AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 2006
                                                     REGISTRATION NO. 333-
================================================================================

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                           -------------------------
                                    FORM F-10
                          REGISTRATION STATEMENT UNDER
                           THE SECURITIES ACT OF 1933
                            -------------------------

                          NORTH AMERICAN PALLADIUM LTD.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                CANADA                                      1099
    (PROVINCE OR OTHER JURISDICTION             (PRIMARY STANDARD INDUSTRIAL
   OF INCORPORATION OR ORGANIZATION)             CLASSIFICATION CODE NUMBER)

                                 NOT APPLICABLE
                                (I.R.S. EMPLOYER
                               IDENTIFICATION NO.)

                      130 ADELAIDE STREET WEST, SUITE 2116
                        TORONTO, ONTARIO, CANADA M5H 3P5
                                 (416) 360-7590
   (ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

                              CT CORPORATION SYSTEM
                           111 8TH AVENUE, 13TH FLOOR
                            NEW YORK, NEW YORK 10011
                                 (212) 894-8940
 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE IN THE UNITED STATES)

                            -------------------------

                                   Copies to:
        MARY D. BATOFF, ESQ.                   RICCARDO A. LEOFANTI, ESQ.
    NORTH AMERICAN PALLADIUM LTD.       SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
130 ADELAIDE STREET WEST, SUITE 2116    222 BAY STREET, SUITE 1750, P.O. BOX 258
  TORONTO, ONTARIO, CANADA M5H 3P5          TORONTO, ONTARIO, CANADA M5K 1J5
           (416) 360-7590                            (416) 777-4700

                                LESLIE GORD, ESQ.
                          GOWLING LAFLEUR HENDERSON LLP
                       1 FIRST CANADIAN PLACE, SUITE 1600
                              100 KING STREET WEST
                        TORONTO, ONTARIO, CANADA M5X 1G5
                                 (416) 862-7525

     APPROXIMATE  DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
   From time to time after the effective date of this Registration Statement.
                           PROVINCE OF ONTARIO, CANADA
                (PRINCIPAL JURISDICTION REGULATING THIS OFFERING)
It is proposed that this filing shall become effective (check appropriate box):

   A.  [ ]  Upon filing with the Commission, pursuant to Rule 467(a) (if in
            connection with an offering being made contemporaneously in the
            United States and Canada).

   B.  [X]  At some future date (check the appropriate box below):

         1.  [ ]      pursuant to Rule 467(b) on (   ) at (   ).

         2.  [ ]      pursuant to Rule 467(b) on (   ) at (   ) because the
                      securities regulatory authority in the review jurisdiction
                      has issued a receipt or notification of clearance on (  ).

         3.  [ ]  pursuant to Rule 467(b) as soon as practicable after
                  notification of the Commission by the Registrant or the
                  Canadian securities regulatory authority of the review
                  jurisdiction that a receipt or notification of clearance has
                  been issued with respect hereto.

         4.  [X]  after the filing of the next amendment to this Form.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to the home jurisdiction's shelf prospectus
offering procedures, check the following box. [ ]

                            -------------------------


                                               CALCULATION OF REGISTRATION FEE

        ====================== ===================== ===================== ==================== =====================
         TITLE OF EACH CLASS                           PROPOSED MAXIMUM     PROPOSED MAXIMUM
         OF SECURITIES TO BE       AMOUNT TO BE       OFFERING PRICE PER   AGGREGATE OFFERING        AMOUNT OF
             REGISTERED           REGISTERED(1)        COMMON SHARE(1)          PRICE(1)        REGISTRATION FEE(2)
        ====================== ===================== ===================== ==================== =====================
                                                                                          
        Common Shares               8,820,655               $11.06             $97,556,444            $10,439
        ====================== ===================== ===================== ==================== =====================


     (1)  Estimated solely for the purpose of calculating the amount of the
          registration fee pursuant to Rule 457(c) under the Securities Act of
          1933, based on the average of the high and low prices of the
          Registrant's common shares on the American Stock Exchange on April 26,
          2006.

     (2)  Pursuant to Rule 457(p) under the Securities Act of 1933, $9,633 of
          the filing fee paid by the Registrant for the Registration Statement
          on Form F-10 (File No. 333-114261) filed with the SEC on April 7, 2004
          is off-set against the current filing fee.

================================================================================



                                     PART I

         INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS



        PRELIMINARY SHORT FORM BASE SHELF PROSPECTUS DATED APRIL 26, 2006

                          NORTH AMERICAN PALLADIUM LTD.

        [LOGO]               8,820,655 COMMON SHARES



On March 29, 2006, North American Palladium Ltd. (the "Corporation") issued
US$35,000,000 aggregate principal amount of Series I convertible notes due
August 1, 2008 (the "Notes") to Kaiser-Francis Oil Company ("KFOC") and IP
Synergy Finance Inc. ("IPSF" and, collectively with KFOC, the "Holders") on a
private placement basis. KFOC currently owns or controls approximately 50% of
the Corporation's outstanding common shares (the "Common Shares").

The principal amount of the Notes may be converted by the Holders at any time,
and in certain circumstances, by the Corporation, into an aggregate of up to
2,873,563 Common Shares (as such number of Common Shares may be adjusted
pursuant to the terms of the Notes). In addition, pursuant to the terms of the
Notes the principal amount is repayable in nine equal bi-monthly instalments
commencing on April 1, 2007. At the option of the Holders, all or any portion of
the principal amount of the Notes that may become due from time to time under
the terms of the Notes (a "Principal Payment Date") may be satisfied through the
issuance of Common Shares at a price per Common Share which reflects a 10%
discount from the volume weighted average trading price per Common Share on the
American Stock Exchange ("AMEX") for the five consecutive trading days
immediately prior to the applicable Principal Payment Date (as such number of
Common Shares may be adjusted pursuant to the terms of the Notes.) (See "Recent
Developments - March 2006 Convertible Notes and Common Share Purchase Warrant
Financing").

Also on March 29, 2006, the Corporation issued Series I share purchase warrants
(the "Warrants") to the Holders on a private placement basis, which Warrants are
exercisable by the Holders to purchase an aggregate of 1,436,782 Common Shares
(as such number of Common Shares may be adjusted pursuant to the terms of the
Warrants) at any time on or before March 29, 2010. (See "Recent Developments -
March 2006 Convertible Notes and Common Share Purchase Warrant Financing").

This short form prospectus (the "Prospectus") may be used by the Holders, as
selling securityholders (see "Selling Securityholders"), in connection with
resales, from time to time, during the period that this Prospectus, including
any amendments thereto, remains valid, of:

        (a)     up to 2,873,563 Common Shares issuable upon the conversion of
                the Notes;

        (b)     up to 4,510,310 Common Shares issuable in satisfaction of the
                repayment of the aggregate principal amount of the Notes
                (representing 125% of the number of Common Shares issuable had
                the aggregate principal amount of the Notes been repaid in
                Common Shares on March 29, 2006); and

        (c)     up to 1,436,782 Common Shares issuable upon exercise of the
                Warrants.

The foregoing Common Shares are referred to in this Prospectus as the
"Underlying Shares".

The Underlying Shares may be offered by the Holders in negotiated transactions
or otherwise, to or though underwriters or dealers purchasing as princpals or
directly to purchasers at varying prices determined at the time of the sale or
at negotiated prices. In addition, the Underlying Shares may be offered from
time to time through ordinary brokerage transactions on the AMEX. See "Plan of
Distribution". This Prospectus is filed in the Province of Ontario, Canada and
as part of a registration statement in the United States pursuant to a
multijurisdictional disclosure system adopted by the United States and Canada.
The Holders may be deemed to be "underwriters" as defined in the United States
Securities Act of 1933, as amended (the "U.S. Securities Act"). Any profits
realized by the Holders may be deemed to be underwriting compensation. If the
Holders use any broker-dealers, any commissions paid to underwriters or dealers
and, if underwriters or dealers purchase any Underlying Shares as principals,
any profits received by such underwriters or dealers on the resale of the
Underlying Shares may be deemed to be underwriting compensation under the U.S.
Securities Act.

                        COVER PAGE CONTINUED ON NEXT PAGE


--------------------------------------------------------------------------------
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.



The Corporation will not receive any proceeds from the sale of any Underlying
Shares by the Holders.

The Common Shares are listed under the symbol "PAL" on the AMEX and on the
Toronto Stock Exchange ("TSX") under the symbol "PDL". The last reported sale
price of the Common Shares on the AMEX on April 26, 2006 was US$11.18 per share,
and on the TSX on April 26, 2006 was Cdn$12.60 per share.

                           ---------------------------

INVESTING IN THE UNDERLYING SHARES INVOLVES RISK. PLEASE CAREFULLY CONSIDER THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 9 OF THIS PROSPECTUS.

                          ----------------------------

UNDER THE MULTIJURISDICTIONAL DISCLOSURE SYSTEM ADOPTED BY THE UNITED STATES AND
CANADA, THE CORPORATION IS PERMITTED TO PREPARE THIS PROSPECTUS IN ACCORDANCE
WITH CANADIAN DISCLOSURE REQUIREMENTS. PROSPECTIVE INVESTORS SHOULD BE AWARE
THAT SUCH DISCLOSURE REQUIREMENTS ARE DIFFERENT FROM THOSE OF THE UNITED STATES.
CERTAIN FINANCIAL STATEMENTS INCORPORATED HEREIN BY REFERENCE HAVE BEEN PREPARED
IN ACCORDANCE WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("CANADIAN
GAAP") AND ARE SUBJECT TO CANADIAN AUDITING AND AUDITOR INDEPENDENCE STANDARDS,
AND THUS MAY NOT BE COMPARABLE TO FINANCIAL STATEMENTS OF UNITED STATES
COMPANIES.

OWNING UNDERLYING SHARES MAY SUBJECT YOU TO TAX CONSEQUENCES BOTH IN THE UNITED
STATES AND CANADA. THIS PROSPECTUS MAY NOT DESCRIBE THESE TAX CONSEQUENCES
FULLY. YOU SHOULD READ THE TAX DISCUSSION UNDER "UNITED STATES FEDERAL INCOME
TAX CONSIDERATIONS" AND "CANADIAN FEDERAL INCOME TAX CONSIDERATIONS". THESE
DISCUSSIONS ARE OF A GENERAL NATURE ONLY AND ARE NOT INTENDED TO BE EXHAUSTIVE
OF ALL POSSIBLE TAX CONSEQUENCES.

THE ENFORCEMENT BY INVESTORS OF CIVIL LIABILITIES UNDER UNITED STATES FEDERAL
SECURITIES LAWS MAY BE ADVERSELY AFFECTED BY THE FACT THAT THE CORPORATION IS
ORGANIZED UNDER THE LAWS OF CANADA, THAT MOST OF ITS OFFICERS AND DIRECTORS AND
MOST OF THE EXPERTS NAMED IN THIS PROSPECTUS ARE RESIDENTS OF CANADA, AND THAT A
SUBSTANTIAL PORTION OF THE CORPORATION'S ASSETS AND THE ASSETS OF A MAJORITY OF
THE CORPORATION'S DIRECTORS AND OFFICERS AND THE EXPERTS NAMED IN THIS
PROSPECTUS ARE LOCATED OUTSIDE THE UNITED STATES.

NO UNDERWRITER HAS BEEN INVOLVED IN THE PREPARATION OF, OR HAS PERFORMED A
REVIEW OF, THE CONTENTS OF THIS PROSPECTUS.

NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE UNDERLYING SHARES, OR
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.



You should rely only upon the information included in, or incorporated by
reference into, this Prospectus. The Corporation and the Holders have not
authorized any other person to provide you with different or inconsistent
information, and you should not rely upon any such information. You should
assume that the information appearing in this Prospectus is accurate as of the
date on the front cover of this Prospectus. The Corporation's business,
financial condition, results of operations and prospects may have changed since
that date. Neither the delivery of this Prospectus nor the registration of the
Underlying Shares hereunder shall, under any circumstances, create any
implication that there has been no change in the Corporation's business or
affairs since the respective dates as of which information is given herein.

This Prospectus summarizes certain documents and other information and you are
referred to this documentation and other information for a more complete
understanding of what is discussed in this Prospectus. In making an investment
decision, you must rely on your own examination of the Corporation and the terms
of the Underlying Shares, including the merits and risks involved.

The Corporation and the Holders are not making any representation to any person
acquiring the Underlying Shares regarding the legality of an investment in the
Underlying Shares by such purchaser under any laws or regulations. You should
not consider any information in this Prospectus to be legal, business or tax
advice. You should consult your own attorney, accountant, business advisor and
tax advisor for legal, business and tax advice regarding an investment in the
Underlying Shares.

You must comply with all applicable laws and regulations in force in any
applicable jurisdiction and you must obtain any consent, approval or permission
required by you for the purchase, offer or sale of the Underlying Shares under
the laws and regulations in force in the jurisdiction to which you are subject
or in which you make such purchase, offer or sale, and the Corporation and the
Holders will not have any responsibility therefor.




                                      - 1 -


                                TABLE OF CONTENTS

                                                                            PAGE

DOCUMENTS INCORPORATED BY REFERENCE...........................................3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.............................4
THE CORPORATION...............................................................5
RECENT DEVELOPMENTS...........................................................5
RISK FACTORS..................................................................9
EXCHANGE RATE INFORMATION....................................................16
SUMMARY CONSOLIDATED FINANCIAL DATA..........................................17
USE OF PROCEEDS..............................................................17
CONSOLIDATED CAPITALIZATION..................................................18
PRICE RANGE AND TRADING VOLUME...............................................18
DIVIDEND POLICY..............................................................18
DESCRIPTION OF COMMON SHARES.................................................19
SELLING SECURITYHOLDERS......................................................19
PLAN OF DISTRIBUTION.........................................................20
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS...................................22
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS..............................22
AUDITORS.....................................................................26
TRANSFER AGENT...............................................................26
LEGAL MATTERS................................................................26
AVAILABLE INFORMATION........................................................26
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT........................27


Unless otherwise indicated, all references in this Prospectus to the
"Corporation" refer to North American Palladium Ltd., together with its
wholly-owned subsidiary, Lac des Iles Mines Ltd.

