North American Palladium Provides Palladium Exploration Update: Offset Zone Continues to Expand

TORONTO, ONTARIO--(Marketwire - June 28, 2011) - North American Palladium Ltd. ("NAP" or the "Company") (TSX:PDL)(NYSE Amex:PAL) today provided an update on the drill results from its 2011 exploration program at the Company's Lac des Iles ("LDI") palladium mine in Northern Ontario. These results (see Appendix) are the first tranche of drill results from the 2011 drill program currently underway at LDI.

Highlights:

• Surface drilling on the Offset Zone intersected significant mineralization over 150 metres south of the shaft location, underpinning significant exploration potential beyond the current resource wireframe;

• A drill following the south extension of the Offset Zone encountered some of the best grades and width ever reported on the zone with 12 metres of 16.4 grams per tonne palladium ("g/t Pd");

• Continued positive infill drill results throughout the Offset Zone, including 65 metres at 6.4 g/t Pd in the top upper part of the zone; and

• Offset Zone drilling improved the definition of the recently discovered Sheriff Zone.

"After completing nearly 35,000 metres of drilling to date in 2011, the exploration results at LDI continue to highlight the significant potential to grow our reserve and resource base through exploration," said William J. Biggar, President and CEO, NAP. "I am particularly encouraged by the excellent results both laterally and at depth, which show that the Offset Zone extends south of where the shaft will be, at some of the highest grades we have ever reported. Likewise, we are gaining valuable new information on the recently discovered Sheriff Zone. These results underpin our belief that LDI has considerable exploration upside, and that we'll be mining there for a very long time."

NAP's 2011 exploration program at LDI is aimed at expanding the size of the Offset Zone, increasing the knowledge of the Offset Zone mineralization to facilitate more efficient mine planning, and identifying potential surface deposits. Since the beginning of the year, a total of 12,950 metres have been drilled from underground, and 21,850 metres from surface, for a total of 34,800 metres.

Due to logging and assaying delays, the available results to date include only 71 holes totaling 24,189 metres of the 34,800 metres drilled, comprised of:

• 18 holes from surface for a total of 15,147 metres, including:
  • 15 holes (11,356 metres) targeting the south area of the Offset Zone, towards and past the shaft area; and
  • 3 deep holes (3,791 metres) into the Offset Zone (around the 4650 mine elevation and below);
• 53 holes from underground for a total of 9,042 metres, of which:
  • 31 holes targeted the Upper Offset Zone; and
  • 22 holes were aimed at completing a previous Offset Zone 15-metre infill drilling pattern.

Complete drill results are included in the appendix of this news release. It is estimated that for surface drilling, true widths represent on average 75% of the reported lengths, and for underground drilling, true widths represent on average 80% of the reported lengths. Elevations referred to in this news release are presented in the mine grid in figure 1, and the drill locations are presented in figure 2.

Surface Drilling

The Offset Zone was drilled from surface to follow it toward the south and to test the upper limit of the zone. In a press release dated February 14, 2011, NAP indicated that a deep hole (10-013) aimed at the southern part of the Offset Zone extension had intersected 69 metres at 3.5 g/t Pd at depth, including 13 metres at 5.7 g/t Pd. This confirmed the presence of the Offset Zone at elevation 4300, at the south limit of the resource calculation (see figure 3 in the appendix for a visual of location).

Since the beginning of 2011, the Offset Zone was drilled toward the south to follow its extension towards the shaft location (see figures 4 and 5 for a visual of location). The 11-100 and 11-050 series of holes are the follow-up holes around the 10-007 hole (46 metres at 3 g/t Pd) which had indicated the possible extension of the Offset Zone in the south area.

Highlights of these series of holes include:

• Hole 11-102 reported 11 metres of 5.1 g/t Pd; and

• Hole 11-051 returned some of the best grades and width ever reported on the Offset Zone with 12 metres of 16.44 g/t Pd.

Surface drilling returned strong results that indicate the south extension of the Offset Zone still remains open over 150 metres past the location of the shaft, where the most southern hole (11-003) first intersectedthe Sheriff Zone (30 metres at 3.5 g/t Pd) and then the Offset Zone (88 metres at 3.6 g/t Pd, including 22 metres of 5.5 g/t Pd and 20 metres of 5.7 g/t Pd) (see figure 6). These results support NAP's belief that the Offset Zone deposit continues to expand to the south.

