Anglesey Mining rallies 13% as Labrador Iron Mines clears way to begin plant and mine construction

Anglesey Mining (LON:AYM) today reported a breakthrough for its 41% owned Labrador Iron Mines (TSX:LIM), which can finally now proceed with mine and plant construction after striking a deal with local First Nations.

The agreement with the Quebec Innu calls for an immediate removal of the barriers that had restricted normal access from the town of Schefferville to adjacent mining properties.

This will enable the company to proceed with the ongoing development of its iron ore projects in Western Labrador and Quebec.
The project construction, now set to begin, will include ground clearing, in parallel with contractor mobilization, to be followed by civil construction and mechanical erection of the plant in the subsequent weeks.

The beneficiation plant is expected to be fully erected in some 12 weeks.

Initial open-pit waste removal and mine extraction will be carried out using local contractors to enable ore to be stockpiled on the crusher pad ahead of dry run testing of the beneficiation plant.

The construction of the plant and camp and the initiation of mining activities, prior to the onset of the mid-winter, will enable commercial production activities to commence in the spring of 2011, said Anglesey.

In order for the deal to be reached, the governments of Quebec and Newfoundland have made “certain commitments” to the Innu to resolve a number of issues that will help facilitate the mining projects in the Schefferville area to move forward on an ongoing basis.

Under the agreement with Innu Matimekush - Lac John, Labrador Iron Mines and New Millennium Capital Corp will jointly support a number of local social activities, including some education, training, health and youth programs and, with Government participation, improvements to the community arena facility in Schefferville.

LIM will now fast track the construction of its iron ore project in Western Labrador, while negotiating to conclude an impact benefits agreement with the Innu Matimekush-Lac John and Innu Takuaikan Uashat Mak Mani-Utenam. The latter has initiated legal action against the Government of Newfoundland and Labrador over their duty of consultation about the permitting of LIM's Schefferville Area Iron Ore Project in Western Labrador.

“LIM is extremely pleased that, with the co-operation of all three Governments, agreement has been reached with the Quebec Innu paving the way for construction of our project so that commercial production of iron ore can commence in 2011,” said Chairman and Chief Executive of Anglesey Mining John Kearney.

The company added that the last two major operating permits, for the operation of the mine and the rail spur, are expected to be issued shortly following a consultation process with potentially affected First Nations.

At the end of the reporting period, 30 June 2010, Labrador had over C$41m in cash and cash equivalents, and the company had no debt.

The company is targeting full scale commercial production in April 2011, and producing 2 Mt (million tonnes) of iron ore during the 2011 calendar year.

LIM also owns 100% of Parys Mountain in North Wales with an historical resource in excess of 7 million tonnes at over 9% combined copper, lead and zinc.

Shares in Anglesey Mining rallied 13% on the news.