Unless otherwise indicated, all financial information included and incorporated
by reference in this Prospectus has been prepared in accordance with Canadian
GAAP, which may differ from generally accepted accounting principles in the
United States ("U.S. GAAP"). Please see the notes to the Corporation's audited
consolidated financial statements for a summary of the significant differences
between Canadian GAAP and U.S. GAAP.

In this Prospectus, unless otherwise specified or the context otherwise
requires, all monetary amounts are expressed in Canadian dollars. References to
"$" or "Cdn$" are to Canadian dollars and references to "US$" are to U.S.
dollars.

Unless otherwise indicated, the mineral reserves ("reserves") and mineral
resources ("resources") estimates contained or incorporated by reference in this
Prospectus were prepared in accordance with NATIONAL INSTRUMENT 43-101 -
STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS ("NI 43-101"), including the CIM
Standards on Mineral Resources and Reserves Definitions and Guidelines adopted
by the Canadian Institute of Mining, Metallurgy and Petroleum Council on August
20, 2000, by employees and consultants of the Corporation who are "qualified
persons" as such term is defined in NI 43-101. Descriptions of reserves and
resources under Canadian standards may not be comparable to similar information
made public by U.S. companies subject to reporting and disclosure requirements
of the SEC.


                                      - 2 -


                       DOCUMENTS INCORPORATED BY REFERENCE

Information has been incorporated by reference in this Prospectus from documents
filed with the Ontario Securities Commission ("OSC") and filed with, or
furnished to, the Securities and Exchange Commission (the "SEC") in the United
States. Copies of the documents incorporated herein by reference may be obtained
on request without charge from the Secretary of the Corporation at Suite 2116,
130 Adelaide Street West, Toronto, Ontario M5H 3P5, telephone: (416) 360-7590,
or by accessing the disclosure documents available through the Internet on the
Canadian Securities Administrators' System for Electronic Document Analysis and
Retrieval (SEDAR) at www.sedar.com, which is the Canadian equivalent of the
SEC's Electronic Document Gathering and Retrieval System (EDGAR). Disclosure
documents filed with, or furnished to, the SEC are available through EDGAR at
www.sec.gov.

The following documents are specifically incorporated by reference and form an
integral part of this Prospectus:

        (a)     audited comparative financial statements of the Corporation and
                the notes thereto for the financial year ended December 31,
                2005, together with the report of the auditors thereon and the
                notes thereto, which have been reconciled to U.S. GAAP in
                accordance with Item 18 of Form 20-F;

        (b)     management's discussion and analysis for the annual comparative
                financial statements referred to in paragraph (a) above;

        (c)     annual information form of the Corporation dated March 29, 2006
                for the fiscal year ended December 31, 2005 (the "AIF");

        (d)     material change report dated January 6, 2006 regarding the
                unscheduled temporary shutdown of the Corporation's primary
                crusher at the Lac des Iles mine;

        (e)     material change report dated March 28, 2006 regarding the
                issuance of the Notes and Warrants; and

        (f)     material change report dated April 24, 2006 regarding the
                Corporation's first quarter operating performance.

Any material change reports (excluding confidential material change reports),
annual information forms, interim consolidated financial statements of the
Corporation (including the management's discussion and analysis in the interim
reports for such periods), annual audited consolidated financial statements of
the Corporation, including the auditors' report thereon and including the
management's discussion and analysis in respect of such annual financial
statements, business acquisition reports, information circulars, and any other
disclosure documents required to be incorporated by reference under National
Instrument 44-101 - SHORT FORM PROSPECTUS DISTRIBUTIONS which are required to be
filed by the Corporation with the OSC after the date of this Prospectus and
prior to the termination of the offering of securities hereunder shall be deemed
to be incorporated by reference into this Prospectus. Any similar document filed
by the Corporation with, or furnished by the Corporation to, the SEC pursuant to
the United States Securities Exchange Act of 1934, as amended (the "U.S.
Exchange Act") after the date of this Prospectus shall be deemed to be
incorporated by reference in this Prospectus, if and to the extent provided in
such document.

ANY STATEMENT CONTAINED IN THIS PROSPECTUS OR IN A DOCUMENT INCORPORATED OR
DEEMED TO BE INCORPORATED BY REFERENCE IN THIS PROSPECTUS SHALL BE DEEMED TO BE
MODIFIED OR SUPERSEDED FOR THE PURPOSES OF THIS PROSPECTUS TO THE EXTENT THAT A
STATEMENT CONTAINED IN THIS PROSPECTUS OR IN ANY OTHER SUBSEQUENTLY FILED
DOCUMENT WHICH ALSO IS OR IS DEEMED TO BE INCORPORATED BY REFERENCE IN THIS
PROSPECTUS MODIFIES OR SUPERSEDES THAT STATEMENT. THE MODIFYING OR SUPERSEDING
STATEMENT NEED NOT STATE THAT IT HAS MODIFIED OR SUPERSEDED A PRIOR STATEMENT OR
INCLUDE ANY OTHER INFORMATION SET FORTH IN THE DOCUMENT THAT IT MODIFIES OR
SUPERSEDES. THE MAKING OF A MODIFYING OR SUPERSEDING STATEMENT IS NOT AN
ADMISSION FOR ANY PURPOSES THAT THE MODIFIED OR SUPERSEDED STATEMENT, WHEN MADE,
CONSTITUTED A MISREPRESENTATION, AN UNTRUE STATEMENT OF MATERIAL FACT OR AN
OMISSION TO STATE A MATERIAL FACT THAT IS REQUIRED TO BE STATED OR IS NECESSARY
TO MAKE A STATEMENT NOT MISLEADING IN LIGHT OF THE CIRCUMSTANCES IN WHICH IT WAS
MADE. ANY STATEMENT SO MODIFIED OR SUPERSEDED SHALL NOT CONSTITUTE A PART OF
THIS PROSPECTUS, EXCEPT AS SO MODIFIED OR SUPERSEDED.


                                      - 3 -


UPON A NEW ANNUAL INFORMATION FORM FOR THE PERIOD ENDED DECEMBER 31, 2006 AND
THE RELATED ANNUAL FINANCIAL STATEMENTS BEING FILED WITH AND, WHERE REQUIRED,
ACCEPTED BY, THE OSC DURING THE CURRENCY OF THIS PROSPECTUS, THE PREVIOUS ANNUAL
INFORMATION FORM, THE PREVIOUS ANNUAL FINANCIAL STATEMENTS AND ALL INTERIM
FINANCIAL STATEMENTS, MATERIAL CHANGE REPORTS AND INFORMATION CIRCULARS FILED
PRIOR TO THE COMMENCEMENT OF THE THEN CURRENT FINANCIAL YEAR WILL BE DEEMED NO
LONGER TO BE INCORPORATED INTO THIS PROSPECTUS FOR PURPOSES OF FUTURE OFFERINGS
OF UNDERLYING SHARES HEREUNDER.

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus and the documents incorporated by reference herein contain
forward-looking statements within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements are necessarily made
based on estimates and assumptions made by the Corporation in light of its
experience and perception of historical trends, current conditions and expected
future developments, as well as other factors it believes are appropriate in the
circumstances. These estimates and assumptions are inherently subject to
significant business, economic and competitive uncertainties, many of which,
with respect to future events, are subject to change. These uncertainties and
contingencies can affect actual results and could cause actual results to differ
materially from those expressed or implied in any forward-looking statements
made by the Corporation, or on its behalf.

In making the forward-looking statements in this Prospectus and the documents
incorporated by reference herein, the Corporation has applied numerous material
factors and assumptions, including, but not limited to:

        o       the assumption that the plans for the development of the
                Corporation's underground mine (including the designs, budgets
                and schedules relating thereto) and its expectations for the
                operation of, and production and processing from, the
                underground mine in conjunction with the open pit mine are
                viable operationally and economically;
        o       the assumption that the advice the Corporation has received from
                its consultants and advisors relating to matters such as mineral
                reserves and mineral resources, environmental requirements and
                certain legal proceedings is reliable and correct and, in
                particular, that the models, dilution strategies and mining
                recovery estimates used to calculate mineral reserves and
                mineral resources are appropriate and accurate;
        o       the assumption that the Corporation will be able to negotiate
                the renewal of its mining leases, and the renewal or entering
                into of new smelting and refining agreements; and
        o       the assumption that the Corporation's plans for sustainable
                recoveries from the Lac des Iles mine, for further exploration
                at the Lac des Iles mine and for exploration in Finland can
                proceed as expected.

The words "expect," "anticipate," "estimate," "may," "will," "should," "intend,"
"believe," "target," "budget," "plan," "projection" and similar expressions are
intended to identify forward-looking statements. Information concerning mineral
reserve and mineral resource estimates also may be considered forward-looking
statements, as such information constitutes a prediction of what mineralization
might be found to be present if and when a project is actually developed. In
light of the risks and uncertainties inherent in all forward-looking statements,
the inclusion or incorporation by reference of forward-looking statements in
this Prospectus should not be considered as a representation by the Corporation
or any other person that its objectives or plans will be achieved. Numerous
factors could cause the Corporation's actual results to differ materially from
those in the forward-looking statements, including the following, which are
discussed in greater detail under the heading "Risk Factors":

        o       inability to meet production or operating cost goals;
        o       inaccurate resource and reserve estimates;
        o       inherent risks associated with mining and processing operations;
        o       failure to successfully develop the underground mining
                operations or to achieve projected production levels;
        o       inability to obtain additional funding for operations, if
                required;


                                      - 4 -


        o       failure of the Corporation's exploration program to increase
                reserves;
        o       interruption of operations at the Lac des Iles mine;
        o       defaults under the Corporation's credit facilities;
        o       termination or failure to renew smelting agreements;
        o       volatility in metal prices;
        o       costs of complying with current and future environmental
                regulation;
        o       costs of complying with other current and future governmental
                regulation;
        o       competition from other suppliers of platinum group metals;
        o       development of new technology leading to reduced demand for
                palladium;
        o       loss of key personnel;
        o       failure to renew mining leases;
        o       hedging activities; and
        o       changes in the United States/Canadian dollar exchange rate.

These factors should be considered carefully, and readers should not place undue
reliance on the Corporation's forward-looking statements. The Corporation
undertakes no obligation to release publicly the results of any future revisions
it may make to forward-looking statements to reflect events or circumstances
after the date of this Prospectus or to reflect the occurrence of unanticipated
events, except as required by law.

                                 THE CORPORATION

The Corporation is the successor to Madeleine Mines Ltd., a company incorporated
under the QUEBEC MINING COMPANIES ACT by letters patent dated February 2, 1968.
In January 1992: (i) Madeleine Mines Ltd. was amalgamated with a wholly owned
Quebec subsidiary of 2750538 Canada Inc., a company incorporated under the
CANADA BUSINESS CORPORATIONS ACT by articles of incorporation dated September
12, 1991; (ii) the amalgamated company was wound up into 2750538 Canada Inc.;
and (iii) 2750538 Canada Inc. changed its name to "Madeleine Mines Ltd.". By
articles of amendment dated July 24, 1993, Madeleine Mines Ltd. changed its name
to "North American Palladium Ltd.". The Corporation has one operating
subsidiary, Lac des Iles Mines Ltd., incorporated under the CANADA BUSINESS
CORPORATIONS ACT, and wholly owned by the Corporation. The Corporation has one
additional subsidiary, North American Palladium Finland Oy, a Finnish
corporation, which is wholly-owned.

The Corporation's registered and executive office is at Suite 2116, 130 Adelaide
Street West, Toronto, Ontario M5H 3P5, telephone: (416) 360-7590, fax: (416)
360-7709. The Corporation's mining operations are situated approximately 85
kilometres northwest of Thunder Bay at Lac des Iles, in northern Ontario. The
postal address is P.O. Box 10547, Station P, Thunder Bay, Ontario P7B 6T9,
telephone: (807) 448-2000, fax: (807) 448-2001.

The Corporation owns and operates an open pit mine known as the Lac des Iles
mine and processing plant with a design capacity of 15,000 tonnes per day. The
mining and processing operation produces by flotation a palladium rich
concentrate that also contains platinum, gold, copper and nickel. The
concentrate is delivered to the Sudbury operations of Falconbridge Limited
("Falconbridge") for smelting, and is further processed at Falconbridge's
European refining operations.

                               RECENT DEVELOPMENTS

MARCH 2006 CONVERTIBLE NOTES AND COMMON SHARE PURCHASE WARRANTS FINANCING

On March 28, 2006, the Corporation announced the execution of formal agreements
relating to the private placement (the "Offering") of up to US$58.5 million
principal amount of convertible notes together with common share purchase
warrants to purchase, for four years from the date of their issuance, 50% of the
number of Common Shares underlying the convertible notes.

The Offering is governed by a securities purchase agreement dated March 24, 2006
(the "Securities Purchase Agreement") among the Corporation and the Holders.
Under the terms of the Securities Purchase Agreement, on March 29, 2006, the
Corporation issued US$17.5 million principal amount of the Notes to each of the
Holders.


                                      - 5 -



The Notes are convertible into 2,873,563 Common Shares representing an effective
price of US$12.18 per share (the "Conversion Price"). The Conversion Price is
equal to 113% of the Initial Market Price. For the purposes of the Notes, the
Initial Market Price is US$10.78, being the five day weighted average trading
price of the Common Shares on the AMEX immediately preceding March 24, 2006. In
addition, Warrants exercisable to purchase 1,436,782 Common Shares were issued
with the Notes, with each Warrant being exercisable to purchase one Common Share
at an exercise price of US$13.48. The exercise price of the Warrants is equal to
125% of the Initial Market Price.

