Northland Resources Operational Update-November 2012
LUXEMBOURG, LUXEMBOURG, Nov 21, 2012 (Menafn - MARKETWIRE via COMTEX) --Northland Resources S.A. (frankfurt:NPK)(oslo:NAUR)(omx:NAURo) ("Northland" or the "Company") announces its fifthbi-monthly operational and construction update on the Kaunisvaaraproject. During this period, September 25 - November 21, Northlandcompleted its first ore blast, received dispensation for 90 tonnestrucks and completed the installation of the primary crusher, whichis now fully operational.
--The schedule for the Kaunisvaara project remains unchanged, with
concentrate production from the Tapuli Mine scheduled to commence at the
end of November 2012, with shipments of concentrate from the Port of
Narvik starting early in first quarter 2013.
--The first Kaunisvaara process line was 95% complete at the end of
October and remains on schedule.
--Cold commissioning of the process plant has commenced.
--The primary crusher is now installed and the feeding of ore into the
stockpile building has commenced.
--The first ore blast of 90,000 tonnes of iron ore and 320,000 tonnes of
waste rock was completed October 18.
--Dispensation was granted by the STA for the use of trucks with a gross
weight of 90 tonnes.
--The Company plans to produce 1.4 dmt(1) in 2013 and to reach the
production capacity of 4.0 dmtpa(2) in the beginning of third quarter of
2014.
THE MINE AND PROCESS PLANT
--The first Kaunisvaara process line is 95% complete, and remains on
schedule. The second Kaunisvaara process line is 56% complete as of
October 31. Cold commissioning is ongoing according to plan and with no
major issues reported.
--The Sahavaara mine and related investments are 35% complete.
--Work on the Tapuli primary crusher is complete and in-line with contract
scope.
--The truck workshop is now in use by PonCat.
--All works on the Tapuli stockpile building are complete.
--All works on the grizzly building are complete.
--Conveyor belts are installed from the Tapuli Mine to the process plant
through the grizzly building.
THE LOGISTICS CHAIN
--Northland has, together with Cliffton Mining ("Cliffton") and truck
manufacturer Scania AB ("Scania"), carried out trial runs with a vehicle
of 90 tonnes gross weight to optimize the future traffic flow on the
road between Kaunisvaara and Pitkajarvi. The trial runs were successful
and the Swedish Transport Administration ("STA") has now decided to
grant Northland dispensation to use trucks with a gross weight of 90
tonnes instead of the Swedish standard of 60 tonnes. The dispensation
applies from November 2012 until October 2013. The dispensation has to
be renewed each year in accordance with standard procedure. The build-
out of the logistics chain is on schedule for the commencement of
deliveries to customers early in the first quarter of 2013.
--Road and rail interchange work is on schedule.
--The Swedish government intends to invest in improved infrastructure in
the County of Norrbotten. Among other measures, new resources will be
allocated to increase the capacity of the Malmbanan, the "Ore Railway".
A further SEK 1.3 billion is earmarked for the road between Pajala and
Pitkajarvi/Svappavaara, along which Northland's iron ore concentrate
will be transported. 30 km has already been upgraded during 2012.
--Kiruna Wagon is currently manufacturing the railcars contracted by
Northland in accordance with the contracted time schedule. To allow for
a quicker production ramp-up, the Company will during an initial period
rent additional rail cars from a third party supplier.
Pitkajarvi trans-loading terminal:
--At the Pitkajarvi trans-loading terminal all road and restoration work
has been completed. The storage tent is expected to be completed during
November and operations are scheduled to start at the beginning/mid-
December 2012.
--All works associated with rail, electrification, signaling and telecoms
are complete.
The Port
--Construction of the Fagernes Terminal in the Port of Narvik remains on
schedule to handle shipments, starting early in the first quarter of
2013. The terminal will be operated by Grieg Logistics AS ("Grieg").
--Jetty construction is progressing according to plan and the construction
of the storage building commenced in September.
