As Vancouver's Northland Resources (TSX: NAU) moves ahead to develop its Tapuli iron ore project, the company is also stepping up its marketing efforts to North American shareholders.
Revised figures for the project presented to analysts and investors Monday project a capex of €146.6 million (US$231.2 million) on a nine-year iron ore project that could produce its first iron ore concentrate in 2010 at the rate of 1 Mtpa increasing to 3 Mtpa in 2012..
However, Northland President Arden Buck Morrow told analysts and investors that permitting is the keystone to the development of Tapuli north of the Arctic circle in Sweden.
In 2004, NRI acquired a 100% interest in Anglo American Exploration's Swedish Pajala Properties which include the Tapuli deposit, which is believed to have total indicated resources of 54.4 million tonnes with an average trade of 27.7 % Fe. The deposit is situation 120 km east of the Kiruna-Malmberget iron ore mining district operated by Luossavaara-Kiirunavaara AB (LKAB).
Some infrastructure is already in place, but will require upgrading, according to Morrow. The Tapuli deposit is easily accessed from a network of roads. The closest towns are Pajala in Sweden and Kolari in Finland. Tapuli is in close proximity to the Finnish border. Both countries have a long history of mining with national geological surveys that have made substantial amounts of high quality exploration data available to the industry at essentially low cost.
Northland says it has sufficient cash to fund its program for three years. The company aims to become a producing European mining company in the next three to five years with iron, copper and gold production within the European market. Morrow told analysts and investors Monday that he expect Middle East iron ore demand to grow more than 13% over the next few years. Western Europe demand will remain plant, but the market is switching to iron ore pellets to reduce Europe's carbon footprint, he explained.
The total estimated capex for all three projects is €1.14 billion (US$1.8 billion). The project pipeline timeline include production of iron ore concentrate at Tapuli in 2010, production of pellets at Stora Sahavaara in Sweden by 2012, and the commencement of production at Hannukainen 2013-2014.
The Stora Sahavaara deposit is located close to the village of Kaunisvaara, 30km north of the town of Pajala, within the Pajala district of northern Sweden.
The Hannukainen deposit is located within the municipality of Kolari, 100km north of the Arctic Circle in northern Finland. Initially, the operation is planned to produce 1.0Mtpa of high grade iron ore pellets. In 2014 production will be increased to produce at a rate of 5.0Mtpa of high grade iron ore pellets.
Stora Sahavaara is viewed as a potential source of both blast furnace pellets and copper sulphide concentrates. Hannukainen is anticipated to produce DR pellets and a copper-gold sulphide concentrate.
Long term, the company hopes to produce a total of 13Mtpa of iron ore production from the three iron ore project.
Our iron and iron-copper-gold resources are within 10km of a maintained railway leading to ports in Finland, and within 10km of -or currently service by-power, roads, water and a tailings dam, according to the company. Swedish iron ore is significantly cheaper for European consumers due to lower shipping costs compared to southern hemisphere iron ore imports.
During Monday's conference call, Northland management said it is considering several strategic alternatives for its suite of three open-pit iron ore projects in Sweden and Finland including:
· Developing a deep water port at Calyx, Sweden
· Building a pellet plant outside of Sweden or Finland, or forming a joint venture for a pellet plants outside of the region. (No pellet processing plant is required for Tapuli production)
· Trade off and timing of an open-pit operation versus underground mining
· Optimizing ore processing using SAG or autogenous mills during the second stage of crushing.
The company has budgeted $48 million for development and exploration programs this year. A new vice president of exploration has also been hired, Morrow said Monday.
Morrow said 95% of Northland's shareholders are based in Europe, and the company completed its last two financings in Europe. However, this puts the company at a disadvantage with other North American iron ore development projects which are better known in Canadian and U.S. markets.
To remedy the situation, Northland has sought the help of two of its board members, Simon Ridgway and Ralph Ruston, both executives of Radius Gold, to help market the project's potential to both institutional investors and the steel industry. Rushton is based in Northland's Vancouver office while Morrow is based in Castle Rock, Colorado.