√ Skilled Workforce - highly skilled and educated

workforce familiar with mining and related

industries; innovative training programs….

Labrador West is an ideal location for a Greenfield

silicon metal smelter. Its key advantages are:

√ Raw Materials - high-quality quartz from large tonnage

quartzite deposits. Other raw materials, such as wood

chips, are available locally....

√ Electrical Power - inexpensive and accessible

hydroelectric power....

√ Infrastructure - a well-developed infrastructure and

transportation system....

√ Favourable Business Climate - a positive business

investment environment and regulatory regime...

√ Inviting Lifestyle - excellent standard of living and a

quality lifestyle....

Labrador West is primarily known for its iron oreresource and has been a major producer of iron ore con-centrate and pellets (55% of Canadian production) forover 40 years. Also, there are vast and extensive, high-quality quartz (quartzite) deposits suitable for commer-cial exploitation. It possesses not only the mineralresources but the energy resource - a combination con-ducive to supporting a state-of-the-art silicon smelter.

The optimal scale for the project is an annual produc-tion capacity for silicon metal of 35 000 tonnes. At thislevel, the smelter would require 437.5 GWh of elec-tricity and 90 000 tonnes of quartz per annum. Proximityto the Churchill Falls hydroelectric project, and theregion's existing available electricity ensure acompetitive energy price.

THE NATURAL RESOURCE

Quartz

The Labrador Trough, a metamorphicsequence of sedimentary rocks, con-tains large and extensive deposits ofquartzite (Wishart Formation), as wellas the more famous dolomitic marbleand iron ore. The quartzite is prominentin the Labrador City and Wabush areawhere it forms notable ridges. Thequartzite is of a high quality with potentialresources in the tens of millions of tonnes. Dean andMeyer (1985) described the quartzite as follows:

The quartzite ridges vary in sizefrom 100 m long by 10m wide to 3000 m long by 700 m wide and some havemore than 100 m of vertical relief Many ridges areadjacent to iron oxide deposits since the WishartFormation generally underlies the iron-bearingSokomon Formation in the Wabush Lake area.

The quartzites occur asfour distinct types: (1) massivewhite recrystallized quartziteforms the largest and mostprominent ridges. It is remarkablyfree of impuritiesand shatters when broken by a hammer Outcrops aregenerally brilliant white, often glacially polished, andmay contain local, narrow diffuse light brown to pink

zones; (2) granular quartzite isgenerally white to gray and has adistinct rough, granular weath-

ered surface. Ridges dominatedby this type often contain zones ofmassive whiter quartzite and

narrow bands of micaceousquartzite may also occur,, (3)micaceous quartzite occurs in

bands generally less than I mthick and contains up to 10%muscovite, chlorite, biotiteand other silicates. These

minerals may represent originalmuddy layers within the quartzites; and (4) white

friable quartzite occurs only in one area on the north sideof the Fermont Highway, 1.5 kms west of Labrador City.This unique exposure is sofriable that it may be sampledwith an ordinary shovel and can be considered to be asilica sand deposit.

The Wishart Quartzite is a prominent physiographic unitexposed on the west side of Wabush Lake. The whitequartzite ridges north and west of Labrador City areparticularly clean and represent significant reserves ofhigh quality silica. Most of the larger ridges are within 5km of Labrador City and several are adjacent to existingiron ore mining operations.

Dean and Meyer (1985) collected 383 samples from 34sections measuring 25 m to 500 m in length. Of these,251 samples indicated SiO2 content higher than 99%.

Further, only 15 of the 383 samples contained less than98% SiO2. Results from this initial sampling indicatedthat the quartzite meets, or exceeds, the specificationsrequired for the manufacture of silicon metal (see TableA at back).

“A world-classmineral resource"

These deposits are amenable to easy and cheap miningquarrying because of their continuous thickness, lengthand vertical relief. Metallurgical testing has also shownthat the quartz has excellent qualities for "lump" silicahaving extremely low levels of impurities, in particulartitanium; it has excellent handling characteristics withlow levels of fines generated during transit. The averagechemical composition of 17 samples ready for shipmentis 0.0571% Fe2O3, 0.0311% Al2O3, 0.069% CaO, and0.0012% TiO2, (see Table B at back).

