Mr. Jim Gallagher reports

NORTH AMERICAN PALLADIUM ANNOUNCES STRONG OPERATIONAL PERFORMANCE WITH ITS FIRST QUARTER 2018 FINANCIAL RESULTS

North American Palladium Ltd. has released the financial and operational results for the three months ended March 31, 2018.

First quarter 2018 results summary:

• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1) for the first quarter of 2018 was $28.4-million compared with $6.8-million for the same period in 2017.
• Net income was $5.6-million this quarter compared with a net loss of $3.8-million for the same period in 2017.
• Underground production was 569,468 tonnes (6,327 tonnes per day) at an average grade of 3.3 grams per tonne compared with 363,136 tonnes (4,035 tonnes per day) at an average grade of 4.4 grams per tonne in the first quarter of 2017.
• Initial production commenced from the Sheriff pit this quarter and totalled 127,940 tonnes at a grade of 1.27 grams per tonne.
• Underground mining cost per tonne in the first quarter decreased to $39 compared with $56 in the same period in 2017.
• Total tonnes milled increased to 1,021,147 in the quarter compared with 458,382 tonnes in the first quarter of 2017, reflecting the return to full-time milling, supplemented by increased underground production, Sheriff pit ore and additional surface stockpile tonnage.
• The company produced 57,053 ounces of payable palladium at an all-inclusive sustaining cost (1) (AISC) of $709 (U.S.) per ounce compared with 40,252 ounces of palladium in 2017 at an AISC of $765 (U.S.).

"Our operational and financial key performance indicators improved significantly this quarter compared to this time last year. Underground production has become consistent, reliable and predictable, and should continue to gradually increase this year as we bring more of the lower-grade reserves in the upper part of the mine back into production. This quarter, we began initial production from the Sheriff pit, which is expected to produce higher-grade material in the second half of the year. Total mill throughput also continued to increase this quarter. All of this indicates further performance improvements throughout 2018," said Jim Gallagher, president and chief executive officer of North American Palladium.

"The recently announced drill results from our Lac des Iles and regional exploration programs highlight the quality and quantity of targets generated from our extensive property holdings. In addition, we recently commenced resource delineation drilling of the Offset South zone, which is our most immediate opportunity to add to the Lac des Iles mineral inventory. We are also seeing positive results from our greenfields exploration efforts that remain focused on the discovery of another Lac-des-Iles-type palladium deposit.

"Palladium prices have shown good resilience to recent financial market volatility driven by trade and sanction concerns. The continuing strength in palladium prices reflects the fundamental supply deficit that still exists, with growing automotive demand and flat global supply," continued Mr. Gallagher.

                   OPERATING AND FINANCIAL HIGHLIGHTS                      
                                                     
Operating highlights                           Three months ended March 31, 
                                                          2018        2017
Ore mined (tonnes)
Underground                                            569,468     363,136
Surface (stockpile and open pit)                       480,916      77,600
Total                                                1,050,384     440,736
Mined ore grade (g/t Pd)
Underground                                                3.3         4.4
Surface                                                    1.0         1.0
Milling
Tonnes milled (dry metric tonnes)                    1,021,147     458,382
Palladium recoveries (%)                                  79.9        82.6
Palladium concentrate grade (g/t)                          263         295
Tonnes of concentrate produced                           7,162       4,496
Production cost per tonne milled (1)                       $47         $70
Payable production
Palladium -- ounces                                     57,053      40,252
Other results (1)
Underground cost per tonne mined                            39          56
AISC per ounce of palladium produced (U.S.$) (1)           709         765
Cash cost per ounce of palladium sold,
net of byproduct revenues (U.S.$) (1)                      567         627
                                               
Financial highlights                           Three months ended March 31,
(expressed in millions of dollars)                        2018        2017

Revenue                                                  $86.6       $44.3
Smelting, refining, freight and royalty                    3.9         2.1
Royalty expense                                            3.6         2.2
Net revenue                                               79.1        40.0
Operating expenses
Production cost
Mining                                                    30.1        23.9
Milling                                                   12.3         6.8
General and administration                                 6.1         5.9
Inventory and other cost                                  (0.1)       (4.7)
Total production costs                                    48.4        31.9
Depreciation and amortization                             12.0         8.1
Inventory price adjustment                                   -        (0.2)
Loss on disposal of equipment                             0.10         0.1
Total mining operating expenses                           60.5        39.9
Income (loss) from mining operations                      18.6         0.1
Net income (loss)                                          5.6        (3.8)
Net income (loss) per share                                0.1       (0.07)
Adjusted EBITDA (1)                                       28.4         6.8
Capital investment, excluding non-cash leases             12.5        16.3

Adjusted EBITDA (1) for the quarter was $28.4-million compared with $6.8-million in the first quarter of 2017. Net income for the quarter was $5.6-million compared with a loss of $3.8-million in 2017. Revenue for the quarter was $86.6-million compared with $44.3-million in the first quarter of 2017. The higher revenue in the quarter was primarily due to an increase in palladium prices and payable palladium sold.

