Baffinland Announces Exceedingly Robust Economics for the Mary River Direct-Shipping Iron Ore Project

TORONTO, ONTARIO–(Feb. 19, 2008) – Baffinland Iron Mines Corporation (TSX:BIM) (“Baffinland” or the “Company”) today released the results of the Definitive Feasibility Study on Deposit No. 1 (the “DFS”) of its 100%-owned Mary River Project, located in Nunavut Territory, Canada. The DFS was managed by Aker Kvaerner E&C, a division of Aker Kvaerner Canada Inc. (“Aker Kvaerner”).A conference call and live web-cast, hosted by Gordon A. McCreary, President and CEO of Baffinland, will be held at 11:00 am (Toronto time) today, February 19, 2008, to discuss the results of the DFS and future plans. To participate in the conference call please call 416-695-6310 or 1-800-952-4972 prior to the commencement of the call. The live web-cast may be accessed through Baffinland’s website at www.baffinland.com and clicking on the link provided. The conference call will also subsequently be available for replay at www.baffinland.com and at 416-695-5800 or 1-800-408-3053 (Access Code: 3252057) until February 26, 2008. An updated slide presentation is also available at www.baffinland.com.

All dollar amounts in this press release are in Canadian dollars unless otherwise stated.

Highlights of the Definitive Feasibility Study

– 20 year mine-life based on proven and probable reserves

– Pre-tax internal rate of return of 20.5%, with a payback period of 3.7 years

– After-tax internal rate of return of 15.9%, with a payback period of 4.3 years

– Project pre-tax cash flow is forecast to be $18.1 billion over the mine life

– Project after-tax cash flow is forecast to be $11.2 billion over the mine life

– Project pre-tax Net Present Value (7%) of $4.9 billion

– Project after-tax Net Present Value (7%) of $2.7 billion

– Capital cost of the Project is forecast to be $4.1 billion including contingency of $438 million

– Iron ore price assumption used in DFS approximately 40% below indicated 2008 benchmark

Based on the shipment of 18 million tonnes of high-grade iron ore (64.7% iron) per year primarily to the European market, the proven reserves of 160 million tonnes and probable reserves of 205 million tonnes, sustain a mine life of over 20 years. A moisture content of two percent and a lump-to-fines ratio of 75%:25% are assumed and are reflective of the metallurgical test-work. Assuming FOB Steensby Inlet, average sales prices of US$67/tonne for lump ore and US$55/tonne for fines, the project generates a pre-tax internal rate of return of 20.5%, with a payback period of 3.7 years, and an after-tax internal rate of return of 15.9%. Project pre-tax cash flow over the life of the mine is forecast to be $18.1 billion with after-tax cash flow of $11.2 billion. During construction parity is assumed between the Canadian and the US dollars and an exchange rate of US$0.85 to C$1.00 is incorporated through the operating phase of the project. Although equity funding is assumed in the study, ultimate project financing is expected to include a substantial debt component.

“The completion of our DFS is a major milestone toward the development of our world class, direct-shipping iron ore deposits and results in significant reduction in project risk. In the second quarter of 2008, further risk reduction is expected with the completion of a Scoping Study demonstrating the scalability of the project by expanding output to 30 million tonnes per year based on the enormous resources delineated in Deposits Nos. 1, 2 and 3. During the third quarter, further technical de-risking of the project is anticipated with the delivery of our bulk sample of 250,000 tonnes of lump and fine iron ore to certain European steel mills,” stated Gordon McCreary, President and CEO of Baffinland.

In managing the Study, Aker Kvaerner worked with several specialist sub-consulting firms. Railway design and costs have been prepared by Canarail Consultants Inc., material handling systems design and costs have been prepared by Lassing Dibben Consulting Engineers Ltd – Bulk Handling, shipping costs and port design have been prepared by Aker Arctic Technology Inc. (“Aker Arctic”). Fednav Limited (“Fednav”) provided expert input into all maritime aspects of the project, while ICAP Hyde & Company Limited contacted shipyards on behalf of the project. Peter Kiewit Sons Co., H.J.O’Connell Construction Ltd., North American Energy Partners Inc., Clark Builders and Black & McDonald Limited provided critical input into construction planning and costs, logistics and scheduling. Comprehensive metallurgical test-work has been performed at Studien Gesellschaft fur Eisenerz-Aufbereitung (“SGA”) in Germany. The overall intended level of estimation accuracy for the Study is +/- 15 percent. Aker Kvaerner E&C is also preparing a Technical Report in conformance to National Instrument 43-101 which will be filed on SEDAR in the near future. Aker Kvaerner is also completing a strategic, or “blue sky” study describing an expansion to 30 million tonnes per annum, incorporating Deposits No. 2 and No. 3 in the Q2 2008.

Open Pit Mining

Mining of Deposit No. 1 at Mary River would utilize conventional open pit drilling and blasting techniques, diesel-hydraulic shovels and 210-tonne haulage trucks. Mining equipment is assumed to be leased and operated by Baffinland. A manufacturer-supported full maintenance and repair contract for the life of the mine is assumed in the costs. Working capital for the project includes provision for mining, crushing and rail haulage of ore for 6 months prior to first commercial shipments.

Pit optimization was completed using Whittle software, an industry-recognized pit optimization program. A cut-off grade of 50% iron was used for production scheduling. The mine design criteria includes average overall pit slopes of 36 to 42 degrees. Internal dilution was included in the block model. Allowances of 97.5% to 99.0% for mining recovery were included in the analysis. The overall waste-to-ore strip ratio is 1.6 to 1 over the life of the mine. The open pit design is based on measured and indicated resources only. The inferred resources contained within the open pit are considered as waste in the production schedule.

