Northland Resources S.A.

Northland Resources S.A.

May 23, 2014 03:21 ET

Agreement Reached Between Northland and Trafikverket Regarding Road Upgrades Between Kaunisvaara and Svappavaara

LUXEMBOURG, LUXEMBOURG--(Marketwired - May 23, 2014) - Northland Resources S.A. (OSLO:NAUR)(FRANKFURT:NPK)(OMX:NAURo) - (together with its subsidiaries "Northland", "NRSA" or the "Company") announces that the Company has signed a co-financing agreement with the Swedish Transport Administration ("Trafikverket") concerning infrastructure upgrades and maintenance of the roads between the mine at Kaunisvaara and the re-loading terminal at Pitkäjärvi, in Svappavaara.

"We are happy to have signed this agreement, which secures our road transportation of iron ore concentrate for the long term. Northland can now continue to optimize and improve the capacity in the road logistics," said Peter Pernlöf, acting CEO.

With the agreed-upon road upgrades, the 160 km roadway between the mine and the railway will be able to carry transports of up to 5.0 million tons of iron ore concentrate per year, using vehicles with a gross weight of up to 90 tons. Northland has previously received dispensation for driving trucks weighing 90 tons on these roads, and the dispensation has been extended in accordance with the agreement and the measures that will be carried out. Heavier transports lead to increased need for road upkeep and maintenance, and Trafikverket will take corresponding measures to improve traffic safety and availability. The roads are also being upgraded to class 3, which entails higher standards for road surface conditioning in the wintertime, including skidding prevention, and other maintenance actions.

"Thanks to the co-financing agreement, a sustainable and reliable solution is being established for ore transports on the road between Kaunisvaara and Svappavaara that can manage heavy loads in the coming years," said Arnold Vonkavaara, regional director, Trafikverket.

Trafikverket is responsible for construction as well as implementing the other actions outlined in the agreement. Northland will contribute approximately 10 percent of the investment expenses. This corresponds to SEK 113 million, divided over the period 2015-2017. Northland will also compensate Trafikverket with SEK 6 million per year for additional road maintenance costs.

The agreement is based on a study performed in 2012. Northland and Trafikverket will continue to carry out studies and evaluate opportunities for further logistics improvements. Among other things, the parties are currently investigating the possibility to establish a new road section that would decrease the distance between Kaunisvaara and Pitkäjärvi by 30 km.

"Decreasing the transportation distance between the mine and re-loading terminal by 30 km each way would mean reduced upkeep and maintenance costs as well as cycle times, and would also reduce the environmental load through reduced fuel consumption," said Hans Nilsson, VP of marketing and logistics.

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 has also finalized a Definitive Feasibility Study ("DFS") for its Hannukainen Iron Oxide Copper Gold ("IOCG") project in Kolari, northern Finland.

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