The Notes bear interest at a rate of 6.5% per annum payable bi-monthly,
commencing on June 1, 2006. Each Note will be repaid in nine equal instalments
commencing on April 1, 2007. The interest payments and/or principal repayment
amounts may be paid to each Holder, at such Holder's option, in any combination
of cash and/or Common Shares. Common Shares issued for interest payments or in
repayment of Notes will be issued at a 10% discount from the weighted average
trading price of the Common Shares on the AMEX for the five consecutive trading
days immediately prior to the applicable payment date. A separate prospectus and
registration statement will be filed in connection with the Common Shares
issuable in satisfaction of any interest payments.

Commencing July 1, 2007, if the weighted average trading price of the Common
Shares on the AMEX for each of any 25 consecutive trading days is 150% of the
Conversion Price, the Corporation will, subject to certain conditions, have the
right to force the Holders to convert all or any of the outstanding principal
amount of the Notes at the then Conversion Price.

The Notes contain customary covenants, including restrictions on the Corporation
incurring debt or obligations for or involving the payment of money in excess of
certain restricted amounts. The Notes also contain customary anti-dilution
protection as well as adjustments in the event that the Corporation issues
Common Shares or securities convertible into Common Shares at a purchase price
(the "Effective Price") per Common Share less than the Conversion Price. In such
event, the Conversion Price will be reduced to the Effective Price, provided
that the adjusted Conversion Price cannot be less than US$9.12 (as adjusted as
prescribed in the Notes).

The Warrants contain anti-dilution protection similar to that of the Notes. In
the event that the Corporation issues Common Shares or securities convertible
into Common Shares at an Effective Price per Common Share less than the exercise
price of the Warrants, the exercise price of the Warrants will be reduced to the
Effective Price provided that the adjusted exercise price cannot be less than
US$10.73 (as adjusted as prescribed in the Notes).

Under the Securities Purchase Agreement, the Corporation, at its option, has the
right to sell to KFOC up to US$13.5 million principal amount of Series II
convertible notes (the "Second Tranche") on or before June 30, 2006, the
proceeds of which will be used to repay the loan under the existing KFOC standby
loan facility. KFOC has granted to the other Holder an option to acquire up to
50% of the Second Tranche. Common share purchase warrants will be issued in
connection with the Second Tranche.

The Securities Purchase Agreement also provides that the Holders will have the
option to acquire an additional US$10 million principal amount of Series III
convertible notes (the "Third Tranche") on or before December 31, 2006, with
each Holder entitled to acquire one-half. If either Purchaser does not acquire
its entire allotment of the Third Tranche, the other Holder may purchase the
balance. Common share purchase warrants will be issued in connection with the
Third Tranche.

The Second Tranche and Third Tranche of convertible notes (collectively the
"Additional Notes"), if issued, will be convertible into Common Shares at the
Conversion Price, provided that the Conversion Price for the Additional Notes
cannot be less than the maximum applicable discount permitted by the TSX, from
the weighted average trading price of the Common Shares on the TSX for the five
consecutive trading days immediately prior to the date of issuance of each
tranche (converted into US dollars). The exercise price of the common share
purchase warrants issued in connection with the Additional Notes (the
"Additional Warrants") cannot be less than the weighted average trading price of
the Common Shares on the TSX for the five consecutive trading days immediately
prior to the date of issuance of such Additional Warrants (converted into US
dollars). Separate prospectuses and registrations statements will be filed in
connection with the Common Shares issuable pursuant to the terms of the
Additional Notes and Additional Warrants.


                                      - 6 -


A maximum of 10,391,137 Common Shares can be issued pursuant to any feature of
the Notes, the Additional Notes, or upon exercise of the Warrants and the
Additional Warrants, without the prior consent by majority vote of the
shareholders of the Corporation ("Shareholder Approval"). Further, a maximum of
5,221,677 Common Shares can be issued pursuant to any feature of the Notes or
the Additional Notes, together with the Common Shares underlying the Warrants
and the Additional Warrants, to KFOC without the prior consent by majority vote
of the shareholders of the Company, excluding the votes attached to the Common
Shares beneficially held directly or indirectly by KFOC, and its associates,
affiliates and insiders (as applicable) (as such terms are defined in the
SECURITIES Act (Ontario)) ("Disinterested Shareholder Approval").

Under the Securities Purchase Agreement, the Corporation is required to seek
Shareholder Approval to issue in excess of 10,391,137 Common Shares in
connection with the features of the Notes, Additional Notes, Warrants and
Additional Warrants and to seek Disinterested Shareholder Approval to issue in
excess of 5,221,677 Common Shares in connection with the features of the Notes,
Additional Notes, Warrants and Additional Warrants to be issued to KFOC. The
Corporation intends to seek shareholder approval for the issuance of Common
Shares in excess of the foregoing limits at the Corporation's 2006 annual
shareholder's meeting to be held in June, 2006. In the information circular to
be delivered to shareholders in connection with the annual shareholder's
meeting, the Corporation's board of directors will recommend that shareholders
vote in favour of the issuance of the Common Shares in excess of the limits set
out above.

If a Holder elects to receive interest payments or principal repayments on the
Notes or Additional Notes in Common Shares and the Corporation is unable to
issue such Common Shares, the interest payment or principal repayment will be
made in cash. If a Holder is restricted in its ability to receive Common Shares
upon conversion of the Notes or Additional Notes, the Holder may require the
Corporation to pay cash to such Holder in an amount equal to the number of
Common Shares which such Holder was not permitted to receive (the "Excess
Shares") multiplied by the average of the weighted average trading price of the
Common Shares on the AMEX for each of the five trading days immediately prior to
the date of the payment, upon which the Corporation will have no further
obligation to issue such Excess Shares. If a Holder is restricted in its ability
to receive Common Shares upon exercise of a Warrant, the Corporation will be
required to pay cash to such Holder in an amount equal to the binomial option
pricing model of the Warrant with respect to the portion of the Warrant which is
unexercisable.

REGISTRATION RIGHTS AGREEMENT

In connection with the issuance of the Notes and Warrants, the Corporation
entered into a registration rights agreement dated as of March 24, 2006 (the
"Registration Rights Agreement") with the Holders. The following summary of
selected provisions of the Registration Rights Agreement is not complete and is
subject to, and is qualified in its entirety by reference to, the provisions of
the Registration Rights Agreement. Copies of the Registration Rights Agreement
are available from the Corporation upon request.

The Holders are entitled to the benefits of the Registration Rights Agreement,
pursuant to which the Corporation has filed this Prospectus with the OSC under
National Instrument 44-102 and a registration statement, of which this
Prospectus forms a part, with the SEC under the U.S. Securities Act. The
Corporation is registering the number of Underlying Shares covered by this
Prospectus pursuant to the terms of the Registration Rights Agreement and under
the U.S. Securities Act to permit the Holders to resell the Underlying Shares
from time to time after the effective date of the registration statement of
which this Prospectus forms a part. Subject to the Corporation's right to
suspend use of the registration statement, as described below, the Corporation
will use its reasonable best efforts to keep the registration statement
effective at all times until the earlier of the (i) fourth anniversary of the
date such registration statement became effective and (ii) the date on which the
Holders have sold all the Underlying Shares covered by the registration
statement provided that, for so long as any Holder is an "affiliate" of the
Corporation as defined in Rule 144 under the U.S. Securities Act, the four year
period shall be extended for such Holder until such time as such Holder is no
longer an affiliate under Rule 144 and provided further, that in the case of
KFOC, such period shall be extended until the earlier of (A) March 24, 2016 or
(B) one year after the death of George B. Kaiser. Notwithstanding the foregoing,
the Corporation is not required to keep a registration statement effective for a
particular Holder that is not an affiliate under Rule 144 if all the Underlying
Shares held by or issuable to such Holder may immediately be sold under Rule 144
during a 90 day period.


                                      - 7 -


When a Holder elects to sell the Underlying Shares pursuant to the registration
statement, such Holder will be required to:

        o       provide the Corporation with any additional information
                requested by the OSC and the SEC, if any;
        o       deliver a copy of this Prospectus to purchasers; and
        o       be subject to the provisions of the Registration Rights
                Agreement, including the indemnification provisions.

Under the Registration Rights Agreement, the Corporation will:

        o       pay all expenses of the registration statement;
        o       provide the Holders with copies of this Prospectus;
        o       notify the Holders when the registration statement has become
                effective; and
        o       take other reasonable actions as are required to permit
                unrestricted resales of the registrable securities in accordance
                with the terms and conditions of the Registration Rights
                Agreement.

Pursuant to the Registration Rights Agreement, the Corporation may suspend the
use of the Prospectus under certain circumstances relating to pending corporate
developments, public filings with the SEC and similar events. Any suspension
period shall not exceed one 90 day period during any period of 365 consecutive
days.

The Corporation will pay predetermined additional interest on the Notes and
liquidated damages on the Underlying Shares in the following circumstances,
among others:

        o       subject to an allowable suspension described above, if Holders
                are not permitted to sell Underlying Securities for any reason
                for three or more consecutive trading days, or five or more
                trading days in aggregate in any 12 month period;
        o       if the Common Shares are not listed or quoted, or are suspended
                from trading on the AMEX for three or more consecutive trading
                days or five or more trading days in aggregate in any 12 month
                period;
        o       if the Corporation fails to deliver a certificate representing
                the Underlying Shares within three trading days after delivery
                of such certificate is required under the terms of the Notes or
                the Warrants;
        o       subject to certain exceptions, if the conversion or exercise
                rights under either the Notes or Warrants are suspended for any
                reason;
        o       if the Corporation fails to have available a sufficient number
                of Common Shares to issue to the Holders pursuant to the terms
                of the Notes and Warrants; and
        o       subject to certain exceptions, if the Underlying Shares are not
                freely tradeable on the TSX after July 29, 2006.


                                      - 8 -


                                  RISK FACTORS

The acquisition of the Underlying Shares involves risk. Any prospective investor
should carefully consider the following risk factors and all of the other
information contained in this Prospectus (including the documents incorporated
by reference) before purchasing any of the Underlying Shares. If any event
arising from these risks occurs, the Corporation's business, prospects,
financial condition, results of operations or cash flows could be adversely
affected, the trading price of the Common Shares could decline and all or part
of any investment may be lost. Additional risks and uncertainties not currently
known to the Corporation, or that are currently deemed immaterial, may also
materially and adversely affect the Corporation's business operations.

FUTURE SALES OR ISSUANCES OF COMMON SHARES COULD LOWER THE CORPORATION'S SHARE
PRICE, DILUTE INVESTORS' VOTING POWER AND MAY REDUCE THE CORPORATION'S EARNINGS
PER SHARE.

The Corporation may sell additional Common Shares in subsequent offerings. It
may also issue additional Common Shares to finance future acquisitions. The
Corporation cannot predict the size of future issuances of Common Shares or the
effect, if any, that future issuances and sales of Common Shares will have on
the market price of the Common Shares. Sales or issuances of substantial numbers
of Common Shares, or the perception that such sales could occur, may adversely
affect prevailing market prices for the Common Shares. With any additional sale
or issuance of Common Shares, investors will suffer dilution to their voting
power and the Corporation may experience dilution in its earnings per share.

THE COMMON SHARES ARE PUBLICLY TRADED AND ARE SUBJECT TO VARIOUS FACTORS THAT
HAVE HISTORICALLY MADE THE CORPORATION'S SHARE PRICE VOLATILE.

The market price of the Common Shares could fluctuate significantly based on a
number of factors in addition to those listed in this Prospectus, including:

        o       the Corporation's operating performance and the performance of
                competitors and other similar companies;
        o       the public's reaction to the Corporation's press releases, other
                public announcements and the Corporation's filings with the
                various securities regulatory authorities;
        o       changes in earnings estimates or recommendations by research
                analysts who track the Common Shares or the shares of other
                companies in the resource sector;
        o       changes in general economic conditions;
        o       the number of the Common Shares to be publicly traded after this
                offering;
        o       the arrival or departure of key personnel;
        o       acquisitions, strategic alliances or joint ventures involving
                the Corporation or its competitors; and
        o       the factors listed under the heading "Special Note Regarding
                Forward-Looking Statements".

In addition, the market price of the Common Shares are affected by many
variables not directly related to the Corporation's success and are therefore
not within the Corporation's control, including other developments that affect
the market for all resource sector shares, the breadth of the public market for
the Common Shares, and the attractiveness of alternative investments. The effect
of these and other factors on the market price of Common Shares on the exchanges
on which the Corporation trades has historically made the Corporation's share
price volatile and suggests that the Corporation's share price will continue to
be volatile in the future.

BECAUSE THE CORPORATION IS A CANADIAN CORPORATION AND THE MAJORITY OF ITS
DIRECTORS AND OFFICERS ARE RESIDENT IN CANADA, IT MAY BE DIFFICULT FOR INVESTORS
IN THE UNITED STATES TO ENFORCE CIVIL LIABILITIES AGAINST THE CORPORATION BASED
SOLELY UPON THE FEDERAL SECURITIES LAWS OF THE UNITED STATES.


                                      - 9 -


The Corporation is a Canadian corporation, with its principal place of business
in Canada. A majority of the Corporation's directors and officers and the
experts named in this Prospectus are residents of Canada and a significant
portion of the Corporation's assets and the assets of a majority of the
Corporation's directors and officers and the experts named in this Prospectus
are located outside the United States. Consequently, it may be difficult for
U.S. investors to effect service of process within the United States upon the
Corporation or its directors or officers or such experts who are not residents
of the United States, or to realize in the United States upon judgments of
courts of the United States predicated upon civil liabilities under the U.S.
Securities Act. Investors should not assume that Canadian courts (1) would
enforce judgments of U.S. courts obtained in actions against the Corporation or
such directors, officers or experts predicated upon the civil liability
provisions of the U.S. federal securities laws or the securities or "blue sky"
laws of any state within the United States or (2) would enforce, in original
actions, liabilities against the Corporation or such directors, officers or
experts predicated upon the U.S. federal securities laws or any such state
securities or "blue sky" laws.

