Metso (OMX: MEO1V) announced it has signed a six-year service contract for Kaunisvaara iron ore processing plant with Northland Resources AB (TSX: NAU, OSE: NAUR, FWB NPK). The order is valued 73 million Euros. In July 19 last year Metso announced a equipment and mill lining services order from the same customers. The most recent contract builds on that, which was also a repeat order.
The duration of the services contract is six years with tasks including technical assistance, maintenance, audits & inspections and spare parts. It is partially in 2011 Q4 order backlog and will go to Q1 2012 orders reserved for the remaining portion. The contract period starts immediately whereas services will be provided once the process line becomes operational.
International development-stage mining company Northland Resources AB is planning to establish a major iron ore province at the Pajala Shear Zone in Northern parts of Sweden and Finland. The company aims to maximize the uptime of the Tapuli (the second of the two iron ore deposits at Kaunisvaara, the other being Sahavaara) process line.
The contract is a cost per ton-type, so it gives them visibility on future plant expenditure. Kaunisvaara Project is expected to start producing high grade iron concentrate towards the end of this year and the company has said it is on track to have the first shipment on Port of Narvik in early 2013. There are off-take agreements for 100% of production in place.
Metso says it will increase its local services offering and customer services in Northern Sweden. It will be adding a service centre in Pajala to support this contract. The company already has presence in Gällivare, Kiruna and Luleå. Metso feels the region holds great potential as mining companies over there will invest in new projects in the future.
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