Northland’s restates preliminary economic assessment

Northland Resources Inc., a well-structured, debt free junior exploration company with a portfolio of high quality iron, gold, and base metal exploration projects in Sweden and Finland, announces the revised results of the NI43-101 compliant Preliminary Economic Assessment (PEA) of its three main magnetite projects: Tapuli and Stora Sahavaara in northern Sweden, and Hannukainen in northern Finland.

Last week, Northland published – and subsequently retracted – the PEA, after a routine review of a shareholder enquiry related to the model highlighted two errors; the first relating to the revenue calculations, and the second related to double-counting of a significant contingency in the mining costs.

Over the last 5 days Northland and Wardell Armstrong International (WAI) have re-worked, and extensively re-checked the financial model, concluding that the net effect of the revision on the NPV, IRR and pay back of the combined projects is limited and the projects have retained their robust valuation.

The combined projects deliver an amended Net Present Value at a 10% discount rate (NPV10) of €1.114 Billion and Earnings Before Interest and Tax (EBIT) of €5.085 Billion. The Internal Rate of Return (IRR) remains unchanged at 27% and the discounted pay back period is 7 years from start of the development program.

At the project level, the EBIT has increased for Hannukainen, and decreased slightly for Tapuli and Stora Sahavaara but was not great enough to affect the overall IRR or NPV. The key economic findings of the individual studies for each project expressed in Euros (€) are:

Tapuli
NPV at a 10% discount rate (NPV10) of €116.7 million, EBIT of €415.1 million and an IRR of 34% with a payback period of 5 years. Estimated Capital Expenditures (CAPEX) of €146.6 million for mine development and construction of the processing facility includes €18.1 million in contingency and €15.8 million in Engineering, Procurement, Construction Management (EPCM) costs.

Stora Sahavaara
NPV10 of €567.2 million, EBIT of €2.646 Billion and an IRR of 27% with a payback period of 6 years. Estimated CAPEX of €258.2 million for mine and processing facilities and €279.0 million to build a 5 million tonne per annum (“Mtpa”) pelletizing facility includes €26.0 million in contingency and €24.2 million in EPCM.

Hannukainen
NPV10 of €429.7 million, EBIT of €2.024 Billion and an IRR of 26% with a payback period of 6 years. Estimated CAPEX of €276.2 million for mine and processing facilities and €279.0 million for construction of a 5Mtpa pelletizing facility includes €35.5 million in contingency and €33.6 million in EPCM.