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Behre Dolbear

In February, 2009, Behre Dolbear & Company (USA), Inc. completed an Independent Review and Valuation of Bending Lake Iron Group Limitedís Iron Ore Development Project, Bending Lake, Ontario. At that time, Bending Lakeís plan was to produce merchant pig iron.  Although the current plan is to produce pellets instead of pig iron, Behre Dolbearís findings on the pig project are helpful.

Behre Dolbearís findings were that:

  1. Using the Market Related Transaction (MRT) valuation method the deposit has a present value of $33.6 million.
  2. The scoping Income (cash flow) valuation method, using a pig iron price of $400 per tonne and a discount rate of 14%, gave an NPV of $212.9 million, an IRR of 20.37% and a net income after taxes of $5.1 billion.  The ratio of net income after taxes to Capex ($833.6 million) for the project is 6.1 to 1.
  3. Assigning a 75% weighting to the MRT method and a 25% weighting to the Income method resulted in a valuation of $78.4 million.  As the project advances through the feasibility study, this weighting would likely change.
  4. Project Risks:  Behre Dolbearís rating of the degree of risk in the major areas of the project are:

    a.  Resources:                                                         Low   Low    
    b.  Mining Operations:                                              Low   Low    
    c.  Processing/Concentrating:                                    Low   Low    
    d.  Processing/Pig Iron Production:                             Moderate   Moderate    
    e.  Processing/Tailing Disposal:                                  Low/Moderate   Low/Moderate    
    f.  Infrastructure:                                                     Low   Low    
    g.  Environmental and Socio-economic Aspects:            Low   Low    

* The final report ďPreliminary Review, Valuation and Cash Flow Projection, Bending Lake Iron Ore Deposit and Bending Lake ProjectĒ can be made available upon request.



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