PAL

All figures are in Canadian dollars except where noted.

TORONTO, ONTARIO--(Marketwired - May 1, 2014) - North American Palladium Ltd. ("NAP" or the "Company") (TSX:PDL)(NYSEMKT:PAL) today announced the operating, development, and financial results for the first quarter ended March 31, 2014 ("Q1").

Q1, 2014 Results Summary

• Produced 42,641 ounces of payable palladium at a cash cost per ounce(1) of US$492;
• Realized palladium selling price of US$739 per ounce, giving a palladium operating margin of US$247 per ounce, or US$10.5 million;
• Revenue of $48.7 million;
• Adjusted EBITDA(1) of $9.8 million;
• Invested $2.9 million in capital expenditures and $0.8 million in exploration;
• Underground ore mined at LDI was 275,845 tonnes at an average grade of 5.0 g/t palladium.
• Processed 254,294 tonnes of low grade surface stockpile at LDI at an average grade of 1.0 g/t palladium.
• Underground production during the quarter averaged 3,065 tonnes per day, ahead of the Company's operating guidance for the first half of 2014.
• LDI mill processed 516,511 tonnes of ore at an average palladium head grade of 3.3 g/t palladium and a record recovery rate of 84.5%.
• Published an updated LOM plan for LDI.
• Completed a $32 million financing during the quarter.
• Subsequent to quarter end, completed a $35 million financing, and entered into a proposed settlement in respect of the previously disclosed potential class action lawsuit.

"During the first quarter we made significant improvements across our operations. Key metrics including underground production, mill recoveries, average palladium grades and ounces of payable palladium produced were all in line with or ahead of our full year guidance," said Phil du Toit, President and Chief Executive Officer. "These operational improvements demonstrate that our ramp-up efforts at LDI are progressing well and trending in the right direction. We remain focused on finalizing improvements to the underground ore handling system to help drive further increases in production rates in the coming quarters."

"Steps were also taken to improve our liquidity during and subsequent to the quarter through two financings. We also published an updated reserve and resource and life of mine plan for LDI which gives us a clearer roadmap for enhancing shareholder value," added Mr. du Toit.

Lac des Iles Operations

Q1 2014 Production

In the first quarter of 2014, the Company's LDI mine produced 42,641 ounces of payable palladium at a total cash cost of US$492 per ounce(1). The cash cost is well below our full year guidance of US$550 and was positively impacted by higher underground grade, lower operating costs, higher mill recoveries and the effects on by-product credits of a weaker Canadian dollar, partially offset by $2.7 million of propane and power costs above plan which are attributable to the extreme winter conditions experienced during the quarter.

Payable palladium production in the first quarter was ahead of our ramp up profile and in line with management's full year guidance for 2014, as the mine continued to balance production volumes between surface and underground ore sources during the transition period. During the first quarter, 530,139 tonnes of ore were mined at LDI, of which 275,845 tonnes came from underground sources (with an average palladium grade of 5.0 grams per tonne), and 254,294 tonnes came from surface stockpiles (with an average palladium grade of 1.0 grams per tonne). During the first quarter, the LDI mill processed 516,511 tonnes of ore at a combined average palladium mill head grade of 3.3 grams per tonne, at an 84.5% palladium recovery rate, and at a total cost of $62 per tonne milled.

Guidance

Given the recent financings, the Company is increasing its guidance for exploration spending by $6 million to $10 million for 2014. The increased exploration spending is to expand the current drill program for the Offset zone to increase reserves and resources and to upgrade existing reserves and resources.

The following table provides a summary of operating results to date for Q1 2014 versus full year guidance for 2014:

The following table includes quarterly results for the first quarter of 2014 and for all four quarters in 2013 and demonstrates some of the key trends in the business.

Development Update

Capital expenditures in the first quarter amounted to $2.9 million, compared to $38.1 million in the same period in 2013.

Exploration

In the first quarter, NAP invested $0.8 million in exploration and infill drilling. For 2014, the Company is planning an exploration program to target the lower portion of the Offset zone in support of an anticipated preliminary economic assessment to be completed later in 2014 or early 2015. As at April 30, 2014, both surface and underground drilling rigs were operating at site.

Financial Results(2)

Revenue for the first quarter was $48.7 million compared to $47.1 million in the first quarter of 2013. The increase in revenue was primarily due to more favourable exchange rates partially offset by lower payable metals sales at lower realized prices for all metals except palladium. During the first quarter, the Company realized a palladium selling price of US$739 per ounce.

Net loss for the quarter was $26.7 million or $0.11 per share compared to a net loss of $2.8 million or $0.02 per share in the same quarter last year. The increase in the net loss is primarily due to the impact of increased foreign exchange losses, depreciation and interest expenses, partially offset by decreased exploration expenses.

