Baffinland eyes early ore production at Mary River
Company looks at shipping two to five million tonnes per year through Milne Inlet
The Baffinland Iron Mines Corp., developer of the Mary River iron project on north Baffin Island, wants to study the idea of using Milne Inlet to make early shipments of ore to Europe while they await the construction of a $1.2 billion railway to Steensby Inlet.
“The Company is examining mining, road haulage along the existing 99-km Milne Inlet tote road and shipping using market vessels during an approximate 90-day (August through October) open water season in Milne Inlet,” Baffinland said in a corporate press release issued June 10.
Company officials, until recently, had set 2014 as their target for the mine’s startup, a date that was pushed back to 2016 because of the recession.
But now, Baffinland wants to finish its draft environmental impact statement this year, then work towards getting all environmental assessment and permitting work done by early 2013.
Baffinland executives once thought about using Milne Inlet, located north of the Mary River site, as its main site for shipping ore to market.
But their most recent plans propose the use of a 230-km railway running south-east to a port at Steensby Inlet, which opens onto the Foxe Basin.
Building that railway and port would cost far more than the mine itself. In addition to paying the $1.2 billion cost of the railway, Baffinland would spend another $706 million on the port.
Their estimated cost for development of the actual mine site is only $591 million.
The company now says use of the Milne Inlet route for early-stage iron ore shipments could pump more cash into the company and raise its stock price, which now languishes at around 42 cents a share.
During the short shipping season, Baffinland says it may be able to ship between two and five million tonnes of ore to market through Milne Inlet.
“Achieving early stage production through this road haulage option would enhance value for Baffinland’s shareholders, achieve cashflow during a period when iron ore prices are forecast to continue to be high and strengthen our efforts to achieve the full development of the Rail Project” Daniella Dimitrov, the company’s new vice-chair, said in a press release.
Dimitrov is one of three new directors appointed to the Baffinland’s board following the departure in March of Gordon MacCreary as president and CEO.
In addition to Dmitrov, a corporate lawyer who has worked as a consultant for Baffinland, Gary Fietz, a a former executive with BHP Billiton, and Ron Simkus, a mining executive with more than 30 years of experience in the industry, joined Baffinland’s board this past April.
The biggest hurdles now facing the company are an environmental assessment process that will start in earnest following the completion of its draft environmental impact statement, and finding an estimated $4.1 billion worth of capital to finance construction of the mine and its related transportation system.