THE CORPORATION IS CURRENTLY RESTRICTED FROM PAYING DIVIDENDS ON THE COMMON
SHARES AND THE CORPORATION DOES NOT PLAN TO PAY DIVIDENDS ON THE COMMON SHARES
IN THE NEAR FUTURE.

The Corporation has never declared or paid any dividends on the Common Shares
and does not anticipate paying dividends in the near future. Moreover, the
Corporation's ability to pay dividends on the Common Shares is restricted by the
terms of its credit facilities and the Securities Purchase Agreement and may in
the future be restricted by the terms of special shares that the Corporation has
the ability to issue under its articles of incorporation. The actual timing,
payment and amount of any dividends will be determined by the board of directors
from time to time based upon, among other things, cash flow, results of
operations and financial condition, the need for funds to finance ongoing
operations and such other business considerations as the board of directors may
consider relevant.

THE BOARD OF DIRECTORS MAY ISSUE, WITHOUT SHAREHOLDERS' APPROVAL, AN UNLIMITED
NUMBER OF SPECIAL SHARES THAT HAVE RIGHTS AND PREFERENCES SUPERIOR TO THOSE OF
THE COMMON SHARES. SUCH AN ISSUANCE MAY DELAY OR PREVENT A CHANGE OF CONTROL.

While there are no special shares currently outstanding, the Corporation's
articles of incorporation allow the issuance of an unlimited number of special
shares in one or more series. The board of directors may set the rights and
preferences of any series of special shares in its sole discretion without
shareholders' approval. The rights and preferences of those special shares may
be superior to those of the Common Shares. Accordingly, the issuance of special
shares may adversely affect the rights of holders of Common Shares and could
have the effect of delaying or preventing a change of control, which may deprive
the Corporation's shareholders of a control premium that might otherwise be
realized in connection with an acquisition of the Corporation.

THE CORPORATION CANNOT ASSURE THAT IT WILL MEET ITS GOALS FOR PRODUCTION AND
OPERATING COSTS AND IF IT DOES NOT, ITS OPERATING RESULTS WILL BE ADVERSELY
AFFECTED.

Planned production levels and operating costs are estimated based on the
Corporation's experience in operating its mine. These estimates are subject to
numerous uncertainties, many of which are beyond the Corporation's control. The
Corporation cannot make assurances that its actual production levels will not be
substantially lower than its estimates or that its operating costs will not be
materially higher than anticipated.

IF RESERVE ESTIMATES ARE NOT ACCURATE, PRODUCTION MAY BE LESS THAN ESTIMATED
WHICH WOULD ADVERSELY AFFECT THE CORPORATION'S FINANCIAL CONDITION AND RESULT OF
OPERATIONS.

Reserve estimates are imprecise and depend on geological analysis based partly
on statistical inferences drawn from drilling, which may prove unreliable, and
assumptions about operating costs and metal prices. The Corporation cannot be
certain that the reserve estimates are accurate and cannot guarantee that it
will recover the indicated quantities of metals. Future production could differ
dramatically from such estimates for the following reasons:

        o       mineralization or formations at the mine could be different from
                those predicted by drilling, sampling and similar examinations;


                                     - 10 -


        o       declines in the market price of palladium may render the mining
                of some or all of the reserves uneconomic; and
        o       the grade of ore may vary significantly from time to time and
                the Corporation cannot give any assurances that any particular
                quantity of metal will be recovered from the reserves.

The occurrence of any of these events may cause the Corporation to adjust the
reserve estimates or change its mining plans, which could negatively affect the
Corporation's financial condition and results of operation. Moreover, short-term
factors, such as the need for additional development of the ore body or the
processing of new or different grades, may impair its profitability in any
particular accounting period.

THE RISKS AND HAZARDS ASSOCIATED WITH MINING AND PROCESSING MAY INCREASE COSTS
AND REDUCE PROFITABILITY IN THE FUTURE.

Mining and processing operations involve many risks and hazards, including among
others:

        o       environmental hazards;
        o       mining and industrial accidents;
        o       metallurgical and other processing problems;
        o       unusual and unexpected rock formations;
        o       pit slope failures;
        o       flooding and periodic interruptions due to inclement or
                hazardous weather conditions or other acts of nature;
        o       mechanical equipment and facility performance problems; and
        o       unavailability of materials, equipment and personnel.

These risks could result in, among other things:

        o       damage to, or destruction of, the Corporation's properties or
                production facilities;
        o       personal injury or death;
        o       environmental damage;
        o       delays in mining;
        o       increased product costs;
        o       asset write downs;
        o       monetary losses; and
        o       possible legal liability.

The Corporation cannot be certain that its insurance will cover the risks
associated with mining or that it will be able to maintain insurance to cover
these risks at affordable premiums. The Corporation might also become subject to
liability for pollution or other hazards against which it cannot insure or
against which the Corporation may elect not to insure because of premium costs
or other reasons. Losses from such events may increase costs and decrease
profitability.

IF THE CORPORATION FAILS TO DEVELOP ITS UNDERGROUND MINING OPERATIONS AT A
REASONABLE COST, OR TO ACHIEVE PROJECTED PRODUCTION LEVELS FOR ITS UNDERGROUND
MINING OPERATIONS, ITS ABILITY TO GENERATE REVENUE AND PROFITS WILL BE ADVERSELY
AFFECTED.

The Corporation's future prospects will be negatively affected if the
underground mine fails to achieve projected production levels. Unforeseen
conditions or developments could arise during the development and construction
of the underground mine which could delay or prevent its completion or
substantially increase the cost of such project, adversely affecting the
Corporation's ability to generate revenue and profits. These events may include,
among others:


                                     - 11 -



        o       delays or difficulties in obtaining required permits;
        o       shortages of equipment, materials or labour;
        o       delays in delivery of equipment or materials;
        o       labour disruptions;
        o       local or political opposition;
        o       adverse weather conditions or natural disasters;
        o       unanticipated increases in costs of labour, supplies and
                equipment;
        o       accidents; and
        o       unforeseen engineering, design, environmental or geological
                problems.

THE CORPORATION MAY EXPERIENCE HIGHER COSTS AND LOWER REVENUES THAN ESTIMATED
DUE TO UNEXPECTED PROBLEMS AND DELAYS.

New mining operations often experience unexpected problems during the
development and start-up phases and such problems can result in substantial
delays in reaching full production. Delays in construction or reaching full
production in connection with the development of the Corporation's underground
mine would increase its operating costs and delay revenue growth.

IF THE COSTS OF COMPLETING THE UNDERGROUND MINE ARE GREATER THAN ANTICIPATED,
THE CORPORATION MAY NEED TO OBTAIN ADDITIONAL FUNDS WHICH MAY NOT BE AVAILABLE
ON FAVOURABLE TERMS OR AT ALL.

The costs of developing the underground mine are subject to many uncertainties
which may cause such costs to be higher than anticipated. In such event, the
Corporation may need to obtain additional capital to pursue its mining plan.
There is no assurance that the Corporation will be able to obtain such capital
on favourable terms, if at all. If additional capital is raised by incurring
debt, the Corporation will be obligated to make greater interest payments which
will reduce funds available for the mining operations. If capital is raised
through the sale of equity securities, shareholders may experience substantial
dilution.

FUTURE EXPLORATION AT LAC DES ILES MINE OR ELSEWHERE MAY NOT RESULT IN INCREASED
RESERVES, WHICH WOULD PREVENT THE CORPORATION FROM SUSTAINING ITS TARGETED
PRODUCTION LEVELS.

The Corporation conducts exploration programs at and surrounding the Lac des
Iles mine with the objective of increasing reserves. Mineral exploration
involves significant risks over a substantial period of time, which even a
combination of careful evaluation, experience and knowledge may not eliminate.
Even if the Corporation discovers a valuable deposit of minerals, it may be
several years before production is possible and during that time it may become
economically unfeasible to produce those minerals. There is no assurance that
current or future exploration programs will result in any new economically
viable mining operations or yield new reserves to replace and expand current
reserves at the Lac des Iles mine. In the event that new reserves are not
discovered, the Corporation may not be able to sustain production beyond 2010 or
earlier.

THE CORPORATION FACES STRONG COMPETITION FROM OTHER MINING COMPANIES FOR THE
ACQUISITION OF NEW PROPERTIES.

Mines have limited lives and, as a result, the Corporation continually seeks to
replace and expand its reserves through the acquisition of new properties. In
addition, there is a limited supply of desirable mineral lands available in
areas where the Corporation would consider conducting exploration and/or
production activities. Because the Corporation faces strong competition for new
properties from other mining companies, many of which have greater financial
resources than it, the Corporation may be unable to acquire attractive new
mining properties on terms acceptable to it.

THE CORPORATION DEPENDS ON A SINGLE MINE TO GENERATE REVENUES AND, IF MINING
OPERATIONS ARE INTERRUPTED, THE CORPORATION'S BUSINESS WILL SUFFER.

All of the Corporation's revenues are derived from its mining operations at the
Lac des Iles mine, which is the Corporation's only mine and the only place it
has reserves. If there is an interruption in operations at the Lac des Iles
mine, or if the Corporation can no longer extract ore from this mine for any
reason, the Corporation's business


                                     - 12 -



will suffer significantly. In addition, any adverse condition affecting mining
conditions at the Lac des Iles mine could have a material adverse effect on the
Corporation's financial performance and results of operations until such time as
the condition is remedied.

THE CORPORATION IS DEPENDENT ON A THIRD PARTY FOR SMELTING AND REFINING ITS
PALLADIUM AND IF THE THIRD PARTY IS UNABLE TO ACCOMMODATE THE CORPORATION'S
SMELTING AND REFINING REQUIREMENTS OR THE EXISTING CONTRACT IS TERMINATED OR NOT
RENEWED THE CORPORATION'S ABILITY TO GENERATE REVENUES COULD BE HARMED.

The Corporation has a smelter agreement with Falconbridge which provides for the
smelting and refining of the principal metals contained in the concentrates
produced at Lac des Iles mine. The existing agreement with Falconbridge expires
on September 30, 2006. The agreement with Falconbridge can be terminated in
certain circumstances, such as default of performance. The inability to renew
this agreement under similar terms or the termination of the agreement could
have a material adverse affect on the Corporation's financial performance and
results of operations until such time as alternative smelting and refining
arrangements can be made or alternative purchasers of the Corporation's
concentrates can be found.

THE CORPORATION'S VULNERABILITY TO CHANGES IN METAL PRICES MAY CAUSE THE COMMON
SHARE PRICE TO BE VOLATILE AND MAY AFFECT THE CORPORATION'S OPERATIONS AND
FINANCIAL RESULTS.

The Corporation's primary source of revenue is the sale of palladium. In fiscal
2005, sales of palladium accounted for approximately 47% of the Corporation's
revenues. Historically, changes in the market price of palladium have
significantly impacted the Corporation's profitability and Common Share price.
The Corporation's financial results are very sensitive to external economic
criteria related to the palladium price. A major risk will arise if there is a
significant weakening of the U.S. dollar combined with a prolonged period of
lower palladium prices. Many factors beyond the Corporation's control influence
the market price of palladium. These factors include:

        o       global supply and demand;
        o       availability and costs of metal substitutes;
        o       speculative activities;
        o       international political and economic conditions; and
        o       production levels and costs in other platinum group
                metal-producing countries, particularly Russia and South Africa.

Economic and political events in Russia could result in declining market prices.
If Russia disposes of substantial amounts of palladium, platinum, rhodium,
ruthenium, osmium and iridium, which are referred to as platinum group metals,
from stockpiles or otherwise, the increased supply could reduce the market
prices of palladium and platinum and adversely affect the Corporation's
profitability and Common Share price. Russia's economic problems make Russian
stockpiles difficult to predict and the risk of sales from stockpiles more
significant.

SINCE THE CORPORATION'S REVENUES ARE IN UNITED STATES DOLLARS AND EXPENDITURES
ARE IN CANADIAN DOLLARS, THE CORPORATION IS SUBJECT TO FLUCTUATIONS IN EXCHANGE
RATES BETWEEN THE UNITED STATES AND CANADIAN DOLLARS.

Currency fluctuations may affect cash flow since the Corporation's production
currently is sold in United States dollars, whereas the Corporation's
administration, operating and exploration costs are incurred in Canadian
dollars. Exploration costs and other property costs will also be incurred in
Euros. Significant long term fluctuations in relative currency values could
adversely affect the Corporation's results of operations. In particular, the
Corporation may be adversely affected by a significant strengthening of the
Canadian dollar against the United States dollar. In addition, the Corporation's
financial results are sensitive to fluctuations in the exchange rate. A major
risk will arise if there is a significant weakening of the U.S. dollar combined
with a prolonged period of lower palladium spot prices.

THE CORPORATION ENTERED INTO A MEMORANDUM OF AGREEMENT WITH THE UNITED STEEL
WORKERS OF AMERICA WHICH WAS RATIFIED BY EMPLOYEES ON APRIL 13, 2006, PROVIDING
FOR A NEW COLLECTIVE AGREEMENT WITH A THREE YEAR TERM. THE INABILITY TO RENEW
THE COLLECTIVE AGREEMENT ON SIMILAR TERMS ON ITS EXPIRY IN FEBRUARY 2009 COULD
HAVE A MATERIAL ADVERSE AFFECT ON THE CORPORATION.


                                     - 13 -



The Corporation's collective agreement with the United Steel Workers of America,
the union representing the employees at the Lac des Iles mine (other than
employees at or above the rank of foreman, safety coordinator, surveyors,
dispatchers, technical staff and office, clerical and security personnel), will
expire in February 2009. The inability to renew the agreement on similar terms
could have a material adverse affect on the Corporation, including the affect of
work stoppages or strikes on the results of operations and financial performance
of the Corporation.

