Baffinland Announces Plans for Definitive Feasibility Study and Additional Studies of Satellite Deposits

    TORONTO, March 28 /CNW/ - Toronto, Ontario - Baffinland Iron Mines
Corporation (TSX: BIM) ("Baffinland" or the "Company") today announced plans
for completion of the Definitive Feasibility Study ("DFS") for Deposit No. 1
of its 100%-owned Mary River Project, located in Nunavut Territory, Canada.
Since reactivating exploration in 2004 Baffinland has spent almost
Cdn$60 million advancing the project, a potential direct shipping ore
operation with grades of approximately 66% iron. The DFS is being managed by
Aker Kvaerner E&C ("Aker Kvaerner"), a division of Aker Kvaerner Canada Inc.,
and is currently scheduled for completion in December 2007. Aker Kvaerner also
managed the Scoping Study for the project completed in May 2006.
    The DFS and additional studies of satellite deposits are expected to
include several enhancements compared to the previously completed Scoping
Study, including:

        -  In the DFS, expanding the annual output from Deposit No. 1 to 12.6
           million dry metric tonnes (dmt) per year from the 10 million dmt
           per year assumed previously.
        -  Making Steensby Inlet on the south coast of Baffin Island the
           priority for the deep water port and terminal for the rail line
           rather than Milne Inlet on the north coast. This is expected to
           extend the shipping season to 12 months from 9 months per year and
           significantly reduce the amount of ice-strengthening that vessels
           servicing the operation would require.
        -  Based on the infrastructure established for Deposit No. 1,
           complete a Scoping Study on Deposit No. 2 assuming an increase in
           total output by 2.4 million dmt per year to 15 million dmt per
        -  Based on the development of Deposits Nos. 1, 2, 3 and 3A complete
           a Blue Sky Study assuming a further increase in output to 25
           million dmt per year.

