests in all of the assets of the Company
and a pledge of the LDI shares. The security interests and pledge of LDI shares
are subordinated to the security interests of the project term loan facility. As
at December 31, 2003, the outstanding loan was US$11,500 (2002 - US$11,500).

       The loan agreement includes customary representations, warranties and
covenants, including a covenant by the Company not to pay dividends or make any
other payment to shareholders while the loan is outstanding. The loan agreement
also provides for customary events of default.

11.    RELATED PARTY TRANSACTIONS AND COMMITMENTS

       In addition to the related party transactions with Kaiser-Francis
disclosed in notes 9 and 10, the Company has completed the following related
party transactions:

       (a)    On January 1, 1999, the Company entered into a farm-in agreement
              with a mining company of which one of the Company's directors is
              an officer and director. Under the agreement, the Company earned
              the right to a 100% interest in six mining claims in the vicinity
              of the Lac des Iles property by making payments to the optionor
              totaling $260 and by conducting exploration work in the amount of
              $135 by December 31, 2000. The optionor retained a 2% net smelter
              royalty on the farm-in claim property.

       (b)    In 2003, a director of the Company received a fee of $400 (2002 -
              $412; 2001 - $166) in connection with the negotiations related to
              the palladium sales contract entered into by the Company in 2000
              (note 13(a)). The contract was made prior to such person becoming
              a director of the Company. A second director received a fee of nil
              (2002 - nil; 2001 - $33) in connection with consulting services
              provided to the Company.

12.    CAPITAL STOCK

       The authorized capital stock of the Company consists of an unlimited
number of common shares and an unlimited number of special shares, issuable in
series, including 10,000,000 Series "A" preferred shares.

       (a)    COMMON SHARES
              The changes in issued common share capital for the year are
              summarized below:

--------------------------------------------------------------------------------
                                      -13-

<PAGE>
<TABLE>
<CAPTION>
                                                     2003                       2002                        2001
                                           ------------------------- --------------------------- -------------------------

                                                 Shares       Amount         Shares       Amount       Shares      Amount
<S>                                          <C>            <C>          <C>            <C>        <C>          <C>
Common shares issued, beginning of year      50,647,955     $311,983     50,447,630     $310,784   50,028,772   $ 308,834
Common shares issued
    Pursuant to stock options exercised          13,450          101        115,572          490      375,355       1,475
    To Group Registered Retirement
      Savings Plan participants                 190,605          905         84,753          709       43,503         475
    Private  placement                           43,328          500             --           --           --          --
                                           ------------------------- --------------------------- -------------------------
Common shares issued, end of year            50,895,338     $313,489     50,647,955   $311,983     50,447,630   $ 310,784
                                           ------------------------- --------------------------- -------------------------
</TABLE>

       (b)    GROUP REGISTERED RETIREMENT SAVINGS PLAN
              The Company has arranged a group registered retirement savings
              plan, which all employees can participate in at their option. The
              Company is required to make matching contributions to a maximum of
              $5 per employee per annum. The Company matching contribution can
              be made either in cash or treasury shares of the company. During
              2003 the Company contributed 190,605 shares at a stated capital of
              $905 (2002 - 84,753 shares at a stated capital of $709; 2001 -
              43,503 shares at a stated capital of $475).

       (c)    PRIVATE PLACEMENT
              On December 22, 2003, the Company completed a private placement of
              43,328 flow through common shares. The gross proceeds of $500 must
              be spent on Canadian exploration expenses as defined in section 66
              of the Income Tax Act (Canada) by December 31, 2004.

       (d)    CORPORATE STOCK OPTION PLAN
              The Company has adopted, and the shareholders have approved, the
              ongoing 1995 Corporate Stock Option Plan (the "Plan"), under which
              eligible directors, officers, employees and consultants of the
              Company are entitled to receive options to acquire common shares.
              The Plan is administered by the Compensation Committee, a
              subcommittee of the Board of Directors, which will determine the
              number of options to be issued, the exercise price (which may not
              be lower than the closing price of the Company's common shares on
              the Toronto Stock Exchange (TSX) on the day prior to the date of
              grant) and expiration dates of each option, the extent to which
              each option is exercisable provided that the term of an option
              shall not exceed 10 years from the date of grant, as well as
              establishing a limited time period should the optionee cease to be
              an "Eligible Person" as set forth in the conditions of the Plan.
              Options granted since December 2001 vest as to 1/3 on each of the
              first three anniversary dates of the date of grant. Prior to
              December 2001, options granted under the Plan vested as to 1/3 on
              the date of grant and 1/3 on each of the first two anniversary
              dates.

              The maximum number of common shares subject to option shall not
              exceed 2,700,000, being approximately 5.3% of the outstanding
              common shares or such greater number of common shares as may be
              determined by the Board of Directors, and approved if required, by
              the shareholders of the Company and by any relevant stock exchange
              or other regulatory authority. As at December 31, 2003, 591,127
              options were available to be granted under the Plan.

--------------------------------------------------------------------------------
                                      -14-
<PAGE>

              The following summary sets out the activity in outstanding common
              share purchase options:

<TABLE>
<CAPTION>
                                                              2003                               2002
                                               ---------------------------------------------------------------------
                                                                        Weighted-                         Weighted-
                                                                          Average                           Average
                                                                         Exercise                          Exercise
                                                    Shares                  Price          Shares             Price
                                               ---------------------------------------------------------------------
<S>                                               <C>            <C>                     <C>          <C>
Outstanding, beginning of year                    1,066,939      $         11.04         1,402,278    $       10.74
Granted                                             258,000                 3.71           148,000            10.01
Exercised                                           (13,450)                7.50          (115,572)            4.24
Cancelled                                          (272,632)                1.15          (367,767)           11.62
                                               ---------------      --------------------------------     -----------
Grand total                                       1,038,857      $          9.24         1,066,939    $       11.04
                                               ---------------      --------------------------------     -----------

Options exercisable at end of year                  685,057      $         11.27           753,855    $       11.02
                                               ---------------      --------------------------------     -----------
</TABLE>

       The following table summarizes information about the Company's stock
options outstanding at December 31, 2003 (see also note 15(a):