THE CORPORATION IS SUBJECT TO EXTENSIVE ENVIRONMENTAL LEGISLATION AND THE COSTS
OF COMPLYING WITH THESE REGULATIONS MAY BE SIGNIFICANT.

Environmental legislation relating to land, air and water affects nearly all
aspects of the Corporation's operations. This legislation requires the
Corporation to obtain various operating licenses and also imposes standards and
controls on activities relating to the exploration, development and production
of palladium and associated metals. The cost of obtaining operating licenses and
abiding by standards and controls on its activities may be significant. Further,
if the Corporation fails to obtain or maintain such operating licenses or
breaches such standards or controls imposed on its activities, it may not be
able to continue its operations in its usual manner, or at all, or the
Corporation may be subject to fines or other claims for remediation which may
have a material adverse impact on its operations or financial results.

The Corporation will be responsible for all costs of closure and reclamation at
the Lac des Iles mine. Under applicable environmental legislation, the
Corporation had to establish a trust fund to prepare for closure and
reclamation. The current amended mine closure plan requires $7.8 million for
clean-up and restoration of the mine site. The trust fund, maintained by the
Ontario Ministry of Northern Development and Mines, is designed to collect $7.8
million through instalments of $100,000 per month. The money in the trust fund
will become available to the Corporation when the mine closure is completed. At
December 31, 2005, approximately $7.2 million was on deposit in the trust fund.
Development of the underground mine as planned required an amendment to the
existing closure plan and may result in an increase in the amount of financial
assurance required by the Ontario Ministry of Northern Development and Mines.
The actual amount needed for the closure of the Lac des Iles mine may be
materially more than the original estimate. Changes in the Province of Ontario
mining regulations may require the Corporation to provide a letter of credit or
other financial instrument as security for the closure of the Lac des Iles mine.

CHANGES IN ENVIRONMENTAL LEGISLATION COULD INCREASE THE COSTS OF COMPLYING WITH
APPLICABLE REGULATIONS AND REDUCE LEVELS OF PRODUCTION.

Changes in environmental laws, new information on existing environmental
conditions or other events may increase future compliance expenditures or
otherwise have a negative effect on the Corporation's financial condition and
results of operations. In addition to existing requirements, it is expected that
other environmental regulations will likely be implemented in the future with
the objective of further protecting human health and the environment. Some of
the issues currently under review by environmental agencies include reducing or
stabilizing air emissions, mine reclamation and restoration, and water quality.
Other changes in environmental legislation could have a negative effect on
production levels, product demand, product quality and methods of production and
distribution. The complexity and breadth of these issues make it difficult for
the Corporation to predict their impact. The Corporation anticipates capital
expenditures and operating expenses will increase as a result of compliance with
the introduction of new and more stringent environmental regulations. Failure to
comply with environmental legislation may result in the issuance of clean up
orders, imposition of penalties, liability for related damages and the loss of
operating permits. The Corporation cannot give assurances that it will at all
future times be in compliance with all federal and provincial environmental
regulations or that steps to bring the Corporation into compliance would not
have a negative effect on its financial condition and results of operations.

COMPLIANCE WITH CURRENT AND FUTURE GOVERNMENT REGULATIONS MAY CAUSE THE
CORPORATION TO INCUR SIGNIFICANT COSTS AND SLOW ITS GROWTH.

The Corporation's activities are subject to extensive Canadian federal and
provincial laws and regulations governing matters relating to mine safety,
occupational health, labour standards, prospecting, exploration, production,
exports and taxes. Compliance with these and other laws and regulations could
require the Corporation to make significant capital outlays which may slow its
growth by diverting its financial resources. The enactment of new adverse


                                     - 14 -


regulations or regulatory requirements or more stringent enforcement of current
regulations or regulatory requirements may increase costs, which could have a
harmful effect on the Corporation. The Corporation cannot make assurances that
it will be able to adapt to these regulatory developments on a timely or cost
effective basis. Violations of these regulations and regulatory requirements
could lead to substantial fines, penalties or other sanctions.

THE CORPORATION IS REQUIRED TO OBTAIN AND RENEW GOVERNMENTAL PERMITS IN ORDER TO
CONDUCT MINING OPERATIONS, WHICH IS OFTEN A COSTLY AND TIME-CONSUMING PROCESS.

In the ordinary course of business, the Corporation is required to obtain and
renew governmental permits for the operation and expansion of existing
operations or for the commencement of new operations. Obtaining or renewing the
necessary governmental permits is a complex and time-consuming process. The
duration and success of our efforts to obtain and renew permits are contingent
upon many variables not within the Corporation's control including the
interpretation of applicable requirements implemented by the permitting
authority. The Corporation may not be able to obtain or renew permits that are
necessary to its operations, or the cost to obtain or renew permits may exceed
what the Corporation expects. Any unexpected delays or costs associated with the
permitting process could delay the development or impede the operation of a
mine, which could adversely affect the Corporation's revenues and future growth.

THE CORPORATION FACES COMPETITION WITH OTHER LARGER SUPPLIERS OF PLATINUM GROUP
METALS AND FROM POTENTIAL NEW SOURCES OF PLATINUM GROUP METALS.

The Corporation competes with other suppliers of platinum group metals, many of
which are significantly larger than it is and have access to greater mineral
reserves and financial resources than it does. In addition, new mines may open
which would increase supply of palladium and platinum. Furthermore, in certain
industrialized countries an industry has developed for the recovery of platinum
group metals from scrap sources, mostly from spent automobile and industrial
catalysts. The Corporation may not be successful in competing with these
existing and emerging platinum group metal producers.

THE DEVELOPMENT OF NEW TECHNOLOGY OR NEW ALLOYS COULD REDUCE THE DEMAND FOR
PALLADIUM AND PLATINUM.

The development of a substitute alloy or synthetic material which has catalytic
characteristics similar to platinum group metals would result in a decrease in
demand for palladium and platinum. Furthermore, the development by the
automobile industry of automobiles that do not use catalytic converters could
reduce the demand for palladium and platinum. Demand might also be reduced by
manufacturers in such industries as automobiles, electronics and dentistry
finding substitutes for palladium. The dentistry and electronics industries have
already experienced advances in new technology which use base metals as a
substitute for palladium in certain component parts. High prices for palladium
would create an incentive for the development of substitutes. Any such
developments could have a material adverse effect on the Corporation's financial
condition and results of operations.

IF THE CORPORATION LOSES KEY PERSONNEL OR IS UNABLE TO ATTRACT AND RETAIN
ADDITIONAL PERSONNEL, THE CORPORATION'S MINING OPERATIONS AND PROSPECTS COULD BE
HARMED.

The Corporation is dependent upon the services of a small number of members of
senior management including James D. Excell, the President and Chief Executive
Officer, and Ian M. MacNeily, the Chief Financial Officer. The Corporation's
current mining operations, its successful development of the underground mine
and its future prospects depends on the experience and knowledge of these
individuals. The Corporation does not maintain any "key man" insurance. The loss
of one or more of these individuals could have a material adverse affect on the
Corporation's mining operations.

THE MINING LEASES CONSTITUTING THE LAC DES ILES MINE EXPIRE IN 2006 AND MAY NOT
BE RENEWED.

The Lac des Iles mine consists of four mining leases issued by the Government of
Ontario. The mining leases are dated August 16, 1985 and have a 21 year term,
which is the term of all mining leases granted by the Government of Ontario.
These leases expire on August 31, 2006 and are renewable for a further term of
21 years if the terms and


                                     - 15 -


conditions of the leases have been complied with. If the leases expire and are
not renewed, the Corporation will not be able to continue its mining operations.

THE CORPORATION'S CREDIT FACILITIES HAVE EVENTS OF DEFAULT, SOME OF WHICH ARE
BEYOND THE CORPORATION'S CONTROL.

The Corporation has borrowed funds under its credit facilities to finance its
operations. The credit facilities and the Notes contain certain events of
default, some of which are beyond the Corporation's control, the occurrence of
which could require the Corporation to pay back immediately all amounts borrowed
under the credit facilities.

THE CORPORATION'S PRINCIPAL SHAREHOLDER HAS THE ABILITY TO DIRECT THE
CORPORATION'S AFFAIRS AND BUSINESS AND, BECAUSE IT OWNS APPROXIMATELY 50% OF THE
COMMON SHARES, THIRD PARTIES MAY BE DETERRED FROM ACQUIRING THE CORPORATION.

To the best of the Corporation's knowledge, KFOC, a privately-held oil and gas
company based in Tulsa, Oklahoma, owns Common Shares, representing approximately
50% of the total number of Common Shares outstanding as of April 26, 2006. KFOC
therefore has the ability to direct the affairs and business of the Corporation.
This concentration of ownership may have the effect of delaying or preventing a
change in control of the Corporation, which may deprive the Corporation's
shareholders of a control premium that might otherwise be realized in connection
with an acquisition of the Corporation.

THE CORPORATION'S HEDGING ACTIVITIES OR ITS DECISION NOT TO HEDGE COULD EXPOSE
IT TO LOSSES.

From time to time, the Corporation engages in hedging activities in connection
with the metals it produces, such as forward sales contracts and commodity put
and call option contracts, to partially offset the risk of declines in metal
prices on its operating results. While these hedging activities may protect the
Corporation against low metal prices, they may also limit the price it can
receive on hedged products. As a result, the Corporation may be prevented from
realizing possible revenues in the event that the market price of a metal
exceeds the price stated in a forward sale or call option contract. In addition,
the Corporation may experience losses if a counterparty fails to purchase under
a contract when the contract price exceeds the spot price of a commodity.


                           EXCHANGE RATE INFORMATION

The following table sets forth, for each period indicated, the high and low
exchange rates for Canadian dollars expressed in U.S. dollars, the average of
such exchange rates on the last day of each month during such period, and the
exchange rate at the end of such period. These rates are based on the inverse
noon buying rate in the City of New York for cable transfers in Canadian dollars
as certified for customs purposes by the Federal Reserve Bank of New York:


                                          FISCAL YEAR ENDED DECEMBER 31,
                                    -----------------------------------------
                                      2002       2003       2004       2005
                                    --------   --------   --------   --------
                                                 (US DOLLARS)
Highest rate during period.......    0.6619     0.7738     0.8493     0.8690
Lowest rate during period........    0.6200     0.6349     0.7158     0.7872
Average rate during period.......    0.6368     0.7186     0.7702     0.8276
Rate at the end of period........    0.6329     0.7708     0.8402     0.8569

On April 27, 2006, the inverse of the noon buying rate was $1.00 per US$0.8901.


                                     - 16 -



                       SUMMARY CONSOLIDATED FINANCIAL DATA

The Corporation's summary historical consolidated financial data in the table
below is derived from and qualified by reference to the audited consolidated
financial statements for each of the two fiscal years in the period ended
December 31, 2005, which have been audited by KPMG LLP.

Prospective investors should read the following information in conjunction with
management's discussion and analysis of financial results, the Corporation's
audited consolidated financial statements and the related notes, all of which
are incorporated by reference herein and the "Risk Factors" sections in this
Prospectus. The Corporation's consolidated financial statements are prepared in
accordance with Canadian GAAP, which differs in certain significant respects
from U.S. GAAP. For a discussion of the principal differences between Canadian
GAAP and U.S. GAAP, see note 19 to the Corporation's audited consolidated
financial statements incorporated by reference herein.


                         SELECTED FINANCIAL INFORMATION

                                      AS AT OR FOR THE YEAR ENDED DECEMBER 31,
                                      ----------------------------------------
                                           2005                   2004
                                           ----                   ----
STATEMENT OF EARNINGS DATA             (CDN$000S EXCEPT PER SHARE  AMOUNTS)
Revenue from metal sales                  92,606                185,204
Net income                               (53,611)               (90,320)
Net income per Common Share
     -  basic                              (1.03)                 (1.79)
     -  diluted                            (1.03)                 (1.79)
BALANCE SHEET DATA
Total assets                             238,357                297,897
Total long-term debt (including           46,272                 50,171
current portion)
Shareholders' equity                     167,211                217,833


                          PRODUCTION AND OPERATING DATA

The following tables provide historical production and operating data for the
Lac des Iles mine for the periods indicated below:

                                          FOR THE YEAR ENDED DECEMBER 31
                                          ------------------------------
                                           2005                   2004
                                           ----                   ----

PRODUCTION DATA
Ore milled (tonnes)                    4,780,599              5,298,544
Concentrate (tonnes)                      30,698                 45,652
Palladium (ounces)                       177,167                308,931
Platinum (ounces)                         18,833                 25,128
Gold (ounces)                             14,308                 25,679
Nickel (lbs)                           2,353,227              4,320,970
Copper (lbs)                           5,514,670              7,836,183
OPERATING DATA
Total throughput tonnes                4,780,599              5,298,544
Mill throughput (tpd)                     13,098                 14,517
Grade (g/t)                                 1.66                   2.41
Palladium recovery (%)                     69.6%                  75.2%
Palladium production (ounces)            177,167                308,931
Total cash costs (US$/ounce) (1)            $359                   $159

(1) Total cash costs including overhead and smelter treatment, refining and
freight costs net of by-product credits and net smelter royalty.

                                 USE OF PROCEEDS

The selling securityholders will receive the net proceeds from the sale of the
Underlying Shares sold under this Prospectus. The sale of Underlying Shares will
not result in any proceeds to the Corporation.


                                     - 17 -


The Corporation realized net proceeds of US$32,850,000 from the sale of the
Notes (after deducting the related offering expenses and placement agent fees)
and no proceeds from the sale of the Warrants. The Corporation has used or
intends to use the net proceeds realized from the sale of the Notes, and any
proceeds received upon exercise of the Warrants to complete the underground
development at its Lac des Iles mine (as further described in the AIF), to
advance the work on the Arctic Platinum Project (described below) in order to
earn up to a 50% and, in certain circumstances, 60% interest in certain
properties indirectly owned by Gold Fields Exploration B.V. ("GFBV") and for
general corporate purposes. The Arctic Platinum Project comprises certain mining
properties indirectly owned by GFBV. The Corporation has been granted an option
(the "Option") to earn up to a 50% and, in certain circumstances, a 60% interest
in the Arctic Platinum Project and will become the project operator. In order to
exercise the Option, the Corporation must spend U.S.$12.5 million, complete a
feasibility study and made a production decision as well as pay GFBV US$36
million or US$45 million to earn a 50% or 60% interest, respectively, through
the issuance of Common Shares (approximately 7.3 million Common Shares or 9.2
million Common Shares as the case may be) on or before August 31, 2008.

