Scandinavia focused Northland Resources is probably the cheapest listed near production iron ore equity.

London based capital markets firm Ocean Equities said that Northland is an iron ore exploration and development company operating in northern Sweden and Finland. Its two major projects are the Kaunisvaara project in Sweden and the Hannukainen project in Finland.

In a definitive feasability study delivered in September, Kaunisvaara had total proven and probable resources of 176 million tonnes at 32.53% iron.

Meanwhile, resources at Hannukainen are 101 million tonnes at 33.8 percent iron in the measured category and nine million tonnes at 35 percent iron in the indicated category.

In a research note, Ocean Equities mining analyst Mr Sam Spring said that Northland presents a binary equity investment in that the company is either going to execute a proposed project financing or it will have to complete a significant-discounted equity raising.

Given the recent debt financings that have taken place by natural resource development and production companies, Ocean's Spring expects the former situation at which time the improvement in iron ore spot prices would also be reflected in Northland’s valuation.

Ocean Equities said the flagship Kaunisvaara project remains on track for first exports in early 2013 and is technically a low risk, high quality iron ore product project expected to ramp up to 5 millions tonnes per annum, located in a favourable mining jurisdiction.

Northland has already secured off-take contracts for 100% of future sales from the first seven to eight years of Kaunisvaara production, which Ocean's Spring expects to generate attractive margins, even at recent iron ore price lows, given the "high quality product spec’s (69% Fe with low impurities), payment structures in place and favorable capital costs".

At Northland's Hannukainen project, plans for the open pit operation to transition to an underground operation will be announced in the first quarter of 2012.

Mr Spring said that "The Hannukainen project is a brownfield deposit with extremely attractive operating cash costs in the initial years. We believe this will provide the next organic leg to Northland’s story as construction continues at Kaunisvaara."

(Sourced from www.proactiveinvestors.com)