News

June 24, 2008

Northland Resources Ought Now To Be Bullet Proof On Its Assumptions For Its Scandinavian Iron Ore Projects

By Rob Davies

Anyone who has built a large spreadsheet to model a company or a project is always aware of the potential for it to hide a tiny little error that might compromise the whole model. Usually such errors are not significant or are discovered in time. But unfortunately for Northland Resources it was only after a particularly diligent Norwegian investor asked a question that an error was exposed in the company’s recently published preliminary economic assessment (PEA) covering its three magnetite iron ore deposits in Scandinavia.

Northland Resources had to withdraw the report and spend two days going over the model in fine detail and then to ask consultants Wardell to do the same before it could finally sign off on a revised version last weekend. The net effects were two small negative revisions and one small increase in the earnings before interest and tax number. Importantly, there was no net overall effect on the three projects taken together, and they still offer payback in seven years, an internal rate of return of...