News Releases

 June 29, 2010
Hannukainen PEA Report Posted on SEDAR
 June 29, 2010 Northland Resources S.A. ("Northland" or "the Company") advises that the Final Report on the Preliminary Economic Assessment (PEA) on the Hannukainen Iron Oxide-Copper-Gold (IOCG) Project ("the Project") authored by Watts, Griffis and McOuat Limited ("WGM"), Consulting Geologists and Engineers of Toronto, Canada, has been posted on SEDAR (www.sedar.com). The separate report which contains the supporting documentation developed by Hatch Engineering (Hatch) has will be posted on the Northland website (www.northland.eu).

At full production the Hannukainen Project is projected to produce 2M tonnes per year of high quality pellet feed grade concentrate and variable amounts of copper/gold concentrate.

WGM's report concludes that "For the most part, WGM believes that the PEA is a conservative document for most areas in the conceptual design and costing of the mine and concentrator."

WGM commented that, "The results show a viable project worthy of being taken forward to feasibility. WGM believes that some of the key costs estimated in the PEA and used in the analysis will change favourably due to the conservative approach that has been taken in some areas. More favourable designs that will result as more information becomes available and basic engineering is advanced should favour the project economics."

In WGM's view, "The project mining schedule has been designed to mine the higher grade copper-gold areas in the early years. This not only takes advantage of the higher projected copper prices in the early years, but increases the project Internal Rate of Return ("IRR") and reduces the payback period."

In finalising its analysis, WGM prepared an Excel spreadsheet to examine the assumptions and conclusions in the PEA. The Model is based on the capital and operating costs contained in the PEA, and various data supplied to WGM by Northland. WGM has modified certain of the parameters, relative to the PEA results released on May 12, 2010, based on its experience, review of the project details and its professional opinions. In particular, WGM:

  • Developed a price forecast based on their view of the market,
  • Increased sustaining capital,
  • Reduced operating costs,
  • Added working capital and
  • Calculated a pre-tax and post-tax Net Cash Flow.
A comparison of the key results of the Pre-tax WGM analysis to the PEA results are summarized below (all amounts in USD except where noted).

Element WGM Analysis PEA Analysis Difference
Net Cash Flow $988 M $1,011 M $23 M
IRR 28.8% 32.5% 3.7%
Capex $509 M $474.5 M $34.5 M
Opex $1,318 M $1,492 M $174 M
Iron Ore Price ¢114.2 /dmtu ¢123.3 /dmtu ¢8.1 /dmtu
Working Capital Max $45 M Not Included  

In their report WGM noted that "Despite the more conservative analysis WGM considers the differences to be immaterial for this level of study." Northland agrees with this and views these differences as well within the +30% level of accuracy of the study.

WGM also modeled a number of sensitivities including modeling the WGM capital and operating assumptions against the price series used in the May 12, 2010 PEA producing the following results:

  • Net Cash Flow = $1,164 M
  • IRR = 33.7%
The Preliminary Assessment is preliminary in nature and includes Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the Preliminary Assessment will be realized.

The Qualified Person responsible for the technical content of this press release is Gordon Watts, P.Eng., Senior Associate Mineral Economist of WGM.

ON BEHALF OF THE BOARD
"Karl-Axel Waplan"
President & CEO
Northland Resources S.A.

For more information please contact:

Karl-Axel Waplan, President & CEO:  +46 705 104 239
Anders Hvide, Executive Chairman:  +47 92 88 98 58
Patrick Foster, Director Finance: +44 77 101 236 03
Marguerite Manshreck-Head, Investor Relations, Canada: +1 647 224 7882
 
 

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