Northland Resources S.A.
TSX : NAU
FRANKFURT : NPK
OSLO : NAUR

Northland Resources S.A.

April 12, 2012 01:30 ET

Northland Signs Final Agreements With Its Logistical Partners

LUXEMBOURG, LUXEMBOURG--(Marketwire - April 12, 2012) - Northland Resources S.A. (TSX:NAU)(FRANKFURT:NPK)(OSLO:NAUR) - ("Northland" or "the Company") will finalize the agreements with its logistical partners Peab, Savage and Grieg at 13.00, April 12. These agreements will secure the delivery of Northland's high quality iron ore concentrate through the Port of Narvik in Norway to customers worldwide from the beginning of 2013.

Press Conference

Northland will hold a press conference at Näringslivets hus, in Stockholm, Sweden, at 13.00 CET, April 12, 2012. Karl-Axel Waplan, President & CEO of Northland, together with Jan Johansson, CEO & President of Peab, Kirk Aubry, COO of Savage Service, and Rune Birkeland, Managing Director of Grieg Logistics, will present the complete logistical chain including the details of each leg between the mine and the port. To participate, please register by emailing to Petter Brunnberg, Investor Relations (pbrunnberg@northland.eu). Sandwiches will be served from 12.30.

Agreements

  • Savage Services Corporation ("Savage") - To manage the seamless logistics chain from Kaunisvaara to Narvik
  • Peab AB ("Peab") - Transportation by truck from Kaunisvaara to Pitkäjärvi
  • Savage- Rail line service from the transload terminal at Pitkäjärvi to the Port of Narvik on the Malmbanan
  • Grieg Logistics AS ("Grieg") - Port operation in Narvik
  • Peab - Construction work at Fagernes terminal in Narvik
  • Kiruna Wagon - Delivery of wagons to be used on Malmbanan

Northland, which is less than one year away from starting production at the Tapuli mine in Kaunisvaara, will today, April 12, 2012, sign 6 final agreements with 4 logistic specialist companies to manage and develop the logistics solution between Kaunisvaara and the Port of Narvik.

"We are pleased to sign these agreements with companies that have extensive experience of handling bulk commodities and have demonstrated an ability to build and operate a robust logistical chain", said Karl-Axel Waplan, President and CEO of Northland. "We are moving quickly ahead on our original timetable and therefore it is very pleasing that we now are able to present a complete solution for the logistics chain covering the transportation of the final product from mine to customer starting early in 2013. We are also happy to confirm that the cost of the logistics chain is in line with the predictions made in the Definitive Feasibility Study, although the final rail costs are still pending."

Peab will be responsible for the trucking operation from Kaunisvaara to the transload terminal at Pitkäjärvi. Northland's high grade iron ore concentrate, is to be transported by truck 150 km on public roads, before reloading to rail wagons at Pitkäjärvi. The trucks will be allowed to carry up to 60 tonnes at the beginning on the public road but, the Swedish Transport Administration ("STA") is expected to grant Northland dispensation for 90 tonne trucks. Northland and STA are at present conducting tests using an actual 90 tonne truck in order to determine the most efficient balance between gross weight and relative speed on the road which will establish an optimum number of daily roundtrips combined with the minimum amount of road maintenance.

The operational agreement with Peab, which is in effect until the end of 2021, is valued at approximately USD 600 million.

"Peab has been an active participant in the Kaunisvaara project, constructing buildings and infrastructure at the mine site and at the port of Narvik. We are therefore pleased to further extend our relationship on this important project for Northland", said Jan Johansson, CEO of Peab.

Peab will also be responsible for the construction of the entire infrastructure at the Fagernes terminal in Narvik. The terminal will consist of a quay, a heated, unloading facility for the rail wagons, a storage building and a ship loader. In addition, Peab is also responsible for the construction of the transload terminal at Pitkäjärvi, where pre-development has already started.

The construction agreement with Peab is valued at approximately USD 60 million.

Savage will operate the train transportation from the transload terminal at Pitkäjärvi to the Port of Narvik. The iron ore concentrate will be transported on the 226 km long railway, Malmbanan. Malmbanan is currently used for iron ore transportation by the Swedish national iron ore producer, LKAB.