<TABLE>
<CAPTION>

       Exercise Price                   Expiry Dates            Options Outstanding at       Options Exercisable at
                                                                     Dec. 31, 2003                Dec. 31, 2003
----------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                <C>                                <C>
$ 3.42                                           April 7, 2011            180,500                            --
$ 3.70                                           April 1, 2011             50,000                            --
$ 4.75                                       February 27, 2011              7,500                            --
$ 5.92                                       September 2, 2011             20,000                            --
$ 7.50                                        October 23, 2006             24,217                        24,217
$ 7.89                                       December 12, 2009             59,400                        39,600
$ 8.40                                           March 3, 2005             75,000                        75,000
$ 9.30                                           July 27, 2005            126,983                       126,983
$ 9.40                                          March 15, 2005             26,839                        26,839
$ 9.70                                        November 6, 2005             24,168                        24,168
$ 10.01                                           June 6, 2010            114,000                        38,000
$ 13.55                                           June 6, 2006            217,750                       217,750
$ 13.90                                      December 14, 2005             47,250                        47,250
$ 14.44                                      February 13, 2006             65,250                        65,250
                                                                ------------------------    --------------------------
                                                                        1,038,857                       685,057
                                                                ------------------------    --------------------------
</TABLE>

       The Company has reserved for issuance 1,038,857 common shares in the
event that these options are exercised.

       Prior to January 1, 2003, the Company did not recognize compensation
expense for stock options. Had compensation expense for options granted in 2002
under the Company's stock option plan been determined based on the fair value at
the grant dates consistent with the fair value based method of accounting for
stock-based compensation, the Company's net income and earnings per share would
have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                 2003             2002
                                                         ---------------------------------
<S>                                                      <C>              <C>
       Net income as reported                            $      38,378    $      15,082
       Stock-based compensation                                    160              160
                                                         ---------------------------------
       Pro forma net income                              $      38,218    $      14,922
                                                         ---------------------------------
       Pro forma basic and diluted  income per share     $        0.75    $        0.30
                                                         ---------------------------------
</TABLE>

--------------------------------------------------------------------------------
                                      -15-
<PAGE>

       The fair value of options granted in 2003 has been estimated at the date
of grant using the Black-Scholes option pricing model with the following
weighted average assumptions: risk free interest rate of 4% (2002 - 4%),
expected dividend yield of nil (2002 - nil), expected volatility of 48% (2002 -
60%), and expected option life of 3 years (2002 - 3 years). The estimated fair
value of the options is expensed over the option's vesting period, which is 3
years. The weighted average fair market value of options granted in 2003 was
$2.13 (2002 - $4.33).

<TABLE>
<CAPTION>
               Reconciliation of the diluted number of shares outstanding:

                                                             2003                  2002                 2001
                                                      -----------------------------------------------------------------
<S>                                                   <C>                   <C>                     <C>
       Net income available to common shareholders    $         38,378      $          15,082       $        7,188
                                                      -----------------------------------------------------------------
       Weighted average number of shares outstanding        50,763,566             50,544,634           50,375,690
       Effect of dilutive securities
          Stock options                                         69,338                 48,874              167,444
                                                      -----------------------------------------------------------------
       Weighted average diluted number of shares
            outstanding                                     50,832,904             50,593,508           50,543,134
                                                      -----------------------------------------------------------------
       Diluted net income per share                   $           0.75      $            0.30      $          0.14
                                                      -----------------------------------------------------------------
</TABLE>

13.    COMMITMENTS

       (a)    PALLADIUM SALES CONTRACT
              During 2000, the Company entered into a contract (the "Palladium
              Sales Contract") whereby the Company hedged the price of 100% of
              the palladium the Company is entitled to receive from the smelter
              firms. Under the Palladium Sales Contract the sales price is based
              on the monthly average spot price for palladium, as determined by
              the London Metal Exchange P.M. Fix, for the month prior to the
              month that the metal is received by the customer, but the price
              will be no less than US$325 per ounce for 100% of the metal
              received and no more than US$550 per ounce for 50% of the metal
              received. For the remaining 50% of the metal received, there is no
              maximum price. The Palladium Sales Contract's term commenced
              effective July 1, 2000 and expires on June 30, 2005. The fair
              value of the Palladium Sales Contract approximated its carrying
              value as at December 31, 2003.

       (B)    SHERIDAN PLATINUM GROUP OF COMPANIES ("SPG") COMMITMENT
              The Company is required to pay a royalty to SPG equal to 5% of the
              Net Cash Proceeds, as defined in the agreement until the
              expiration of the Lac des Iles mine leases.

       (C)    PLATINUM FORWARD CONTRACTS
              At December 31, 2003, the Company had forward sales contracts for
              13,677 ounces of platinum at an average price of US$754 per ounce
              maturing at various dates through December 2004. The fair value of
              these forward sales contracts was below their carrying value by
              $142 as at December 31, 2003.

       (D)    NICKEL SWAP CONTRACTS
              At December 31, 2003, the Company had swap contracts for 2,381,000
              lbs. of nickel at an average fixed price of US $5.67 per lb.
              maturing at various dates through

--------------------------------------------------------------------------------
                                      -16-
<PAGE>

              December 2004. The fair value of these swap contracts was below
              their carrying value by $2,651 as at December 31, 2003.

       (E)    ELECTRICITY SWAP CONTRACTS
              At December 31, 2003, the Company had electricity swap contracts
              on 65,755 MWh of electricity at a fixed price of $54.00 per MWh
              maturing at various dates through December 2004. As at December
              31, 2003, the fair value of these swap contracts approximated
              their carrying value.

14.    REVENUE FROM METAL SALES

<TABLE>
<CAPTION>
                                                             2003                  2002                 2001
                                                       ----------------      ----------------    ----------------
<S>                                                 <C>                   <C>                 <C>
       Palladium (a)                                $       109,443       $       101,317     $        80,925
       Palladium forward contracts (b)                       20,437                46,033              27,825
       Adjustments for mark-to-market                        (1,163)               (9,243)             (5,831)
       Other metals                                          63,424                38,666              18,577
                                                       ----------------      ----------------    ----------------
                                                    $       192,141       $       176,773     $       121,496
                                                       ----------------      ----------------    ----------------
</TABLE>

       (a)    Palladium revenues include the effect of the Palladium Sales
              Contract (note 13(a)).