EBITDA(1) was $1.0 million for the first quarter, compared to $2.9 million in the same quarter last year. Adjusted EBITDA(1) (which excludes interest expenses and other costs, depreciation and amortization, exploration, foreign exchange gains and losses and mine restoration costs net of insurance recoveries) was $9.8 million in the first quarter, compared to $8.3 million in first quarter last year.

During the first quarter, the Company closed the first $32.0 million tranche related to its previously announced convertible unsecured subordinated debenture financing. As at March 31, 2014, the Company had cash and cash equivalents of $21.9 million compared to $9.8 million as at December 31, 2013. The Company's credit facility availability was limited by the borrowing base to US$38.6 million of which US$36.4 million was utilized.

Subsequent to quarter end, the Company entered into a proposed settlement in respect of the previously disclosed potential class action lawsuit pending in the Ontario Superior Court of Justice. Under the terms of the settlement, the Company's insurance will pay $2.4 million for the benefit of the settlement class and for legal costs. There has been no admission of any wrongdoing by the Company or its officers and directors; however the Company is of the view that the settlement is favorable given the significant cost and management time associated with defending the action. The settlement is subject to finalization of the settlement agreement and approval by the Court.

While the Company has operations that generate revenue, it has not yet achieved consistently profitable operations and incurred a net loss of $26.7 million for the three months ended March 31, 2014. The achievement of this is dependent on a number of variables including, but not limited to, metal prices, operational costs, capital expenditures, timely transition to mining by shaft, and meeting production targets. Adverse changes in any of these variables may require the Company to seek additional financing.

About North American Palladium

NAP is an established precious metals producer that has been operating its Lac des Iles mine (LDI) located in Ontario, Canada since 1993. LDI is one of only two primary producers of palladium in the world, and is completing a major expansion to increase production and reduce cash costs per ounce. The Company's shares trade on the NYSEMKT under the symbol PAL and on the TSX under the symbol PDL.

(1) Non-IFRS measure. Please refer to Non-IFRS Measures in the MD&A.

(2) NAP's condensed interim consolidated financial statements for the first quarter ended March 31, 2014 are available in the Appendix of this news release. These financial statements should be read in conjunction with the notes and management's discussion and analysis available at www.nap.com, www.sedar.com, and www.sec.gov.

Cautionary Statement on Forward Looking Information

Certain information contained in this news release constitutes 'forward-looking statements' within the meaning of the 'safe harbor' provisions of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities laws. All statements other than statements of historical fact are forward-looking statements. The words 'potential', 'anticipate', 'contemplate', 'target', 'may', 'will', 'would', 'could', 'intend', 'estimate' and similar expressions identify forward-looking statements. Forward-looking statements in this news release include, without limitation: information pertaining to the Company's strategy, plans or future financial or operating performance, such as the ramp-up at the Company's LDI mine, timelines, production plans, projected expenditures, operating cost estimates, proposed mining methods, expected mining rates and other statements that express management's expectations or estimates of future performance. The Company cautions the reader that such forward-looking statements involve known and unknown risk factors that may cause the actual results to be materially different from those expressed or implied by the forward-looking statements. Such risk factors include, but are not limited to: the risk that the Company may not be able to obtain sufficient financing to fund capital needs including capital expenditures required to continue the LDI mine expansion at depth, the risk that the Company will not be able to meet its financial obligations as they become due, the possibility that metal prices and foreign exchange rates may fluctuate, inherent risks associated with development, exploration, mining and processing including risks to tailings capacity, ground conditions, environmental hazards, uncertainty of mineral reserves and resources, the possibility that the LDI mine may not perform as planned, changes in legislation, regulations or political and economic developments in Canada and abroad, risks related to employee relations and the availability of skilled labour, litigation, and the risks associated with obtaining necessary licenses and permits. For more details on these and other risk factors see the Company's most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities.

Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions contained in this news release, which may prove to be incorrect, include, but are not limited to: that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business, that metal prices and exchange rates between the Canadian and United States dollar will be consistent with the Company's expectations, that there will be no material delays affecting operations or the timing of ongoing projects including the LDI mine ramp-up, that prices for key mining and construction supplies, including labour costs, will remain consistent with the Company's expectations, and that the Company's current estimates of mineral reserves and resources are accurate. The forward-looking statements are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise, except as expressly required by law. Readers are cautioned not to put undue reliance on these forward-looking statements.

Condensed Interim Consolidated Balance Sheets (expressed in thousands of Canadian dollars) (unaudited)

Condensed Interim Consolidated Statements of Operations and Comprehensive Loss (expressed in thousands of Canadian dollars, except share and per share amounts) (unaudited)

Condensed Interim Consolidated Statements of Cash Flows (expressed in thousands of Canadian dollars) (unaudited)

North American Palladium Ltd.John VincicInvestor Relations416-360-7374jvincic@nap.comwww.nap.com