Labrador Iron Mines

Holdings Limited

TSX: LIM

Corporate Information

Common Shares

Corporate Overview

LIM's eight DSO hematite iron ore deposits are represented in 34 mineral rights licenses covering approximately 8,400 hectares situated in the Province of Newfoundland and Labrador. These deposits comprise the James, Redmond, Houston, Knob Lake, Astray, Sawyer, Howse and Kivivic deposits. The development plan envisions mining the deposits in three phases, the first phase comprising the deposits located closest to existing infrastructure, which will be undertaken in two stages: the first being the James and Redmond deposits, and the second stage the Houston and Knob Lake deposits. The James deposit is accessible by existing gravel roads and located approximately 3 km southwest of the town of Schefferville. The Redmond deposit is located approximately 5 km south of the James deposit and can be reached by existing gravel roads. The Knob Lake deposit, located approximately 3 km southwest of the town of Schefferville and the Houston deposit located approximately 18 km southeast of Schefferville can also be reached by existing gravel roads.

The deposits were part of the original Iron Ore Company of Canada (IOC) direct shipping Schefferville operations conducted from 1954 to 1982 and formed part of the 250 million tons of reserves and resources previously identified by IOC. These eight deposits have a historical resource estimated to be approximately 90 million tons of direct shipping iron ore, based on work carried out by the IOC prior to the closure of its Schefferville operations in 1984. The historic estimate was prepared according to the standards used by IOC and, while still considered relevant, is not compliant with National Instrument 43-101 ("NI 43-101").

The James and Redmond deposits are brownfield with low strip ratios where a large amount of pre-stripping has already taken place. The entire operation will use well proven and relatively basic technology, including conventional open pit mining and a chemical-free beneficiation process (crushing, washing and screening. The material excavated averages 56% to 58% iron with beneficiation removing unwanted silica and increasing the product grade to around 65% iron.

Concurrent with the development of the phase 1 deposits, planning for the future development of the more distant deposits in phases 2 and 3 is envisioned. The Astray and Sawyer deposits, located approximately 50-60km southeast of Schefferville, do not currently have road access but can be reached by float plane or by helicopter. The Howse and Kivivic deposits are located approximately 21km and 40km to the northwest of the James deposit, respectively, and both can be reached by existing gravel roads.

Subject to satisfactory release of the Project from further environmental review and receipt of subsequent permit approvals, LIM expects to commence first commercial production of iron ore in mid 2010. Mining and processing operations will be conducted for eight months per year, from April to November at an anticipated initial mining rate of 6,000 tonnes per day. LIM is planning for production in the first year to be up to 1 million tonnes per annum, growing to 2-3 million tonnes per annum in 2011-2012.

The Project envisions two iron ore products - the first a coarse lump ore, and the second a finer sinter feed product. Approximately one-quarter of the product is expected to comprise lump ore which has generally commanded a premium price in the market over fines. These products are to be transported by the existing railroad systems to the port of Sept-Iles on the St. Lawrence River for onward shipping, initially to steel mills in Europe and possibly Asia.

A test mining program to excavate 6,500 tonnes of bulk ore samples from the first phase deposits was carried out in October 2008 by RSM Mining from Labrador City. This material was crushed and screened producing lump and sinter fine ore samples, some of which were shipped for market testing to potential end users primarily in Europe. LIM's products received a very encouraging level of interest for their high iron grades and low level of impurities. On November 24, 2009 the Company announced results of chemical, physical and metallurgical testing of James South lump and sinter fines ore by SGA research centre in Germany, an independent process laboratory specializing in iron and steel process testwork. SGA concluded that the ore showed excellent metallurgical characteristics and should be attractive to steel mills. The products that were moved in LIM's bulk sample process were the first iron ore shipments to leave the Schefferville area in over a quarter of a century.

Marketing discussions have commenced with potential end users, particularly in Europe and samples have been dispatched to a number of steel mills. These discussions have indicated an encouraging level of interest in the LIM products based on the metallurgical test results and analysis of the samples supplied. The indicated high iron grades and the low level of impurities are important and should ensure that LIM will be able to market both its lump ore and its sinter fines products. In addition to the European interest there is significant Chinese interest in seeking iron ore from Eastern Canada. The growing Chinese demand for iron ore, coupled with the slower than expected development in new iron ore mines closer to China, has begun to make Eastern Canada a viable source for this market. Discussions continue with a number of Chinese customers and importers.