Kaunisvaara

The Kaunisvaara project comprises the two iron ore deposits Sahavaara and Tapuli, located approximately 100 km north of the Arctic Circle in Norrbotten County, Sweden, in the municipality of Pajala and near the village of Kaunisvaara.

The project area lies 15 kilometres south of the Swedish/Finnish border, and within 150 kilometres of Western Europe’s two major iron mines, the Kiruna and Malmberget mines, both operated by LKAB. Geologically, both Sahavaara and Tapuli have similarities to the two LKAB mines with affinities to the IOCG class of deposits.

The Kaunisvaara Project has a number of favorable attributes. First, the Project will be producing a high grade 69% iron ore concentrate which can command a premium price. The Project is situated in a very favorable mining region with low political and legal risks.

The Project also benefits from access to established road, rail and port facilities together with the necessary power and other supplies. Last, the Kaunisvaara mine has a large proven and probable reserve base, a long production life and has a strong projected cash generation.

We already have in place off-take agreements for 100% of our production. Production will start in the fourth quarter of 2012 and the first shipment to the Port of Narvik will be made early 2013.

Northland will use already existing roads (150 km) and railway (226 km) from Kaunisvaara to the Port of Narvik. At the ice free Port of Narvik the Iron Ore Concentrate will be reloaded on Cape Size Vessels. On December 1, 2011 Northland received construction permit for a new iron ore terminal in Narvik, Norway. The terminal, which is expected to efficiently load vessels of up to 180,000 tonnes, will consist of a quay, an unloading facility for the railcars, a storage building and a ship loader.

Current mineral reserve estimates are sufficient to support a minimum life of the Kaunisvaara project of 19 years, which is expected to generate a strong cash flow. During 2010, Northland signed three off-take agreements for the production for at least 7 years, with Tata Steel, Stemcore and Standard Bank.

In September 2010, Northland published a Definitive Feasibility Study (DFS) on the Kaunisvaara project. The DFS demonstrated that the Kaunisvaara project stands to be financially rewarding with robust operating margins and high rates of return, as well as technically feasible. The DFS was updated in May 2011, confirming the logistical solution.

At the end of 2011, the Kaunisvaara project is on track and the first shipment is expected to reach the market early 2013.