Baffinland Iron Mines Corporation

Baffinland Iron Mines Corporation

September 10, 2007 08:56 ET

Baffinland Reports Significant Operational Progress

TORONTO, ONTARIO--(Marketwire - Sept. 10, 2007) –

Attention Business Editors:

Baffinland Iron Mines Corporation ("Baffinland" or the "Company")(TSX:BIM) reports significant progress in operations on its Mary River Project on Baffin Island. This news release has been prepared to update the marketplace with regard to the progress that Baffinland has made in 2007 to advance its Mary River Project, prior to the site visits this week by mining analysts from the brokerage industry and representatives of potential debt providers for the building of the project. In addition, later this month a Baffinland team will be hosting public meetings in several communities in the Baffin Region to discuss the Company's development plans. Consequently, this press release is publicly disclosing updated information about many important issues that are expected to be topics of discussions with both our site visitors and at the subsequent community meetings.

Baffinland's primary activities in 2007 can be broadly characterized as those in support of exploration, the bulk sample program and various studies. These studies include the Definitive Feasibility Study ("DFS"), the Scoping Study investigating expansion to 15 million tonnes per year and the Strategic "Blue Sky" Study looking at subsequent expansion to 25 million tonnes per year. The DFS remains on track for completion in December 2007 and the other studies remain scheduled for completion in the first quarter of 2008. "We expect the robust nature of our world class direct-shipping iron ore project to be confirmed by these studies" stated Gordon McCreary, President and CEO of Baffinland. He went on to state that "Although we have had some delays in advancing the bulk sample program, we are still targeting the delivery of up to 250,000 tonnes of lump and fines to several steel mills starting in third quarter of 2008. The high level of interest by the global steel industry in our Mary River Project suggests that the bulk sample will be oversubscribed. We have recently begun dialogues with steel mills to formalize off-take contracts for the bulk sample and investigate long term off-take contracts for the 12.6 million tonne per year initial project output identified by the DFS."

Drilling Programs

The productivity of drilling improved during 2007 for the Mary River exploration, geomechanical and geotechnical programs. As at August 31, 2007, a total of 8,090 metres were drilled for such programs compared to a total of 7,067 metres drilled for the entire 2007 field program. A total of 9,300 metres was budgeted for 2007; however, the forecast to the end of the drill season in early October, is now anticipated to surpass 10,000 metres.

Drilling for the exploration program has confirmed continuity between deposits No. 3 and No. 3A although the thickness appears to diminish to the east. Drilling on 450 metre centres has confirmed continuity over a 1,800 metre strike length with the deposit open along strike and at depth. As is the norm, the new drilling has shown the original interpretation to be too simplistic and we await additional drilling and the assay results to assist in a more comprehensive interpretation and a resource model leading to the estimation of an inferred resource. Comparing this years' drilling to that of 2006 on Deposit No.3, we continue to target a significant specular hematite resource as the ultimate result. In addition to exploration drilling on Deposit No. 3 exploration activities during 2007 were also focused on infill drilling on Deposit No. 1. As at August 31, 2007, exploration and geomechanical drilling totaled 3,995 metres on Deposit No. 1 and 1,809 metres on Deposit No. 3.

Geomechanical drilling up to August 31, 2007, totalled 1,269 metres. In addition, 1,257 metres of exploration drilling on Deposit No. 1 were also evaluated for this purpose. The geomechanical program is necessary to understand rock characteristics and long-term pit stability to be incorporated into the pit design and is essential for pit modeling in support of the DFS.

Drilling for the 2007 geotechnical program focused on the following areas essential to the DFS and future infrastructure design: port sites drilling, overburden drilling at the Mary River project site and drilling on the Mary River to Steensby Inlet rail corridor. Drilling commenced from the sea ice for the port sites and was successfully completed before the spring thaw. An initial program of 43 geotechnical holes was planned for the rail route. This program has been completed one month ahead of schedule and additional holes have been added to further reduce the risk associated with volumetric calculations in the definitive feasibility study. For the eight months ended August 31, 2007, a total of 2,286 metres of geotechnical drilling were completed with additional drilling planned.

Bulk Sample Program

Mobilization activities have commenced and are progressing well for the bulk sample program. Extraction of up to 250,000 tonnes of high grade hematite and magnetite ores is planned to progress continuously until shipment from Milne Inlet during the 2008 summer season. Site activity levels have recently increased, coinciding with receipt of the approvals necessary to commence activities in support of the bulk sample program. There are currently about 200 workers on site supporting 2007 operational programs. Although we had a later start than planned with regard to some of the activities that support the bulk sample program, we are exploring operational efficiencies with the object of making up for lost time and delivering the full 250,000 tonne bulk sample.

An all season support camp for the bulk sample program is being established at Milne Inlet and is in the final stages of commissioning, with a larger all-season camp to be installed at the Mary River site as soon as the road allows transportation of materials. Installation of the new Mary River camp is currently anticipated to commence in the period between mid to late October.

In preparation for the bulk sample and continuing exploration and engineering activities, three dry-cargo ships were scheduled to arrive in August and September 2007 and a tanker is currently delivering 8.25 million litres of fuel to a new bulk fuel storage facility constructed at Milne Inlet. Two of the three dry-cargo sealifts have been received, and the final ship is scheduled for late September 2007. With the arrival of these sea-lifts, the majority of the materials and supplies required to support the bulk sample and 2008 drilling programs will have been mobilized to site. The transition to bulk fuel will allow the project considerable savings on future transportation costs for fuel required to haul ore and to support future field exploration and geotechnical drilling programs.

