Northland Resources: Operational Update for the Kaunisvaara Project
November 14 2013 - 1:18AM
Marketwired Canada
Northland Resources S.A. (OSLO:NAUR)(FRANKFURT:NPK)(OMX:NAURo) (together with
its subsidiaries "Northland", "NRSA" or the "Company") publishes an operational
update for the Kaunisvaara project, including production figures for the third
quarter of 2013. Among other important milestones, the third Vertimill ("VTM")
has been installed and is operational. The Company is also expecting to have
completed the installment of the ship-loader and the unloading facilities at the
Port of Narvik during the fourth quarter of 2013.
Reference is made to the press release dated November 13, 2013 announcing that
the third quarter result will be postponed until November 28, 2013.
The following is an operational update of the Kaunisvaara Project.
Kaunisvaara Project
-- The first process line is now complete and operational with the third
VTM installed.
-- The second process line is expected to be completed and operational at
the end of Q3 2014. Metso recommenced their work on site in July.
-- Civil works at Sahavaara stockpile, water purification building and
Sahavaara conveyor foundations has recommenced.
Kaunisvaara Production
In December, 2012, Northland produced its first iron ore concentrate in the
process plant. During the three first quarters of 2013, the Company has
continued to ramp up production and hot commissioning is now close to
completion. The logistics chain has proven solid and the Company has
successfully delivered ten shiploads of iron ore concentrate to end customers.
Northland expects completion and hand over of the unloading station and ship
loader in the Port of Narvik during the fourth quarter of 2013.
-- At the end of September, Northland had produced a total of 589,000 dmt
of iron ore concentrate with 69 percent Fe-grade.
-- The Company plans to produce at least 1 million tonnes of iron ore
concentrate in 2013 and to reach the production rate of 4.0 dmtpa during
Q4 2014.
Mine and process plant
-- The first Kaunisvaara process line is in hot commissioning/production.
Full design capacity from the first processing line is expected to be
reached during Q4 2013.
-- The third VTM has been installed and is operational.
-- Northland is currently producing between 4,000 and 6,000 tonnes of iron
ore concentrate per day.
-- During the ongoing commissioning the quality of the iron ore concentrate
produced meets the specification achieved during the test works and the
project study, with the exception of moisture level, which has been
higher than the targeted 6%.
-- Limited access to the thickener in the process plant could lead to a
production shortfall of 15 000-20 000 tonnes per month during November
and December of 2013. However, actions have been taken to solve this.
-- Five haul trucks (CAT 793), two wheel loaders (CAT 994), one hydraulic
shovel(CAT 6060), 7 drill rigs (two CAT 980, two CAT D10, two Atlas
Copco D65, and one Atlas Copco PV-271), are currently in production at
the mine Atlas Copco has delivered the second out of the three drill
rigs (PV-271), and Pon Cat has delivered the second hydraulic shovel
(CAT 6060) which will be operational during the fourth quarter of 2013.
During the fourth quarter 2013, two additional haul trucks will be
delivered, securing the required capacity for the planned production
output.
Production during third quarter
Production report in tonnes '000 1Q 2Q 3Q YTD 9m
----------------------------------------------------------------------------
Mine
Ore to Concentrator WMT 682 942 914 2,538
Ore to Concentrator DMT 648 895 869 2,411
Average FE grade in % 18.4 18.9 23.1 20.6
0
Concentrate Produced WMT 146 212 276 634
Concentrate Produced DMT 135 197 256 589
Average FE grade in % 69.8 69.4 69.1 69.4
0
Port 0
Shipped Concentrate Weight WMT 54 168 318 540
Shipped Concentrate Weight DMT 50 157 297 504
Average FE grade in % 67.9 69.7 68.8 69.1
Summary:
The Fe grade during Q3 was lower than planned as mining positions have not been
fully met due to the lower production rate compared to budget for the first
three quarters.
During Q3, the process plant operated with only two VTM's. During the first two
months of the quarter, there were large variations in Fe-grade for the incoming
ore going through to the processing plant. This has affected production by
periodically high circulating loads in the VTM circuits. The quality of the
product has been consistently good except for the moisture level, which from
time to time has been above 7%.
The mine has managed to minimize variations of Fe grade of the ore during
September.
The third VTM was put into trial operation during the last week of Q3, 2013
which immediately resulted in a significantly higher production.
Kaunisvaara marketing and sales
-- Ten shipments totaling about 540,000 tonnes of iron ore concentrate had
been shipped to end customers by the end of Q3, 2013.
The logistics chain
-- The logistics chain is in most aspects working in accordance with
expectations and will be further enhanced in Q4, 2013, whereby the
relatively high inventory level in Kaunisvaara will be reduced.
-- Cliffton operates the truck transportations with a current fleet of 16
trucks. Five more trucks will be brought into operation during Q4, 2013
and additionally five trucks during February 2014
-- In order to reduce inventory in Kaunisvaara, Cliffton is in the process
of engaging external trucking capacity until all 90-ton trucks have been
delivered
-- The rented box cars were used until mid-October when the specially
designed rail cars from Kiruna Wagon were taken into operation.
-- At the end of Q3, 2013, 64 rail cars had been manufactured and a total
of 100 rail cars are expected to have been delivered by the end of the
year.
The Port
-- Narvik Ore Terminal is now operational. Final permit to use terminal
rail tracks has been given. Intermediate permit has been given to use
storage facilities and unloading facilities during commissioning. The
terminal is operated by Grieg Logistics AS.
