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Scandinavian Resources acquires advanced iron project and permits in Sweden

Published: 10:21 08 Jun 2011 AEST

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Scandinavian Resources (ASX: SCR) has acquired a 100% interest in the advanced Ekströmsberg iron project and Tjårrojåkka iron copper project from Grängesberg Iron AB, located 45 kilometres from the Kiruna Iron District in northern Sweden.

The beauty of the deal is that when combined with Scandinavian Resource's subsidiary, Kiruna Iron AB's existing JORC resources it provides a platform for Scandinavian to mine iron from regional deposits and transporting the magnetite concentrate to Port Narvik.

The acquisition includes nine iron permits which contain a total exploration target of 244 million tonnes to 271 million tonnes iron, grading in a range of 32% to 52% iron.

Olof Forslund, technical director of Scandinavian, said “Ekströmsberg and Tjårrojåkka are key iron projects because they add additional tonnage to the portfolio and adjoin our existing iron projects which are located close to modern infrastructure at Kiruna.”

The company expects to update the combined JORC Inferred Mineral Resource with an exploration target in July this year after the completion of Phase I drilling comprising 10,000 metres, assaying and modelling.

Scandinavian acquired the nine permits through its wholly-owned subsidiary Kiruna Iron AB and moves Kiruna a step closer to becoming a producer of magnetite concentrate.

The acquisition is consistent with Kiruna’s long term strategy of mining iron from a number of 50 million tonne to 100 million tonne iron deposits within the world class Kiruna iron district, and transporting a premium quality magnetite concentrate to the Port of Narvik.

The consideration comprises the issue of 8.2 million ordinary shares in Scandinavian, a US$2 million payment and a 1% NSR on future production.

The cash component, to be funded from existing cash reserves and existing facilities, is payable in three tranches: US$500,000 within 14 days, US$750,000 by 15 August 2011 and US$750,000 by 15 November 2011.

The shares will be issued prior to 30 June 2011 and will be escrowed until 15 August 2011 whereupon 50% will remain in escrow until 15 November 2011.

No shareholder meetings will be required to complete the transaction.

The transaction will be effected through the acquisition of 100% of the issued capital in a wholly – owned Swedish incorporated subsidiary of Grängesberg Iron which owns 100% unencumbered interest in the permits.

Sale of the permits by Grängesberg Iron allows it to focus on reopening the historic Grängesberg iron mine in southern Sweden and completing an IPO during 2011.

Scandinavian’s company strategy is to ‘incubate’ a highly prospective portfolio of iron, gold, PGE and base metals projects in Scandinavia.

The company is one of the largest landholders by area of minerals exploration projects in Sweden and one of the largest landholders in the Kiruna iron oxide copper gold district.

Scandinavian’s flagship Kiruna Iron Project is 30 kilometres from the two billion tonne Kiruna iron mine, owned by LKA, the world’s largest and most modern underground iron mine.

 

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