                           CONSOLIDATED CAPITALIZATION

Other than the issuance of 41,568 Common Shares to the employee registered
retirement savings plan, the issuance of 102,088 Common Shares upon the exercise
of options and the issuance of $35,000,000 principal amount of Notes, there have
been no material changes in the share and loan capitalization of the Corporation
which have occurred subsequent to the fiscal year ended December 31, 2005.

                         PRICE RANGE AND TRADING VOLUME

The Common Shares are listed for trading on the AMEX and TSX under the trading
symbols "PAL" and "PDL", respectively. The following table sets out the reported
high and low closing prices and trading volume of the Common Shares on the AMEX
and TSX for the periods indicated:



                                                         AMEX                                 TSX
                                            -------------------------------     -------------------------------
                                              HIGH      LOW       VOLUME          HIGH      LOW       VOLUME
                                            --------  -------  ------------     --------  -------  ------------
                                              (US$)    (US$)                     (CDN$)    (CDN$)
                                                                                   
2006
   April (through April 26, 2006)             12.29    10.80     7,925,200        14.20    12.31     1,172,472
   March                                      12.30     9.65    12,908,900        14.27    11.10     1,979,853
   February                                   12.39     9.60    12,223,900        14.10    11.21     2,140,121
   January                                    10.73     8.50     7,645,900        12.30     9.79     1,505,791

2005
   Fourth Quarter                              9.50     4.54    28,331,700        10.92     5.28     5,219,158
   Third Quarter                               5.51     4.22    11,154,300         6.78     5.12     2,122,365
   Second Quarter                              7.36     3.90    12,433,200         9.04     5.02     2,596,195
   First Quarter                               8.65     7.23    12,971,700        10.56     8.81     2,762,370

2004
   Fourth Quarter                              9.67     7.53    18,646,800        11.60     9.14     3,414,946
   Third Quarter                               9.55     6.32    12,484,000        12.49     8.34     2,267,677
   Second Quarter                             13.67     8.30    27,533,700        17.85    11.39     6,421,183
   First Quarter                              11.78     7.75    21,129,100        15.58     9.93     4,353,560


The last reported sale price of the Common Shares on April 26, 2006 was US$11.18
and Cdn$12.60 on the AMEX and TSX, respectively.


                                 DIVIDEND POLICY

The Corporation has not paid any dividends to date on the Common Shares. In
addition, the payment of dividends on the Common Shares is restricted under the
Corporation's credit facilities with a Canadian chartered bank and KFOC and
under the terms of the Securities Purchase Agreement. Accordingly, it is not
anticipated that the


                                     - 18 -


Corporation will pay any dividends on its Common Shares in the near future. The
actual timing, payment and amount of any dividends will be determined by the
board of directors from time to time based upon, among other things, cash flow,
results of operations and financial condition, the need for funds to finance
ongoing operations and such other business considerations as the board of
directors may consider relevant.


                          DESCRIPTION OF COMMON SHARES

The Corporation is authorized to issue an unlimited number of Common Shares.
Each Common Share entitles the holder thereof to one vote at all meetings of
shareholders other than meetings at which only the holders of another class or
series of shares are entitled to vote. Each Common Share entitles the holder
thereof, subject to the prior rights of the holders of special shares (none of
which are currently issued and outstanding), to receive any dividends declared
by the board of directors and the remaining property of the Corporation upon
dissolution. As of April 26, 2006, there were 52,340,873 Common Shares issued
and outstanding.

There are no pre-emptive or conversion rights that attach to the Common Shares.
All Common Shares now outstanding and to be outstanding upon issuance of the
Underlying Shares are, or will be, fully paid and non-assessable, which means
that the holders of such Common Shares will have paid the purchase price in full
and the Corporation cannot ask them to pay additional funds.

The Corporation's by-laws provide for certain rights of its shareholders in
accordance with the provisions of the CANADA BUSINESS CORPORATIONS ACT. Such
by-laws may be amended either by a majority vote of the shareholders or by a
majority vote of the board of directors. Any amendment of the by-laws by action
of the board of directors must be submitted to the next meeting of the
shareholders whereupon the by-law amendment must be confirmed as amended or
repealed by a majority vote of the shareholders voting on such matter.

Shareholders do not have cumulative rights for the election of directors.
Therefore, the holders of more than 50% of the Common Shares voting for the
election of directors could, if they choose to do so, elect all of the directors
and, in such event, the holders of the remaining Common Shares would not be able
to elect any directors.

The rights of holders of Common Shares may be adversely affected by the rights
of holders of any special shares that may be issued in the future.

                             SELLING SECURITYHOLDERS

The table below sets forth the name of each selling securityholder, the number
of Common Shares held by such selling securityholder as of April 26, 2006, the
percentage of the outstanding Common Shares that the Common Shares held by the
selling securityholder represents, the principal amount of the Notes held by the
selling securityholder, the number of Common Shares into which the Notes may be
converted, the number of Common Shares issuable if, instead of being converted
into Common Shares, the principal amount of the Notes was repaid in Common
Shares immediately upon issuance, and the number of Common Shares for which the
Warrants are exercisable.


                                     - 19 -



                                                                                     
------------------ ---------------- -------------- -------------------- -------------- --------------- ---------------
     SELLING        COMMON SHARES       % OF        PRINCIPAL AMOUNT       COMMON           COMMON      COMMON SHARES
 SECURITYHOLDER      OWNED AS OF     OUTSTANDING        OF NOTES           SHARES      SHARES ISSUABLE  ISSUABLE UPON
                   APRIL 26, 2006      COMMON                           ISSUABLE UPON        UPON        EXERCISE OF
                                       SHARES                           CONVERSION OF      IMMEDIATE     WARRANTS(1)
                                                                           NOTES(1)      REPAYMENT OF
                                                                                          PRINCIPAL
                                                                                          AMOUNT OF
                                                                                         NOTES(1)(2)
------------------ ---------------- -------------- -------------------- -------------- --------------- ---------------
Kaiser-Francis        26,080,319          50%         US$17.5 million      1,436,781      1,804,124        718,391
Oil Company
------------------ ---------------- -------------- -------------------- -------------- --------------- ---------------
IP Synergy                --              --          US$17.5 million      1,436,781      1,804,124        718,391
Finance Inc.
------------------ ---------------- -------------- -------------------- -------------- --------------- ---------------

(1)  Subject to certain adjustments.
(2)  Assumes that the principal amount of the Notes was repaid in Common Shares
     on March 29, 2006.

Because the selling securityholders may offer all or some of the Underlying
Shares from time to time and may acquire additional Common Shares in
satisfaction of interest payments due under the Notes, the Corporation cannot
estimate the number of Common Shares that will be held by the selling
securityholders upon the termination of any particular offering.

Only selling securityholders identified above who beneficially own the Notes set
forth opposite each such selling securityholder's name in the foregoing table on
the effective date of the registration statement, of which this Prospectus forms
a part, may sell Underlying Shares pursuant to the registration statement. Prior
to any use of this Prospectus in connection with an offering of the Underlying
Shares by any holder not identified above, the registration statement of which
this Prospectus forms a part will be amended by a post-effective amendment, or a
supplement to this Prospectus will be filed, if applicable, to set forth the
name and aggregate amount of Notes beneficially owned by the selling
securityholder intending to sell Underlying Shares and the number of Underlying
Shares to be offered.

The selling securityholders are incorporated, continued or otherwise organized
under the laws of a foreign jurisdiction or reside outside of Canada. Although
IPSF and KFOC have appointed Stikeman Elliott LLP, 5300 Commerce Court West, 199
Bay Street, Toronto, Ontario M5L 1B9, Attention: Simon A. Romano, and McMillan
Binch Mendelsohn, BCE Place, Suite 4400, Bay Wellington Tower, 181 Bay Street,
Toronto, Ontario M5J 2T3, Attention: H. Stewart Ash, respectively, as their
agent for service of process in the Province of Ontario, it may not be possible
for investors to collect from such selling securityholders judgment obtained in
Canadian courts predicated on the civil liability provisions of Canadian
securities legislation.

                              PLAN OF DISTRIBUTION

The Corporation has been advised by the selling securityholders that the selling
securityholders may sell all or a portion of the Underlying Shares beneficially
owned by them and offered hereby from time to time on any United States stock
exchange, market or trading facility on which the Common Shares are traded or in
private transactions in the United States. These sales may be at fixed or
negotiated prices. The selling securityholders may use any one or more of the
following methods when selling shares:

        o       ordinary brokerage transactions and transactions in which the
                broker-dealer solicits purchasers;
        o       block trades in which the broker-dealer will attempt to sell the
                Underlying Shares as agent but may position and resell a portion
                of the block as principal to facilitate the transaction;
        o       purchases by a broker-dealer as principal and resale by the
                broker-dealer for its account;


                                     - 20 -


        o       an exchange distribution in accordance with the rules of the
                applicable exchange;
        o       privately negotiated transactions;
        o       short sales;
        o       broker-dealers may agree with the selling securityholders to
                sell a specified number of Underlying Shares at a stipulated
                price per share;
        o       a combination of any such methods of sale; and
        o       any other method permitted pursuant to applicable law.

The selling securityholders may also sell shares under Rule 144 or Regulation S
under the U.S. Securities Act, if available, rather than under this Prospectus.

The selling securityholders may also engage in short sales against the box, puts
and calls and other transactions in the Corporation's securities or derivatives
of the Corporation's securities and may sell or deliver Underlying Shares in
connection with these trades.

Broker-dealers engaged by the selling securityholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling securityholders (or, if any broker-dealer acts as
agent for the purchaser of Underlying Shares, from the purchaser) in amounts to
be negotiated. The selling securityholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved. Any
profits on the resale of Underlying Shares by a broker-dealer acting as
principal might be deemed to be underwriting discounts or commissions under the
U.S. Securities Act. Discounts, concessions, commissions and similar selling
expenses, if any, attributable to the sale of Underlying Shares will be borne by
a selling securityholder. The selling securityholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the Underlying Shares if liabilities are imposed on that person under the
U.S. Securities Act.

The selling securityholders may from time to time pledge or grant a security
interest in some or all of the Underlying Shares owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the Underlying Shares from time to time under this
Prospectus after the Corporation has filed an amendment to this Prospectus under
the applicable provisions of the U.S. Securities Act amending the list of
selling securityholders to include the pledgee, transferee or other successors
in interest as selling securityholders under this Prospectus.

The selling securityholders also may transfer the Underlying Shares in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this Prospectus
and may sell the Underlying Shares from time to time under this Prospectus after
the Corporation has filed an amendment to this Prospectus under the applicable
provisions of the U.S. Securities Act amending the list of selling
securityholders to include the pledgee, transferee or other successors in
interest as selling securityholders under this Prospectus.

The selling securityholders and any broker-dealers or agents that are involved
in selling the Underlying Shares may be deemed to be "underwriters" within the
meaning of the U.S. Securities Act in connection with such sales. In such event,
any commissions received by such broker-dealers or agents and any profit on the
resale of the Underlying Shares purchased by them may be deemed to be
underwriting commissions or discounts under the U.S. Securities Act.

The Corporation has agreed to pay all fees and expenses incident to the
registration of the Underlying Shares, other than fees and disbursements of
counsel to the Selling Securityholders. The Corporation has agreed to indemnify
the selling securityholders against certain losses, claims, damages and
liabilities, including liabilities under the U.S. Securities Act.

The selling securityholders have advised the Corporation that they have not
entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of the Underlying Shares, nor
is there an underwriter or coordinating broker acting in connection with a
proposed sale of Underlying Shares by


                                     - 21 -



any selling securityholder. If the Corporation is notified by any selling
securityholder that any material arrangement has been entered into with a
broker-dealer for the sale of Underlying Shares, if required, the Corporation
will file a supplement to this Prospectus. If the selling securityholders use
this Prospectus for any sale of the Underlying Shares, they will be subject to
the Prospectus delivery requirements of the U.S. Securities Act.

The anti-manipulation rules of Regulation M under the U.S. Exchange Act may
apply to sales of the Underlying Shares and activities of the selling
securityholders.

                   CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

NON-RESIDENT HOLDERS

The following is a summary of the principal Canadian federal income tax
considerations generally applicable to a person (a "Non-Resident Holder"): (1)
who acquires Common Shares from a selling securityholder under this Prospectus,
(2) who at all relevant times, for purposes of the INCOME TAX ACT (Canada) (the
"Tax Act"), holds such Common Shares as capital property, and deals at arm's
length and is not affiliated with the Corporation or the selling securityholder,
(3) who, at all relevant times, for purposes of the Tax Act and any applicable
tax convention (i) is not, and is not deemed to be, a resident of Canada, (ii)
does not use or hold and is not deemed to use or hold the Common Shares in, or
in the course of, carrying on a business in Canada and (iii) does not carry on
an insurance business in Canada and elsewhere, and (4) whose Common Shares do
not constitute "taxable Canadian property" of the person for purposes of the Tax
Act. Provided that the Common Shares are listed on a prescribed stock exchange
(which includes the TSX and AMEX) at a particular time, the Common Shares will
generally not constitute "taxable Canadian property" to a Non-Resident Holder at
that time unless, at any time during the five-year period immediately preceding
that time, 25% or more of the issued shares of any class or series of a class of
the Corporation's capital stock was owned by the Non-Resident Holder, persons
with whom the Non-Resident Holder did not deal at arm's length or any
combination thereof. Notwithstanding the foregoing, in certain circumstances set
out in the Tax Act, Common Shares could be deemed to be taxable Canadian
property.

