Baffin Island project given 20-year life span

Baffinland Iron Mines Corp. Feb. 19 released the results of a definitive feasibility study on its Mary River Project iron ore deposits located on Baffin Island, Nunavut.

The study outlined a 20-year mine project based on proven and probable reserves of 160 million metric tons and 205 million metric tons, respectively, and annual shipment of 18 million metric tons of high-grade iron ore (64.7 percent iron) primarily to the European market. A moisture content of two percent and a 75:25 lump-to-fines ratio are assumed and reflect metallurgical test work.

Baffinland said the project would have a capital cost C$4.1 billion with a contingency of C$438 million, the company said.

The pre-tax internal rate of return was calculated at 20.5 percent, with a payback period of 3.7 years, assuming iron ore prices about 40 percent below the 2008 benchmark, the study said.

Baffinland said the completion of the definitive feasibility study is a major milestone toward the development of a world class operation with direct shipping of iron ore deposits to European steel mills, and it results in significant reduction in project risk.

Further risk reduction is expected with the completion of a scoping study in the second quarter of 2008 that will demonstrate the scalability of the project by expanding output to 30 million metric tons per year based on the enormous resources delineated in Deposits 1, 2 and 3.

During the third quarter of 2008, further technical de-risking of the project is anticipated with the delivery of a bulk sample of 250,000 metric tons of lump and fine iron ore to certain European steel mills, according to Gordon McCreary, Baffinland's president and CEO.