The quality and suitability of these deposits for siliconmetal production is attested to by the recent (I 999)development of a local silica mining operation. It isbeing operated by Shabogamo Mining &Exploration (SME), alocally owned com-pany, which supplieslump quartzite feed-stock to the SKWCanada silica smelterat B6cancour, Quebec,under a ten-year contractagreement for up to I 00000 tpa. SME has provenreserves of 1.2 milliontonnes and anticipates thatthis will be significantlyincreased.

Wabush. Large forest resources are also available alongthe year-round Trans Labrador Highway that runs east,from Labrador City to Churchill Falls and HappyValley-Goose Bay.

Electrical Power

The Churchill Falls hydroelectric project is one of thelargest underground hydro generating plants in theworld and supplies large quantities of low-cost power tothe iron ore mining and beneficiation operations inLabrador West and Quebec, the aluminum smelters andother power-intensive industries in Quebec and to the

populace of Labrador West and the HappyValley-Goose Bay region. Newfoundlandand Labrador Hydro (NLH), a govern-ment agency, has the right to recall sub-

stantial quantities of this power to servelocal markets. The power can be madeavailable through the construction of anew, third 230 kV transmission line

from Churchill Falls toLabrador West. It wouldalso accommo-

date expected growthin the iron ore industryand in the

general market.

Mining operations consist of a crushing andscreening plant at the mine site. The material isthen transported 10 km to a processing plantwith a rated capacity of 200 tph; the plant isadjacent to the main rail line. At the processingplant, the quartzite is washed, re-screened, sam-pled, and classified before being loaded into railcars for shipment to Sept iles, Quebec, and then via theSt. Lawrence River to the B6cancour smelter.

The price of powerto the siliconmetal projectwould be deter-mined during anyproject fea-

sibility study in conjunctionwith government and NLH. However,

power will be competitively priced.

~~

Wood Chips

Abundant forest resources for making wood chips areavailable in the immediate vicinity of Labrador City and

2

HUMAN RESOURCES

The Labrador West region developed about 40 years agoas an iron ore mining and beneficiation centre. Thus,minerals-related activities account for about 40% of thetotal local labour market. Therefore, there is a substan-tial local tradition of employment in the metals industryand all skills relevant to silicon smelter operations areavailable locally.

Labour Force (1996)(5555)

The workforce in Labrador West is well educated,highly skilled and very stable. As illustrated in the piechart, approximately 55% of the working-age populationhas achieved an educational level beyond high school,and approximately 85% graduated high school. In anation- wide comparison of twenty economic zones,Labrador West performed extremely well in high schoolgraduation rates and in various basic and math skillsperformance indicators.

The Iron Ore Company of Canada and the United SteelWorkers of America in partnership with the College ofthe North Atlantic, and local community stakeholdershave established the highly innovative "Employee ofThe Future Program". This industrial training programis designed to develop a flexible, multi-skilled employeeready to meet the needs of today's highly technicalworkplace.

The labour relations climate reflects the understandingthat cooperation among all parties to maximizeefficiency is essential because the market for mineralproducts is global in nature, and extremely competitive.The number of work-related disputes has steadilydeclined to its present-day historical low.

Achieved Education Level (Age 15+)

* Percentages include individuals aged 15 years or older who are stillin high school

3

INFRASTRUCTURE ANDTRANSPORTATION

a participant in distance education and telemedicine andis recognized as a world leader in the provision of thesetypes of services.

The Labrador West region consists of the towns ofLabrador City, Wabush and Churchill Falls. The nearbytown of Fermont, Quebec, is part of the same economicregion. The region offers a full range of social, recre-ational, educational and medical facilities as well as aninventory of both residential and industrial propertiesdesigned to accommodate future expansion.