DIVIDENDS ON COMMON SHARES

Dividends on Common Shares paid or credited or deemed under the Tax Act to be
paid or credited to a Non-Resident Holder generally will be subject to Canadian
withholding tax at the rate of 25%, subject to any applicable reduction in the
rate of withholding in an applicable tax treaty where the Non-Resident Holder is
a resident of a country with which Canada has an income tax treaty. Where the
Non-Resident Holder is a U.S. resident entitled to benefits under the
CANADA-UNITED STATES INCOME TAX CONVENTION (1980) and is the beneficial owner of
the dividends, dividends on Common Shares generally will be subject to Canadian
withholding tax at the rate of 15%. If the Non-Resident Holder is a U.S.
resident company that owns at least 10% of the voting stock of the Corporation
and is the beneficial owner of the dividends, the Canadian withholding tax on
such dividends will be at the rate of 5%.

DISPOSITION OF COMMON SHARES

Provided that the Common Shares acquired by a Non-Resident Holder under this
Prospectus do not constitute "taxable Canadian property" of the Non-Resident
Holder at the time of disposition, the Non-Resident Holder will not be subject
to tax under the Tax Act in respect of any capital gain realized on a
disposition of Common Shares, nor will capital losses arising therefrom be
recognized under the Tax Act.

                 UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a general summary of certain United States federal income tax
considerations relating to the purchase, ownership and disposition of Common
Shares as of the date of this Prospectus Supplement. The discussion below is
based upon the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations, Internal Revenue Service (IRS) rulings and
judicial decisions as in effect as of the date hereof, all of which may be
repealed, revoked or modified (possibly with retroactive effect) so as to result
in United States federal income tax consequences different from those discussed
below.


                                     - 22 -



The summary is applicable to U.S. Holders (as defined below) (i) who are
residents of the United States for the purposes of the current Canada-United
States Income Tax Convention (the "Convention"), (ii) whose Common Shares would
not, for purposes of the Convention, be effectively connected with a permanent
establishment in Canada and (iii) who otherwise would qualify for the full
benefits of the Convention. Except where noted, it deals only with Common Shares
held as capital assets and does not deal with special situations, such as those
of brokers, dealers in securities or currencies, financial institutions,
tax-exempt entities or qualified retirement plans, insurance companies, persons
holding Common Shares as part of a hedging, integration, conversion or
constructive sale transaction or a straddle, partnerships and other pass-through
entities, persons owning (or who are deemed to own for United States federal
income tax purposes) 10% or more of the Corporation's stock (by vote or value),
traders who elect to mark-to-market their securities, persons whose "functional
currency" is not the United States dollar, or persons owning (either alone or
with others that they do not deal with at arm's length) 25% or more of the
issued shares of any class of the Corporation's capital stock within 5 years of
the disposition of Common Shares. This discussion also does not address any
United States federal income tax consequences to any person who owns an interest
in any entity that holds Common Shares. Furthermore, this summary does not
address alternative minimum taxes, or any aspect of foreign, state, local,
estate or gift taxation.

PERSONAL CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF COMMON SHARES
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY TAXING JURISDICTION.

As used herein, the term "U.S. Holder" means a beneficial holder of Common
Shares that is (i) an individual citizen or resident of the United States, (ii)
a corporation (or any entity that is treated as a corporation for U.S. federal
income tax purposes) created or organized under the laws of the United States or
any political subdivision thereof, (iii) an estate the income of which is
subject to United States federal income taxation regardless of its source, or
(iv) a trust (X) that is subject to the supervision of a court within the United
States and the control of one or more United States persons as described in
Section 7701(a)(30) of the Code or (Y) that has a valid election in effect under
applicable U.S. Treasury regulations to be treated as a United States person. A
"Non-U.S. Holder" is a beneficial holder of Common Shares that is not a U.S.
Holder.

The following discussion assumes that the Corporation is not a passive foreign
investment company. See "Passive Foreign Investment Company Rules" below for the
rules that would apply if the Corporation were a passive foreign investment
company.

DISTRIBUTIONS

The gross amount of any distribution received by a U.S. Holder with respect to
Common Shares (including amounts withheld to pay Canadian withholding taxes)
will be included in the gross income of such U.S. Holders, as a dividend, to the
extent attributable to current or accumulated earnings and profits, as
determined under United States federal income tax principles. The Corporation
has not paid any dividends to date on its Common Shares and has not calculated
its earnings and profits under United States federal income tax rules. Provided
that the Corporation is not treated as a passive foreign investment company,
described below, the Corporation believes that it is considered to be a
"qualified foreign corporation," and therefore distribution to non-corporate
U.S. Holders that are treated as dividends should qualify for a reduced rate of
tax for dividends received in taxable years beginning on or before December 31,
2008. Dividends on Common Shares generally will not be eligible for the
dividends received deduction allowed to corporations under the Code.

The amount of any dividend paid in Canadian dollars (including amounts withheld
to pay Canadian withholding taxes) will equal the Unites States dollar value of
the Canadian dollars calculated by reference to the exchange rate in effect on
the date the dividend is received by the U.S. Holder regardless of whether the
Canadian dollars are converted into United States dollars. If the Canadian
dollars received as a dividend are converted into United States dollars on the
date of receipt, the U.S. Holder generally should not be required to recognize
foreign currency gains or losses in respect of the dividend income. If the
Canadian dollars received as a dividend are not converted into United States
dollars on the date of receipt, a U.S. Holder will have a tax basis in the
Canadian dollars equal to their United States dollar value on the date of
receipt. Any gain or loss realized on a subsequent conversion or other
disposition of the Canadian dollars by a U.S. Holder will be treated as United
States source ordinary income or loss.


                                     - 23 -


The maximum rate of Canadian withholding tax on dividends paid to a U.S. Holder
pursuant to the Convention is 15 percent. A U.S. Holder may be entitled to
deduct or credit such tax, subject to applicable limitations in the Code. For
purposes of calculating the foreign tax credit, dividends paid on the Common
Shares will be treated as income from foreign sources and will generally
constitute "passive income" or, in the case of certain U.S. Holders, "financial
services income". Special rules apply to certain individuals whose foreign
source income during the taxable year consists entirely of "qualified passive
income" and whose creditable foreign taxes paid or accrued during the taxable
year do not exceed US$300 (US$600 in the case of a joint return). Further, in
certain circumstances, a U.S. Holder that (i) has held Common Shares for less
than a specified minimum period during which it is not protected from risk of
loss or (ii) is obligated to make payments related to the dividends, will not be
allowed a foreign tax credit for foreign taxes imposed on dividends paid on
Common Shares. The rules governing the foreign tax credit are complex. U.S.
Holders are urged to consult their tax advisors regarding the availability of
the foreign tax credit under their particular circumstances.

To the extent that the amount of any distribution exceeds the Corporation's
current and accumulated earnings and profits for a taxable year, the
distribution will first be treated as a tax-free return of capital, causing a
reduction in the adjusted tax basis of the Common Shares with regard to which
the distribution was made, and to the extent in excess of such basis, will be
treated as gain from the sale or exchange of such Common Shares.

Subject to the discussion below under "Information Reporting and Backup
Withholding", a Non-U.S. Holder generally will not be subject to U.S. federal
income tax or withholding tax on dividends received, unless the income is
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business in the United States.

SALE, EXCHANGE OR OTHER DISPOSITION

For United States federal income tax purposes, a U.S. Holder will recognize
taxable gain or loss on any sale, exchange or other taxable disposition of
Common Shares in an amount equal to the difference between the amount realized
for the Common Shares and the U.S. Holder's adjusted tax basis in the Common
Shares. Such gain or loss will be capital gain or loss. Capital gains of
non-corporate U.S. Holders derived with respect to capital assets held for more
than one year are eligible for reduced rates of taxation. The deductibility of
capital losses is subject to limitations. Any capital gain or loss recognized by
a U.S. Holder will generally be treated as United States source gain or loss for
United States foreign tax credit purposes.

Subject to the discussion below under "Information Reporting and Backup
Withholding", a Non-U.S. Holder generally will not be subject to U.S. federal
income tax or withholding tax on any gain realized on the sale or exchange of
Common Shares unless (i) such gain is effectively connected with the conduct by
the Non-U.S. Holder of a trade or business in the United States or (ii) in the
case of any gain realized by an individual Non-U.S. Holder, the holder is
present in the United States for 183 days or more in the taxable year of the
sale or exchange and certain other conditions are met.

PASSIVE FOREIGN INVESTMENT COMPANY RULES

Special rules are applicable to U.S. Holders owning shares in a "passive foreign
investment company" (a "PFIC"). A foreign corporation will generally be
classified as a PFIC for United States federal income tax purposes if at least
75% of its gross income for the taxable year is passive income, or if at least
50% of the average value of its assets during the taxable year consists of
assets that produce, or are held for the production of, passive income,
determined on the basis of a quarterly average. In determining whether a foreign
corporation is a PFIC, if the foreign corporation owns directly or indirectly
25% or more (by value) of the stock of another corporation, the foreign
corporation is treated as if it (i) held its proportionate share of the assets
of such other corporation, and (ii) received directly its proportionate share of
the income of such other corporation. In general, "passive income" includes
dividends, interest, certain rents and royalties and the excess of gains over
losses from certain commodities transactions, including transactions involving
gold and other precious metals. However, gains and losses from commodities
transactions generally are excluded from the definition of passive income if (i)
such gains or losses are derived by a foreign corporation in the active conduct
of a commodity business, and (ii) "substantially all" of such corporation's
business is as an active producer, processor, merchant, or handler of
commodities of like kind (the "active commodities business exclusion").


                                     - 24 -


Based on the nature of the Corporation's income, assets and activities, the
Corporation believes that it presently qualifies, and expects to continue to
qualify in the future, for the active commodities business exclusion and that
the Corporation will not be classified as a PFIC for the current and subsequent
taxable years. However, because the PFIC determination is made annually on the
basis of facts and circumstances that may be beyond the Corporation's control
and because the principles and methodology for applying the PFIC tests are not
entirely clear, including the active commodities business exclusion, there can
be no assurance that the Corporation will not be a PFIC in the current or
subsequent taxable years.

If the Corporation were a PFIC in any taxable year and a U.S. Holder held Common
Shares, such shareholder generally would be subject to special rules with
respect to "excess distributions" made by the Corporation on the Common Shares
and with respect to gain from the disposition of Common Shares. An "excess
distribution" generally is defined as the excess of distributions with respect
to the Common Shares received by a U.S Holder in any taxable year over 125% of
the average annual distributions such U.S. Holder has received from the
Corporation during the shorter of the three preceding years, or such U.S.
Holder's holding period for the Common Shares. Generally, a U.S. Holder would be
required to allocate any excess distribution or gain from the disposition of the
Common Shares rateably over its holding period for the Common Shares. Such
amounts would be taxed as ordinary income and amounts allocated to prior taxable
years would be subject to an interest charge at a rate applicable to
underpayments of tax.

If the Corporation were a PFIC in any taxable year, then a qualified U.S. Holder
may be able to make a mark-to-market election that may alleviate certain of the
tax consequences referred to above. U.S. Holders are urged to consult their tax
advisors regarding the tax consequences which would arise if the Corporation
were treated as a PFIC for any year.

CONTROLLED FOREIGN CORPORATION STATUS

Because the Corporation is classified as a controlled foreign corporation for
U.S. federal income tax purposes, special rules apply to U.S. persons who own,
actually or constructively, 10% or more of the voting power of the Corporation's
capital stock. U.S. Holders who own 10% or more of the voting power of the
Corporation's capital stock should consult their own tax advisors to determine
the application of the controlled foreign corporation rules to them, and the
interaction of the passive foreign investment company rules, described above,
and the controlled foreign corporation rules.

INFORMATION REPORTING AND BACKUP WITHHOLDING

In general, information reporting requirements will apply to the payment of
dividends of the Common Shares or the proceeds received on the sale, exchange,
or redemption of Common Shares paid within the United States (and in certain
cases, outside the United States) to holders other than certain exempt
recipients (such as corporations, Non-U.S. Holders that provide appropriate
certification, and certain other persons). In addition, a backup withholding tax
(currently imposed at a rate of 28% for years through 2010) may apply to such
amounts if the holder fails to provide an accurate taxpayer identification
number, or is notified by the IRS that it has failed to report dividends
required to be shown on its federal income tax returns. The amount of any backup
withholding from a payment to a U.S. Holder will generally be allowed as a
credit against the U.S. Holder's United States federal income tax liability, and
may entitle such holder to a refund, provided that the required information is
provided to the IRS in a timely manner.

Non-U.S. Holders generally are not subject to backup withholding with regard to
dividends paid on, or the proceeds of, the Common Shares, provided that the
Non-U.S. Holder provides a taxpayer identification number, certifies its foreign
status or otherwise establishes an exemption from such requirements.

THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX
CONSEQUENCES RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE COMMON
SHARES. EACH PROSPECTIVE INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISOR
CONCERNING THE TAX CONSEQUENCES OF ITS PARTICULAR SITUATION.


                                     - 25 -



                                    AUDITORS

The Corporation's auditors are KPMG LLP, Chartered Accountants, Yonge Corporate
Centre, Suite 200, 4100 Yonge Street, Toronto, Ontario M2P 2H3 for the two year
period ended December 31, 2005 and Ernst & Young LLP, Chartered Accountants,
Ernst & Young Tower, 222 Bay Street, Toronto-Dominion Centre, Toronto, Ontario
M5K 1J7 for the year ended December 31, 2003.

                                 TRANSFER AGENT

Computershare Investor Services Inc. is the registrar and transfer agent of the
Common Shares in Canada and Computershare Trust Company, Inc. is the registrar
and co-transfer agent for the Common Shares in the United States.