-- Commissioning and take-over process from contractors will continue
during Q4, 2013.
-- The ship loader arrived at Narvik on September 4, 2013 and will become
operational during the Q4, 2013.
-- The unloading facilities have been completed during the month of October
2013.
-- The upgrading of the Fagernes line, from Narvik station to Narvik Ore
Terminal to handle 30 tonnes axle load is completed and in use. Minor
reconstruction works by Norwegian national rail administration
("Jernbaneverket") still remains in 2014. The preliminary Norwegian
state budget for 2014 was released in October, still to be decided by
the Norwegian parliament later in 2013. Jernbaneverket has on November
5, 2013, requested advanced payments during 2014 from Northland to cover
annual budgetary variations. This will, according to agreement, be
repaid to Northland in 2020-2022.
Organization
Northland Resources has completed the transition into becoming an operational
Mining Company. Since mid-2012 the Company has been staffed in all functions
required to produce high quality iron ore concentrate. During the Q4, 2012, the
Company started operations in the mine and went into hot commissioning,
producing iron ore concentrate. The period since, has been very intensive, but
successful from an operational perspective. The mine and the process plant are
currently in operation, producing iron ore concentrate 24/7 and the Company
continues to hire staff.
On September 12, 2013 it was announced that Johan Dagertun will replace Eva
Kaijser as CFO on November 15. Mr. Dagertun has held various positions in the
Company since 2010. His current position in the Company is VP Business
Development and Deputy COO. Due to the postponement of the third quarter result,
Eva Kaijser will keep her position as CFO until the third quarter results has
been published at the end of November.
By September 30, 2013, the total number of employees in the Company was 276.
Safety
Lost Time Injury Frequency Rate ("LTIFR"), according to the Swedish standard was
4.65 from the end of September 2012 until end of September 2013 (4.64 for the
previous period, i.e. end of June 2012 to June 2013). The corresponding number
according to the international standard for the same period was 0.77 per 200,000
worked hours (0.80 for the previous period)
There was 1 lost time injury ("LTI") reported, both according to international
and Swedish standards, during the third quarter, 2013 (in the previous quarter,
there were no LTIs according to Swedish and international standards
respectively). A total of 108 near hits were reported for the third quarter
(previous quarter: 107 near hits).
In October, the LTIFR was 6.70 according to Swedish standard and 1.0 according
to international standard. There were 2 LTI during October and 60 near hits.
Environment
24 environmental incidents were recorded during the third quarter, typically
minor oil spills, occurring within the industrial area as a consequence of
vehicle or mobile unit malfunctions. Routines are in place for collecting oil
spills and managing contaminated material appropriately. In October there were 6
environmental incidents.
A number of actions have been taken in order to address complaints and mitigate
the risk of dusting during transportation of the iron ore concentrate. In
Kaunisvaara, truck tracks inside the area as well as the exit have been paved
with asphalt in order to reduce the amount of concentrate that sticks to the
truck wheels and is released during the transport to Pitkajarvi. Wind breakers
have also been installed to reduce the risk of concentrate being carried by the
wind to surrounding areas. In Pitkajarvi, Northland has started spraying the
train wagons with a dust binding agent in order to further reduce the risk of
dusting during train transports up to Narvik. Equipment to measure dusting has
also been placed along the railroad to Narvik.
Permitting
The environmental permitting process for the Extended Kaunisvaara Operations
including the Sahavaara mine continues. A preliminary hearing was held by the
Environmental Court September 16-19, 2013. At the meeting, a need for additional
complementary information was identified. This is considered to be quite
extensive work and the due date for submission of new material to the court is
set to December 20, 2013. Consequently, the main court hearings will be
postponed to first quarter of 2014.
An extended mine concession covering the Southern extension of the Tapuli pit is
in the final stages of preparation.
Hannukainen and Pellivuoma DFS release
Northland is currently focusing on its current and planned production from the
Tapuli and Sahavaara deposit, in line with its business plan. Therefore the
finalization of the Pellivouma deposit DFS will not published in the near term.
The DFS report for Hannukainen is expected to be published during the first half
of 2014.
Northland is 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 complete and
production ramp-up started in November 2012. The Company expects to produce
high-grade, high-quality magnetite iron concentrate in Kaunisvaara, Sweden,
where the Company expects to 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.
Forward-Looking Information
This announcement may include "forward-looking" information within the meaning
of applicable securities laws. This forward-looking information 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. This forward-looking information includes all matters that are
expectations concerning, among other things, Northland's results of operations,
financial condition, liquidity, prospects, growth, strategies and the industry
in which it operates. By their nature, forward-looking information involves
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 information is not a guarantee of future performance and
that Northland's 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 information
contained in this press release. In addition, even if Northland's results of
operations, financial condition and liquidity, and the development of the
industry in which Northland operates are consistent with the forward-looking
information contained in this press release, those results or developments may
not be indicative of results or developments in subsequent periods.
FOR FURTHER INFORMATION PLEASE CONTACT:
Northland Resources S.A.
Jonas Lundström
Senior Vice President Corporate Communication
+46 705 49 33 38
Northland Resources S.A.
Johan Dagertun
VP Business Development & Deputy COO
+46 703 700 031
Northland Resources S.A.
Eva Kaijser
CFO
+46 709 320 901
Northland Resources S.A.
Petter Brunnberg
Investor Relations
+46 727 24 41 09
www.northland.eu
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