       (b)    The Company entered into palladium forward contracts in 2001 for
              100,800 ounces of palladium at an average price of US$922 per
              ounce, the revenue from which was fully recognized by June 30,
              2003. The effect of palladium forward contracts represents the
              difference between the fixed price realized under the palladium
              forward contracts and the palladium price at the time of revenue
              recognition.

15.    CONTINGENCIES

       (a)    The Company is a defendant in an action by another mining company
              claiming damages in the amount of $20,000, punitive and exemplary
              damages in the amount of $5,000 and a declaration that the Company
              held the Compania Minerales de Copan, S.A. de C.V. ("Copan")
              property in trust for the plaintiff. No provision has been made in
              the accounts as at December 31, 2003 or 2002 for any possible loss
              from this action as management of the Company believes it has a
              valid defense and it has been indemnified by SPG regarding this
              action. In addition, certain stock options are claimed to be held
              by employees of Copan. These options have not been included in
              note 12(a) as the Company has been indemnified by SPG regarding
              such matters.

       (b)    The Company has filed a claim with its insurance company relating
              to losses incurred in connection with the failure of the primary
              crusher in 2002. The Company will record the effect of this
              insurance recovery when the proceeds are received.

       (c)    From time to time, the Company is involved in other litigation,
              investigations, or proceedings related to claims arising out of
              its operations in the ordinary course of business. In the opinion
              of the Company's management, these claims and lawsuits in the
              aggregate, even if adversely settled, will not have a material
              effect on the consolidated financial statements.

--------------------------------------------------------------------------------
                                      -17-
<PAGE>

16.    INCOME TAXES

       The provision for income and mining taxes differs from the amount that
       would have resulted by applying the combined Canadian Federal and Ontario
       statutory income tax rates of approximately 39%.

<TABLE>
<CAPTION>
                                                                   2003               2002                2001
                                                            ----------------------------------------------------------
<S>                                                           <C>                 <C>                <C>
Income tax provision using statutory income tax rates         $    18,147         $    11,888        $     5,573
Increase (decrease) in taxes resulting from:
  Changes in income tax rates and laws                             (3,546)                 --                 --
  Resource allowance                                               (3,342)             (5,320)            (2,384)
  Non-taxable portion of capital (gains) losses                    (2,908)                 --              1,389
  Benefit of income tax losses not previously recognized             (811)                 --             (2,200)
  Federal large corporations taxes                                    837                 817                827
  Ontario mining taxes                                                983               4,357              2,226
  Other                                                            (1,206)              2,120                654
                                                            ----------------------------------------------------------
Income tax expense                                            $     8,154       $      13,862        $     6,085
                                                            ----------------------------------------------------------
</TABLE>

       The details of the Company's income tax expense are as follows:

<TABLE>
<CAPTION>
                                                                   2003               2002               2001
                                                            ----------------------------------------------------------
<S>                                                           <C>                 <C>                 <C>
Current income tax expense:
Income taxes                                                  $      (550)        $           --      $       830
Mining taxes                                                          475                     --               --
Federal large corporations tax                                        837                    816              827
                                                            ----------------------------------------------------------
                                                              $       762         $          816      $     1,657
                                                            ----------------------------------------------------------
Future income tax expense:
Income taxes                                                  $     6,884         $        8,546      $     2,228
Mining taxes                                                          508                  4,500            2,200
                                                            ----------------------------------------------------------
                                                              $     7,392         $       13,046      $     4,428
                                                            ----------------------------------------------------------
                                                              $     8,154         $       13,862      $     6,085
                                                            ----------------------------------------------------------
</TABLE>

       Future tax assets (liabilities) consist of the following temporary
differences:

<TABLE>
<CAPTION>
                                                                               2003                  2002
                                                                      ---------------------------------------------
<S>                                                                   <C>                    <C>
Current future income tax asset:
Non-capital loss carry-forwards                                       $            84        $         4,868
                                                                      ---------------------------------------------
Net future tax asset, current                                         $            84        $         4,868
                                                                      ---------------------------------------------

Long-term future income tax asset:
Mining interests, net                                                 $         7,472        $         8,426
Deferred financing costs                                                        1,022                  1,823
Non-capital loss carry-forwards                                                    --                    969

Future mining tax liability                                                     2,157                     --
Other assets                                                                      231                     --
Ontario corporate minimum tax credits                                             257                     --
Capital loss carry-forwards                                                     1,308                  2,100
Valuation allowance for capital loss carry-forwards                            (1,308)                (2,100)
                                                                      ---------------------------------------------
</TABLE>

--------------------------------------------------------------------------------
                                      -18-
<PAGE>
<TABLE>
<CAPTION>
                                                                               2003                  2002
                                                                      ---------------------------------------------
<S>                                                                   <C>                    <C>
Net future income tax asset, long-term                                         11,139                 11,218
Future income tax liability, long-term:
Project term loan and Kaiser-Francis credit facility                           (1,805)                    --
                                                                      ---------------------------------------------
Net future income tax asset, long-term                                $         9,334        $        11,218
                                                                      ---------------------------------------------

Current future income tax liability:
Deferred financing costs                                              $           216        $            --
                                                                      ---------------------------------------------
Net future tax asset, current                                         $           216        $            --
                                                                      ---------------------------------------------

Future mining tax liability, long-term:
Mining interests, net                                                 $        10,108        $         9,600
                                                                      ---------------------------------------------
Net future mining tax liability, long-term                            $        10,108        $         9,600
                                                                      ---------------------------------------------
</TABLE>

       At December 31, 2003, the Company had net capital loss carry-forwards of
approximately $3,700 (2002 - $5,700), which are available to reduce net capital
gains of future years.

