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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of January 2006
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Commission File Number 1-15142
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NORTH AMERICAN PALLADIUM LTD.
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(Translation of registrant's name into English)
130 Adelaide Street West, Suite 2116, Toronto, Ontario, Canada M5H 3P5
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F _________ Form 40-F ___X____
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7):
Indicate by check mark whether by furnishing the information contained
in this Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes _________ No ____X____
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b) : 82-____________
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DOCUMENTS INCLUDED AS PART OF THIS REPORT
Document
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1 Reconciliation to Accounting Principles Generally Accepted
in the U.S.
DOCUMENT 1
Reconciliation to Accounting Principles Generally Accepted in the U.S.
The Company's unaudited interim consolidated financial statements for
the three and nine month periods ended September 30, 2005 and 2004 have been
prepared in accordance with Canadian generally accepted accounting principles,
which differ in some respects from those in the United States. The following
table presents amounts that would have been reported had the Company's
unaudited interim 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 per share amounts)
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Three months ended Nine months ended
September 30 September 30
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2005 2004 2005 2004
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(unaudited) (unaudited) (unaudited) (unaudited)
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Statement of earnings (loss) and deficit:
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Net income (loss) under Canadian GAAP $ (19,610) $ 6,598 $ (42,574) $ 15,553
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Capitalized interest (a) 275 -- 655 --
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Amortization of capitalized interest (a) (15) (26) (47) (74)
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Concentrates and crushed and broken ore
stockpiles (b) -- 656 (2,944) 607
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Derivative financial instruments (c) (333) 423 701 2,674
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Tax liability on flow-through financing (e) -- -- (1,116) --
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Tax effect of differences -- -- -- 210
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Net income (loss) and comprehensive income
(loss) under U.S. GAAP $ (19,683) $ 7,651 $ (45,325) $ 18,970
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Basic and diluted income (loss) per share
under U.S. GAAP $ (0.38) $ 0.15 $ (0.87) $ 0.37
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September 30, December 31,
2005 2004
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Balance sheets: (unaudited)
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Current assets (b) and (c) $ 93,151 $ 155,842
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Mining interests (a) $ 152,806 $ 136,567
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Crushed and broken ore stockpiles - long term $ 1,089 $ 1,568
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Future tax liability $ 1,669 $ --
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Capital stock (d) $ 330,477 $ 329,002
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Retained earnings (deficit) $ (154,317) $ (108,992)
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(a) Under U.S. GAAP, interest is capitalized as it arises from
indebtedness incurred, directly or indirectly, to finance development and
construction activities on assets that are not yet subject to amortization or
depletion. For the three and nine month periods ended September 30, 2005,
interest of $275 and $655, respectively, has been capitalized related to the
investment in the underground development, which is expected to reach
commercial production during the first quarter of 2006. The current year
amortization adjustment relates to the amortization of amounts previously
capitalized 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. However for Canadian GAAP, the Company has recorded its concentrate
inventory at its net realizable value and any allocation of amortization of
production related assets would be written off immediately. In addition the
Company has valued its crushed and broken ore stockpiles at their expected long
term sales prices. As a result, the Company has written off prior amounts
capitalized to concentrate and crushed and broken ore stockpiles.
(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
September 30, 2005.
(e) Under U.S. GAAP, the renunciation of tax deductions to holders of
flow-through shares is treated as a future tax expense rather than as a cost of
issuing equity as required by Canadian GAAP.
(f) U.S. GAAP requires that amounts totaling 5% or more of accounts
payable and accrued liabilities be identified separately. As at September 30,
2005, these amounts were as follows: trade payables and accruals - $12,829
other accruals - $5,402.
(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, consistent with Canadian GAAP, 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 No. 148, pro forma
disclosure is still required for those options granted prior to January 1, 2003
as follows:
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Three months ended September 30 Nine months ended September 30
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2005 2004 2005 2004
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(unaudited) (unaudited) (unaudited) (unaudited)
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Net income (loss) as reported under U.S.