                                  LEGAL MATTERS

Certain legal matters in connection with the securities offered hereby will be
passed upon for the Corporation by Gowling Lafleur Henderson LLP, Toronto,
Ontario with respect to matters of Canadian law, and Skadden, Arps, Slate,
Meagher & Flom LLP, Toronto, Ontario with respect to matters of U.S. law. As of
the date hereof, the partners and associates of Gowling Lafleur Henderson LLP
own, directly or indirectly, in the aggregate, less than 1% of the Corporation's
outstanding Common Shares.

                              AVAILABLE INFORMATION

The Corporation has filed with the SEC a registration statement on Form F-10
with respect to the Underlying Shares. This Prospectus does not contain all the
information set forth in the registration statement. For further information
about the Corporation and the Underlying Shares, please refer to the
registration statement.

The Corporation is subject to the information requirements of the U.S. Exchange
Act and applicable Canadian securities legislation, and in accordance therewith
it files reports and other information with the SEC and with the securities
regulators in the Province of Ontario. Under the MJDS, the Corporation generally
may prepare these reports and other information in accordance with the
disclosure requirements of Canada, which requirements are different from those
of the United States. As a foreign private issuer, the Corporation is exempt
from the rules under the U.S. Exchange Act prescribing the furnishing and
content of proxy statements, and the Corporation's officers, directors and
principal shareholders are exempt from the reporting and short-swing profit
recovery provisions contained in Section 16 of the U.S. Exchange Act. In
addition, the Corporation is not required to publish financial statements as
promptly as U.S. companies.

Investors may read and copy any document the Corporation files with the SEC at
the public reference room of the SEC at 100 F Street, N.E., Washington, D.C.
20549. Investors may also obtain copies of the same documents from the public
reference room of the SEC in Washington by paying a fee. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. The SEC
also maintains a web site (www.sec.gov) that makes available reports and other
information that the Corporation files electronically with it, including the
registration statement it has filed with respect to this offering.

Investors are invited to read and copy any reports, statements or other
information that the Corporation files with the OSC or other similar regulatory
authorities at their respective public reference rooms. These filings are also
electronically available from SEDAR at (www.sedar.com). Reports and other
information about the Corporation are also available for inspection at the
offices of the TSX.


                                     - 26 -


              DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT

The following documents have been filed with the SEC as part of the registration
statement of which this Prospectus forms a part: (1) the documents listed under
"Documents Incorporated by Reference"; (2) the consent of KPMG LLP; (3) the
consent of Ernst & Young LLP; (4) the consent of Roscoe Postle Associates Inc.
and certain of its "qualified persons" under National Instrument 43-101 adopted
by the OSC, Messrs. Graham G. Clow, James W. Hendry, Luke Evans and Richard E.
Routledge; and (5) the powers of attorney from the directors and certain
officers of the Corporation.




                                     - 27 -


                                     PART II

       INFORMATION NOT REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS


INDEMNIFICATION.

        Section 124 of the CANADA BUSINESS CORPORATION ACT, as amended ("CBCA"),
provides as follows:

        1.      INDEMNIFICATION. A corporation may indemnify a director or
officer of the corporation, a former director or officer of the corporation or
another individual who acts or acted at the corporation's request as a director
or officer, or an individual acting in a similar capacity, of another entity,
against all costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgment, reasonably incurred by the individual in respect
of any civil, criminal, administrative, investigative or other proceeding in
which the individual is involved because of that association with the
corporation or other entity.

        2.      ADVANCE OF COSTS. A corporation may advance moneys to a
director, officer or other individual for the costs, charges and expenses of a
proceeding referred to in subsection (1). The individual shall repay the moneys
if the individual does not fulfill the conditions of subsection (3).

        3.      LIMITATION. A corporation may not indemnify an individual under
subsection (1) unless the individual:

                (a)     acted honestly and in good faith with a view to the best
        interests of the corporation, or, as the case may be, to the best
        interests of the other entity for which the individual acted as director
        or officer or in a similar capacity at the corporation's request; and

                (b)     in the case of a criminal or administrative action or
        proceeding that is enforced by a monetary penalty, the individual had
        reasonable grounds for believing that the individual's conduct was
        lawful.

        4.      INDEMNIFICATION IN DERIVATIVE ACTIONS. A corporation may with
the approval of a court, indemnify an individual referred to in subsection (1),
or advance moneys under subsection (2), in respect of an action by or on behalf
of the corporation or other entity to procure a judgment in its favour, to which
the individual is made a party because of the individual's association with the
corporation or other entity as described in subsection (1) against all costs,
charges and expenses reasonably incurred by the individual in connection with
such action, if the individual fulfils the conditions set out in subsection (3).

        5.      RIGHT TO INDEMNITY. Despite subsection (1), an individual
referred to in that subsection is entitled to indemnity from the corporation in
respect of all costs, charges and expenses reasonably incurred by the individual
in connection with the defence of any civil, criminal, administrative,
investigative or other proceeding to which the individual is subject because of
the individual's association with the corporation or other entity as described
in subsection (1), if the individual seeking indemnity:

                (a)     was not judged by the court or other competent authority
        to have committed any fault or omitted to do anything that the
        individual ought to have done; and

                (b)     fulfils the conditions set out in subsection (3).

        6.      INSURANCE. A corporation may purchase and maintain insurance for
the benefit of an individual referred to in subsection (1) against any liability
incurred by the individual

                (a)     in the individual's capacity as a director or officer of
        the corporation; or

                (b)     in the individual's capacity as a director or officer,
        or similar capacity, of another entity, if the individual acts or acted
        in that capacity at the corporation's request.

                                      II-1


        7.      APPLICATION TO COURT. A corporation, an individual or an entity
referred to in subsection (1) may apply to a court for an order approving an
indemnity under this section and the court may so order and make any further
order that it sees fit.

        8.      NOTICE TO DIRECTOR. An applicant under subsection (7) shall give
the Director notice of the application and the Director is entitled to appear
and be heard in person or by counsel.

        9.      OTHER NOTICE. On an application under subsection (7) the court
may order notice to be given to any interested person and the person is entitled
to appear and be heard in person or by counsel.

        Subject to the limitations contained in the CBCA, the By-laws of the
Registrant provide that every director or officer of the Registrant, every
former director or officer of the Registrant or another individual who acts or
acted at the Registrant's request as a director or officer, or an individual
acting in a similar capacity, of another entity, and such person's heirs and
legal representatives shall, from time to time, be indemnified and saved
harmless by the Registrant from and against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment, reasonably
incurred by the individual in respect of any civil, criminal or administrative
action or proceeding in which such individual is involved because of that
association with the Registrant or other such entity if (i) he or she acted
honestly and in good faith and with a view to the best interests of the
Registrant, and (ii) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, such individual had
reasonable grounds for believing that his or her conduct was lawful.

        The Registrant maintains insurance for the benefit of its directors and
officers against liability in their respective capacities as directors and
officers except where the liability relates to the person's failure to act
honestly and in good faith and with a view to the best interests of the
Registrant. The directors and officers are not required to pay any premium in
respect of the insurance. The policy contains standard industry exclusions and
no claims have been made thereunder to date.

        Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers or persons controlling the Registrant pursuant to the foregoing
provisions, the Registrant has been informed that in the opinion of the U.S.
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.



                                      II-2


                                    EXHIBITS

EXHIBIT NO.    DESCRIPTION

    4.1        Annual Information Form of the Registrant for the fiscal year
               ended December 31, 2005, dated March 29, 2006.(1)
    4.2        Audited comparative consolidated financial statements of the
               Registrant and the notes thereto for the financial year ended
               December 31, 2005, together with the report of the auditors
               thereon, prepared in accordance with Canadian generally accepted
               accounting principles, and reconciled to United States generally
               accepted accounting principles in accordance with Item 18 of
               Form 20-F.(1)
    4.3        Management's Discussion and Analysis of the financial condition
               and results of operations of the Registrant for the fiscal year
               ended December 31, 2005. (1)
    4.4        Material change report, dated January 6, 2006.(2)
    4.5        Material change report, dated March 28, 2006.(3)
    4.6        Material change report, dated April 24, 2006 (4)
    5.1        Consent of KPMG LLP.
    5.2        Consent of Ernst & Young LLP.
    5.3        Consent of Roscoe Postle Associates Inc.*
    5.4        Consent of Graham G. Clow.*
    5.5        Consent of James W. Hendy.*
    5.6        Consent of Luke Evans.*
    5.7        Consent of Richard E. Routledge.*
    6.1        Powers of Attorney (included on the signature page of this
               Registration Statement).
------------
*       To be filed by amendment.
(1)     Incorporated by reference to the Registrant's Annual Report on Form 40-F
        for the fiscal year ended December 31, 2005, filed with the Commission
        on March 31, 2006.
(2)     Incorporated by reference to the Registrant's Report on Form 6-K,
        furnished to the Commission on January 9, 2006.
(3)     Incorporated by reference to the Registrant's Report on Form 6-K,
        furnished to the Commission on March 29, 2006.
(4)     Incorporated by reference to the Registrant's Report on Form 6-K,
        furnished to the Commission on April 24, 2006.


                                      II-3


                                    PART III

                  UNDERTAKING AND CONSENT TO SERVICE OF PROCESS


ITEM 1. UNDERTAKING.

        The Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to the securities registered pursuant to Form F-10 or to transactions
in such securities.

ITEM 2. CONSENT TO SERVICE OF PROCESS.

        (a)     Concurrently with the filing of this Registration Statement on
        Form F-10, the Registrant is filing with the Commission a written
        irrevocable consent and power of attorney on Form F-X.

        (b)     Any change to the name or address of the Registrant's agent for
        service of process shall be communicated promptly to the Commission by
        Amendment to Form F-X referencing the file number of this Registration
        Statement.




                                     III-1


                                   SIGNATURES

        Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-10 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Toronto, Province of Ontario, Canada on April 28,
2006.

                                       NORTH AMERICAN PALLADIUM LTD.


                                       By:  /s/ James D. Excell
                                            ------------------------------------
                                            Name:  James D. Excell
                                            Title: President and Chief Executive
                                                   Officer

                               POWERS OF ATTORNEY

KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that each officer or director of North
American Palladium Ltd. whose signature appears below constitutes and appoints
James D. Excell and Ian M. MacNeily, and each of them, with full power to act
without the other, his or her true and lawful attorneys-in-fact and agents, with
full and several power of substitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any or all amendments,
including post-effective amendments, and supplements to this Registration
Statement on Form F-10, and registration statements filed pursuant to Rule 429
under the Securities Act and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
they or he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or his or her or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed below by or on behalf of the following persons in the capacities
indicated on April 28, 2006



                                                                           
            SIGNATURE                          TITLE


/s/ James D. Excell
----------------------------------
James D. Excell                              President, Chief Executive Officer and Director
                                             (Principal Executive Officer)

/s/ Ian M. MacNeily
----------------------------------
Ian M. MacNeily                              Vice President Finance and Chief Financial Officer
                                             (Principal Financial Officer and Principal Accounting
                                             Officer)

/s/ Michael P. Amsden
----------------------------------
Michael P. Amsden                            Director


/s/ Steven R. Berlin
----------------------------------
Steven R. Berlin                             Director


                                     III-2



/s/ Andre J. Douchane
----------------------------------
Andre J. Douchane                            Chairman of the Board of Directors


/s/ Gregory J. Van Staveren
----------------------------------
Gregory J. Van Staveren                      Director








                                     III-3



                            AUTHORIZED REPRESENTATIVE


        Pursuant to the requirements of Section 6(a) of the Securities Act, the
Authorized Representative has duly caused this Registration Statement to be
signed on its behalf by the undersigned, solely in its capacity as the duly
authorized representative of North American Palladium Ltd. in the United States,
in the City of Tulsa, in the State of Oklahoma on April 28, 2006.


                                          Steven R. Berlin
                                          (Authorized Representative)


                                          By: /s/ Steven R. Berlin
                                              ----------------------------------
                                              Name:   Steven R. Berlin
                                              Title:  Director





                                     III-4



                                  EXHIBIT INDEX


EXHIBIT NO.    DESCRIPTION

    4.1        Annual Information Form of the Registrant for the fiscal year
               ended December 31, 2005, dated March 29, 2006.(1)
    4.2        Audited comparative consolidated financial statements of the
               Registrant and the notes thereto for the financial year ended
               December 31, 2005, together with the report of the auditors
               thereon, prepared in accordance with Canadian generally accepted
               accounting principles, and reconciled to United States generally
               accepted accounting principles in accordance with Item 18 of
               Form 20-F.(1)
    4.3        Management's Discussion and Analysis of the financial condition
               and results of operations of the Registrant for the fiscal year
               ended December 31, 2005. (1)
    4.4        Material change report, dated January 6, 2006.(2)
    4.5        Material change report, dated March 28, 2006.(3)
    4.6        Material change report, dated April 24, 2006 (4)
    5.1        Consent of KPMG LLP.
    5.2        Consent of Ernst & Young LLP.
    5.3        Consent of Roscoe Postle Associates Inc.*
    5.4        Consent of Graham G. Clow.*
    5.5        Consent of James W. Hendy.*
    5.6        Consent of Luke Evans.*
    5.7        Consent of Richard E. Routledge.*
    6.1        Powers of Attorney (included on the signature page of this
               Registration Statement).
------------
*       To be filed by amendment.
(1)     Incorporated by reference to the Registrant's Annual Report on Form 40-F
        for the fiscal year ended December 31, 2005, filed with the Commission
        on March 31, 2006.
(2)     Incorporated by reference to the Registrant's Report on Form 6-K,
        furnished to the Commission on January 9, 2006.
(3)     Incorporated by reference to the Registrant's Report on Form 6-K,
        furnished to the Commission on March 29, 2006.
(4)     Incorporated by reference to the Registrant's Report on Form 6-K,
        furnished to the Commission on April 24, 2006.