17.    STATEMENT OF CASH FLOWS

       (a)    The net changes in non-cash working capital balances related to
              operations are as follows: 2003 2002 2001

<TABLE>
<CAPTION>
                                                                  2003               2002               2001
                                                            ----------------------------------------------------------
<S>                                                           <C>                 <C>                 <C>
Decrease (increase) in:
Concentrate awaiting settlement                               $     (9,298)     $      (2,778)     $    (32,825)
Inventories and stockpiles                                           3,179                507           (12,815)
Accounts receivable and other assets                                   296                943             2,992
                                                            ----------------------------------------------------------
                                                              $     (5,823)     $      (1,328)     $    (42,648)
                                                            ----------------------------------------------------------

Increase (decrease) in:
Accounts payable and accrued liabilities                      $      1,218      $      (2,442)     $      9,679
Taxes payable                                                         (630)            (1,599)            1,559
                                                            ----------------------------------------------------------
                                                              $        588      $      (4,041)     $     11,238
                                                            ----------------------------------------------------------
                                                              $     (5,235)     $      (5,369)     $    (31,410)
                                                            ----------------------------------------------------------
</TABLE>

       (b)    Cash outflows during the year for interest and income taxes were
              as follows:

<TABLE>
<CAPTION>
                                                                  2003               2002               2001
                                                            ----------------------------------------------------------
<S>                                                           <C>                 <C>                 <C>
Interest paid                                                 $      3,433      $      5,842       $      6,390
Income taxes paid                                             $         --      $         --       $         --
</TABLE>

       (c)    During 2003, capital assets (including plant and equipment and
              equipment under capital lease) were acquired at an aggregate cost
              of $11,691 (2002 - $7,093; 2001 - $117,948) of which $980 (2002 -
              $1,514; 2001 - $1,244) were acquired by means of capital leases.

18.    RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE U.S.

       These consolidated financial statements have been prepared in accordance
       with Canadian generally accepted accounting principles, which differ in
       some respects from those in the

--------------------------------------------------------------------------------
                                      -19-
<PAGE>

       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 United States generally accepted accounting
       principles ("U.S. GAAP"):

       (Canadian funds in thousands of dollars, except share and per share
       amounts)
<TABLE>
<CAPTION>
                                                                   2003                2002                2001
                                                            -------------------------------------------------------------
<S>                                                         <C>                    <C>                 <C>
Statements of earnings and deficit:
Net income under Canadian GAAP                              $        38,378        $       15,082      $        7,188
Amortization of capitalized interest (a)                                (39)                  (20) o              (17)
Concentrates and crushed and broken ore stockpiles (b)               (1,702)                 (404)              2,914
Derivative financial instruments (c)                                 (2,867)                   74                  --
Reversal of asset retirement obligation under Canadian
GAAP (e)                                                                 --                    53                 322
Tax effect of differences                                             1,459                   112                (879)
                                                            -------------------------------------------------------------

Net income and comprehensive income under U.S. GAAP          $       35,229        $       14,897      $        9,528
     before cumulative impact of change in accounting
     policy
Cumulative impact of change in accounting policy for
     asset retirement obligations (e)                                  (375)                   --                  --
                                                            -------------------------------------------------------------

Net income and comprehensive income under U.S. GAAP          $       34,854        $     14,897        $       9,528
                                                            -------------------------------------------------------------

Basic and diluted income per share under U.S. GAAP before
     cumulative impact of change in accounting policy        $         0.69        $         0.29      $         0.19
                                                            -------------------------------------------------------------

Basic and diluted income per share under U.S. GAAP           $         0.69        $         0.29      $         0.19
                                                            -------------------------------------------------------------
Balance sheets:
Current assets (b) and (c)                                   $      124,186        $      127,731
Mining interests (a)                                         $      247,769        $      267,143
Crushed and broken ore stockpiles - long-term (b)            $        6,889        $        9,774
Future tax asset, long-term                                  $        9,124        $        9,549
Capital stock (d)                                            $      319,587        $      318,081
Deficit                                                      $      (19,333)       $      (54,187)
</TABLE>

       (a)    The Company capitalizes interest on major projects where direct
              indebtedness has occurred. 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. The
              current year adjustment relates entirely to the amortization of
              these amounts under U.S. GAAP.

       (b)    Under Canadian GAAP, the cost of the Company's concentrate and
              crushed and broken ore stockpiles is determined on the average
              production cost and does not include an allocation of the
              amortization of production related assets, whereas under U.S. GAAP
              the cost of these assets should include this allocation.

--------------------------------------------------------------------------------
                                      -20-
<PAGE>

       (c)    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.

       (d)    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 at December 31, 2003 and 2002.

       (e)    Effective January 1, 2003, the Company adopted FAS 143,
              "Accounting for Asset Retirement Obligations" which requires that
              the fair value of liabilities for asset retirement obligations be
              recognized in the period in which they occur. A corresponding
              increase to the carrying amount of the related asset is generally
              recorded and amortized over the life of the asset. The amount of
              the liability is subject to re-measurement at each reporting
              period. The cumulative effect of the change through January 1,
              2003 was to increase mining assets by $6,489, increase the mine
              closure obligation to $7,019 and a one time after-tax charge to
              net earnings of $375. The equivalent accounting policy was
              retroactively adopted under Canadian GAAP, with restatement of
              prior year's financial statements (note 2). Under US GAAP, a
              change in accounting policy is adopted retroactively, without
              restatement of prior year's financial statements, by recording a
              cumulative catch-up adjustment through current year net income.

       (f)    U.S. GAAP requires that amounts totaling 5% or more of accounts
              payable and accrued liabilities be identified separately. As at
              December 31, 2003, these amounts were as follows: trade payables
              and accruals - $13,756 (2002 - $13,339); other accruals - $2,285
              (2002 - $1,484).

       (g)    U.S. GAAP does not permit the disclosure of subtotal of cash from
              operations before changes in non-cash working capital.

       (h)    Effective January 1, 2003, the Company prospectively adopted FAS
              No. 123 "Accounting for Stock-based Compensation" as amended by
              FAS No. 148, whereby compensation expense for options granted
              after January 1, 2003 is measured at fair value at the grant date
              using the Black-Scholes valuation model and recognized over the
              remaining vesting period of the options granted. Previously, the
              Company, for purposes of preparing financial information in
              accordance with U.S. GAAP, accounted for its stock-based
              compensation plan under Accounting Principles Board Opinion 25
              "Accounting for Stock Issued to Employees" (APB No. 25) which did
              not result in the recognition of compensation expense. Under FAS
              148, pro forma disclosure is still required for those options
              granted prior to January 1, 2003.

