Form 6-K
 
SECURITIES AND EXCHANGE COMMISSION
 
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934

For the month of September, 2009	Commission File Number: 1-15142	
 
NORTH AMERICAN PALLADIUM LTD.
(Name of Registrant)
 
130 Adelaide Street West
Suite 2116
Toronto, Ontario
Canada  M5H 3P5
(Address of Principal Executive Offices)
 
Indicate by checkmark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F	o	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):    o
 
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):    o
 
Indicate by checkmark whether the registrant, by furnishing the information contained in this Form is also thereby furnishing the information to the SEC pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes     o    Assigned   File No.             	No	 	x	
 
If “Yes” is marked, indicate the file number assigned to the Registrant in connection with Rule 12g3-2(b).

 

 
This report on Form 6-K is specifically incorporated by reference into North American Palladium’s registration statement on Form S-8 (File No. 333-13766), and North American Palladium’s registration statements on Form F-10 (File Nos. 333-133668; 333-134764; 333-136317; 333-137822; 333-139137; 333-140478; 333-141902; 333-143528; 333-145210; 333-146513; 333-147126; and 333-158082).
 
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.	

Date:	September 28, 2009	 	By:	/s/ Trent Mell	
 	 	 	 	Trent C. A. Mell
Vice President, General Counsel & Corporate Secretary	
 
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EXHIBIT INDEX

Exhibit	 	Description of Exhibit	
 	 	 	
1	 	Supplementary Schedule of “Reconciliation to Accounting Principles Generally Accepted in the United States” in accordance with Item 18 of Form-20F	
 
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Exhibit 1
 
Reconciliation to Accounting Principles Generally Accepted in the U.S.
 
The Company’s unaudited interim consolidated financial statements for the three and six month periods ended June 30, 2009 and 2008 have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”), 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 accounting principles generally accepted in the United States (“U.S. GAAP”):
 
(Canadian funds in thousands of dollars, except per share amounts)

 	 	Three months ended
June 30	 	Six months ended
June 30	 	
 	 	2009	 	2008	 	2009	 	2008	 	
 	 	(unaudited)	 	(unaudited)	 	(unaudited)	 	(unaudited)	 	
Statements of operations (loss) and deficit:	 	 	 	 	 	 	 	 	 	
Income (loss) under Canadian GAAP	 	$	(9,806	)	$	10,387	 	$	(9,459	)	$	22,982	 	
Amortization of capitalized interest (a)	 	—	 	(105	)	—	 	(193	)	
Tax liability on flow-through financing (c)	 	—	 	(246	)	—	 	(407	)	
Accretion expense relating to convertible notes (f)	 	—	 	(352	)	—	 	(566	)	
Amortization of deferred financing costs (f)	 	—	 	(38	)	—	 	(108	)	
Fair value adjustment on embedded derivatives and common share purchase warrants (f)	 	(226	)	(1,130	)	690	 	(4,553	)	
Transaction costs relating to the business combination	 	(884	)	—	 	(884	)	—	 	
Income (loss) and comprehensive income (loss) under U.S. GAAP	 	$	(10,916	)	$	8,516	 	$	(9,653	)	$	17,155	 	
Basic loss per share under U.S. GAAP	 	$	(0.12	)	$	0.10	 	$	(0.11	)	$	0.21	 	
Diluted loss per share under U.S. GAAP	 	$	(0.12	)	$	0.10	 	$	(0.11	)	$	0.21	 	
Weighted average number of shares outstanding	 	 	 	 	 	 	 	 	 	
Basic	 	92,736,944	 	82,100,127	 	89,760,259	 	80,927,966	 	
Weighted average number of shares outstanding	 	 	 	 	 	 	 	 	 	
Diluted	 	92,736,944	 	82,992,583	 	89,760,259	 	83,067,864	 	
 
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Balance sheets:	 	June 30,
2009	 	December 31,
2008	 	
 	 	(unaudited)	 	 	 	
Current assets	 	$	83,336	 	$	106,540	 	
Mining interests (a)	 	84,526	 	32,573	 	
Liabilities – common share purchase warrants (f)	 	331	 	1,021	 	
Common share capital and common share purchase warrants (b),(c),(f)	 	532,600	 	485,273	 	
Contributed surplus	 	4,339	 	2,305	 	
Deficit (b),(c),(f)	 	(380,421	)	(370,768	)	

Acquisition of Cadiscor Resources Inc.
 
On March 31, 2009 the Company announced that they had entered into a definitive agreement pursuant to which the Company would acquire, by way of a plan of arrangement, all of the outstanding common shares of Cadiscor in an all-equity transaction. Coincident with the signing of the definitive agreement, the Company advanced to Cadiscor a total of $7.5 million, pursuant to the purchase of a $5.4 million, 12% convertible debenture, and a $2.1 million, 12% debenture, the proceeds of which would be used by Cadiscor to bring the Sleeping Giant mine in Quebec back into production. Both debentures have a term of 18 months and are secured by a first charge on Cadiscor’s assets.
 