The area has a well-developed telecommunicationsystem including customized telephone networks, andcellular and teleconferencing services. Under a federalgovernment program Labrador is becoming a leader inthe integration of information and communicationstechnologies into the community and local businesses.This includes intemet connectivity, video-conferencingand high-speed data and voice transfer.

Provincial telecentres provide on-line access to invest-ment opportunities, statistical information, communityprofiles, major library indexes and governmentprocurement and public tendering information. Theprovince is

Labrador West is served by the Quebec North Shore &Labrador Railway which links the region to Sept iles,Quebec, a deepwater, year-round port. Iron ore is theprincipal outbound product while inbound traffic con-sists of supplies to the iron ore mining industry and thegeneral community. Because outbound traffic is sub-stantially in excess of inbound, it would probably bepossible to negotiate attractive backhaul freight rates formaterials and supplies required for a silicon smelter.

As an alternative to the railroad, the Baie-Comeau Roadand Trans Labrador Highway link the region with theyear-round port of Baie-Comeau in Quebec. Thishighway network is the principal supply route to thecommunities of Fermont, Labrador City, Wabush,Churchill Falls and Happy Valley-Goose Bay. Sincemost trucks return empty, it would probably be possibleto negotiate heavily discounted backhaul freight rates forsilicon metal shipments, at least to Baie-Comeau.

Low-cost shipping to the Great Lakes, the industrialheartland of North America, is available out of bothSept iles and Baie-Comeau.

4

FRIENDLY INVESTMENTENVIRONMENT

The federal, provincial and municipal governments inCanada are committed to positive economic develop-ment and offer a variety of incentives to ensure thesuccess of new projects. At the local level, economicagencies offer support and incentives for new businessventures.

The Canadian government currently assesses a basicfederal corporate tax of 28% of net income on all busi-nesses. Substantial deductions from this base rate existfor certain sectors. For example, a manufacturing andprocessing tax credit of 7% is available. Furthermore, thefederal government has announced that within five yearsthe corporate tax rate would be reduced from 28% to 2 1% for businesses not currently eligible for special taxtreatment. A federal investment tax credit of 10% of thecost of qualified property used in the province is alsoavailable.

A new or expanding company may qualify for statusunder the province's Economic Diversification andGrowth Enterprise Program (EDGE). EDGE providesfor start-up assistance, the leasing of Crown Land for anominal fee, and tax breaks to qualifying companies,including:

A 10-year waiver on the provincial income tax of14% of net income, phased in over an additionalfive years.

A 10-year waiver on the 2% health and post-secondary education tax that is assessed on grosssalaries and wage bills in excess of $400 000,phased in over an additional five years.

“A competitive

tax regime ....ready for the global

marketplace"

A dedicated facilitator will assist the investor in gainingaccess to funding and in obtaining permits and licensesor any other authorizations necessary to implement abusiness plan. The facilitator will also assist inaccessing various other incentive programs in such areasas human-resource development.

There are some mandatory employee benefit programsto which both companies and employees must con-tribute.

At the federal level, companies and employees mustcontribute to both Employment Insurance and theCanada Pension Plan.

At the provincial level, employers must carryworkers compensation premiums that alleviatean individual company’s responsibility to carryindependent liability insurance.

The Provincial Sales Tax and the Federal Goods andServices Tax (GST) are combined to form the 15%Harmonized Sales Tax (HST). Because businesses areallowed full input tax credits for HST paid in theprovince, the effective tax rate is 0%.

5

AN INVITING LIFESTYLE

Labradorians live close to nature, having a relaxed paceof life that emphasizes quality. Labrador offers clean airand water, a spectacular natural environment andabundant opportunities for outdoor recreation in whichthe stresses and strains of modern living find manyavenues for healthy release. With a relaxed pace of life,a low crime rate, and nature at their doorstep, it is nowonder that Labradorians are renowned for their friend-liness, spirit and sense of community.

