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Revised EIS Document
21 Aug, 2009
Schefferville Area Project
The Company's Projects are located in the western central part of the Labrador Trough iron range, one of the most prolific iron ore producing regions in the world, about 350km north of the seaport of Sept-Iles. The Schefferville area has a tradition in iron ore production that dates back to the early 1950s. The properties comprising LIM's Project were part of the original IOC Schefferville operations and formed part of the 400 million tons of reserves and resources identified by IOC. These properties include the James and Redmond deposits on which initial mining or development activities had been undertaken by IOC and where LIM plans to initiate its first phase of production.
Access to the area is by rail from Sept-Iles or by air from Montreal to Sept-Iles. LIM's twenty iron ore deposits are direct-shipping hematite lump and sinter fine ores lying within 2km to 65km from the town of Schefferville, Quebec. The projects were discovered by IOC during the period it operated direct shipping iron ore at Schefferville.
LIM's mine operations involve the extraction of iron ore by developing open pit mines initially at the James and Redmond deposits. Beneficiation is taking place at the Silver Yard marshalling area and a rail spur has been re-established along the existing railbed that connects with the main rail line. A significant portion of the infrastructure and beneficiation plant was transported by rail from a railhead near Labrador City to Schefferville via the TSH aboriginal railroad, which is jointly owned by the two Quebec Innu communities and the Naskapi Nation.
Ore mining operations commenced at the James Mine in June 2011 and full scale mining operations are now underway. Development of the first mining bench in the north end of the James pit has exposed a mining face over 400 metres along strike in the higher grade blue ore, the first ore to be mined and directly shipped without further processing. The waste rock has proven to be largely free digging and mine development is currently ahead of schedule.
Approximately 120,000 tonnes of iron ore has been stockpiled to date. Ore mining will continue for the season until November at a mining rate of approximately 15,000 tonnes of ore per day, using conventional open-pit mining methods and, where necessary employing standard drilling and blasting practices. Overburden and waste mining, and some ore mining, will continue through the winter period. Ore mined will be classed into three products for direct shipping, plant feed, and stockpiling for treatment in 2012.
As was the case with IOC, all mining operations will be by conventional open pit mining methods. The ore excavated is estimated to contain around 63% iron and it is expected that the beneficiation process will enhance the product grade to around 65% iron and remove unwanted material. Historically the "direct shipping" iron ore produced by IOC needed no or only very little processing and that only crushing and screening was performed before the ore was loaded on trains to be transported.
Two products are being produced, a coarse lump ore and a finer sinter feed. Approximately one-quarter of the product is expected to be lump ore. These products are being transported by the existing railroad systems to the port of Sept-Iles on the St Lawrence River for onward shipping to steel mills in Europe and the Far East. The shorter shipping distances and thereby lower shipping costs to European markets compared with other major iron ore producing regions is advantageous to LIM. However, continued growth in demand for iron ore particularly from China is providing additional market opportunities.
LIM continues to make good progress in advancing the Schefferville Projects with ongoing active programs, including drilling, metallurgical testing, environmental, permitting, marketing, engineering, purchasing and construction.
At present, LIM has confirmed NI 43-101 compliant indicated resources of over 39 million tonnes on the James, Redmond, Denault and Houston deposits including NI 43-101 compliant measured and indicated resource of 22 million tonnes on the Stage 2 Houston deposit. In addition to these deposits, the remaining seventeen deposits have a total combined historical resource estimated to be approximately 125 million tons based on work carried out by IOC prior to the closure of its Schefferville operations in 1984. The historical estimate was prepared according to the standards used by IOC and, while still considered relevant, is not compliant with NI 43-101.
The Company plans to bring the historical resources on these other deposits into NI 43-101 compliant status sequentially in line with their intended phases of production, commencing with the deposits in the second phase in Stage 1.
2011 Exploration Program
The Company has commenced its largest ever exploration program on its Schefferville Area Projects. A total of 17,500 metres of drilling is underway for the 2011 season, using four drill rigs, and a further 4,000 metres of exploration trenching will be carried out.
The principal targets are deposits that comprise Stage 1 subsequent to James and Redmond, and further work on the Stage 2 deposits at Houston. The deposits to be explored will be Knob Lake, Ruth Lake 8, Gill, Star Creek and Denault for Stage 1, and Houston 1, 2 and 3 plus Malcolm for Stage 2. Some additional definition drilling will be also carried out on the James and Redmond deposits. It is planned to carry out further airborne geophysical surveys to continue to identify extensions to current deposits as well as potential new targets. In addition it is planned to carry out some field exploration of a number of the more distant deposits in Quebec. This work will be used in planning further exploration in the following season.
LIM's exploration work has demonstrated good correlation between the resources estimated by LIM's recent drilling programs and the historical IOC resources. It can be expected that with further exploration the historical resources will be upgraded such that operations can be continued for a number of years thereafter.
Previous Drill Programs
A successful exploration program was conducted in 2010 at the Denault, Ruth 8 and Houston properties comprising 4,600 metres of drilling and 1,400 metres of trenching. An additional 1,804 metres of drilling in 26 holes at Houston has indicated a new mineralized zone located between Houston 1 and 2. This has culminated in new measured and indicated resource estimates for the Houston deposits of a significant increase over previous resources, indicating that these deposits may now be of sufficient tonnage to merit evaluation of a stand-alone operation. the Houston deposits remain open along strike particularly to the southeast and further drilling is planned on Houston 3 during 2011. (See PR of Feb. 11, 2011 for details)
In addition to the new Houston resource estimates, a new measured and indicated resource estimate at the Denault deposit located in Quebec about 6 km northwest of the town of Schefferville resulted from RC drilling of 1,688 metres in 26 holes during the 2010 exploration program. A new M&I resource of 6.4 million tonnes compared favourably to the previous historical estimate of 3.7 million tonnes due in large part to the discovery of a new mineralized zone. (See PR of Mar 4, 2011 for details)
The 2009 exploration program commenced in June of that year with a program of reverse circulation drilling and continued through to the end of October. A total of 4,830 metres of reverse circulation drilling in 72 drill holes was completed on five separate deposits and resulted in 1,735 samples being sent for assay. This drilling was supported by 1,525 meters of trenching in 31 trenches yielding a further 543 samples for assay. The deposits tested comprise those planned for the Company's Stage 1 development plan, together with some limited drilling on the more distant Howse deposit.
In addition, testing conducted by SGA research centre in Germany, an independent process laboratory specializing in iron and steel process testwork, of James South lump and sinter fines ore showed excellent metallurgical characteristics that should be attractive to steel mills. The results of the James South lump ore sample indicate that the iron content is high at 66.98%, the high reducibility evaluated as being superior to the typical ore grades available on the
European market. As for the sinter fines, testing showed excellent
sintering behavior, clearly improving sintering productivity and metallurgical properties of the sinters. The high iron content and low gangue as well as the low portion of fines indicate the quality as being highly acceptable by the market.
During 2008, LIM's activities focused on advancing the developmental stages of the Project while awarding various contracts, including environmental baseline studies, detailed exploration drilling, bulk sampling, resource estimation, metallurgical process testing, rail and port studies and engineering design, all directed to move the Schefferville Project forward.
LIM also completed a drilling and trenching program in 2006 at James and Houston 1, twinning existing trenches completed by IOC. Results obtained were expectedly similar to those reported by IOC.
In 2005, LIM initiated a limited exploration/reconnaissance and rock sampling program on its claims in the Schefferville area. The program included the survey of existing IOC trenches, pits and geological features for the geo-referencing of the local grids into UTM system. The program also included sampling of trenches and outcropping mineralization for grade verification.
Test Work & Bulk Sampling
A test mining program to excavate 6,500 tonnes of bulk ore samples from the first phase deposits was carried out by RSM Mining from Labrador City in October 2008. Work commenced in June 2008 with the necessary preparation work including some brushing and pad work at the Silver Yard area to create a suitable place to stockpile the sample material and to accommodate the crushing and screening equipment. There was also a need for some road work to improve access to the four different sites. Excavation of bulk sample material was completed at the end of July.
Once all the samples were stockpiled (in their individual stockpiles) at the Silver Yard area, the material was crushed and screened with some samples being washed offsite to replicate the final lump (-50mm to +6mm) and sinter fine ore (-6mm) products.
Representative 200kg samples of each raw ore type were collected. In total five train cars of samples were transported to Sept-Iles destined for shipping to SGS Laboratories for metallurgical test work and assays, while some product was shipped to potential end users principally in Europe for market testing.
The test mining program was successfully carried out and did not encounter any particular problems in mining or processing. Discussions to date have indicated a very encouraging level of interest in LIM products. The metallurgical testwork indicated that the direct shipping ore mined during the bulk sampling exercise is readily amenable to a simple washing and screening process. This process removes silica and enhances the grades of both the lump ore and the sinter fines to acceptable levels. In addition, the level of deleterious impurities in the samples is generally low and suitable for end users.
SNC-Lavalin, in partnership with the Labrador Innu Development Corporation and Geostat Systems International Inc., was awarded contracts for resource and engineering studies, including detailed engineering design and specifications for the major items of plant and infrastructure. As well, metallurgical test-work towards the design of the process circuit was carried out by SGS-Lakefield.
Historic Exploration
Most of the exploration on the Properties was carried out by IOC until the closure of their Schefferville operations in 1982, in response to technological changes in the steel industry and the emphasis on concentrating and pelletizing ores. A large amount of high quality historical IOC data has been recovered and reviewed by LIM.
Stage 1(a)Properties
James
Redmond
Houston
Stage 1(b) Properties
Ruth Lake 8
Gill
Knob Lake
Stage 2 Properties
Howse
Barney
Fleming
Stages 3 & 4 Properties
Sawyer Lake
Astray Lake
Kivivic
Eclipse
Partington
Trough
The James deposit is accessible by existing gravel roads and is located approximately 3km southwest of the town of Schefferville.
The Redmond deposit is located approximately 15km south of the James deposit and can be reached by existing gravel roads.
The Houston deposit is located approximately 18km southeast of Schefferville and can also be reached by existing gravel roads.
The Astray and Sawyer Lake deposits, approximately 50-65km 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 can be reached by existing gravel roads developed during the former IOC operations.
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