Total production cost for the quarter before inventory and other cost adjustments was $48.5-million ($47 per tonne milled) compared with $36.6-million ($80 per tonne milled) in the first quarter of 2017. Cash provided by operations prior to changes in non-cash working capital for the quarter was $23.8-million compared with $6.3-million for the same period in 2017.

The AISC per ounce of palladium produced decreased to $709 (U.S.) per ounce for the quarter, compared with $765 (U.S.) per ounce in the first quarter of 2017. Sustaining capital expenditures in the first quarter were $8.6-million compared with $7.0-million in 2017. Cash costs for the quarter were $567 (U.S.) per ounce sold, compared with $627 (U.S.) per ounce sold in first quarter 2017.

Financial liquidity

As at March 31, 2018, the company had cash and cash equivalents of $20.7-million compared with $18.1-million for the same period in 2017. During the quarter, the company extended the term of its $60-million (U.S.) credit facility to Dec. 31, 2018. At quarter-end, the company had total debt of $102.9-million compared with $123.3-million for the same period of 2017. As at April 15, 2018, the company had credit available of $14-million (U.S.) under the company's credit facility.

Exploration

Exploration expenditures were $3.8-million for the quarter, compared with $500,000 for the same period in 2017. The increased costs are attributable to an increase in greenfield exploration and drilling activity at the recently acquired Sunday Lake project.

A total of 14,067 metres of drilling was completed in the quarter. This includes 6,264 metres of underground and surface drilling at the Lac des Iles mine (LDI), 5,582 metres of drilling at the Sunday Lake project and 2,221 metres of drilling at the Legris Lake project. Results from these programs were announced in the company's March 27, 2018, April 3, 2018, and April 5, 2018, news releases.

In the second quarter, the company plans to complete resource definition and conversion drilling on the Offset South zone. Additional drilling programs at LDI will test underground targets near the Offset zone and near-surface targets in the eastern part of the mine property. North American Palladium expects to provide an update to its LDI mineral resource estimate later this year. Preparations are in progress for a several-month field program of trenching, mapping, geophysical surveying and surface prospecting on selected greenfields properties.

Further updates on exploration activities will be provided as significant, new results become available.

Outlook

The company's previously stated 2018 guidance of palladium production between 230,000 and 240,000 ounces of palladium at an average AISC cost of $640 (U.S.) to $660 (U.S.) per ounce remains unchanged.

Shareholder information

The complete condensed consolidated interim financial statements of the company for the three months ended March 31, 2018, and the related management's discussion and analysis can be found on the company's website and on SEDAR.

The company invites you to join its webcast and conference call on May 4, 2018, at 8:30 a.m. ET. A recording of the conference call will be available within 24 hours following the call at the company's website.

Conference call and webcast details

Date:  May 4, 2018

Time:  8:30 a.m. ET

Dial-in:  North America: 1-800-319-4610 or international: 1-604-638-5340

Replay:  North America: 1-855-669-9658

Replay passcode:  2198

Note

(1) Non-international financial reporting standard measure. Please refer to non-IFRS measures in management's discussion and analysis.

Qualified person

The technical content of this news release was reviewed and approved by the company's vice-president, exploration, Dr. Dave Peck. Dr. Peck is a qualified person under the meaning of National Instrument 43-101 and a registered professional geoscientist with the Association of Professional Geoscientists of Ontario, the Association of Professional Engineers and Geoscientists of British Columbia, and the Association of Professional Engineers and Geoscientists of Manitoba.

About North American Palladium Ltd.

North American Palladium is a Canadian company with over 25 years of production at the Lac des Iles mine, located northwest of Thunder Bay, Ont. North American Palladium is the only pure play palladium producer in the world. With over 600 employees, the Lac des Iles mine features a unique world-class orebody, modern infrastructure, including both an underground mine and an open-pit mine, and a world-class exploration portfolio.

We seek Safe Harbor.