              Had the amortization of the fair value of options been charged to
              compensation expense under U.S. GAAP, the pro forma net income
              would be $36,014 and pro forma net income per share and diluted
              net income per share would be $0.71 (2002 net income of $12,249
              and net income and diluted net income per share of $0.24; 2001 net
              income of $5,884 and net income and diluted net income per share
              of $0.12).

--------------------------------------------------------------------------------
                                      -21-
<PAGE>

              The weighted average fair market value of options granted in 2002
              was $4.33 (2001 - $5.84).

              The Company estimated the fair value of options granted in 2001
              using the Black-Scholes option-pricing model with the following
              assumptions: risk free interest rate 4%, expected life of options
              of 3 years, expected volatility of the Company's share price of
              71%, expected dividend yield of nil.


IMPENDING ACCOUNTING CHANGES

CANADIAN GAAP
In 2003, the CICA issued Accounting Guideline AcG-15, "Consolidation of Variable
Interest Entities", to provide guidance for applying the principles in Handbook
Section 1590, "Subsidiaries", to certain entities. Although the CICA is
contemplating amendments to the Guideline, it is expected to be effective for
the Company's 2005 fiscal year. The Company will review AcG-15, the impact of
the Guideline, if any, on the Company's consolidated financial statements when
the CICA issues the amended Guideline.


In 2003, the CICA finalized amendments to Accounting Guideline AcG-13, "Hedging
Relationships", that clarified certain of the requirements in AcG-13 and
provided additional application guidance. AcG-13 is applicable for the Company's
2004 fiscal year. The Company does not expect the adoption of this Guideline to
have a material impact on its consolidated financial statements.

U.S. GAAP
In 2003, the FASB amended Interpretation No. 46, "Consolidation of Variable
Interest Entities" ("FIN 46R"). FIN 46R requires that a variable interest entity
("VIE") be consolidated by a company if that company is subject to a majority of
the risk of loss from the VIE's activities and/or is entitled to receive a
majority of the VIE's residual returns. For the Company, the requirements of FIN
46R apply to VIE's created after January 31, 2003. For VIEs created before
January 31, 2003, the requirements of FIN46R apply as of December 31, 2004 for a
VIE that does not meet the definition of a special-purpose entity ("SPE") and as
of January 1, 2004 for a VIE that is an SPE.

Although the Company is currently reviewing FIN 46R, the impact, if any, of
these pronouncements on the Company's consolidated financial statements has not
been determined.

19.    COMPARATIVE FIGURES
       Certain of the prior years' figures have been reclassified to conform to
       the presentation adopted in 2003.

--------------------------------------------------------------------------------
                                      -22-
<PAGE>

                           FORWARD-LOOKING STATEMENTS


Enclosed are the Company's consolidated balance sheets as at December 31, 2003
and 2002 and the consolidated statements of earnings and deficit and cash flows
for each of the years in the three-year period ended December 31, 2003
(collectively the "Financial Statements") and management's discussion and
analysis of operations and financial position ("MD&A") for the Financial
Statements. Certain statements included the Financial Statements and MD&A are
forward-looking statements which are made pursuant to the "safe harbor"
provisions of the United States Private Securities Litigation Reform Act of
1995. They include estimates and statements that describe the Company's future
plans, objectives and goals, including words to the effect that the Company or
management expects a stated condition or result to occur. When used herein,
words such as "estimate", "expect", "intend", and other similar expressions are
intended to identify forward-looking statements. In particular, statements
relating to estimated mineral reserves, cash flows, capital costs, ore
production, mine life, financing, construction and strategic plans are
forward-looking statements. Such forward-looking statements involve inherent
risks and uncertainties and are subject to factors, many of which are beyond our
control, that may cause actual results or performance to differ materially from
those currently anticipated in such statements. Important factors that could
cause actual results to differ materially from those expressed or implied by
such forward-looking statements include among others metal price volatility,
economic and political events affecting metal supply and demand, fluctuations in
ore grade, ore tonnes milled, geological, technical, mining or processing
problems, future profitability and production, and availability of financing on
acceptable terms. For a more comprehensive review of risk factors, please refer
to the Company's most recent "Management's Discussion and Analysis" (enclosed)
and Annual Information Form under "Risk Factors" on file with the U.S.
Securities and Exchange Commission and Canada provincial securities regulatory
authorities. Given these uncertainties, readers are cautioned not to put undue
reliance on these forward-looking statements. The Company disclaims any
obligation to update or revise any forward-looking statements whether as a
result of new information, events or otherwise.

--------------------------------------------------------------------------------
                                      -23-
<PAGE>

                                                                  DOCUMENT NO. 3

<PAGE>

Management's Discussion and Analysis of Financial Results


THE FOLLOWING IS MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND
FINANCIAL POSITION AND SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS THAT ARE INCLUDED ELSEWHERE IN THIS ANNUAL
REPORT. IT IS INTENDED TO PROVIDE ADDITIONAL INFORMATION ON THE COMPANY'S
PERFORMANCE, FINANCIAL POSITION AND OUTLOOK.

OVERVIEW AND STRATEGIC ACTIVITIES

North American Palladium Ltd. (the "Company") operates the Lac des Iles mine
located 85 kilometres northwest of Thunder Bay, Ontario. The mine is Canada's
only primary producer of platinum group metals and contains one of the largest
open pit bulk mineable palladium reserves in the world. In addition to
palladium, the Company earns substantial revenue from nickel, platinum, gold and
copper by-product metals. Palladium's primary use continues to be in the auto
industry where it is an important component in controlling exhaust emissions as
mandated by more stringent hydrocarbon emission standards for cars, light trucks
and SUVs, particularly in the United States, Europe and Japan. In addition,
palladium is consumed in the dental, electronics, jewellery and chemical
sectors.

During 2003, the Company replaced the damaged primary crusher and made
substantial progress in optimizing the grinding and flotation circuits in the
mill. With the resumption of normal crushing operations and the improvement in
mill availability, average throughput improved to over 15,000 tonnes per day in
the second half of 2003. With continued mill circuit optimization, and normal
availability, the mill is expected to operate at an average rate of 15,000
tonnes per day in 2004.

During 2003, the Company continued to investigate the feasibility of an
underground development of the Main High Grade Zone, which lies directly below
the ultimate depth of the open pit. Based on completion of a positive
feasibility study, a decision has been made to proceed with an underground mine
development program at an estimated capital cost of $55 million. The Company
expects to finance the project using operating cash flow, vendor financing, and
a combination of debt and equity.

