Canada's Baffinland Iron Mines Contemplate Road Haulage Option to Fast Track Mary River Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Canadian mining company Baffinland Iron Mines Corporation (TSX:BIM) (Toronto, Ontario) is reportedly considering the short-term haulage of iron ore by road from the company's Mary River project in Nunavut in order to gain a head start on production.

The move is aimed at providing a temporary solution to the problem of ore haulage while the port and rail infrastructure for the mine is developed. Baffinland completed a feasibility study in 2008 for a project aimed at improving the port facilities at Steensby Inlet and developing a rail link to enable 18 million tons per year of ore to be moved from the mine.

The interim solution is to haul the ore along the 99-kilometer long tote road to Milne Inlet and ship the ore from there. However, Milne Inlet, located on the north coast of Canada's largest island, Baffin Island, has only a 90-day open water season between August and October.

In 2008, Baffinland developed a unique system to make the most of the short open water season by using a 91.4- by 7.6-meter floating wharf that was designed to cope with the high winds, 2-meter tides and the unique seabed properties at Milne Inlet. During the 2008 season, the wharf was able to handle up to 10,800 tons of ore each day.

Under the interim solution, Baffinland hopes to achieve mining and shipping of between 2 million and 5 million tons of lump and fine iron ore of each year, with an optimum rate of 3 million tons each year.

The Mary River project is the focus of Baffinland's operations in Canada and consists of five direct-shipping iron-ore deposits on a 32,670-hectare property about 1,000 kilometers northwest of Iqualuit, the capital of Nunavut. Conditions at the mine site are challenging, with 24-hour darkness from November to January and bitterly cold conditions. Although the mine experiences 24-hour daylight from May to August, conditions are still cool to cold.

The rail and port system planned for the project will transport ore from the mine to the deep-water, all-season port at Steensby Inlet, from where it will be loaded onto ore carriers for overseas shipment through Foxe Basin. A fleet of cape-sized ore carriers with ice breaking capabilities will be chartered from a consortium of Canadian shipping companies headed by Fednav Limited (Montreal, Quebec).

Production from the mine is expected to consist of 75% high-quality lump iron ore with the remaining 25% comprising premium quality fine iron ore used as sinter feed. Both the lump and fine ores are expected to achieve better than 66% iron content during the first 10 years of operation at the mine. With currently defined iron-ore reserves, the mine is expected to have an operational life of about 21 years, although this may be extended as exploration continues in the area, where geological conditions suggest further reserves may be found.

Baffinland is keen to have the mine in production at the earliest possible stage to enable it to achieve cash flow, particularly at a time when iron ore prices are high and are forecast to continue to be high.

At the same time that Baffinland is contemplating the road-haulage option, the company is also planning to accelerate the drafting of the environmental impact assessment (EIA) statement this year, with the ultimate goal of completing the full EIA statement and permitting processes by the end of 2012 or early 2013.

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