Scandinavian Resources (ASX: SCR), through its wholly owned subsidiary Kiruna Iron AB, has reached agreement with Anglo American Exploration BV (LON: AAL) and Rio Tinto Mining & Exploration (NYSE: RIO, ASX: RIO) to acquire 100% of the Rakkuri Project in Sweden.
The Rakkuri Project is located in northern Sweden, less than 3km from Europe’s largest iron mine, the two Billion tonne Kiirunavaara mine owned by LKAB, with port and rail infrastructure and contains a JORC compliant inferred resource of 87.7Mt @ 33.2% iron with an exploration target of 25-35Mt @ 25-36% iron.
Rakkuri also contains an exploitation concession application covering the Rakkurijarvi IOCG deposit.
Kiruna Iron AB, the new Kiruna iron company, has excellent potential for rapid growth and its resource base has grown to 185Mt of iron (Fe) with an exploration target that has grown to 150 - 185Mt of iron (Fe) in a range of 25% – 37% iron.
Olof Forslund, Kiruna Iron AB director, said “this is a major milestone for Kiruna Iron AB. The Rakkuri Project is well known in Sweden as a copper-gold project discovered by Anglo American and Rio Tinto. The mineralisation is hosted in magnetite; typical of an IOCG deposit and district such as Kiruna."
"We’ve now assessed the available data and we’re quite confident that this iron project will increase in size with additional exploration drilling due to start soon."
The project also has significant undeveloped copper-gold mineralisation and the company is going to continue consultation with Kiruna stakeholder groups to explain its iron exploration, development and mining strategy and how its plans will be tailored to ensure positive outcomes are achieved for the Kiruna Community.
“We are also very excited about having the exclusive license to utilise Anglo American’s exploration database for Sweden and to have an open line of communication with Anglo to make the most of the information," he added.
"I am very aware of how active Anglo American has been in exploring Sweden for the last 10 years so there is a huge amount of highly valuable data to work through. They have always completed high quality work but they are also looking for world-class deposits. There may be deposits lying somewhere in the data that would represent significant value for shareholders of Scandinavian Resources.”
Exploration diamond drilling is to commence late December 2010 and continue throughout winter field season.
The expanded portfolio has achieved the critical mass necessary to initiate preliminary scoping study on iron development options.
Capacity at the Port of Narvik in Norway has been confirmed along with ‘open access’ to the Swedish rail network. The mine is within 30km of a modern mining town (Kiruna) and rail infrastructure that leads to the deep water port. It is also close to Kiruna Iron AB's Puoltsa iron prospect.
The acquisition includes exclusive license to use Anglo American’s exploration database for Sweden and enables rapid incubation of projects at low cost leveraging off high quality exploration completed by Anglo American.
The combined purchase price for the two separate agreements, the Rakkuri Project and the Anglo American Data Agreement, is US$7m with each agreement having an NSR of 1.5%.
US$1m has been paid, and US$3m cash is to to be paid during November 2010, with the balance to be paid within 12 months.
A A$2.5 million convertible loan agreement has been secured, convertible into SCR shares at 33 cents, principal and interest to be repaid within 13 months.
The project contains an exploitation concession application for the mining of coppergold which will be amended by Kiruna Iron AB to include iron upon completion of exploration drilling.
The Kiruna Iron AB strategy is to aggregate sufficient iron projects through acquisition and joint venture to consider iron mining scenarios.
The majority of the company’s iron portfolio has had minimal exploration since the 1970’s. The expectation is that exploration drilling scheduled to commence late December 2010 and continue throughout the European winter will identify substantial additional iron tonnes.
Kiruna Iron AB has a corporate goal of establishing 500Mt of iron resources within the medium term.
A cornerstone investor in Scandinavian Resources is OM Holdings (ASX: OMH).
With the acquisition of Rakkuri iron project in Sweden from Anglo and Rio, less than 3km from the 2 billion tonne Kiirunavaara mine owned by LKAB, with open access rail and port capacity hoists Scandinavian Resources onto the global iron ore radar.