Report released into remaining reserves at Wabush Mines

Natural Resources Minister Ed Byrne today released the consultant�s report government commissioned in January 2005 to assess the ore reserves at the Wabush Scully Mine as a result of union concerns over the mine�s life.

The consultant, Strathcona Mineral Services Limited of Toronto, has concluded that there is no evidence of "highgrading" or mismanagement in the execution of the mine plan and that the mine managers properly calculated the mineral reserve estimates in 2002 and 2003 to accurately reflect the amount of iron ore that can be economically mined.

"There appears to be sufficient iron ore reserves at the mine to potentially continue operation until 2021 with the proper investment by the company," Minister Byrne said. "I understand the employment concerns of the union. As a government, we are interested in the long-term viability of the mine and I intend to seek a meeting with the mine partners, Cleveland-Cliffs, Stelco and Dofasco, about their plans for investing in the operation and, in particular, for a manganese reduction plant."

The report confirms the presence of sufficient iron ore reserves to support mining operations until 2013. The construction of a manganese reduction plant could prolong the life of the mine beyond 2013, and possibly up to 2021. Cleveland-Cliffs, manager of the Wabush Mines joint venture, has been examining the possibility of installing a manganese reduction plant and the consultant is recommending that the remaining test work be expedited. If economically feasible, the project could allow the current blend of pellet products to be produced until 2021. Capital investment required is about $40 million.

The United Steelworkers of America Local 6285 had expressed concerns to government about adjustments to the reserve estimates by Cleveland-Cliffs. The report confirms the current factors affecting mines reserves, including unacceptably high manganese concentrations in the ore, water in the pit that contains the best quality ore and the strengthening of the Canadian dollar against the U.S. dollar along with increased operating costs.

"We committed to investigating the union�s concerns and making the final report and consultant available to the union executive. That is what we have done. The consultant has met with the union to go over the report and answer questions," Minister Byrne said. "The continued operation of Wabush Mines is of vital importance to the Town of Wabush and to the province. We will continue to work with all involved to ensure all possibilities for extending the life of the mine are explored and the resource is properly managed."

Minister Byrne said the next step now is to establish a process whereby the government, the union, the town council and the operators all work together to identify opportunities for investment and how to move forward to ensure the continued viability of the Scully Mine into the future.

The report can be found at: //www.nr.gov.nl.ca/mines&en/publications/wabush-memo-v3.pdf

Media contact: Tracy Barron, Communications, (709) 729-5282 or 690-1703

2006 04 26                             12:30 p.m.