Northland Resources SA announced the positive outcome of the Preliminary Economic Assessment on its 100% owned Hannukainen Iron Oxide Copper Gold Project located in northern Finland. Watts, Griffis and McOuat Limited, Consulting Geologists and Engineers of Toronto, Canada was responsible for the overall PEA and was supported by Hatch Engineering, Northland for various aspects of the study and an international accounting firm was engaged to assist with the development of the economic model.
Highlights of the PEA include
1. Using a discount rate of 8%, the Project has a potential Net Present Value of USD 471 million, an Internal Rate of Return of 32.5% and a 2.4 year payback period from first production.
2. Total Operating Cost per tonne of iron concentrate including Cu and Au credits, delivered FOB at the port of Kemi, Finland, is estimated to average USD 31.86 per tonne for the Life of Mine and averages US USD 26.35 over the first 10 years of operation. The OPEX figures include contingency, royalty, transport and port loading.
3. Capital expenditure to first production is estimated at USD 371 million and maximum negative cash is USD 382 million.
4. The updated Hannukainen mineral resources contained within a US 110 cents per dry metric tonne unit Iron price, 15% Fe cut off and within an optimized pitshell are 101 million tonnes Measured and 9 million tonnes Indicated for a total of 110 million tonnes grading 33.9%Fe and 0.17% Copper.
5. The PEA, based on a more conservative Fe pricing assumption of US 85 cents per dry metric tonne unit, 20% Fe cut off and within an optimized designed pit identified 75 million mineable tonnes of process plant feed at a grade of 35.7% Fe. This entire tonnage is classified as Measured and Indicated mineral resources.
6. The PEA envisions Hannukainen beginning production in 2014 with an estimated 14 year Mine Life based on the NI 43-101 defined surface mineable mineral resources at Hannukainen.
7. The production rate is planned at 2 million tonnes per year of Fe concentrate at approximately 69% Fe. In addition, significant value is derived from the production of a Copper or Gold concentrate which is a by product of the Fe processing. The Cu or Au concentrate is estimated to contain 25% Cu and 5.4 grams per tonne Au with 7.7 grams per tonne Au in the early years. The LOM average annual Cu or Au concentrate production is 35,000 tonnes per year.
8. Additional mineral resources were identified in areas that were not included in the PEA. An underground resource at Hannukainen was estimated at 88 million tonnes Inferred mineral resources grading 31.7% Fe at 20% Fe cut off. A new resource was defined at the nearby Kuervitikko deposit with Indicated mineral resources of 26 million tonnes grading 24% Fe and Inferred mineral resources of 19 million tonnes grading 22% Fe at a 15% Fe cut off.
9. WGM completed the mineral resource estimates for Hannukainen and Kuervitikko. Hatch, supported by Northland, developed the capital and operating costs. Raw Materials Group developed the Fe pricing assumptions and CRU Strategies developed the Cu pricing assumptions. An international accounting firm was engaged to assist with the development of the economic model. The final report will be posted on SEDAR within 45 days.
Mr Bill Wagener executive VP of Northland of Finland said that the results of the PEA demonstrate that the Hannukainen IOCG Project has the potential to be a financially rewarding project with robust operating margins and high rates of return.
Mr Karl Axel Waplan president and CEO of Northland Resources said that “We are pleased that the Company's portfolio now includes two iron projects with completed PEAs that indicate that the projects are technically and economically viable; the Kaunisvaara Iron Concentrate Project and now the Hannukainen IOCG Project. The priority of Northland is to complete the Feasibility Study currently underway on the Kaunisvaara Project and to secure financing for that project. With respect to Hannukainen, we will likely seek partners to participate in the project before proceeding to the Feasibility Study stage."
