Standard Bank Group gets physical with Northland off-take deal
29 November 2010

Standard Bank Group (SBG) has signed a long-term off-take agreement with Northland Resources S.A. for up to 3-million tonnes of iron ore pellet feed per year from the Kaunisvaara Iron Ore Project in northern Sweden.

Standard Bank Group has a long and successful history of trading physical commodities globally, and especially in Asia. The bank's ability to trade physical iron ore directly with clients in China via its local trading company Standard Resources China make it uniquely positioned to leverage global bulk commodity trade flows. Plus, Standard Bank Group has extensive commodity and emerging market expertise.

Access to end-use customers through the bank's strong presence in China is supported by the bank's strategic alliance with Industrial & Commercial Bank of China (ICBC) - the world's largest bank - which holds a 20% stake in Standard Bank Group.

In addition to the off-take agreement, the parties will enter into a marketing and sales agreement to co-ordinate and co-operate on marketing and sales activities in order to maximize the value added from customized funding and other arrangements for end-use customers of both Northland and Standard Bank Group.

The entire production from Kaunisvaara is now sold on long-term off-take agreements where Standard Bank Group has committed to take 60% of the volume.

Bruce Garner, Managing Director and Global Head of Commodities, Standard Bank Group, says: "The transaction with Northland Resources demonstrates Standard Bank's commitment to supporting the development of world class projects. "Our experience in providing the full value chain from structured finance right through to physical commodity sales, coupled with our strong position in Asia were key factors in the two parties coming together."

Karl-Axel Waplan, President and CEO of Northland, adds: "We are very pleased with the agreement with Standard Bank. They are bringing great value to our project with their strong strategic position in Asia and have the potential of introducing Northland to a customer base that can best benefit from Northland's high value product.

"The co-operation on marketing and sales will provide great flexibility and will create opportunities for sales into other global markets as and when they develop."

The Standard Bank Group off-take agreement is subject to financial support and the parties have entered into a letter of intent for a plant and equipment guarantee facility for up to US$80-million and a cost overrun facility for US$40 million which will cover part of the cost overrun account that is required by the senior lenders.

The first facility is expected to be available in 2011 to cover part of the vendor's exposure for committing long lead items to the Kaunisvaara Iron Ore Project, and the second facility guaranteeing the cost overrun account is expected to be in place before draw down on the Senior Loan in 2012.

Northland has agreed on a term sheet for the Senior Loan which will be applied to cover part of the expected capital expenditures as presented in the Definitive Feasibility Study on the Kaunisvaara Project. The Senior Loan is for up to US$-400 million and a minimum term of eight years.

The total capital expenditures and financing requirements for the Kaunisvaara Iron Ore Project will depend on a number of factors. As such the Company is considering additional sources of financing in order to complete the required financing for the construction of the Kaunisvaara Iron Ore Project and other projects in the company's portfolio.

Northland is a development-stage mining company with a portfolio of iron projects in northern Sweden and Finland. Northland's Kaunisvaara Project contemplates the staged development of magnetite iron ore deposits that would provide feed to a single, multi-line processing facility in Sweden, producing a high-grade, high-quality magnetite iron concentrate.

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