LabMag Property

Portions of the following information are based on assumptions, qualifications and procedures. For more information, please consult our legal page.

Geology

Historical Exploration and Development
The LabMag deposit is in the Howells River taconite area and was explored by Labrador Mining and Exploration Co. (LM&E) and IOCC from 1949 to 1979. The work involved regional aeromagnetic surveys, detailed geological mapping, sampling, drilling, ground magnetometer survey and airborne electromagnetic and magnetic surveys. The property is located on the extreme western margin of the Labrador Trough adjacent to Archean basement gneisses.

Mineralogy and Ore
The iron formation in Howells River consists mostly of recrystalized chert, jasper with bands and disseminations of magnetite. Some oxidized magnetite (martite) also occurs. The other gangue minerals present are iron silicates, minnesotite and stilpnomelane. The units on the property that contain the highest concentrations of magnetite are PGC and LRC. In the southern part of the drilled area, LC and JUIF also contain higher concentrations of magnetite. Hematite is most common in JUIF, URC and LRC. Iron silicate minerals are more abundant in GC, LC and LIF. The iron carbonate siderite and manganese carbonates rhodocrocite and kutnahorite occur in LC and LIF members.

The principal ore mineral is the magnetite in the taconite. Magnetite is present in all the units at varying amounts. The concentrate of magnetite is produced by magnetic separation.

Drilling
The portion of the property that has been explored by drilling includes Block A, B and Central Block C and has a strike length of 9.5 km in a northwest-southeast direction and continues beyond the property boundary in both directions. The following table gives the details of drilling carried out by NML during the years 2004, 2005 and 2006:

Resources
Based on the drilling done to date, external consultant SGS Geostat estimated the classified resources. The following table provides the details:

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Mine Layout

The LabMag deposit was originally drilled in separate blocks: Block A and Block B and the mineral reserves for LabMag are contained in these two blocks. However, subsequent drilling of Block C between Block A and Block B has demonstrated a continuity of the ore body. The ore is located near the surface, requiring a minimum of stripping and waste removal. The LabMag iron ore deposit will be mined using conventional open pit mining methods based on trucks and shovels. After drilling and blasting, ROM ore will be delivered to primary crushers located to minimize the haulage distance.
The nominal capacity of the mine is based on LabMag producing 15 million tonnes of pellets per year, which requires 14.2 million tonnes of concentrate per year. Based on the results of metallurgical test work and geological block modelling work, the resulting average weight recovery for the first 25 years of the mining plan is 27.6%, equivalent to a concentration ratio of 3.63 tonnes of ROM per tonne of concentrate. This results in an average feed requirement of 51.6 million tonnes of crude ore to produce 14.2 million tonnes of concentrate per year
The deposit contains seven economic layers of iron ore, each layer having different physical and chemical characteristics. Blending of material from the different layers in the pit is expected to be carried out in order to:

Ensure that concentrate produced contains less than 3% SiO2;

Generate the highest project net present value by optimizing the use of high weight recovery ore

Feed the mill with a constant ore hardness to facilitate stable process plant operation.

Environment

In 2005-2006 NML conducted many of the environmental baseline studies required for the LabMag Project.
They addressed the following topics:

• the hydrology of the Howells River;
• a wind/wave/climate study for a dock in the Sept-Îles area;
• a compilation of wildlife observations in the Howells River Valley;
• a literature review of the presence and harvesting of aquatic fauna in the Moisie River estuary;
• a desktop data review and characterization of potential water crossings in the ferroduct corridor;
• several surveys of bats, micromammals and amphibians;
• surveys of birds in the Howells River basin, the ferroduct corridor and Pointe-Noire;
• hydrological and hydrogeological studies of the mine site;
• survey of winter habitat use;
• water and sediment analyses at stream crossings at the mine site and in the ferroduct corridor;
• water analysis and flow measurements at Pointe-Noire;
• fisheries studies at the mine site and in the ferroduct corridor;
• sampling of aquatic micro-organisms at the mine site, Emeril and Pointe-Noire;
• terrestrial ecosystem mapping;
• assessment of historic resources potential and archaeological assessment of mine site;
• geological studies at the mine site, Emeril and Pointe-Noire;
• monitoring of ambient air and noise at the mine site, Emeril and Pointe-Noire;
• visual impacts at the mine site and Pointe-Noire.

When the LabMag Project was suspended in favour of the DSO Project in late 2006, all of the unprocessed data was saved in databases for later analysis.