"We are pleased to support Northland in this important project," said Allen Alexander, President and CEO of Savage Services. "We look forward to working closely with Peab and Grieg to move the iron ore from the mine to the port with worry-free consistency".

Savage will supply the management service for the whole logistics chain, including overall responsibility for the coordination, management and cooperation between the three parties, Peab, Savage and Grieg.

Grieg will operate the Fagernes Terminal in Narvik, where the iron ore concentrate will be reloaded from rail wagons to capsize vessels for onward transportation to the end users. The terminal is expected to load vessels of up to 180,000 tonnes. The use of Fagernes terminal in Narvik is a temporary solution (minimum 10 years) and the Company is in discussions with the Narvik municipality to find a long-term terminal solution.

"Grieg has been involved for the last 12 months in the planning of the port operations together with Savage and Northland. We look forward to a long and prosperous cooperation with professional logistic partners to secure the safe and timely handling of the Northland iron ore", said Rune Birkeland, CEO of Grieg Logistics AS.

In 2013, 1.3 million tonnes of iron ore concentrate is expected to be transported from Kaunisvaara to Narvik, ramping up to full production of more than 4 million tonnes by 2015.

Kiruna Wagon will deliver 150 wagons to be used for transporting the iron ore on Malmbanan. Northland also has an option to buy another 44-92 wagons from Kiruna Wagon. A warranty period of 2-4 years after delivery of each unit is included in the agreement. The wagons will be delivered between January 1, 2013 and May 5, 2014.

The combined operational agreements, which are in effect until the end of 2021, have a total value of approximately USD 900 million.

In February 2012 Northland decided to include the logistics solution in the overall project and the wholly-owned subsidiaries Northland Logistics AB and Northland Logistics AS were created. This solution gives Northland full control of the logistics chain.

Karl-Axel Waplan, President & CEO

Northland Resources S.A

Northland is a development-stage mining company with a portfolio of iron ore projects in northern Sweden and Finland. The Company's Kaunisvaara Project will exploit two magnetite iron ore deposits in Sweden. The process is expected to yield a high-grade, high-quality magnetite iron concentrate. The construction of the Kaunisvaara project is well underway and production is planned to start in the fourth quarter of 2012. Northland has entered into industrial off-take contracts for the entire production from Kaunisvaara. The Company is also preparing a Definitive Feasibility Study for its Hannukainen Iron Oxide Copper Gold Project in Kolari, northern Finland.

Savage is an Innovative Supply Chain Solutions company, dedicated to creating value for customers who depend on the Savage team to move and manage critical materials with worry-free consistency. The company is an international leader in providing project management, design, engineering, and logistics systems for mining, chemical, railroad, oil refining and electric power generation customers. Savage also owns and/or operates large bulk terminals and over 40 transload facilities, which specialize in handling a diverse range of industrial commodities. Savage has 150 operations in 36 US states and five Canadian provinces. For more information on Savage, please visit www.savageservices.com.

Peab is an innovative construction and civil engineering company which combines the strengths of a large group with those of a local company's ability to create flexible solutions. Net sales 2011 were SEK 40 billion and the company employs approximately 15,000 people across the Nordic region. For more information, go to www.peab.com.

Grieg, established in 1969 as a separate business unit within the Grieg Group, is a leading provider of ship services and terminal operations to oil & gas, shipping, offshore, maritime and general industries. Grieg Logistics is the manager of the Exxon and Alcoa terminals in Norway. The Grieg Group is a privately owned line of companies which operates globally within a variety of business areas: shipping, logistics, ship broking, fish farming, insurance, investments and renewable energy. The Grieg Group operating revenues totalled NOK 5.1 billion in 2010 with approximately 1,700 employees. The structure as a family owned business, together with the strength of the company culture and the dedicated employees, enables the Grieg Group to always view business in a long-term perspective, and be responsive to changes in the business environment. For more information, go to www.grieg.no.

Contact Information

  • Northland Resources S.A.
    Karl-Axel Waplan
    President and CEO
    +46 705 104 239

    Northland Resources S.A.
    Anders Antonsson
    Vice President Investor Relations
    +46 709 994 970

    Northland Resources S.A.
    Willy Sundling
    Project Manager Logistics
    + 46 705 533 883

    Northland Resources S.A.
    Marguerite Manshreck-Head
    Investors Relations, Canada
    +1 647 224 7882
    www.northland.eu