The Company hedges the price of its palladium production under a long-term
contract with a major automotive manufacturer (the "Palladium Sales Contract").
The hedge price is based on the monthly average spot price for palladium with a
floor price of US$325 per ounce for 100% of production and a ceiling price of
US$550 per ounce for 50% of production. The remaining 50% of production is sold
at market prices or the contract floor, whichever is higher. The Palladium Sales
Contract expires on June 30, 2005.

RESULTS OF OPERATIONS

The Company generated gross revenue from metal sales of $192.1 million in 2003,
compared to $176.8 million in 2002. Revenue in 2003 from the sale of palladium
before the mark-to-market effect of price changes and palladium forward
contracts was $109.4 million compared to $101.3 million in 2002. The revenue
increase was due to a 32% increase in palladium production, offset by a drop in
the average palladium price. The Company entered into palladium forward
contracts in 2001 for 100,800 ounces of palladium at an average price of US$922
per ounce, the revenue from which had been fully recognized by June 30, 2003.
These palladium forward contracts provided additional revenue of $20.4 million
in 2003 compared to $46.0 million in 2002. The effect of palladium forward
contracts represents the difference between the fixed price realized under the
palladium forward contracts and the palladium price at the time of revenue
recognition. During 2003, the spot


16 North American Palladium Ltd.     [LOGO]                       Building Value

<PAGE>

price of palladium per ounce ranged from a high of US$269 to a low of US$148 and
averaged US$200 compared to an average of US$338 during 2002. Palladium
production sold to third-party smelters takes up to seven months from time of
receipt at the smelter to settle the final pricing. The price adjustment
relating to palladium settled and awaiting settlement was a small negative
amount of $1.2 million compared to a negative $9.2 million in 2002 when the
palladium price weakened throughout the year. Revenue from by-product metal
sales increased by 64% to $63.4 million in 2003 compared to $38.7 million in
2002 reflecting the increased production and much improved price levels for
nickel, platinum, gold and copper.

During 2003, the mill processed 5,159,730 tonnes of ore or an average of 14,136
tonnes per day compared to 4,851,621 tonnes of ore or an average of 13,292
tonnes per day in 2002. Mining in 2003 moved into a higher-grade section of the
pit, with the average palladium head grade improving to 2.31 grams per tonne as
compared to 1.91 grams per tonne in 2002. During the year, mill palladium
recoveries also improved to 75.5% as compared to 73.8% in 2002. While total
production costs for 2003 of $103.7 million were comparable to $100.6 million in
the prior year, unit cash costs to produce palladium (production costs including
overhead and smelter treatment, refining and freight costs), net of other metal
revenues and royalties, decreased to US$175 per ounce in 2003 compared to US$264
per ounce in 2002. The improvement in unit cash costs was achieved by a 32%
increase in palladium production to 288,703 ounces in 2003 compared to 219,325
ounces in 2002 combined with higher revenue from by-product metals. With the
activation of the new primary crusher in June 2003, continued improvement in
mill throughput and availability, and stronger by-product revenue, cash costs
improved to US$108 per ounce in the last half of 2003.

Non-cash amortization increased to $28.6 million in 2003 compared to $20.2
million in 2002. The higher amortization amount is attributable to the 32%
increase in palladium production and the increase in the unit of production
amortization rate due to a restatement of reserves at June 30, 2003 that
resulted in a 20% reduction in palladium reserve ounces.

During 2003, there was a write-down of mining interests of $2.3 million relating
to the damaged primary crusher, which was removed from service and replaced with
a new unit. In 2002, by comparison there was no write-down of mining assets.

Income from mining operations was $33.8 million in 2003 compared to $34.3
million for the previous year. Although there was a significant improvement in
palladium production compared to 2002, the results for 2003 were negatively
impacted by a lower average realized palladium price and a reduction of $25.6
million in revenue from the palladium forward sales program.

Other income and expense, which includes interest income and expense,
exploration and foreign exchange gains and losses, was an income of $12.7
million in 2003 compared to an expense of $5.3 million in 2002. In the current
year there was a foreign exchange gain of $18.1 million compared to a gain of
$0.8 million in 2002. The foreign exchange gain in the current year relates
primarily to the Company's US dollar denominated credit facilities which have
benefited from the strengthening of the Canadian dollar compared to the US
dollar.

In 2003, the Company incurred interest expense on the project term loan, and on
the credit facility provided by Kaiser-Francis Oil Company ("Kaiser-Francis"),
in the amount of $3.2 million compared to $5.4 million in 2002.

The Company's current year provision for income tax expense of $8.2 million
consists of a current federal large corporation tax expense of $0.8 million and
a future income and mining tax expense of $7.4 million. The Company's 2003 tax
provision was reduced for the non-taxable portion of a capital gain relating to
the foreign exchange gain and for changes in federal and provincial income tax
rates and laws affecting the resource industry. Net income for the year improved
by 154% to $38.4 million or $0.75 per share (diluted) compared to $15.1 million
or $0.30 per share (diluted) in 2002.


2003 Annual Report                   [LOGO]                                   17

<PAGE>

<TABLE>
<CAPTION>
                                                                             2003
($000, EXCEPT PER SHARE AMOUNTS)                1ST QTR         2ND QTR     3RD QTR    4TH QTR     FULL YEAR
-------------------------------------------------------------------------------------------------------------
<S>                                            <C>             <C>         <C>        <C>         <C>
Revenue from metal sales                         45,120          44,631      42,585     59,805      192,141
Net income                                        8,390          10,361       3,535     16,092       38,378
Net income per share                               0.17            0.20        0.07       0.32         0.76
Fully diluted net income (loss) per share          0.17            0.20        0.07       0.31         0.75

                                                                             2002
($000, except per share amounts)                1st Qtr         2nd Qtr     3rd Qtr    4th Qtr     Full Year
-------------------------------------------------------------------------------------------------------------
Revenue from metal sales                         44,577          41,745      46,547     43,904      176,773
Net income (loss)                                 6,246           7,521       2,894     (1,579)      15,082
Net income (loss) per share                        0.12            0.15        0.06      (0.03)        0.30
Fully diluted net income (loss) per share          0.12            0.15        0.06      (0.03)        0.30
</TABLE>

CHANGES IN ACCOUNTING POLICY

Effective January 1, 2003, the Company changed its method of accounting for
stock options from the intrinsic value method to one that recognizes as an
expense the cost of stock-based compensation based on the estimated fair value
of new stock options granted to employees and directors. The fair value of each
stock option granted is estimated on the date of the grant using the
Black-Scholes option pricing model. As a result of this change in accounting
policy, which was applied prospectively, an expense of $138,000 was recorded in
2003 to reflect the fair value of stock options granted to employees and
directors in 2003.

