Trading Symbols TSX - PDL AMEX - PAL TORONTO, Oct. 6 /PRNewswire-FirstCall/ -- During the third quarter of 2005, the Lac des Iles mill processed 1,328,433 tonnes of ore, or an average of 14,439 tonnes per day with an average palladium head grade of 1.47 grams per tonne, producing 39,532 ounces of palladium at an average recovery rate of 62.9%. By- product metals production during the third quarter of 2005 included 4,567 ounces of platinum, 3,428 ounces of gold, 399,852 pounds of nickel and 1,401,856 pounds of copper. This compares to the third quarter of 2004 when the mill processed 1,301,378 tonnes of ore, or 14,145 tonnes per day with a palladium grade of 2.53 grams per tonne, producing 79,174 ounces of palladium at a recovery rate of 74.8%. The milling problems the Company faced with regards to throughput and availability in the first and second quarters of 2005 were resolved during the third quarter, with the mill averaging close to its design capacity during September. Due to the low open pit ore grade that had to be mined throughout the third quarter and the low recovery rate of 62.9%, there was a significant reduction in the total amount of palladium ounces produced. Typical palladium losses to the mill tailings are in the range of 0.4 to 0.5 grams per tonne. These losses are primarily dictated by the ore's mineralogy and generally do not fluctuate. However, during the early part of the third quarter, the mill experienced a period wherein the losses to the tailings went up into the 0.6 grams of palladium per tonne range, mainly due to metallurgical issues, and adversely affected the quarter's palladium recovery. The ore grade projected to be mined in the fourth quarter is slightly over 1.75 grams of palladium per tonne, which in combination with the improvement in ore metallurgy is expected to result in a higher overall recovery rate than experienced during the third quarter. As a result, if the mill continues to operate at its design capacity, the expectation is to produce approximately 56,000 ounces of palladium during the fourth quarter. In addition to returning the mill to its standard operations, Lac des Iles recently began the implementation of cost savings measures that are expected to result in a future 10% overall cost reduction. Mine personnel are committed to identifying further cost savings as rising electrical power and fuel costs, combined with weak palladium prices continue to place stress on the Company's operations. The underground's development throughout the third quarter progressed as planned, with the ramp now down 1,036 metres to the 5180 stope level. Development and construction continue to be on target for commercial production during the first quarter of 2006. The Company is anticipating the start of the underground's production in order to blend its high grade ore with that of the open pit, which will bring the combined head grade average for 2006 to over 2.4 grams per tonne palladium. The following table outlines the operating results for the past five quarters: