The Sydvaranger Iron Project consists of three magnetite iron deposits with JORC compliant resources (Kjellmannsåsen, Fisketind Øst and Bjørnevatn) and a further 20 prospects with known iron mineralisation located over a 12km strike length. The existing equipment and infrastructure to be refurbished at the site includes primary crushers and a cobbing plant (not currently owned by Northern Iron but are subject to a purchase agreement in favour of Sydvaranger Gruve), a concentrator and various related infrastructure.

Subject to the conditions outlined in this section, the redevelopment schedule envisages the recommencement of mining in the March quarter of 2009, followed by concentrate production in the June quarter of 2009. The critical path items for the restart of operations include the delivery and installation of three primary mills, the delivery of the mining fleet and the receipt of all permits and approvals required for mining and production, including government approval for the submarine disposal of tailings in Bjørkfjorden.

Sydvaranger Gruve has begun preparatory work for the redevelopment, including exploration drilling and planning for the refurbishment of the concentrator and crushers. Negotiations with a mineral processing company to carry out the refurbishment activities and to supply the new equipment have commenced. This work is ongoing and orders for the long lead items are expected to be placed in the December quarter of 2007.

Northern Iron has designed pits for each of the three deposits that have JORC compliant resources and has produced a mine schedule based on these mineral inventories. This has enabled an estimate of the mine fleet requirements to be completed, which will be used to negotiate equipment deliveries from suppliers.

The Sydvaranger Iron Project has an estimated mine life of 19 years at an annual production rate of 7 Mtpa of mill feed. After processing, this is expected to produce approximately 2.9Mtpa of magnetite concentrate. Northern Iron considers there to be strong potential to increase both the throughput and mine life at Sydvaranger through:

• the conversion of known iron mineralisation to JORC compliant resources;
• the conversion of the existing mineral inventory to a JORC compliant reserve;
• the discovery of additional mineral inventory; and
• open pit and underground mining studies.

The expected timing of the key work-streams for the redevelopment and commencement of concentrate production is shown in the figure below. Subject to approvals being in place, potential exists to recommence production on a smaller scale prior to the June quarter 2009 by using the existing mills on site. Northern Iron is carrying out a Detailed Mine Planning Study and a Plant Refurbishment Study as part of the redevelopment plan for the Sydvaranger Iron Project.

The Detailed Mine Planning Study will:

• review the geotechnical inputs to determine if steeper slopes can be utilised in the mining of the proposed open pits;
• incorporate the site geological, grade and survey data and results from drilling by Sydvaranger Gruve into resource models to upgrade to the Measured Resource and Indicated Resource categories where possible;
• determine the optimal mine schedule;
• determine the mine fleet requirements, preferred equipment suppliers and enable the negotiation of supply, lease and Maintenance and Repairs Contracts (‘MARC’); and
• determine consumable requirements, preferred suppliers and enable the negotiation of contracts.

The Plant Refurbishment Study will:

• review the cost and availability of appropriate crushing and milling equipment allowing for flexibility in the sizing of the respective machinery;
• determine the preferred crusher and mill selection with respect to operating/capital cost and delivery time using a cost/benefit analysis;
• complete a detailed design and engineering plan for plant refurbishment;
• prepare tenders for long lead items such as crushers, mills and thickeners;
• determine the style of the construction contract;
• determine the timing to procure long lead items; and
• determine consumable and utility requirements, preferred suppliers and enable the negotiation of contracts.

Summary Recommissioning Schedule

Concentrate production planned for June quarter 2009

Subject to:

• receipt of necessary regulatory approvals and permits; and
• progressive approvals by the Board of Northern Iron for various stages of development,
  Northern Iron intends to re-commission the Sydvaranger Iron Project in the June quarter of 2009.