--Conveyors for moving concentrate into and out of bulk storage are
expected to be on site by end of December, 2012. Ship loader Phase II
engineering is nearing completion.
--Permits necessary for the temporary solution in the Port of Narvik are
either in place or nearing completion. Significant improvements have
been made to the project by moving the unloading station to the port
side of the area. The changed plans, however, have called for some
provisional solutions for unloading the trains and loading the vessels.
These solutions require further temporary permits which are now subject
to consultation and management is in constructive dialogue with the
Community. An adjustment to the existing local plan permit is required
to accommodate for the new ship-loader, the storage building, the
unloading facility and the heating station. The main concerns from the
community are dust and noise, which Northland does not expect to be a
problem as all of the facilities will be enclosed and comprehensive
cleaning and housekeeping procedures will be in place.
Financing
Northland Resources believes that, in combination with the continuingsupport of Standard Bank Plc ("Standard Bank") through the CostOverrun Facility of USD 40 million signed in May 2012, and the Letterof Intent ("LOI") signed with Stemcor Trade Finance Ltd ("Stemcor")whereby Stemcor intends to commit USD 50 million of working capital,the Company has sufficient funds to start production at theKaunisvaara project and thereby generate revenues during the firstquarter of 2013.
The Company is negotiating with several parties concerning thefinancing of rail cars and harbor equipment, which would decreaseNorthland's investments in Capex.
At the end of October, the Value of Work Done for the KaunisvaaraProject was USD 645 million.
The third Cost-to-Complete ("CTC") test will be conducted during theRoyal Haskoning DHV (formerly known as Turgis) planned site visitlate in November. Royal Haskoning DHV is required, according to thebond agreement, to monitor if Northland has enough availablefinancing sources to complete the first part of construction in theKaunisvaara area, the Logistics chain through the port of Narvik andto verify if the project is progressing according schedule.
Nasdaq OMX Stockholm has decided to enable access to the Northlandshare through its Multilateral Trading Facility ("MTF"). Northlandwill maintain its formal listings on Toronto Stock Exchange ("TSX")and Oslo Bors ("OSL"), and this will not have any effect for thosewho already trade Northland shares on these markets. Northland'sticker symbol on Nasdaq OMX Stockholm is NAURo and can be found underthe First North NOK list and on the Company's website.
The Kaunisvaara Project
Work at the Kaunisvaara site is progressing according to plan. Theschedule for the Kaunisvaara Project remains unchanged with the startof concentrate production from the Tapuli Mine expected in November2012 and with shipments of concentrate expected to begin early in thefirst quarter of 2013.
The primary crusher is now installed and the feeding of ore into thestockpile building has commenced. All major mechanical components areon site and installations are standing at 95% complete.
The truck workshop was completed at the end of October 2012 and theconveyor belts are installed from the Tapuli Mine to the processplant.
At the beginning of November, two haul trucks, one wheel loader, twodozers and one grader, had arrived at the mine site. Atlas Copco hasdelivered the second of the two ordered drill rigs. This equipment isalready being used in the operation of the mine.
Northland Resources completed its ore first blast consisting of90,000 tonnes of iron ore and 320,000 tonnes of waste rock.
The ore shed for the first Kaunisvaara process line has beencompleted and is operational and the ore shed for the second processline is 80% complete.
At the end of October, the process plant was connected to thepermanent power supply from the Swedish power company VattenfallEldistribution AB ("Vattenfall").
In the process plant, the SAG/AG mill and VertiMills from MetsoCorporation ("Metso") are assembled, including the electrical wiring.Cold commissioning is ongoing.
The out-loading/filter buildings and the construction of theelectrical substation are complete.
The construction of water systems is close to complete. Piping worksfor the tailings dam are complete and electrical installation work isin progress.
Health & Safety
Lost Time Injury Frequency Rate ("LTIFR") according to the Swedishstandard(3) from the end of October 2011 until end of October 2012was 4.33 (5.34 for the previous period that ended August 30).
The corresponding number according the international standard(4) forthe same period was 0.72 per 200,000 worked hours (previous period:0.89).
