An Overview of the Mary River Iron Ore Project

The Mary River iron ore deposits were discovered in the 1960?s. The high quality of the deposits was immediately evident, and drilling programs were successful in defining a resource adequate for supporting a feasibility study. Through a combination of ownership, market and political forces, the deposits were not developed. Having missed the window of opportunity, the project remained dormant for over three decades. Baffinland Iron Mines Corporation, with its 100% ownership of the Mary River deposits, began trading publicly in 2004. Modern exploration and metallurgical test work began in 2004 and has continued in 2005 and 2006, resulting in total expenditures during this period of almost C$60 million. In May 2006, an engineering team lead by Aker Kvaerner E&C, a division of Aker Kvaerner Canada Inc., completed a scoping study based on the first of five identified deposits. Highlights of that study include direct shipping of high quality lump ore to Europe over a 34 year mine life at a production rate of 10 million tonnes per annum, based on an indicated resource of 309 million tonnes at 66.1% Fe and an inferred resource of 28 million tonnes at 65.9% Fe. Capital costs were estimated at C$1.5 billion. Using iron ore prices approximately 36% below that of the 2006 market, a pre-tax internal rate of return of 15% was estimated assuming equity financing. Payback on initial capital was 5.9 years. The pre-tax life-of-mine cash flow was estimated to be C$6.3 billion. As a result of this study, Baffinland initiated a Definitive Feasibility Study, under the management of Aker Kvaerner, which is scheduled for completion in December 2007. This paper touches on the geology of the deposits, the current resource and the outlook for expansion. Project permitting, construction planning, logistical challenges and ocean shipping considerations are discussed, providing a current perspective on the project scale, scope and timeline for commercial production. In addition, an overview of the Company?s bulk sampling program will be provided.