Anglesey’s 41% owned associate Labrador Iron Mines Holdings Limited (TSX: LIM) is pleased to report that it has signed an Agreement with Tshiuetin Rail Transportation Inc. (“TSH”) for the transportation of iron-ore from LIM’s Schefferville Area Direct Shipping Ore Project over the 235 kilometre TSH Railway, which connects Schefferville to the Emeril Junction, for the calendar year 2011.
The Agreement anticipates that iron ore will be hauled approximately eight months per year (April to November) with shipments on the TSH Rail commencing in April 2011 with the tonnage in calendar 2011 expected to be up to 2 million tonnes.
It is contemplated that a separate agreement between the parties will be concluded for calendar 2012 and subsequent years. LIM’s negotiations are continuing with other rail operators for the onward transportation of LIM’s iron ore from Emeril Junction to the Port of Sept-Iles.
The operation is expected to run for around 240 days, with about two trains every three days. LIM will provide the locomotives, which will be leased by LIM and operated by TSH. Each train will comprise 120 rail cars and be powered by two robotized SD-40 locomotives. These rail cars will also be leased by LIM.
LIM has agreed to advance to TSH a capacity reservation deposit of $750,000 to enable TSH to prepare for a smooth ramp up of its operations to ship LIM’s iron ore in calendar 2011 in accordance with LIM’s operating requirements. TSH will repay the reservation deposit over a two year period beginning in 2013 as a deduction against monthly haulage rates.
The Agreement, which includes a confidential tariff and other terms, acknowledges that it is in the best interests of both parties that the TSH Railway be rehabilitated as soon as possible in 2011 and that additional rehabilitation and capital funding will be necessary to increase tonnage capacity on the TSH Rail in subsequent years. The 2011 rehabilitation program is the first year of an estimated ten year rehabilitation program to be carried out by TSH.
Under the Agreement TSH and LIM have agreed to co-operate, and to co-operate with others, on sourcing funding for the rehabilitation of the TSH Railway. To expedite the rehabilitation program LIM has agreed to contribute $3.5 million towards the cost of the program, with expenditures to be approved and managed by a Partners Committee comprised of two representatives of TSH and two representatives of LIM.
“We are very pleased to have concluded this rail haulage agreement with TSH and to partner with TSH in the upgrade of the TSH railway to enable the carriage of our anticipated iron ore production in 2011 and future years.” said John Kearney, Chairman.
TSH is owned equally by a consortium of three Aboriginal First Nations; Naskapi Nation of Kawawachikamach; Innu Matimekush-Lac John and Innu Uashat Mak Mani-Utenam. TSH currently operates a passenger and freight train service between Sept-Iles and Schefferville twice per week.
TSH rail services were used extensively by LIM during the latter part of 2010 to successfully transport to Schefferville all of the mining equipment and plant components for its planned DSO operations which are scheduled to commence in April 2011.