    Due to the continued tightness of global iron ore markets, iron ore
prices continue to increase and have reinforced a revised "stronger for
longer" expectation. Consequently, these new studies are expected to use a
higher iron ore price assumption than that used in the study of May 2006. The
iron ore price used in the base case for these studies will be finalized in
the second half of 2007 and the studies will provide iron ore price
    "Our outstanding exploration success has allowed Baffinland to
contemplate expanded output that is expected to have significant positive
implications for our Mary River Project. Although the expanded output and the
longer rail line to the south coast of Baffin Island would logically add to
the capital costs, the overall project economics are expected to be enhanced
significantly," stated Gordon McCreary, President and CEO of Baffinland.
    In May 2006, Baffinland reported the results of a Scoping Study, the
highlights of which were a 34 year mine life at a production rate of 10
million dmt per year, with a pre-tax internal rate of return of 15%, a payback
period of just under 6 years and a project cash flow in excess of
Cdn$6 billion after taking into account capital costs of almost Cdn$1.5
billion. A conservative iron ore price assumption was used in the Scoping
Study that was approximately 37% below the actual iron ore price for 2006. The
Scoping Study justified proceeding to a more advanced and detailed engineering
and economic analysis of the project this year. In addition, iron ore prices
on international markets have advanced an additional 9.5 percent in 2007,
adding further justification for the new studies. Iron ore prices have tripled
since 2002.
    In managing the studies, Aker Kvaerner continues to work with several
specialist sub-consulting firms who participated in the Scoping Study. Railway
design and costs are being prepared by Canarail Consultants Inc., material
handling systems design and costs are being prepared by Lassing Dibben
Consulting Engineers Ltd - Bulk Handling, shipping costs and port design are
being prepared by Aker Arctic Technology Inc. ("Aker Arctic"). Geotechnical
engineering services are being provided by Knight Piésold. Comprehensive
metallurgical test-work continues at Studien Gesellschaft fur
Eisenerz-Aufbereitung ("SGA") in Germany. In addition, Enfotec Technical
Services, a subsidiary of Fednav Limited, has provided ice interpretation,
ship design criteria and an assessment of shipping lanes for the proposed
project. It is expected that in connection with the preparation of the DFS,
Aker Kvaerner E&C will also prepare a revised Technical Report in conformance
to National Instrument 43-101 which will be filed on SEDAR.
    The Company continues to evaluate transportation corridors and ocean
shipping routes from both Milne Inlet (100 kilometers) to the northwest, and
to Steensby Inlet (140 kilometers) to the south-southeast. Based on
discussions with ship owners and operators, the Enfotec analysis of ice
conditions and shipping lanes, preliminary community consultations and
preliminary baseline environmental studies, the Company has decided that the
southerly route to Steensby Inlet is the preferred alternative for
transportation of the iron ore to market. Additional traditional knowledge and
environmental studies are planned in 2007 to further evaluate and quantify
this decision, under the ongoing management of Knight Piésold , who are also
coordinating the permitting of the project.
    In order to conform to the Company's original mine-life target of 25
years, the base case production rate for the DFS has been increased to
12.6 million dmt per year. Management believes that the mine-life target is
consistent with balancing the maximization of net present value with
maintaining long term customer relationships and with the long term nature of
the capital assets to be depreciated. This base case will continue to focus
exclusively on Deposit No. 1 and will have an intended level of estimation
accuracy of +/- 15 percent.
    As a result of a successful drilling program at Deposit No. 2 in 2006, a
separate Scoping Study will be completed concurrent with the DFS. Deposit
No. 2 would share common infrastructure with Deposit No. 1 and, at an
incremental production rate of 2.4 million dmt per year, would increase
production at Mary River to 15 million dmt per year within the first five
years of production. This Scoping Study will have an intended level of
estimation accuracy of +/- 20-25 percent.
    Aker Kvaerner has also been asked to complete a Blue Sky Study of a
production increase to 25 million dmt per year based on exploitation of
Deposits No. 1, 2, 3 and 3A. This Study will form the basis for long term
strategic planning, and is anticipated to demonstrate a significant reduction
in unit operating costs through the full utilization of all infrastructure
proposed for the project. Additional exploration drilling is planned for
Deposits No. 3 and 3A during the 2007 drilling season to follow up the first
hole in Deposit No. 3 that returned a continuous 169.8 metre interval grading
65.8% iron.
    An exploration targeting study will also be undertaken to assess the
merits of additional exploration at Deposit No. 4. Should this study result in
a positive outcome, the first exploration drilling at Deposit No. 4 could
commence in 2008.
    The Company's plans in 2007 include additional traditional knowledge
studies and environmental baseline studies. A diamond drilling program
consisting of 9,300 meters of drilling for infill, exploration and
geotechnical purposes is planned using six drill rigs operated by Boart
    A Mineral Development Advisory Group meeting is planned in June to obtain
input from the regulators prior to completion of the detailed project
description. In addition, discussions between Baffinland and the Qikiqtani
Inuit Association (the "QIA") to develop an Inuit Impact and Benefits
Agreement "in principle" are ongoing and will provide input into the final
description of the project. Prior to the end of 2007, the Company plans to
submit a detailed Project Description to the regulators in order to initiate
the Nunavut Impact Review Board process. At the present time, the Company does
not have a target date for construction, as it remains difficult to determine
specifically when construction could begin. The DFS is scheduled for
completion in December of 2007, and at that time the Company expects to be
able to more accurately define when construction could commence.

