Iron grades strong at Northland satellite target

Vancouver – As Northland Resources (NAU-T, NRSRF-O) moves along its Tapuli iron ore project in Sweden the company continues to confirm good iron grades at the nearby Pellivuoma target.

As part of its 2009 winter drilling program in the magnetite-rich Pajala shear zone, which stradles the border of Sweden and Finland, Northland is reassessing a historic resource estimate that pegged Pellivuoma at 43 million tonnes grading 32.7% iron.

Hole 1 hit the longest intercept and returned 108 metres grading 38.3% starting 9 metres downhole.

In total Northland drilled 24 holes and has so far received assay results from ten. Each hole hit mineralization in intercepts ranging in width from about 15 metres to over 100 metres. Grades varied between about 25% and 40% iron and along with holes drilled in 2008 certainly confirm historic grades.

A planned resource estimate at Pellivuoma will verify its size.

Pellivuoma is just over 10 kilometres southwest of the Tapuli project where Northland has decided to focus its efforts to develop an open pit iron ore mine.

Tapuli is one of three iron deposits within about 30-km of the town of Kolari, Finland, that Northland outlined in a 2008 scoping study.

The other two are Hannukainen and Stora Sahavaara.

Although Northland envisions developing several mines in the area, including satellite deposits such as Pellivuoma, the company decided last fall to concentrate on Tapuli as it was the smallest of the three projects and produced the highest return on investment.

Tapuli, with a resource estimate of 59 million measured tonnes grading 27.82% iron and 35 million indicated tonnes grading 24.08%, has an internal rate of return (IRR) of 34%.

Capital costs at both Sahavaara and Hannukainen were over €500 million while Tapuli’s came in at €147 million.

For those reasons Northland president Buck Morrow said in a 2008 Annual Report that Tapuli “will be the first cab out of the rank.”

As of Oct. 31, 2008 the company had about $101 million in cash on hand.

Although it has enviable cash stores Northland CEO Bill Wagener has told the The Northern Miner that he does not “want to dump everything into developing the (Tapuli) mine” and will consider raising equity and debt to finance the project so it can preserve some liquidity to develop other projects.

In terms of transportation logistics, after studying its options this fall, Northland currently favours using a railway to the port of Kemi, Finland, about 200 km to the south.

In February Northland said it was, in conjunciton with the Port of Kemi, Euroports and Havator Group, studying expansion potential of the port. Each are chipping in 25% towards the cost of the study.

And this month Northland announced it was studying rail link options with the help of Bombardier Transportation Sweden and VR, a Finnish transportation sector company.

To save money as it weathers the global recession Northland recently closed its Vancouver, Castle Rock (U.S.) and Storuman (Sweden) offices and said it was going to focus on the European investor community where the majority of the company’s investors are located.

On news of the drill results Northland gained 1¢ at 77¢. It has 110 million shares outstanding.