Operational Summary

In a press release on March 28, 2007 Baffinland announced two important operational changes to be incorporated in the DFS as compared to the May 2006 Scoping Study: the increase in the initial production rate by 26% to 12.6 million tonnes per year and the decision to make Steensby Inlet on the south coast of Baffin Island our preferred port site. Although the rail corridor is 50% further to the potential port site on the south coast, there is a significant enhancement to shipping from Steensby Inlet to market, where less ice-strengthened cape-sized ore carriers are expected to extend shipping to 12 months per year. It was also announced at the time that Baffinland was going to refrain from commenting on an expected timeline for the project until the logical timeline became apparent through the work on the DFS. Although the delivery of the DFS is still over three months from now, it has recently been determined by the work done to date for the DFS that production is now expected to begin in 2013 in order to build the stockpiles that will result in first commercial deliveries in 2014. This schedule assumes that permits will be in hand to commence construction in the summer of 2010 and that the necessary debt and equity financing will be available as needed.

Baffinland also indicated in the press release of March 28, 2007 that the 26% expansion of production and the additional rail distance to Steensby Inlet were expected to add to the capital cost estimate in the DFS as compared to the Scoping Study of May 2006. Although we will not be able to quantify this until the DFS is completed, the additional rail distance to Steensby Inlet of approximately 50 kilometres and the less gentle topography compared to the Milne Inlet route are expected to add to capital costs and have added to the expected construction time. Also contributing to the expectation of increased capital costs is the impact of the increase in the price of steel on the cost of many of the projects components. Countering this impact is the fact that strong steel demand and pricing has also resulted in substantial increases in expectations for iron ore prices for the foreseeable future.

Rod Cooper, Vice President Operations and COO, stated "We eagerly await the DFS and other studies that will be the results of the collective efforts of the many people that make up the Baffinland team. We fully expect the world-class nature of the Mary River to be clearly demonstrated by these studies and we are gratified by the high level of interest by many engineering firms and construction companies in future participation in the development of the Mary River Project."

Baffinland is a Canadian publicly-traded junior mining company that is focused on its wholly-owned Mary River iron ore deposits located on Baffin Island, Nunavut Territory, Canada. Baffinland's shares trade on the Toronto Stock Exchange under the trading symbol BIM.

This press release contains certain information that may constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to management's future outlook and anticipated events or results, and may include statements or information regarding the future plans or prospects of the Company. Without limitation, statements about the Company's plans to complete a definitive feasibility study, including the scheduled timing thereof and other related statements, statements about the planned bulk sample program and related statements, statements about the completion of a project description and draft environmental impact statements, statements about the Company's planned drilling program, statements about the timing of the commencement of construction, statements about the timing of the first commercial delivery, and statements about the timing of initiation or completion of other project requirements such as regulatory processes and approvals, are forward-looking information.

Forward-looking information is based on certain factors and assumptions regarding, among other things, expected mineral resources, iron ore prices, the timing and amount of future exploration expenditures, the estimation of additional capital requirements, the availability of necessary financing and materials, the receipt of necessary regulatory approvals, the feasibility of constructing and operating a direct-shipping iron ore mine at the Company's Mary River project and assumptions with respect to environmental risks, title disputes or claims, weather conditions and other similar matters. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Without limitation, in stating that the Company has scheduled the completion of a definitive feasibility study in December of 2007, to initiate constructions in the summer of 2010, to undertake its first commercial mining in 2013 followed by commercial deliveries in 2014, a bulk sample program in 2008, initiate the regulatory process by the end of 2007, and related statements, the Company has assumed, among other things, that iron ore prices will not change materially from the prices used in its current financial forecasts and that it will obtain the financing and regulatory approval and other authorizations required to enable the exploration, development and mining activities required in order to complete such activities. In stating that the Company anticipates completion of its project description in 2007 and environmental impact statement in 2008 and in making other statements about the IIBA process, the Company has assumed, among other things, that it will successfully negotiate and complete an environmental assessment process through the Nunavut Impact Review Board and that it will successfully negotiate and execute an Inuit Impact Benefits Agreement.

Forward looking-information is subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what is currently expected. These factors include risks inherent in the exploration for and development of mineral deposits, risks relating to changes in iron ore prices and changes in the worldwide demand for and supply of iron ore, uncertainties inherent in the estimation of mineral reserves and resources, risks relating to the remoteness of the Mary River Property including access and supply risks, reliance on key personnel, construction and operational risks inherent in the conduct of mining activities, regulatory risks, including risks relating to the acquisition of necessary licenses and permits, financing, capitalization and liquidity risks, including the risk that the financing required to fund all currently planned exploration and related activities may not be available on satisfactory terms, or at all, environmental risks and insurance risks.

The information provided in this press release is given as at August 31, 2007. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, the Company is under no obligation and does not undertake to update this information at any particular time, except as required by law.

Contact Information

  • Baffinland Iron Mines Corporation
    Gordon A. McCreary
    President and Chief Executive Officer
    (416) 814-3163

    Baffinland Iron Mines Corporation
    Rodney A. Cooper
    VP, Operations and COO
    (416) 814-3158

    The Equicom Group
    Andreas Curkovic
    (416) 815-0700 ext. 262