In the Labrador West area, affordable housing is justminutes from shopping, schools, parks and restaurants.The towns offer a wide range of activities includingcultural centres, nightlife, sporting activities and a widerange of social clubs and service organizations. Outdoorrecreational opportunities abound, including downhilland cross-country skiing, snowmobiling, golfing,boating, hunting and fishing.

Labrador West combines the advantages of modernliving with life close to nature. It is a fine place to live,work, and raise a family.

“... a great placeto live and work"

6

Table A. Average chemical analyses for channel-sampled sections (shown on figure below) across quartzite ridges inthe Labrador West area (from Meyer and Dean, 1986) No. of (percent) (SiO2

Section Samples SiO2 Al 2O3 Fe tot MgO CaO Na2O K2O TiO2 MnO P2O5 LOI Total calc.)

S-01S-02S-03S-04S-05S-06S-07S-08S-09S-10S-11S-12S-13S-14S-15S-16S-17S-18S-19S-20S-21S-22S-23S-24S-25S-26S-27S-28S-29S-30S-31S-32S-33S-34

3222374811665107141456485464107102726163676516

99.4799.0899.1099.0599.0999.4099.3699.1099.1298.6298.4797.5799.1898.9598.5799.1093.6699.1498.7393.4998.8398.6698.1299.3198.7299.1598.8898.8699.1998.8199.0199.3399.0999.10

0.100.090.130.060.100.100.080.080.120.220.270.640.080.140.100.134.930.230.123.470.260.220.380.130.230.060.230.280.100.300.100.080.100.11

0.100.050.070.030.060.060.170.510.230.280.600.880.030.120.100.030.100.060.060.460.080.040.180.160.390.090.090.110.070.090.150.150.210.03

0.010.010.020.010.010.010.020.020.010.120.080.160.010.010.010.010.020.020.010.230.020.020.030.020.030.020.020.020.020.030.020.020.020.01

0.010.010.030.020.010.020.020.040.020.150.030.050.010.010.010.010.010.010.040.050.020.030.060.020.040.020.030.020.020.050.020.030.020.03

0.010.010.020.010.010.010.010.010.010.010.010.100.010.010.010.010.010.010.010.030.010.010.120.010.010.010.030.010.010.080.010.010.020.01

0.020.020.030.010.010.020.010.010.020.040.030.130.010.030.010.020.260.050.020.230.060.010.050.020.020.010.050.050.020.050.020.020.020.01

0.020.010.010.010.010.010.010.010.010.020.020.020.010.010.010.010.020.010.010.110.030.010.010.010.030.010.020.020.030.030.020.020.020.02

0.010.010.010.010.010.010.010.020.010.010.010.020.010.010.010.010.010.010.010.010.010.010.010.010.020.010.010.010.010.010.010.010.010.01

0.010.020.020.020.010.010.020.020.020.020.020.030.010.020.010.010.010.010.030.030.020.020.010.010.010.010.010.010.010.040.020.020.010.01

0.220.280.270.340.250.180.260.330.180.440.230.320.200.230.220.200.430.310.220.780.280.330.310.260.190.220.270.220.170.300.240.270.250.25

99.9799.5699.6799.5399.5399.81100.04100.1199.7199.9299.7599.9099.5399.5099.0599.5199.4599.8299.2299.8699.5999.3299.2799.9399.6699.5999.5999.5999.6299.7599.6199.9099.7499.57

99.4999.4999.4099.4899.5299.5699.3898.9699.3698.6998.6997.6599.6199.4199.5099.5594.2099.2899.4894.6199.2299.3298.8399.3599.0399.5399.2599.2599.5599.0599.3899.3999.3299.50

