Pitkäjärvi trans-loading terminal:
-
At the Pitkäjärvi 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 continuing support of Standard Bank Plc ("Standard Bank") through the Cost Overrun Facility of USD 40 million signed in May 2012, and the Letter of 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 the Kaunisvaara project and thereby generate revenues during the first quarter of 2013.
The Company is negotiating with several parties concerning the financing of rail cars and harbor equipment, which would decrease Northland''s investments in Capex.
At the end of October, the Value of Work Done for the Kaunisvaara Project was USD 645 million.
The third Cost-to-Complete ("CTC") test will be conducted during the Royal Haskoning DHV (formerly known as Turgis) planned site visit late in November. Royal Haskoning DHV is required, according to the bond agreement, to monitor if Northland has enough available financing sources to complete the first part of construction in the Kaunisvaara area, the Logistics chain through the port of Narvik and to verify if the project is progressing according schedule.
Nasdaq OMX Stockholm has decided to enable access to the Northland share through its Multilateral Trading Facility ("MTF"). Northland will maintain its formal listings on Toronto Stock Exchange ("TSX") and Oslo Børs ("OSL"), and this will not have any effect for those who already trade Northland shares on these markets. Northland''s ticker symbol on Nasdaq OMX Stockholm is NAURo and can be found under the First North NOK list and on the Company''s website.
The Kaunisvaara Project
Work at the Kaunisvaara site is progressing according to plan. The schedule for the Kaunisvaara Project remains unchanged with the start of concentrate production from the Tapuli Mine expected in November 2012 and with shipments of concentrate expected to begin early in the first quarter of 2013.
The primary crusher is now installed and the feeding of ore into the stockpile building has commenced. All major mechanical components are on site and installations are standing at 95% complete.
The truck workshop was completed at the end of October 2012 and the conveyor belts are installed from the Tapuli Mine to the process plant.
At the beginning of November, two haul trucks, one wheel loader, two dozers and one grader, had arrived at the mine site. Atlas Copco has delivered the second of the two ordered drill rigs. This equipment is already being used in the operation of the mine.
Northland Resources completed its ore first blast consisting of 90,000 tonnes of iron ore and 320,000 tonnes of waste rock.
The ore shed for the first Kaunisvaara process line has been completed and is operational and the ore shed for the second process line is 80% complete.
At the end of October, the process plant was connected to the permanent power supply from the Swedish power company Vattenfall Eldistribution AB ("Vattenfall").
In the process plant, the SAG/AG mill and VertiMills from Metso Corporation ("Metso") are assembled, including the electrical wiring. Cold commissioning is ongoing.
The out-loading/filter buildings and the construction of the electrical substation are complete.
The construction of water systems is close to complete. Piping works for the tailings dam are complete and electrical installation work is in progress.
Health & Safety
Lost Time Injury Frequency Rate ("LTIFR") according to the Swedish standard3 from the end of October 2011 until end of October 2012 was 4.33 (5.34 for the previous period that ended August 30).
The corresponding number according the international standard4 for the same period was 0.72 per 200,000 worked hours (previous period: 0.89).
There was 0 LTIFR incident reported for both the International and Swedish standards during this period, September 1-October 31 (July 1-August 31: 1).
A total of 85 near hits were reported for the same period (previous two-month period: 49). The increase is mainly due to a 40% increase of worked hours.
Pellivuoma
Pellivuoma is located approximately 15 km west of Sahavaara. The Company controls 100% of the exploration permit, which totals 11,346 hectares. The deposit constitutes potentially significant additional tonnage in the Kaunisvaara area.
Following a review of the ongoing definitive feasibility study ("DFS") work at Pellivuoma in early 2012, management modified the scope of the DFS to ensure that Pellivuoma is developed in the most cost-effective and financially-rewarding manner when combined with the existing Kaunisvaara mining and processing site. Potential scenarios include an increase in the production of high-grade concentrate or an extension of the life of the Kaunisvaara operation in combination with an increase of the production. The DFS is expected to be completed in the beginning of 2013.
Next Operational Update
The Operational Update for the period up to December/January 2012 will 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''s Discussion and Analysis for the period ending December 31, 2012, on February 12, 2013.
Karl-Axel Waplan, President & CEO, Northland Resources S.A.
Northland is set to become a producer of iron ore concentrate, with a portfolio of production, development and exploration mines and projects in northern Sweden and Finland. The first construction phase of the Kaunisvaara Project is nearing completion and production of concentrate is expected to start during November 2012. The Company will produce high-grade, high-quality magnetite iron concentrate in Kaunisvaara, Sweden, where the Company will exploit two magnetite iron ore deposits, Tapuli and Sahavaara. Northland has entered into off-take contracts with three partners for the entire production from the Kaunisvaara Project over the next seven to ten years. The Company is also preparing a Definitive Feasibility Study ("DFS") for its Hannukainen Iron Oxide Copper Gold ("IOCG") project in Kolari, northern Finland and for the Pellivuoma deposit, which is located 15 km from the Kaunisvaara processing plant.
Important Notice
Forward-Looking Statements
This announcement may include "forward-looking" statements within the meaning of applicable securities laws. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are expectations concerning, among other things, Northland Resources results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which it operates. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Readers are cautioned that forward-looking statements are not guarantees of future performance and that Northland Resources'' actual results of operations, financial condition and liquidity, and the development of the industry in which it operates may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if Northland Resources'' results of operations, financial condition and liquidity, and the development of the industry in which Northland Resources operates are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments 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 the accident. Reference period: 1 million worked hours.
4 International Lost Time Injury definition: Absence of three shifts or more from regular duty following the accident. Reference period: 200,000 worked hours.