Effective May 26, 2009, the Company acquired 100 percent of the outstanding common shares of Cadiscor in an all-equity transaction. The results of Cadiscor’s operations have been included in these consolidated financial statements since the date of acquisition.
 
Pursuant to the acquisition agreement, Cadiscor shareholders received 0.33 common shares of the Company for each common share of Cadiscor. The Company issued 14.5 million common shares on closing at a price of $2.66 per share based on the closing stock price of the Company’s common shares on May 26, 2009.
 
In addition, all of Cadiscor’s outstanding stock options and warrants as at the date of acquisition were exchanged for equivalent instruments in the Company. Approximately 0.9 million stock options and 1.4 million warrants were issued by the Company in the exchange. The Company recorded $1.6 million and $2.0 million as part of the purchase consideration, representing the fair value of these stock options and warrants respectively. The Company also assumed the equity conversion option relating to convertible debentures with an assigned fair value of $3.3 million at the date of acquisition.
 
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The following table summarizes the estimated preliminary fair value of the assets acquired and liabilities assumed as at the date of acquisition:

ASSETS	 	 	 	
Current Assets	 	 	 	
Cash and cash equivalents	 	$	7,248	 	
Taxes recoverable	 	461	 	
Inventories	 	420	 	
Other assets	 	559	 	
 	 	8,688	 	
Mining interests	 	50,284	 	
Mine restoration deposit	 	1,769	 	
 	 	$	60,741	 	
LIABILITIES	 	 	 	
Current Liabilities	 	 	 	
Accounts payable and accrued liabilities	 	$	1,732	 	
Current portion of obligation under capital leases	 	7	 	
 	 	1,739	 	
Mine restoration obligation	 	2,537	 	
Long-term debt	 	11,066	 	
Obligation under capital leases	 	27	 	
 	 	$	15,369	 	
Net assets acquired	 	$	45,372	 	
TOTAL PURCHASE CONSIDERATION	 	 	 	
Common share capital	 	$	38,457	 	
Stock options	 	1,582	 	
Purchase warrants	 	2,003	 	
Convertible rights on convertible debenture	 	3,330	 	
Total purchase price	 	$	45,372	 	
 
Under Canadian GAAP, the Company applied a closing common share price of $1.89 per share based on the volume weighted average closing stock price of the Company’s common shares for the period from March 27, 2009 to April 2, 2009.
 
As a result of using that share price, under Canadian GAAP, the stock options and warrants exchanged for equivalent instruments in the Company were recorded at a value of $1.0 million and $1.2 million respectively and the equity conversion option relating to convertible debentures was assigned a fair value of $1.4 million at the date of acquisition.
 
In addition, under Canadian GAAP, transaction costs incurred as part of a business combination were included in the acquisition price. These transaction costs must be expensed as incurred under U.S. GAAP.

(a)    Under Canadian GAAP, the Company capitalizes interest on major projects where direct indebtedness has occurred and commences amortization upon reaching commercial production. 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 2009, interest of $nil (2008 - $nil), respectively, has been capitalized related to the investment in the
 
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underground development at the Lac des Iles mine, which reached commercial production during the first quarter of 2006. Upon the underground mine reaching commercial production, the Company commenced amortization of interest capitalized for the underground development, in addition to the amortization of interest amounts previously capitalized under U.S. GAAP.
 
(b)    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 as at June 30, 2009 and December 31, 2008.
 
(c)    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.
 
(d)    U.S. GAAP requires that amounts totaling 5% or more of current liabilities be identified separately. As at June 30, 2009, these amounts were as follows: trade payables and accruals - $5,832 (December 31, 2008 - $11,215); other accruals - $1,504 (December 31, 2008 - $2,782).
 
(e)    U.S. GAAP does not permit the disclosure of subtotal of cash from operations before changes in non-cash working capital.
 
(f)     Under Canadian GAAP, the components of the convertible notes payable must be bifurcated and accounted for separately as debt and equity instruments. The attached warrants are separable from the convertible notes and are accounted for as an equity instrument.
 
Under U.S. GAAP, the common share warrants are presented as a liability and subsequent changes in fair value are recorded in the consolidated statements of loss and deficit at each reporting date.
 
Under U.S. GAAP the Company allocated the residual amount of the gross proceeds received to the convertible notes payable after the separate fair value measurement of the warrants and embedded derivatives. The Company allocated the Series I proceeds as follows: US$18,504 to the debt, US$10,060 to the embedded derivatives and US$6,436 to the warrants. The Company allocated the Series II proceeds as follows: US$9,952 to the debt, US$2,092 to the embedded derivatives and US$1,456 to the warrants.
 
