Company Information for Northern Iron Limited

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ASX; NFE

Company Statement

Northern Iron is an Australian company headquartered in Perth which was formed to acquire the Sydvaranger Iron Project in northern Norway. Northern Iron intends to redevelop the Sydvaranger Iron Project to commence production of magnetite iron concentrate for supply into the European market. The Sydvaranger Iron Project encompasses:

Three magnetite deposits with JORC compliant resources (Bjørnevatn, Fisketind Øst, Kjellmannsåsen);
A further 20 prospects with known iron mineralisation, several of which have been mined previously; and
Various infrastructure requiring refurbishment including:
-        Primary crushers (subject to a purchase agreement);
-        Cobbing plant (subject to a purchase agreement);
-        Secondary and tertiary crushing building;
-        Concentrator facility including six mills and magnetic separators;
-        Rail facility and rolling stock; and
-        Ore storage silos.

Northern Iron’s development plan for the Sydvaranger Iron Project is based on utilising the existing infrastructure in order to commence production of a magnetite concentrate product as quickly as possible for the lowest capital cost. This strategy aims to provide investors in Northern Iron with direct exposure to iron ore prices within the next two years.

Current plans for the re-furbished mine are for the mining of 7Mtpa of ore to produce approximately 2.9Mtpa of concentrate grading 67.5% Fe over a 19 year mine life. Commissioning of the operation is expected in the June quarter of 2009 at a total pre-production capital cost (excluding mining fleet which is intended to be lease financed) of approximately US$100 million.

The medium term strategy for Northern Iron is to expand the production of the Sydvaranger Iron Project through exploration of the known iron mineralisation and to further improve economic returns through the potential development of a pelletising plant.

Current Operations

The Sydvaranger Iron Project consists of three magnetite iron deposits with JORC compliant resources (Kjellmannsåsen, Fisketind Øst and Bjørnevatn) and a further 20 prospects with known iron mineralisation located over a 12km strike length. The existing equipment and infrastructure to be refurbished at the site includes primary crushers and a cobbing plant (not currently owned by Northern Iron but are subject to a purchase agreement in favour of Sydvaranger Gruve), a concentrator and various related infrastructure.

Subject to the conditions outlined in this section, the redevelopment schedule envisages the recommencement of mining in the March quarter of 2009, followed by concentrate production in the June quarter of 2009. The critical path items for the restart of operations include the delivery and installation of three primary mills, the delivery of the mining fleet and the receipt of all permits and approvals required for mining and production, including government approval for the submarine disposal of tailings in Bjørkfjorden.

Sydvaranger Gruve has begun preparatory work for the redevelopment, including exploration drilling and planning for the refurbishment of the concentrator and crushers. Negotiations with a mineral processing company to carry out the refurbishment activities and to supply the new equipment have commenced. This work is ongoing and orders for the long lead items are expected to be placed in the December quarter of 2007.

Northern Iron has designed pits for each of the three deposits that have JORC compliant resources and has produced a mine schedule based on these mineral inventories. This has enabled an estimate of the mine fleet requirements to be completed, which will be used to negotiate equipment deliveries from suppliers.

The Sydvaranger Iron Project has an estimated mine life of 19 years at an annual production rate of 7 Mtpa of mill feed. After processing, this is expected to produce approximately 2.9Mtpa of magnetite concentrate. Northern Iron considers there to be strong potential to increase both the throughput and mine life at Sydvaranger through:

the conversion of known iron mineralisation to JORC compliant resources;
the conversion of the existing mineral inventory to a JORC compliant reserve;
the discovery of additional mineral inventory; and
open pit and underground mining studies.

The expected timing of the key work-streams for the redevelopment and commencement of concentrate production is shown in the figure below. Subject to approvals being in place, potential exists to recommence production on a smaller scale prior to the June quarter 2009 by using the existing mills on site. Northern Iron is carrying out a Detailed Mine Planning Study and a Plant Refurbishment Study as part of the redevelopment plan for the Sydvaranger Iron Project.

The Detailed Mine Planning Study will:

review the geotechnical inputs to determine if steeper slopes can be utilised in the mining of the proposed open pits;
incorporate the site geological, grade and survey data and results from drilling by Sydvaranger Gruve into resource models to upgrade to the Measured Resource and Indicated Resource categories where possible;
determine the optimal mine schedule;
determine the mine fleet requirements, preferred equipment suppliers and enable the negotiation of supply, lease and Maintenance and Repairs Contracts (‘MARC’); and
determine consumable requirements, preferred suppliers and enable the negotiation of contracts.

The Plant Refurbishment Study will:

review the cost and availability of appropriate crushing and milling equipment allowing for flexibility in the sizing of the respective machinery;
determine the preferred crusher and mill selection with respect to operating/capital cost and delivery time using a cost/benefit analysis;
complete a detailed design and engineering plan for plant refurbishment;
prepare tenders for long lead items such as crushers, mills and thickeners;
determine the style of the construction contract;
determine the timing to procure long lead items; and
determine consumable and utility requirements, preferred suppliers and enable the negotiation of contracts.

Concentrate production planned for June quarter 2009

Subject to:

receipt of necessary regulatory approvals and permits; and
progressive approvals by the Board of Northern Iron for various stages of development,
Northern Iron intends to re-commission the Sydvaranger Iron Project in the June quarter of 2009.

Geographical Spread

Norway

Board of Directors and Key Management

Neil Douglas Hamilton	Non-Executive Chairman
Mick McMullen	Managing Director
Peter Steiness Larsen	Non-Executive Director
Peter Ross Bilbe	Non-Executive Director
Felix Tschudi	Non-Executive Director
Ashwath Mehra	Non-Executive Director
David Charles Griffiths	Non-Executive Director

Company Address

Level 3, 3 Ord Street
West Perth, Australia 6005


Telephone:	+61 (08) 93219334
Facsimile:	+61 (08) 93219334
Email:	info[at]northerniron.com.au
Website:	http://www.northerniron.com.au

Capital

165 million fully paid shares and 4.3 million options as at 13 December

Year End

31 December

Major Shareholders

Tschudi Mining AS – 51.5%

Ashwath Mehra – 6%

Mick McMullen – 3%

Most Recent Statement

05/01/09 - OFFTAKE AGREEMENT WITH CORUS AND OPERATIONAL UPDATE
03/11/08 - Change of Director`s Interest Notice
27/10/08 - Quarterly Activities Report and Appendix 5B
17/10/08 - Change of Director`s Interest Notice
11/09/08 - Interim Financial Report - 30 June 2008
11/09/08 - INTERIM FINANCIAL REPORT 30 JUNE 2008

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