Posted on 05 Jan 2012
Essar Steel Minnesota LLC ("ESML" or the "Company") announces that it has received the results of its National Instrument ("NI") 43-101 Mineral Resources and Mineral Reserves Report (the "Technical Report") prepared by Met-Chem Canada Inc. ("Met-Chem") in connection with its Minnesota iron ore project. In that technical report, measured and indicated resources for the project are estimated to be 1.77 billion metric tons, with a grading of 31.78% total iron, making it a leading iron ore resource party in the North American Basin. Inferred mineral reserves and resources are estimated at 201 million metric tons.
"The measured, indicated and inferred resources of nearly 2 billion metric tons at Essar Steel Minnesota's iron ore project exceeded our expectations," commented Madhu Vuppuluri, President and CEO of Essar Steel Minnesota. "We are also pleased to learn that 95% of total measured and indicated resources are made up of mineral reserves. We believe that our project contains sufficient reserves and resources not only to increase the planned production of iron ore pellets from 4.1 million metric tons to 7 million metric tons annually, but also will enable us to evaluate options to further utilize our increased mineral resources ."
ESML's project is a taconite iron ore project located at Nashwauk, Minnesota in the western part of the Mesabi Range, approximately 20 miles (32 km) east of Grand Rapids and 106 miles (170 km) from Duluth. The project permit area encompasses approximately 19,200 acres. All permits for the construction and production of 4.1 million metric tons of iron ore pellets annually have been received. Applications have been filed for a second phase expansion to add an additional 2.9 million metric tons of iron ore pellets production annually. Phase one construction of the iron ore mine, crushing facilities, concentrator and pellet plant commenced in October 2010.
Table 1 presents the NI 43-101 categorized mineral resources set out in the Technical Report. Met-Chem used 3D Block Modeling techniques to estimate the tonnage and the grade of the mineral resources.
Table 1 –Summary of Estimated Mineral Resources (in metric tons)(1) (2)
(Using a 14% magnetic iron cut-off grade)
[PICTURE1]
(1) The classification of the mineral resource for Essar Steel Minnesota's iron ore project is based on the geological and grade continuity of the iron ore deposit. The current mineral reserves and resources estimates were calculated using the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM"), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions summarized below.
(2) Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The mineral resource estimate may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
Table 2 – Summary of Estimated Mineral Reserves (in metric tons) (1) (2)
(Using a 14% magnetic iron cut-off grade)
[PICTURE2]
(3) The mineral reserves are exclusive of Inferred resources and are based only on Measured resources (Proven reserves) and Indicated resources (Probable reserves) presented in Table 1. Mineral reserves include dilution and are based on economic pit limits, engineered pit and mine plans.
(4) Davis Tube concentrate silica percentage.
Each of Mr. Daniel M. Gagnon, Eng. and Mr. Yves A. Buro, Eng. of Met-Chem, the authors of the Technical Report, are independent "qualified persons" ("QP") in accordance with NI 43-101. Mr. Gagnon has reviewed and is responsible for the mineral reserves and resources estimates presented in this news release.