Effective January 1, 2003, the Company adopted a new accounting standard of the
Canadian Institute of Chartered Accountants ("CICA") for asset retirement
obligations which harmonizes with U.S. Generally Accepted Accounting Principles.
This standard significantly changed the method of accounting for future site
restoration costs. Under this new standard, asset retirement obligations are
recognized when incurred and recorded as liabilities at fair value. The amount
of the liability is subject to re-measurement at each reporting period. The
liability is accreted over time through periodic charges to earnings. In
addition, the asset retirement cost is capitalized as part of the asset's
carrying value and amortized over the estimated life of the mine. This change in
accounting policy was applied retroactively and, accordingly, the consolidated
financial statements of prior periods were restated. As a result of this change,
certain balance sheet accounts as of December 31, 2002 were restated as follows:
mining interests increased by $6.5 million and the mine closure obligation
increased to $7.0 million. An expense of $0.9 million was recorded in 2003 for
accretion of the mine closure obligation and depreciation for asset retirements.


18 North American Palladium Ltd.     [LOGO]                       Building Value

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from operations (prior to changes in non-cash working capital) was
$59.8 million in 2003, compared to $47.5 million in 2002. The $12.3 million
increase was primarily due to an increase in income from mining operations that
resulted from increased palladium and by-product metal production, offset by
lower palladium prices. Changes in non-cash working capital consumed $5.2
million of cash in the current year as compared to $5.4 million in 2002.
Palladium awaiting settlement grew to 147,570 ounces at December 31, 2003
compared to 93,619 ounces at December 31, 2002; however, this increase was
offset by lower average palladium prices and a weaker US dollar, which are used
to value the concentrate awaiting settlement. After allowing for non-cash
working capital changes, cash provided by operations was $54.6 million in 2003
compared to $42.1 million in 2002.

Investing activities required $8.3 million of cash in 2003, with short-term
investments providing $3.3 million and additions to plant and equipment and
deferred exploration and development costs at the Roby deposit requiring $11.7
million. This compares with $8.1 million of net investing activities in 2002.

During the year, the Company's financial position was further strengthened by a
disciplined debt reduction program. In 2003, long-term debt was reduced by $63.6
million as a result of repayments of $45.1 million and a foreign exchange gain
of $18.5 million. The Company's total debt was reduced to $58.8 million at
December 31, 2003 compared to $122.5 million at December 31, 2002. The year-end
cash and cash equivalents balance was $12.0 million compared to $11.5 million
for the prior year.

RISKS AND UNCERTAINTIES

The price of palladium is the most significant factor influencing the
profitability of the Company. In 2003, sales of palladium accounted for
approximately 67% of the Company's revenue. Many factors influence the price of
palladium, including global supply and demand, speculative activities,
international political and economic conditions and production levels and costs
in other platinum group metal-producing countries, particularly Russia and South
Africa. To offset the price risk, the Company entered into the Palladium Sales
Contract and other hedge contracts to cover a portion of expected annual
production as set out below.

The possible development of a substitute alloy or synthetic material, which has
catalytic characteristics similar to platinum group metals, may result in a
future decrease in demand for palladium and platinum.

Currency fluctuations may affect cash flow since production currently is sold in
United States dollars, whereas the Company's administration, operating and
exploration expenses are incurred in Canadian dollars. As a result, changes in
the exchange rate between Canadian and United States dollars can affect revenue
and profitability.

The Company is dependent on one mine for its metal production. The business of
mining is generally subject to risks and hazards, including environmental
hazards, industrial accidents, metallurgical and other processing problems,
unusual and unexpected rock formations, pit slope failures, flooding and
periodic interruptions due to inclement weather conditions or other acts of
nature, mechanical equipment and facility performance problems and the
availability of materials and equipment. These risks could result in damage to,
or destruction of, the Company's properties or production facilities, personal
injury or death, environmental damage, delays in mining, monetary losses and
possible legal liability. Although the Company maintains insurance in respect of
the mining operations that is within ranges of coverage consistent with industry
practice, such insurance may not provide coverage of all the risks associated
with mining. The Company has made a claim under its property damage and business
interruption insurance policies relating to the primary crusher failure which
occurred in 2002. The Company will record the effect of this insurance recovery
in its financial statements when the proceeds are received.


2003 Annual Report                   [LOGO]                                   19

<PAGE>

OUTLOOK

North American Palladium made a significant improvement in operating performance
in the second half of 2003. Achieving our targeted operating objectives at the
Lac des Iles mine and the resulting strengthening of our financial position will
allow the Company to exploit the future exploration and development potential at
the Lac des Iles mine. The immediate priority is to develop the Main High Grade
Zone where the economic viability of a conventional underground mining operation
has been demonstrated. The development of the Main High Grade Zone will be
fast-tracked by ramp access with commercial production expected in the second
half of 2005. This zone is almost 12 metres thick with a strike length in excess
of 350 metres and an average grade of 6.6 grams palladium per tonne.

The Company expects to spend over $2.0 million on its 2004 exploration program
that will focus on three primary properties that have given encouraging
preliminary results. In particular, work on our 100%-owned Haines claim block
and the contiguous Inco Limited Shebandowan joint venture properties, totaling
almost 7,000 hectares, will figure prominently in the 2004 exploration program.

The Company continues to hold a positive view on the long-term palladium
fundamentals and believes that there is the potential for a sustained rally in
the price of palladium. The primary use for palladium is in the production of
autocatalysts, which are used to reduce harmful air emissions from the exhaust
systems of automobiles. Given the continued movement by global governments to
enact more stringent air emission standards, palladium demand is expected to
increase. With platinum currently trading at more than three times the price of
palladium, the Company continues to believe that automobile manufacturers will
be encouraged to increase their use of palladium in catalytic converters. The
switch back to palladium will be further encouraged by the reliability of
supply, which has improved over the past year.

During the second half of 2003, the Company initiated a corporate development
strategy to expand its precious metals mining business with an initial focus in
Canada. During the coming year, we will continue to evaluate opportunities that
include existing base and precious metal operation and development projects. We
are targeting advanced-stage projects with the potential to host world-class
base and precious metal deposits where our demonstrated operating strength will
enhance shareholder value.


20 North American Palladium Ltd.     [LOGO]                       Building Value

<PAGE>

A.   DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are defined by the Securities and Exchange
Commission as those controls and other procedures that are designed to ensure
that information required to be disclosed by North American Palladium Ltd. (the
"Registrant") in reports filed or submitted by it under the Securities Exchange
Act of 1934, as amended, is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission's rules and
forms. The Registrant's Chief Executive Officer and Chief Financial Officer have
evaluated the Registrant's disclosure controls and procedures as of the end of
the period covered by this Annual Report on Form 40-F and have determined that
such disclosure controls and procedures are effective.

B.   CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

Since the most recent evaluation of the Registrant's internal controls, there
has not been any significant change in the Registrant's internal control over
financial reporting that has materially affected or is reasonably likely to
materially affect, the Registrant's internal control over financial reporting.

C.   NOTICE OF PENSION FUND BLACKOUT PERIOD

The Registrant was not required by Rule 104 of Regulation BTR to send any notice
to any of its directors or executive officers during the fiscal year ended
December 31, 2003.

D.   AUDIT COMMITTEE FINANCIAL EXPERT

The Registrant's board of directors has determined that Mr. Gregory J. Van
Staveren, an individual serving on the audit committee of the Registrant's board
of directors, is an audit committee financial expert, as that term is defined in
General Instruction B(8)(a) of Form 40-F. The Registrant's board of directors
has also determined that Mr. Van Staveren is independent, as that term is
defined under the rules and regulations of the American Stock Exchange.

E.   CODE OF ETHICS

The Registrant has adopted a code of ethics that applies to all directors,
officers and employees. The Registrant will provide a copy of the code of ethics
without charge to any person that requests a copy by contacting the Corporate
Secretary, at the address on the cover of this Form 40-F.

F.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

     AUDIT FEES

The aggregate fees billed by Ernst & Young LLP, the Registrant's principal
accountant (the "Outside Auditors"), for the fiscal years ended December 31,
2002 and 2003 for professional services rendered by the Outside Auditors for the
audit of the Registrant's annual financial statements or services that are
normally provided by the Outside Auditors in connection with statutory and
regulatory filings or engagements for such years were Cdn$175,000 and
Cdn$195,000, respectively.

     AUDIT-RELATED FEES

No fees were billed by the Outside Auditors for the fiscal years ended December
31, 2002 and 2003 for assurance and related services rendered by it that are
reasonably related to the performance of the audit or review of the Registrant's
financial statements.

<PAGE>

     TAX FEES

The aggregate fees billed by the Outside Auditors for the fiscal years ended
December 31, 2002 and 2003 for professional services rendered by it for tax
compliance, tax advice, tax planning and other services were Cdn$28,207 and
Cdn$26,426, respectively. Tax services provided included preparation of
corporate tax returns and review of tax provisions.

     ALL OTHER FEES

The aggregate fees billed by the Outside Auditors for the fiscal years ended
December 31, 2002 and 2003 for products and services provided by the Outsider
Auditors, other than the services reported in the preceding three paragraphs,
were Cdn$7,500 and Cdn$nil, respectively. Other products and services provided
included accounting support.

     AUDIT COMMITTEE PRE-APPROVAL POLICIES

All audit and non-audit services performed by the Registrant's auditor are
pre-approved by the audit committee of the Registrant.

G.   OFF-BALANCE SHEET ARRANGEMENTS

The Registrant is not a party to any off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on its financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to investors.

H.   TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table sets out the Registrant's known contractual obligations for
its long-term liabilities and lease commitments as of the fiscal year ended
March 31, 2004.

<TABLE>
<CAPTION>

(CANADIAN DOLLARS IN THOUSANDS)
-------------------------------------------------------------------------------------------------
                                    Payments due by period
-------------------------------------------------------------------------------------------------
                                                     Less than      1 to 3    4 to 5
                                          Total         1 year       years     years  Thereafter
-------------------------------------------------------------------------------------------------
<S>                                   <C>             <C>            <C>        <C>         <C>
PROJECT TERM DEBT                     $  33,153      $  33,153  $        -    $    -        $  -
KAISER-FRANCIS CREDIT FACILITY           15,063              -      15,063         -           -
CAPITAL LEASE OBLIGATIONS                 2,130          1,156         867       107           -
OPERATING LEASES                          2,360            945       1,344        71           -
OTHER PURCHASE OBLIGATIONS                1,122          1,122           -         -           -
-------------------------------------------------------------------------------------------------
TOTAL CONTRACTUAL OBLIGATIONS         $  53,828      $  36,376  $   17,274    $  178        $  -
=================================================================================================
</TABLE>

<PAGE>

                  UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

A.   UNDERTAKING

The Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to: the securities in relation to which the obligation to file an
annual report on Form 40-F arises; or transactions in said securities.

B.   CONSENT TO SERVICE OF PROCESS

The Registrant has previously filed with the Commission a Form F-X in connection
with its Common Shares.

<PAGE>

                                    SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant certifies that it meets all of the requirements for
filing on Form 40-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereto duly authorized.


                                         NORTH AMERICAN PALLADIUM LTD.





Dated: May 19, 2004                      By:     /s/ George D. Faught
                                                 -------------------------------
                                         By:     George D. Faught
                                         Title:  Vice President, Finance and
                                                 Chief Financial Officer

<PAGE>

                                  EXHIBIT INDEX



NUMBER         DOCUMENT
------         --------

  1.      Consent of Ernst & Young LLP
 31.      Certification of CEO and CFO pursuant to Section 302 of the
          Sarbanes-Oxley Act of 2002
 32.      Certification of CEO and CFO pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002