There was 0 LTIFR incident reported for both the International andSwedish standards during this period, September 1-October 31 (july1-august 31:1).
A total of 85 near hits were reported for the same period (previoustwo-month period:49). The increase is mainly due to a 40% increaseof worked hours.
Pellivuoma
Pellivuoma is located approximately 15 km west of Sahavaara. TheCompany controls 100% of the exploration permit, which totals 11,346hectares. The deposit constitutes potentially significant additionaltonnage in the Kaunisvaara area.
Following a review of the ongoing definitive feasibility study("DFS") work at Pellivuoma in early 2012, management modified thescope of the DFS to ensure that Pellivuoma is developed in the mostcost-effective and financially-rewarding manner when combined withthe existing Kaunisvaara mining and processing site. Potentialscenarios include an increase in the production of high-gradeconcentrate or an extension of the life of the Kaunisvaara operationin combination with an increase of the production. The DFS isexpected to be completed in the beginning of 2013.
Next Operational Update
The Operational Update for the period up to December/January 2012will be published on January 23, 2013.
Financial Statements and MD&A for the fourth quarter 2012
The Company will publish its Financial Statements and Management'sDiscussion and Analysis for the period ending December 31, 2012, onFebruary 12, 2013.
Karl-Axel Waplan, President & CEO, Northland Resources S.A.
Northland is set to become a producer of iron ore concentrate, with aportfolio of production, development and exploration mines andprojects in northern Sweden and Finland. The first construction phaseof the Kaunisvaara Project is nearing completion and production ofconcentrate is expected to start during November 2012. The Companywill produce high-grade, high-quality magnetite iron concentrate inKaunisvaara, Sweden, where the Company will exploit two magnetiteiron ore deposits, Tapuli and Sahavaara. Northland has entered intooff-take contracts with three partners for the entire production fromthe Kaunisvaara Project over the next seven to ten years. The Companyis also preparing a Definitive Feasibility Study ("DFS") for itsHannukainen Iron Oxide Copper Gold ("IOCG") project in Kolari,northern Finland and for the Pellivuoma deposit, which is located 15km from the Kaunisvaara processing plant.
Important Notice
Forward-Looking Statements
This announcement may include "forward-looking" statements within themeaning of applicable securities laws. These forward-lookingstatements can be identified by the use of forward-lookingterminology, including the terms "believes", "estimates","anticipates", "expects", "intends", "may", "will" or "should" or, ineach case, their negative, or other variations or comparableterminology. These forward-looking statements include all mattersthat are expectations concerning, among other things, NorthlandResources results of operations, financial condition, liquidity,prospects, growth, strategies and the industry in which it operates.By their nature, forward-looking statements involve risks anduncertainties because they relate to events and depend oncircumstances that may or may not occur in the future. Readers arecautioned that forward-looking statements are not guarantees offuture performance and that Northland Resources' actual results ofoperations, financial condition and liquidity, and the development ofthe industry in which it operates may differ materially from thosemade in or suggested by the forward-looking statements contained inthis press release. In addition, even if Northland Resources' resultsof operations, financial condition and liquidity, and the developmentof the industry in which Northland Resources operates are consistentwith the forward-looking statements contained in this press release,those results or developments may not be indicative of results ordevelopments in subsequent periods.
(1) Dry million tonnes
(2) Dry million tonnes per annum
(3) Lost Time Injury Swedish standard as adopted by SveMin members:Absence of one shift or more from regular duty following theaccident. Reference period: 1 million worked hours.
(4) International Lost Time Injury definition: Absence of threeshifts or more from regular duty following the accident. Referenceperiod: 200,000 worked hours.
Contacts:
Northland Resources S.A.
Karl-Axel Waplan
President and CEO
46 705 104 239
Northland Resources S.A.
Peder Zetterberg
Acting CFO
46 708 652 120
Northland Resources S.A.
Anders Antonsson
Vice President - Investor Relations
46 709 994 970
www.northland.eu
SOURCE: Northland Resources S.A.
http://www.northland.eu
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