Crushing and Screening

Run-of-mine ore is hauled to a primary gyratory crusher located approximately 200 metres south of the deposit. Ore is crushed to -8 inches in size and conveyed to three secondary crushers where it is further reduced in size. Lump ore (less than 31.5 mm greater than 6.3 mm) is expected to constitute 75% of the crusher product. Sinter feed, or fines (less than 6.3 mm), should constitute 25% of the crusher product. Two linear stockpiles containing 400,000 tonnes for fines, and 1,000,000 tonnes for lump, are planned near the rail loadout facility at the mine. The stockpiles are equipped with rail-mounted stacker/reclaimer systems. This facility would have the capability of loading rail cars at a rate of 6,000 tonnes per hour.

Railway System

From the Mary River rail load-out facility, trains would proceed 143 kilometres to port facilities located at Steensby Inlet. The railway has been designed in accordance with standard mainline railway practice and includes maintenance equipment, sidings, yard tracks, and rolling stock workshops. The rail system is designed to accommodate production rates well in excess of the initial production requirements, with only six trains per day, 300 days per year, required to deliver 18 million tonnes per year to the port. The railway system will be used to transfer operating supplies, personnel and equipment from Steensby Inlet to the Mary River operations. Steensby Inlet was selected as the preferred location for the port, over Milne Inlet, after a comprehensive review of socio-economic, environment and operational considerations.

Port Facilities

From the rail loop at the Steensby Inlet port, rail cars are emptied with a twin rotary car dumper to a conveyor system that discharges to a 1,300,000 tonne fines stockpile or a 3,200,000 tonne lump stockpile. Rail-mounted stacker/reclaimer systems manage the stockpiled ore. From here the ship loading conveyor discharges to a ship loader which would operate at 12,000 tonnes per hour.

One ore carrier berth and two service berths are planned at Steensby Inlet. The service berths would be used by harbour tugs and for the delivery of supplies. Other facilities at Steensby Inlet include a diesel fuel tank farm, diesel power generation, camp, general warehousing and the railway maintenance yard and facilities.

Infrastructure

Infrastructure envisioned at the Mary River mine site includes open pit maintenance shops, explosives mixing plant and storage, diesel fuel tank farm, diesel power generation, the primary camp, airstrip capable of accommodating Boeing 737 jet aircraft, general warehousing, surface equipment maintenance shops, administrative and technical offices, environmental and metallurgical laboratories, as well as mine rescue and training facilities.

Ocean Transportation

The port facility at Steensby Inlet is designed to accommodate cape-sized ore carriers for 12 months each year. Shipment of ore from Steensby Inlet primarily to the European market, together with all port assistance vessels, is assumed to be a service provided by major international shipping company(s), coordinated by our valued shipping partner, Fednav.

Enfotec, Fednav’s consulting company specializing in ice navigation, completed a comprehensive review of ice conditions over a ten year period in order to establish appropriate shipping lanes, and to recommend the required “ice class” for the dedicated ore carriers. A detailed bathymetric survey of the shipping lanes was completed, to Canadian Hydrographic Service standards, by Kivalliq Marine. Trans-Atlantic transit simulations to evaluate the efficiency of ore shipment in each month of the year were completed by Fednav and Aker Arctic, the designers of approximately 60 percent of the ice-breaking vessels currently in operation worldwide.

The ship design used in the DFS is a cape-size ore carrier, Polar Class 4 (DNV +1A1), of 135,000 dwt (deadweight tonnes) capacity, suitable for dedicated operations between Steensby Port and Europe over a 12 month operating period each year. A fleet of ten dedicated vessels is required to fully service the project requirements. This design will be evaluated in 2008 and optimized with respect to cargo capacity and dimensions. In addition, market vessels may be chartered in the ice-free period, August and September each year. Construction costs for the dedicated ships have been obtained from five of the world’s largest and most reputable shipyards in South Korea and Europe, including Aker Yards, Daewoo Shipbuilding & Marine Engineering Co. Ltd., Hyundai Heavy Industries Co. Ltd., Samsung Heavy Industries Co. Ltd. and STX Shipbuilding Company Ltd.

Environment and Permitting

Knight Piesold Ltd. has been engaged to conduct environmental baseline studies and Inuit knowledge studies, to complete the environmental impact assessment of the project and the closure plan, and to represent Baffinland through the Nunavut Impact Review Board (“NIRB”) and Canadian Environmental Assessment Act (“CEAA”) processes. Baseline studies have been underway for nearly four years. A project description will be filed with the regulators to initiate the NIRB and CEAA processes in March 2008, and the Draft Environmental Impact Statement is anticipated to be completed in Q4, 2008. Negotiations for the Inuit Impact and Benefits Agreement with the Qikiqtani Inuit Association (“QIA”) began in late 2006 and are anticipated to be completed concurrent with the regulatory approval process. Management is not aware of any impediments to the successful completion of the regulatory process.

Engineering and Construction Schedule

Basic engineering for the project is anticipated to be completed in early 2010, leading to the definitive capital cost estimate for control during project construction. With completion of the regulatory process in 2010, project construction will proceed, with commissioning and startup of the project anticipated in early 2014. Full commercial ore shipments are scheduled to commence in May 2014, with 11.8 million tonnes delivered to market in that year.

Capital Costs

The initial capital cost for the project is estimated to be $4.1 billion, including all direct costs, indirect costs, contingencies and owner’s costs. Sustaining capital is estimated to be $0.4 billion over the life of the project, including project reclamation and closure costs.

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