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Newfoundland and Labrador, Canada

Grand River. Newfoundland and Labrador, Canada. Ironsands. December 2009 From iron sands to iron making in Eastern Canada - massive heavy mineral sands deposit located next to sea port. We seek an equity partner with $30 million

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Newfoundland and Labrador, Canada

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  1. Grand River Newfoundland and Labrador, Canada Ironsands December 2009 From iron sands to iron making in Eastern Canada - massive heavy mineral sands deposit located next to sea port

  2. We seek an equity partner with $30 million • The Company with over 300 drill holes has solved the 113 year old challenge facing this deposit. The breakthrough has produced a viable economic model. • The Company at a minimum will produce iron (e.g. pig iron or iron nuggets) – the possibility of producing steel makes economic sense and will be evaluated. • The $30 million will see the project through to mining lease (Bankable Feasibility, Environmental and Resource Delineation). Portion will be used to expand resource size as well as a pilot plant using electricity for iron making. • The final phase will raise $400 million (with the possibility of Canadian government providing 50%) • Interest in debt in exchange for off-take rights • Interest in IPO from major global investment banker (post feasibility) • Likely control interest from largest operator of electric arc furnaces in US Our immediate goal….

  3. Price of pig iron • Currently selling for $310-325/tonne • Speculation from forecasters is wide ranging but typically $400/tonne is common forward price target • Managing against price • Pig iron is a raw material required to make steel – very few can match our cost of production (top 10% of low cost producers) • Focused on reducing shipping and handling • Focused on supplying markets within 7 days shipping – closer targets than Russia and Brazil • Targeting firms that value pig iron made under solid environmental conditions Key Business Sensitivity

  4. Happy Valley – Goose Bay Location - Northeast Canada Direct access to US and Europe by sea (less than 7 days) – resource covers more than 600 square kilometres – river and land.

  5. Ironsands DepositHappy Valley-Goose Bay, Labrador Unique Canadian Mineral Project – nature has done the work Dredging, gravity and magnetic separation – environmentally safe mining and processing Adjacent to a full service community and workforce – population 7,600 Port Community Low Cost Hydro Power ~$0.05/kWh Enormous resource body Ironsands in Raised Dunes in river

  6. Private Company with 93 shareholders including major shareholders - Innu First Nation and Chinese investor/advisor – Grand Overseas Economic Development • Company has been developing the claims since 2000; new management and board in 2007 • 16.5 million shares fully diluted • 8 person Board – including Band Chiefs from the two Innu First Nation communities in Labrador • Operating focus is balancing geology, metallurgy and economic considerations • Have invested approximately $5 million over past 9 years understanding and advancing the mineral resource and business model Grand River Ironsands Incorporated (GRI)

  7. GRI will be an environmental leader in mining – using gravity, water and magnets – Nature has done blasting and crushing over the past 7,000+ years • Low Cost Production • Iron ore concentrate at under $20 per tonne • pig iron (96-97% Fe) production cost under $200 per tonne • Steel billets for approximately $300 per tonne • Locational benefits – rare in the world to have all on one footprint – full service community, port, low cost power, large resource, workforce • Using robust environmental controls we will be able to produce a high quality pig iron at an operating cost under $200 per tonne – only a few globally can do lower • Iron making • Coal-based approach meets or exceeds environmental standards • Electricity-based approach will generate carbon credits – will be an environmental leader in iron making What we believe

  8. For the first time in 113 years – when deposit was discovered – we have established a productive use for the resource – confirmed by various technical experts • We have developed, with industry (geology, mining, iron making and investment bankers) a financial model that supports viability • We have drilled approximately 300 holes on the river targets and more than 40 on land targets. Moreover, we understand how the deposit was created and predictive models for optimal targeting. • We have researched and begun melt tests on the likely approaches to iron making • Have developed solid relationships with all levels of government, the Innu First Nations (land claim owners), local people in host community, environmental groups and industry participants – investment bankers, steel producers, pig traders, etc. • Expressions from the provincial government of tax credits totaling an possible $150 million over first 20 years; a Federal government that has expressed an interest in providing 50% f debt for coal based approach; governments interested in funding a portion of $30 million pilot plant using electricity What we have achieved to date…

  9. One footprint approach • Mine, produce iron ore concentrate and make pig iron all in same immediate location – reducing shipping and handling costs • Ship less volume of a higher value product • Rather than shipping 1.6 tonnes of iron ore concentrate (cost of $20/t that sells for $60/t) – we will ship 1 tonne of pig iron (cost of $175/t that sells for $325/t) – that is 37% less shipping weight (at $0.50/t/day at sea) • Co-locating with key infrastructure • Port, full service community (hospitals, recreation, homes, schools, suppliers, airport, etc.), low cost hydro power and workforce • Resource supply for generations – to make 500,000 tpa of pig iron • If mining areas with 11% heavy mineral concentrations will need to mine approximately 1 square km per year to 10 metres depth • If mining areas with 22% heavy mineral concentrations will need to mine 300 X 300 metres X 20 metres depth • Overall resource area is estimated at more than 600 square kilometres Simple Business Model