    Additional Disclosure

    Geologic analysis is provided by Dr. Lynn Moxham, P. Geo. and geological
modeling is performed by George Wahl, P. Geo., while open pit mine modeling is
performed by Rene Gharapetian, P. Eng. All three of these independent
technical professionals are Qualified Persons as defined by NI 43-101 and they
performed their resource analysis and open pit modeling under the guidance of
Aker Kvaerner E&C for inclusion in the Scoping Study.
    Assaying and analytical work are performed by SGS Lakefield Research
Limited ("Lakefield") under a strict protocol designed for testing lump iron
ores. Samples are then sent from Lakefield to SGA in Germany, where samples
are composited for detailed metallurgical testing to ISO standards for iron
ore. The testwork is specific for lump ores. Additional test-work was also
completed on fine material for sintering.
    Drill hole metallurgical data were interpreted by Michael T. Zurowski, P.
Eng., Executive VP and a Qualified Person as defined by NI 43-101. As VP
Operations and COO, Rodney Cooper, P. Eng., a Qualified Person as defined by
NI 43-101, has had oversight responsibility regarding resource estimation,
engineering studies and environmental permitting.
    Mineral resources which are not mineral reserves do not have demonstrated
economic viability. Due to the uncertainty that may attach to indicated
mineral resources, there is no assurance that mineral resources will be
upgraded to proven and probable ore reserves. Inferred mineral resources are
considered too speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral reserves.
    Certain information included in this press release may constitute
forward-looking information within the meaning of securities laws. In some
cases, forward-looking information can be identified by the use of terms such
as "may", "will", "should", "expect", "believe", "plan", "scheduled",
"intend", "estimate", "forecast", "predict", "potential", "continue",
"anticipate" or other similar expressions concerning matters that are not
historical facts. Forward-looking information may relate to management's
future outlook and anticipated events or results, and may include statements
or information regarding the future plans or prospects of the Company. Without
limitation, statements about the Company's plans to complete a definitive
feasibility study, including the scheduled timing thereof and other related
statements, statements derived from the Company's scoping study on Deposit No.
1, statements about the planned Nunavut Impact Review Board process, and
statements about the Company's plans to complete an additional Scoping Study
on Deposit No. 2, a Blue Sky Study, an updated Technical Report, an
exploration targeting study, traditional knowledge studies and environmental
baseline studies and a 9,300 diamond drilling program, are forward-looking
    Forward-looking information is based on certain factors and assumptions
regarding, among other things, the estimation of mineral resources, the
realization of mineral resource estimates, iron ore prices, the timing and
amount of future exploration expenditures, the estimation of additional
capital requirements, the availability of necessary financing and materials,
the receipt of necessary regulatory approvals, and assumptions with respect to
environmental risks, title disputes or claims, weather conditions and other
similar matters. While the Company considers these assumptions to be
reasonable based on information currently available to it, they may prove to
be incorrect. Without limitation, in stating that the Company has scheduled
the completion of a definitive feasibility study in December of 2007, and that
the Company plans to complete an additional Scoping Study on Deposit No. 2, a
Blue Sky Study, an updated Technical Report, an exploration targeting study,
traditional knowledge studies and environmental baseline studies and a 9,300
diamond drilling program, and related statements, the Company has assumed,
among other things, that iron ore prices will not change materially from
current levels, that weather conditions will permit the drilling and other
exploration activities necessary in order to complete such work, and that the
Company will obtain the financing and regulatory approvals and other
authorizations required to enable the exploration, development and mining
activities required in order to conduct such activities .
    Forward-looking information is subject to certain factors, including
risks and uncertainties, which could cause actual results to differ materially
from what management currently expects. These factors include risks inherent
in the exploration for and development of mineral deposits, risks relating to
changes in iron ore prices and changes in the worldwide demand for, and supply
of, iron ore, uncertainties inherent in the calculation of mineral reserves
and resources, risks relating to the remoteness of the Mary River Property
including access and supply risks, reliance on key personnel, operational
risks inherent in the conduct of mining activities, regulatory risks,
including risks relating to the acquisition of the necessary licences and
permits, financing and capitalization risks, including the risk that the
financing required to fund all currently planned exploration and related
activities may not be available on satisfactory terms, or at all,
environmental risks and insurance risks. For a detailed discussion of these
and other relevant risk factors, see the Company's disclosure documents that
are publicly filed on SEDAR.
    You should not place undue importance on forward-looking information and
should not rely upon this information as of any other date. While the Company
may elect to, the Company is under no obligation and does not undertake to
update this information at any particular time, except as required by law.

For further information:

For further information: visit the Baffinland website at, e-mail or contact: Gordon A. McCreary,
President and CEO, Baffinland Iron Mines Corporation, (416) 814-3163; Investor
Relations: Andreas Curkovic, The Equicom Group, (416) 815-0700 x 262

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