North American Palladium (AMEX:PAL) is a Canadian precious metal company focused on growing its production of palladium and gold in mining-friendly countries. The company, along with Stillwater Mining, is one of only two primary palladium producers in the world.

North American Palladium recently announced that it had restarted production at its flagship Lac des Iles mine in northwestern Ontario. This mine, which produced palladium since 1993, was shuttered in October 2008. Ore production from the Roby Underground zone at the Lac des Iles mine is expected to have increased on May 1 from 2,000 tons per day to 2,600 tons per day. In total, North American Palladium is expected to produce 140,000 ounces of palladium per year.

North American Palladium re-opened its huge palladium mine due to a sharp increase in the price of palladium this year. At current prices, the company will be able mine its palladium at a very nice profit. The price of palladium has moved up this year due to several factors.

On the demand side, there has been increasing demand for palladium (used in catalytic converters) from automakers globally. The demand for palladium has been especially strong in China where auto sales have been setting new records (for China) month after month. There has been increasing investment demand for palladium as well. Exchange traded funds, such as ETFS Physical Palladium Shares, which are backed by actual palladium, are popping up globally.

On the supply side, production of palladium – which is often produced as a by-product of nickel mining – has fallen. Problems at South African mines along with cutbacks at Russia’s Norilsk Nickel have curtailed palladium supplies greatly.

North American Palladium also owns and operates the Sleeping Giant gold mine which is located in the prolific Abitibi region of Quebec. The mine produced over 1 million ounces of gold before being put on care and maintenance in 2008 by IAMGOLD.