Differences in U.S. GAAP and Canadian GAAP result from the initial allocation differences and the subsequent accretion expenses, amortization of deferred financing costs and from the fair value re-measurement of the warrant and embedded derivatives as liabilities each reporting period under U.S. GAAP.  These convertible notes were fully repaid prior to December 31, 2008.  As a result, these differences only affect reported balances relating to 2008.
 
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Adoption of new United States accounting pronouncements
 
SFAS 157  — Fair Value Measurements
 
Statement of Financial Accounting Standards No. 157, Fair Value Measurements, (“SFAS 157”) was issued September 2006.  The Statement provides guidance for using fair value to measure assets and liabilities.  The Statement also expands disclosures about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurement on earnings. This Statement applies under other accounting pronouncements that require or permit fair value measurements.  This Statement does not expand the use of fair value measurements in any new circumstances.  Under this Statement, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts.  SFAS 157 is effective for the Company for fair value measurements and disclosures made by the Company in its fiscal year beginning on January 1, 2008. The adoption of SFAS 157 on January 1, 2008 had no material impact on the consolidated financial statements of the Company.
 
SFAS 159  — The Fair Value Option for Financial Assets and Financial Liabilities
 
In February 2007, the FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities.  This statement permits entities the option to measure financial instruments at fair value, thereby achieving an offsetting effect for accounting purposes for certain changes in fair value of certain related assets and liabilities without having to apply hedge accounting. This statement is effective for the Company beginning January 1, 2008.  The adoption of FASB Statement No. 159 on January 1, 2008 had no material impact on the consolidated financial statements of the Company .
 
SFAS 141R  — Business Combinations
 
In December 2007, the FASB issued a revised standard on accounting for business combinations. The standard is converged with proposals issued by the Accounting Standards Board (“AcSB”) and the International Accounting Standards Board (“IASB”) on this subject. The major changes to accounting for business combinations are summarized as follows:
 
·       All business acquisitions would be measured at fair value
·       The existing definition of a business would be expanded
·       Pre-acquisition contingencies would be measured at fair value
·       Most acquisition-related costs would be recognized as expenses as incurred (they would no longer be part of the purchase consideration)
·       Obligations for contingent consideration would be measured and recognized at fair value at acquisition date (would no longer need to wait until contingency is settled)
 
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·       Liabilities associated with restructuring or exit activities be recognized only if they meet the recognition criteria of SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities , as of the acquisition date.
 
·       Non-controlling interests would be measured at fair value at the date of acquisition (i.e., 100% of the assets and liabilities would be measured at fair value even when an acquisition is less than 100%)
·       Goodwill, if any, arising on a business combination reflects the excess of the fair value of the acquiree, as a whole, over the net amount of the recognized identifiable assets acquired and liabilities assumed. Goodwill is allocated to the acquirer and the non-controlling interest.
·       In accounting for business combinations achieved in stages, commonly called step acquisitions, the acquirer is to re-measure its non-controlling equity investment in the acquiree at fair value as of the acquisition date and recognize any unrealized gain or loss in income.
 
The statement is effective for business combinations occurring in the first annual reporting period beginning on or after December 15, 2008 and is to be applied prospectively. The Company has applied this new standard to the acquisition reported in the six month period ended June 30, 2009.
 
SFAS 161  — Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133
 
In March 2008, the FASB issued Statement No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161 intends to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. SFAS 161 also requires disclosure about an entity’s strategy and objectives for using derivatives, the fair values of derivative instruments and their related gains and losses. SFAS 161 became effective for fiscal years and interim periods beginning after November 15, 2008. The Company did not identify any material impact on its reconciliation of accounting principles generally accepted in the US as a result of applying SFAS 161.
 
EITF 07-5 — Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock
 
In June 2008, the FASB ratified EITF 07-5, “Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock” EITF 07-5 provides guidance in determining whether or not derivative financial instruments are indexed to a Company’s own stock. It is effective the first fiscal year beginning after December 15, 2008, including interim periods within those fiscal years. The Company adopted EITF 07-5 on January 1, 2009 and did not identify any material impact on its reconciliation of accounting principles generally accepted in the US as a result of applying EITF 07-5.
 
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Impact of recently issued United States accounting pronouncements
 
SFAS 168  — The FASB Accounting Standards Codification_ and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162
 
In June 2009, the FASB issued SFAS No. 168, ‘‘The FASB Accounting Standards Codification_and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162’’ (‘‘SFAS 168’’). SFAS 168 will become the source of authoritative US GAAP recognized by the FASB to be applied by nongovernmental entities. The Codification reorganizes the thousands of GAAP pronouncements into roughly 90 accounting topics and displays them using a consistent structure. Also included in the Codification is relevant Securities and Exchange Commission guidance organized using the same topical structure in separate sections within the Codification. On the effective date of SFAS 168, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non grandfathered non-SEC accounting literature not included in the Codification will become non authoritative. SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. As SFAS 168 is not intended to change or alter existing US GAAP, it is not expected to have any significant impact on the Company’s consolidated financial position or results of operations under US GAAP.
 
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