Dannemora Mineral AB: Press release January 28 2008
Dannemora Mineral AB has during 2007 commissioned three consultant companies to carry out a Feasibility Study for the planned resumption of operations in the Dannemora Mine. The Study has now been finalized and is presented more detailed in appendix 1 to this press release. The Feasibility Study represents a sound technical and economical base for further development of the project. The Board of Dannemora Mineral AB is pleased by the positive result of the study and is below summarizing and commenting the report and its results.
On behalf of Dannemora Mineral AB, the Feasibility Study in regards to the Dannemora iron ore mine has been performed by three independent companies.
- ARRC Geoconsulting AB (mineral resources)
- Vattenfall Power Consultant AB (ore reserves, all parts of the study related to mining, the compilation of the study and the economical valuation)
- PROing H&J AB (process and the ore treatment plant)
The feasibility study, performed by the three independent consultant companies, constitutes the base for:
- the investment decision (resumption of the production)
- the funding of the project
The Feasibility Study is picturing the present situation. Like all studies of this type, it includes however simplifications and assumptions. Given this, the study proves the project to be clearly economical feasible. Besides the study itself, efforts to optimize solutions have been ongoing. This has impacted the scope of work whereby the study has been delayed. Continuous work to optimize the operation is ongoing with the goal to cut costs and to make the project even more attractive.
The Board identifies a number of potential activities to further improve the feasibility of the project.
- One important item is when, and to what extent, it is possible to transport ore with rail road from the mine to the harbour. In the study the assumption is to use trucks during the lifetime of the mine which impacts the cost for transportation heavily.
- Recently completed tests indicate possibilities to increase the percentage of lump ore in the final products. Since lump ore is paid better than fines a positive result of the continuing tests will have a positive impact on the result.
- Many of the known ore bodies are "open" downwards and there are also possibilities to find new orebodies in the extension of the field along the strike (south-north). As a consequence we have planed to spend SEK 5 millions in yearly exploration and we have also designed the ore treatment plant to be able to handle more ore than considered in the study
A risk and also a possibility is the calculated average level of the product price. As shown in the study the price of our iron ore products has a huge impact on the economical result.
Another basic factor is the ability to finance the project. Crucial for the shareholder value is the structure of the future financing (ratio between equity capital and borrowed capital) and the capital cost level for financing. Dannemora Mineral now investigating different possibilities of financing including among other things equity capital, bank loans and leasing alternatives. The purpose is to find the most profitable financial solution for the share holders.
The full press release can be downloaded from the following link: