Norway Iron Ore Project Comes Closer For Northern Iron

Success in raising $14.3 million through a placement will rejuvenate progress at WA-based Northern Iron's promising iron ore project in Norway.

Northern Iron, which is back on the boards today after a trading halt, raised the funds as part of a $55.3 million equity raising that included Perth-based OM Holdings agreeing to take shares equal to a 10 per cent share in the company.

Its Norwegian Sydvaranger project, which aims to supply iron ore to European markets, has been dogged by plant issues which has affected product quality and throughput.

The institutional placement will fund an overhaul of the plant and repair these problems.

In the quarter ended December 31, Northern Iron mined 378,000 tonnes, up 10 per cent on the previous quarter, with concentrate production of 197,000 tonnes.

The first sale of the product were made during the quarter but because of reduced quality, these were shipped to China. European sales are expected when the plant and quality improve.

OM Holdings and Northern Iron now work together in rectifying Sydvaranger's issues and are negotiating for a formal marketing agreement over sales into Asia.

OM Holdings said Sydvaranger has ``the potential to become an independent long-life world-class emerging iron-ore opportunity''.

``OMH's commodity diversification strategy incorporating this investment is in line with its stated objective of building a significant carbon-steel materials business,'' said OM Holding's CEO Peter Toth.

``This investment is also viewed as strategically important and complementary to OMH's existing operations within the global steel materials market.''

Mr Toth said OMH would assist Northern Iron to penetrate the growing Asian market and facilitate in extracting maximum value from Northern Iron's production.

``Short and long-term synergies have been identified between the two companies and OMH considers that this investment will provide an excellent platform on which these synergies can be executed,'' he said.

``The Sydvaranger iron ore project hs a number of competitive advantages relative to many of its respective sized peers, predominantly driven by the size and quality of its resource, its established infrastructure base, long mine life, historically proven iron concentrate product, independent competitiveness in major steel markets and potential for future expansion opportunities.'

Source: Perth Now