  10. Finalize investment partners and approach – the next round of $25 million of investment may chose that path in whom we partner with: • Steel producers (seek pig iron as a raw material) • Pig Iron traders (seek to re-market to mills and foundries) • Investment banker (Public Offering) • Select technical team for Bankable Feasibility • Determine primary mining targets – land or river • Select the iron making technology • SLRN (Outotec) coal based system to fuel kiln – Rotary kiln + electric furnace to make pig iron, or • Cardero Resources – electricity basedsystem – from briquette to pig iron casting (or molten iron if steel making is desired end product) Key decisions in 2010…

  11. China (Dalian Port) would be 25 days by sea at a speed of 20 nautical miles or 42 days at a speed of 12 nautical miles

  12. Mineral Sands – Cost Advantage No blasting, no crushing – lower capital cost and minimal impact to land reducing environmental remediation costs – dark strands are heavy minerals

  13. The Mining Process – Dredging Sands Dredger capable of extracting 5,000 tonnes of sand per hour – low tech and proven approach

  14. Low Cost Separation and Concentration Spiral Separation (water and gravity) and Wet Magnetic Separators to produce final products – low tech and proven technologies for separation

  15. First Pass Spiral – Gravity Separation High Grade Magnetite at 68.3% Fe Ti-Mag is 56.68% Fe and 7-11% TiO2

  16. Overview of Producing Iron Ore Concentrate (Magnetite and Titanmagnetite) Dredge and conveyor to the processor and a return circuit after separation of valuable minerals Sands (dried) from the river after dredging Gravity Spiral—Uses Water 100 % of River Sands Silica Sands (returned to the river or land) Heavy Mineral Concentrate 77-88% of River Sands 12 - 23% of River Sands Magnetite (66.1 - 68.3% Fe) Magnetic Separators and Rare Earth Drum Rollers— extracts magnetite & titanmagnetite and two other products of value Titanmagnetite Garnet Zircon

  17. + Magnetite (66-68% Fe from River – 1% of head feed) Titanmagnetite (56% Fe and 7-11% TiO2 from River – 4% of head feed) Magnetite + Titanmagnetite =Iron Ore Concentrate to make Pig Iron

  18. Pig Iron/Iron Products Takes 1.6 tonnes of iron ore concentrate to produce 1 tonne of pig – the cost edge starts with iron ore concentrate at $20 per tonne

  19. BlueScope Steel (formerly New Zealand Steel) The ironsands of Grand River are superior to the chemistry of NZ SLRN (Outotec)Coal-Based - 50+ plants

  20. Mining Life Not yet quantified due to enormous size Generally we know/believe: 1. River Claim is 144 square Kms 2. Land Claim is 475 square kms To produce 500,000 tpa of pig iron requires 800,000 tpa of iron ore concentrate River will be mined to 20 metres; land to 30-50 metres depth 800 ktpa of iron ore concentrate To 10 metres = < 1 sq km To 20 metres = < 0.5 sq km *Port 1 Goose Bay 2

  21. CapEx $368mm (50/50 Debt:Equity) • Mining - $83 million • Iron Making - $285 million • Revenue $200 million • 500,000 tpa @ $400/t • EBIDTA $112 million • EBT (earnings before taxes) $78 million • IRR is 30% (at $400/tonne) • potential for 20 years of tax credits to increase IRR to 36% • Model doesn’t include potential revenues from garnet, zircon, titanium or carbon credits sales Financial Model Scenario - Pig Iron

  22. Finalize the $30 million investment to fulfill requirements to build out the project ($400 million) • Complete resource delineation (NI 43-101); environmental permit; bankable feasibility study for iron making and securing approval for mining lease • Key considerations for success • Iron making technology (coal or electricity) • If coal fired approach; there is immediate interest in financing • if electricity, will require pilot plant to first prove up • Canadian government is prepared to provide up to 50% of CapEx in form of loan • Interest from NL Hydro and Province in attracting electric smelting to HVGB – project is next to the proposed $12 billion Lower Churchill Hydro project (2,800 MW generation) Next Steps…

  23. To secure an operating partner that has a need for the end products produced (pig iron or billets) • Pig Iron with 95-97% Fe; 3-4.5% Carbon; Sulfur <0.05-1.0%; Silicon <0.1-0.5%; P <0.05-0.1%; Mn – Trace; TiO2 <0.1% (Right: pig button from river sands + TiO2 slag) • Successfully proving Phase I of producing 500,000 tpa of iron making (pig iron) to enhance future phases. Resource base and markets can easily support increasing to 2 mtpa. • To focus on value-add as promised to the community and Innu partners. • Be an environmental leader in mining, processing and iron making and subsequent benefits (carbon credits). The ideal model would focus on using electricity-based model. Our goals…

  24. Grand River www.grandriverironsands.com Ironsands Thank you!

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