Table B. Chemical analyses of quartzite product ready forshipment to smelter

(percent)Sample No. Al2O3 Fe2O3 CaO TiO2

04-13-069 0.0245 0.0676 0.0054 0.0009 04-14-070 0.0322 0.0674 0.0052 0.0009 04-17-071 0.0185 0.0576 0.0049 0.0008 04-18-072 0.0260 0.0579 0.0062 0.0008 04-19-073 0.0306 0.0476 0.0025 0.0012 04-20-074 0.0342 0.0523 0.0049 0.0011 04-24-075 0.0410 0.0490 0.0048 0.0008 05-01-076 0.0305 0.0628 0.0101 0.0012 05-02-077 0.0294 0.0508 0.0095 0.0012 05-03-078 0.0370 0.0653 0.0161 0.0012 05-04-079 0.0525 0.0870 0.0043 0.0016 05-08-080 0.0378 0.0737 0.0095 0.0024 05-09-081 0.0350 0.0543 0.0084 0.0012 05-10-082 0.0341 0.0663 0.0122 0.0014 05-11-083 0.0188 0.0303 0.0031 0.0008 05-15-084 0.0409 0.0718 0.0097 0.0026 05-16-085 0.0360 0.0668 0.0079 0.0017

Average (17 samples) 0.0311 0.0571 0.069 0.0012

NOTE: The average SiO2 content is approximately 99.5%

RESOURCE INFORMATION

Dean, P.L. and Meyer, J.R. 1985: Industrial Minerals in Labrador West. In Current Research. Mineral Development Division, Newfoundland Department of Mines and Energy, Report 85-1, pages 1-3.

Meyer, J.R. and Dean, P.L. 1986: Industrial Minerals in Labrador West. In Current Research. Mineral Development Division, Newfoundland Department of Mines and Energy, Report 86-1, pages 1-8.

1987: Silica in Labrador West. In Current Research. Mineral Development Division, Newfoundland Department of Mines and Energy, Report 87-1, Pages 71-82.

I.M.D Laboratories Ltd. 1987: Potential markets for a quartz deposit near Labrador City. Report for Department of Mines and Energy, Government of Newfoundland and Labrador 89 pages.

Golder Associates 1987: Preliminary assessment of quartzite near Wabush Lake, Newfoundland. Final Report, Prepared for Department of Energy, Mines and Resources, Government of Canada, 64 pages.

Fenco 1988: Pre-feasibility study of the establishment of a silica-based industry in Labrador West. Report for Department of Energy, Mines and Resources, Government of Canada, and Newfoundland Department of Mines and Energy, 84 pages.

Hatch Associates Ltd. 1994: Final report for study of the Labrador West mineral sector. Report for Department of Energy, Mines and Resources, Government of Canada.

Resource Strategies Inc. 1994: A review of the power-extensive industry for Newfoundland and Labrador. Report for Government of Newfoundland and Labrador, St. John’s, Newfoundland, Canada.

CONTACT INFORMATION

DEPARTMENT OF MINESAND ENERGYGOVERNMENT OF NE WFO UNDLAND AND LABRADOR

MAILING ADDRESS. P 0. B OX 8 700, ST JOHN'S, NF, CANADA A IB 4J6STREETADDRESS: 50 ELIZABETHA VENUE, ST JOHN'S, NF, CANADA A ]A I W5

Contacts

Websites

Minister's Office, Department of Mines and EnergyTelephone 709-729-2760, Fax 709-729-0059, E-mail: Imatthew@mail.gov.nf.ca

Deputy Minister's Office, Department of Mines and EnergyTelephone 709-729-2766, Fax 709-729-0059, E-mail: bmaynard@mail.gov.nf.ca

Sam Banfield, Director, Customer Services, Newfoundland and Labrador HydroTelephone 709-737-1321, Fax 709-737-1902, E-mail: sam_banfield@nlh.nf.ca

Government of Newfoundland and Labrador: http://www.gov.nf.ca

Department of Mines and Energy: http://www.gov.nf.ca/mines&en/

Labrador West: http://www.labradorwest.com

Produced By:

Photo Credits:

Mines BranchDepartment of Mines and Energy

Department of Mines and Energy, Department of Industry, Tradeand Technology, Department of Tourism, Culture and Recreation,Town of Labrador City, and Ed Montague.

(August, 2000)