North American Palladium Signs Option Agreement With Midland Exploration for Laflamme Gold Property

TORONTO, ONTARIO, Aug 27 (MARKET WIRE) --
North American Palladium Ltd. ("NAP" or the "Company") (TSX: PDL)(TSX:
PDL.WT)(NYSE Amex: PAL)(NYSE Amex: PAL.WS) has signed a Letter of
Agreement with Midland Exploration Inc. ("Midland") to earn an interest
in the Laflamme gold property. Strategically located between NAP's
Sleeping Giant gold mine and the Comtois gold deposit in Quebec's Abitibi
region, Laflamme consists of 410 claims covering a surface area of
approximately 220 square kilometres west of Lebel-sur-Quevillon. Laflamme
offers excellent potential for gold mineralization. A recent study
conducted by the Ministere des Ressources naturelles et de la Faune du
Quebec ("MNRF") has identified a list of gold-bearing targets in major
structures that appear on the property. NAP's other properties in the
area include Discovery, Dormex, Cameron Shear, Flordin and Florence, for
which the Company has budgeted $2 million for exploration.

"This transaction is part of NAP's regional gold exploration strategy,
with the objective of leveraging Sleeping Giant's milling facilities,"
said William J. Biggar, the Company's President and CEO. "We remain on
target and on budget to put the Sleeping Giant gold mine into production
in Q4 2009."

NAP has the option to acquire a 50% interest in the Laflamme Property
over a period of four years for the following consideration:

- Cash payments totalling $100,000, including a $30,000 payment upon
signing;

- Exploration expenditures totalling $1 million over four years,
including $300,000 in work expenditures during the first year.

NAP will be the Operator. Following acquisition of the initial 50%
interest, NAP will have the option to acquire an additional 15% interest
upon delivery of a bankable feasibility study.

About North American Palladium: Re-engineering the Future

NAP is a precious metals company that owns the Lac Des Iles mine, which
produced platinum group metals for 15 years until October 2008 when it
was placed on temporary care and maintenance due to low metal prices.
Prior to the temporary shutdown, the mine had annual production of
270,000 ounces of palladium, 20,000 ounces of platinum and 20,000 ounces
of gold. The Company also owns and operates the Sleeping Giant gold mine
located in the Abitibi region of Quebec, which produced over 1 million
ounces of gold from 1988-2008 at an average grade of 11.44 g/t. NAP
expects gold production to resume in the fourth quarter of 2009 at an
annual rate of 50,000 ounces. NAP benefits from operating in a
politically stable jurisdiction with developed infrastructure and a
history of innovation and excellence in mining. Please visit www.nap.com
for more information.

Cautionary Statement on Forward-Looking Information

Certain information included in this press release, including any
information as to our future financial or operating performance,
exploration results, and other statements that express management's
expectations or estimates of future performance, constitute
"forward-looking statements" within the meaning of the 'safe harbor'
provisions of the United States Private Securities Litigation Reform Act
of 1995 and Canadian securities laws. The words "expect", "believe",
"will", "intend", "estimate" and similar expressions identify
forward-looking statements. Forward-looking statements are necessarily
based upon a number of estimates and assumptions that, while considered
reasonable by management, are inherently subject to significant business,
economic and competitive uncertainties, risks and contingencies. The
Company cautions the reader that such forward-looking statements involve
known and unknown risks, uncertainties and other factors that may cause
the actual financial results, performance or achievements of North
American Palladium to be materially different from the Company's
estimated future results, performance or achievements expressed or
implied by those forward-looking statements and that the forward-looking
statements are not guarantees of future performance. These statements are
also based on certain factors and assumptions. For more details on these
estimates, risks, assumptions and factors, see the Company's most recent
Form 40-F/Annual Information Form on file with the U.S. Securities and
Exchange Commission and Canadian provincial securities regulatory
authorities. In addition, there can be no assurance that the Company's
Lac des Iles or Sleeping Giant mines will be successfully restarted or
that other properties can be successfully developed. The Company
disclaims any obligation to update or revise any forward-looking
statements, whether as a result of new information, events or otherwise,
except as expressly required by law. Readers are cautioned not to put
undue reliance on these forward-looking statements.

Contacts:
North American Palladium Ltd.
Michel Bouchard
Vice President, Gold Division
450-449-0066
mbouchard@nap.com

North American Palladium Ltd.
Annemarie Brissenden
Director, Investor Relations
416-360-7971 Ext. 226
abrissenden@nap.com
www.nap.com

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