Some of these surface holes also intersected and better defined the Sheriff Zone. The following table includes some of the best results from the surface drilling on the Offset Zone and the Sheriff Zone (see figures 5 and 6):

Additional drilling from surface is currently in progress and will continue to test the extensions toward the south of the Offset Zone and the Sheriff Zone.

Deep Surface Drilling

The surface directional drill continued to target the Offset Zone at elevation below the 4650 mine level (see figure 2 for a visual of location). The following intersections were encountered during the first tranche of drilling:

These latest results confirm that the Offset Zone remains open towards the south and at depth, and that the other zones remain to be followed.

Underground Definition Drilling

In 2011 the underground drilling on the Offset Zone continued to define the ore body on a 15-metre drill pattern. This includes holes which were mostly completed in the upper sector of the Offset Zone, where production is scheduled to commence in early 2012 (see figures 5, 7 and 8). The holes were drilled on fan patterns from the Offset Zone ramp and the vast majority intersected the Offset Zone with grades similar or better than the recently published resource estimate. Some of the best results include:

2011 LDI Exploration

Following the exploration success achieved over the past two years, NAP will continue to make significant investments in exploration to expand mineral reserves and resources at LDI and to identify new targets. In total, NAP plans to drill 59,000 metres at LDI this year, including 7,000 metres at NAP's other nearby properties.

The primary focus of the exploration program will be continued underground exploration at LDI targeting the Offset Zone. The program will attempt to better define the upper extension of the Offset Zone for mine planning, as well as testing the extension of the Offset Zone mineralization north, south, down-dip, and up-dip towards surface. NAP has also started a definition drilling program on some of the possible extensions of the Roby Zone ore body, to be completed in the third quarter of 2011.

Technical Information and Qualified Persons

The assay analyses performed during NAP's drill programs are subject to a formal quality assurance and quality control (QA/QC) program. Diamond drill core is logged and sampled on site and at the Company's exploration office in Thunder Bay with sample transport by the Company and Courtesy Courier to Activation Laboratories Ltd. (Thunder Bay and Ancaster), an independent accredited laboratory, for assay analysis. Check assay analyses are carried out by SGS Minerals Services (Toronto), a laboratory that is also independent of the Company. The Company's exploration team designed and executed the drilling program under the supervision of Mr. Michel Bouchard, P. Geo., Vice President, Exploration and Development, NAP, a Qualified Person as defined by National Instrument 43-101, who has reviewed and approved the content of this news release.

About North American Palladium

NAP is a Canadian precious metals company focused on growing its production of palladium and gold in mining-friendly jurisdictions. The Company's flagship mine, Lac des Iles, is one of the world's two primary palladium producers. NAP also owns and operates the Sleeping Giant gold mine located in the prolific Abitibi region of Quebec. The Company has extensive landholdings adjacent to both its Lac des Iles and Sleeping Giant mines, and a number of exploration projects. NAP trades on the NYSE Amex under the symbol PAL and on the TSX under the symbol PDL.

Cautionary Statement on Forward Looking Information

Certain information included in this press release, including any information as to our future exploration, financial or operating performance and other statements that express management's expectations or estimates of future performance, constitute 'forward-looking statements' within the meaning of the 'safe harbor' provisions of the United States Private Securities Litigation ReformAct of 1995 and Canadian securities laws. The words 'expect', 'believe', 'will', 'intend', 'estimate' and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, risks and contingencies, including the possibility that drill programs will not yield the expected results, that operations at the Lac des Iles and Sleeping Giant mines may not proceed as planned, that Vezza and other properties can be successfully developed, and that metal prices, foreign exchange assumptions and operating costs may differ from management's expectations. The Company cautions the reader that such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of North American Palladium to be materially different from the Company's estimated future results, performance or achievements expressed or implied by those forward-looking statements and that the forward-looking statements are not guarantees of future performance. These statements are also based on certain factors and assumptions. For more details on these estimates, risks, assumptions and factors, see the Company's most recent Form 40-F/Annual Information Form on file with the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities. 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.

Appendix:

Surface Exploration (South Pit Area)

To view the figures associated with this press release, please visit the following link: http://media3.marketwire.com/docs/NAP628figs.pdf.