North American Palladium (TSX: PDL) and Cadiscor Resources (TSX-V: CAO) Tuesday announced they have entered into a friendly merger in which North American Palladium will acquire all of the outstanding common shares of Cadiscor.

Each Cadiscor shareholder will receive 0.33 shares of North American Palladium (NAP) for each common share of Cadiscor.

In a news release, NAP CEO William Biggar said the acquisition of Cadiscor will add additional gold to our significant palladium resources.  Our acquisition focus will continue to be gold with the objective of growing NAP to be a mid-tier precious metals producer operating in mining friendly jurisdictions.

Michael Bouchard, the CEO of Cadiscor, said NAP brings with it a strong balance sheet with the capacity to restart the Sleeping Giant Mine this year. Cadiscor acquire 100% ownership of the Quebec gold mine last October.

Sleeping Giant mined 63,000 ounces of gold last year and has produced a total of 968,000 ounces since it commenced production in 1988. Cadiscor also owns the Discovery advanced gold project, also in Quebec, as well as the Flordin and Cartwright deposits.

NAP has a resource of more than 3.7 million ounces of palladium at its Lac des Iles mine in Thunder Bay, which was placed on temporary care and maintenance in October 2008 due to low metal prices. NAP's mine personnel possess significant experience in developing and starting underground mines, which Cadiscor hopes to utilize at Sleeping Giant.

Prior to the shutdown Lac des Iles annually mined 270,000 ounces of palladium, 20,000 ounces of platinum, and 20,000 ounces of gold. It has measured and indicated mineral resources of 3.7 million ounces of palladium, 300,000 ounces of platinum and 250,000 ounces of gold. It is believed the mine can quickly be restarted when PGM prices improve.

If Cadiscor terminates the agreement, it will have to pay a break fee of $1 million. In February Cadiscor terminated another proposed business combination with Tiomin Resources (TSX: TIO). At the time Bouchard said, We are looking at other financing alternatives to finance the Sleeping Giant Mine production start-up. With the continued surge in gold price we are confident to obtain the financing to commence gold production from the Sleeping Giant Mine in 2009.

With the signing of the agreement, NAP has advanced $7.5 million to Cadiscor, the proceeds of which will be used by Cadiscor to bring Sleeping Giant back into production. Cadiscor will also gain one seat on NAP's board.