GAAP $ (19,683) $ 7,651 $ (45,325) $ 18,970
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Stock based compensation -- 42 -- 126
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Pro forma net income (loss) under U.S.
GAAP $ (19,683) $ 7,609 $ (45,325) $ 18,844
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Pro forma basic and diluted income
(loss) per share $ (0.38) $ 0.15 $ (0.87) $ 0.37
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(i) Impact of recently issued United States accounting pronouncements
In November 2004, the Financial Accounting Standards Board ("FASB") issued FAS
No. 151, which clarifies the accounting for abnormal amounts of idle facility
expense, freight, handling costs and wasted material as they relate to
inventory costing and requires these items to be recognized as current period
expenses. Additionally, the allocation of fixed production overheads to the
cost of inventory should be based on the normal capacity of the production
facilities. FAS No. 151 is effective for inventory costs incurred during fiscal
years beginning after June 15, 2005. The Company does not believe that the
application of FAS No. 151 will have a material impact on the consolidated
statements under U.S. GAAP.
In December 2004, FAS No. 123 (revised) "Share-Based Payment", was issued. This
statement requires an entity to recognize the grant date fair value of stock
options and other equity-based compensation issued to employees. In the income
statement, FAS No.
123 (revised) eliminates the ability to account for share-based compensation
transactions using the intrinsic value method in APB No. 25. The Company will
adopt FAS No. 123 (revised) in 2006 in accordance with the appropriate
transition options and adoption period prescribed in the statement. The Company
does not expect that the adoption of this standard will have a material impact
on the consolidated financial statements.
In May 2005, the FASB issued FAS No. 154, "Accounting Changes and Error
Corrections, a Replacement of APB Opinion No. 20 and FAS No. 3". FAS No. 154
requires retrospective application of changes in accounting principle to prior
periods' financial statements, rather than the use of the cumulative effect of
a change in accounting principle, unless impracticable. If impracticable to
determine the impact on prior periods, then the new accounting principle should
be applied to the balances of assets and liabilities as of the beginning of the
earliest period for which retrospective application is practicable, with a
corresponding adjustment to equity, unless impracticable for all periods
presented, in which case prospective treatment should be applied. FAS No. 154
applies to all voluntary changes in accounting principle as well as those
required by the issuance of new accounting pronouncements if no specific
transition guidance is provided. FAS No.154 does not change the previously
issued guidance for reporting a change in accounting estimate or correction of
an error. FAS No. 154 becomes effective for accounting changes and corrections
of errors made in fiscal years beginning after December 15, 2005. The Company
does not expect this policy to have a material impact on the consolidated
financial statements. The Company will adopt FAS No. 154 on January 1, 2006.
In March 2005, the FASB ratified EITF 04-06 "Accounting for Stripping Costs in
the Mining Industry". The consensus reached is that stripping costs incurred
during the production phase of a mine are variable production costs that should
be included in the costs of the inventory produced during the period that the
stripping costs are incurred. EITF 04-06 is effective for the first reporting
period in fiscal years beginning after December 15, 2005 with early adoption
permitted. The Company will adopt EITF 04-06 on January 1, 2006. The Company
believes the adoption of this standard will not have a material impact on the
consolidated financial statements.
January 16, 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NORTH AMERICAN PALLADIUM LTD.
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(Registrant)
Date: January 17, 2006 By: /s/ MARY BATOFF
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Name: Mary Batoff
Title: Vice President, Legal and Secretary
This report on Form 6-K, dated January 17, 2006, is specifically incorporated
by reference into North American Palladium's registration statement on Form S-8
(File No. 333-13766), which was originally filed with the Securities and
Exchange Commission in July 2001. This report on Form 6-K is also specifically
incorporated by reference into North American Palladium's registration
statement on Form F-10 (File No. 333-114261), which was originally filed with
the Securities and Exchange Commission on April 7, 2004.