Mary River A World Class DirectShipping Iron Ore Project

1
Mary River A World Class Direct-Shipping Iron
Ore Project

• January 2009
• BIM-TSX
• www.baffinland.com

2
Highlights

• Wholly-owned Mary River deposits are the best
  undeveloped iron ore deposits in the world
• Large tonnage
• Proven and Probable Reserves in Deposit No. 1
  365 million tonnes (Mt)
• Additional Resources in Deposits Nos. 1, 2 3
• 52 million tonnes of Measured and Indicated
  Resources
• 448 million tonnes of Inferred Resources
• High grade
• Reserve grade 64.7 iron
• Resource grade gt65 iron
• High quality 75 of production is expected to
  be premium priced lump
• Initial output targets 18 million tonnes per year
  of direct-shipping ore
• Avoids capital-intensive processing no tailings
  (environmental benefit)
• 20 year initial mine-life based on current
  reserves excellent potential to expand output
  and/or extend mine-life to become a
  multi-generational project

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Highlights (contd)

• Strategically located in a politically stable
  jurisdiction with strong local, regional and
  federal government support
• Core strategic partners Inuit of the Qikiqtani
  region and Nunavut Territory
• Nunavut supports sustainable development Nunavut
  Land Claims Agreement
• Canadian government support Aboriginal and
  Arctic Sovereignty agendas
• Definitive Feasibility Study demonstrates robust
  economics project scalability
• Strategic value to steel producers with excellent
  proximity to European market
• Demand and prices for iron ore are at record
  levels protracted supply deficit China
• Letters of Intent for off-take with five European
  steel producers and initial modest marketing
  rights with Mitsubishi into the Asian market
• Experienced management team, strategic shipping
  partner (Fednav) and world class team of
  engineers, consultants and construction
  contractors
• Recently engaged Citi and CIBC as financial
  advisors Minority Strategic Partnering

4
Iron Ore Industry Dynamics
Global Market Share of Top 5 Producers (Percent
of Market Share)
Top 5 Seaborne Iron Ore Producers(Percent of
Market Share)

• Iron ore production is highly concentrated
• Big Three control 78 of seaborne iron ore
• Concentration set to increase if BHP/Rio Tinto
  merge
• Steel producers now focused on securing their own
  sources of iron ore
• ArcelorMittal targets iron ore self-sufficiency
  of 90 by 2018 from current 47
• Citic Pacific (Fortescue), Sinosteel (Midwest),
  Tata (Cote dIvoire, Liberia)

Top 5 57
Top 5 86
1997
2007
Source Company reports, Factset, Tex Report,
Roskill, UNCTAD.
Source Tex Report, Roskill, UNCTAD.
5
Iron Ore Market Trends

• Since 2002 iron ore prices have increased almost
  five times
• Mining analysts continue to believe iron ore has
  among the best long term fundamentals of any
  commodity
• Prices have increased 65 to 80 for fines 87
  for pellets and 85 for lump. Rio Tinto has
  negotiated a 7.50 (12 per dmtu) freight
  premium for its iron ore into the Asia Market.
• Forecasts have prices changing from -30 to 0 in
  2009. This wide range is a reflection of the
  uncertainty created by recent turbulence in all
  global markets.

Iron Ore Price Trends
World Seaborne Iron Ore Trade
(US cents/DMTU)
Note Pricing represents Carajás Sinter
Feed. Source CVRD website.
Source Tex Report, Roskill, UNCTAD.
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Premium Pricing
Historical Iron Ore Prices

• Lump price commands a historic 22-30 premium to
  that of fines, but pellets 32-40 more expensive
  than lump

Historical Iron Ore Exports by Product Type

• Lump was 45 of seaborne trade in 1983 totaling
  107 Mt by 2007 lump was reduced to 13 of the
  seaborne market totaling 102 Mt

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Mary River - World Class Iron Ore Deposits

• Mary River is the highest grade, large
  undeveloped iron ore project in the world that
  remains independently owned

1
1 Roche Bay resource non 43-101 compliant, grade
is mid-point of estimate. Source FactSet,
Company filings, Metals Economics Group.
8
Nunavut Land Claims Agreement Secures our legal
framework and lowers project risk
9
Mary River Project Description

• Conventional open pit mine 18 million tonnes
  annual production and 1.61 strip ratio
• 20 year mine-life based only on Proven
  Probable Reserves in Deposit No. 1
• Opportunity for expansion and/or mine-life
  extension from known and future resources in
  Deposits Nos. 1, 2 and 3 and the exploration of
  Deposit No. 4
• No processing required other than simple crushing
  and screening
• Less capital and energy intensive
• Low environmental impact
• 143 km rail from mine site to year-round marine
  terminal at Steensby Inlet
• Ocean transport by dedicated ice-strengthened ore
  carriers (Polar Class 4)
• Key shipping objective Competitive freight rate
  to Europe compared with Brazilian production
• Fednav to deliver the shipping solution shipping
  pool and shipyards
• Market vessels will supplement ice-strengthened
  fleet in ice-free season

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• Deposit No. 1
• 365 Mt of Reserves
• Proven 160 Mt _at_ 64.4 Fe
• Probable 205 Mt _at_ 64.9 Fe
• Deposits Nos. 1, 2 3
• 0.4 Mt of Measured Resources
• 52 Mt of Indicated Resources
• 448 Mt of Inferred Resources
• Deposit 4
• Strike length of 2,700 metres

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Deposit No. 1 - Looking West
2,500 metre strike length
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Plan View Deposit No. 1
Cross-Section
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(No Transcript)
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Mary River Site Infrastructure
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Rail Route Alternatives 2 alternatives to Milne
Inlet 5 alternatives to Steensby Inlet Have
defined the most easterly route south to Steensby
Inlet by comprehensive work for the Definitive
Feasibility Study

• Rail line 143 km southeast of Deposit No. 1 to
  the year-round marine terminal at Steensby Inlet
• Further rail distance to Steensby Inlet balanced
  against longer ice-free period and 12 month
  shipping season
• Best in Class partnership with Canarail

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Port Sites
Milne Inlet lay down area for sealift of inbound
supplies and outbound bulk sample in Q3/08 gt50
metre water depth
Steensby Inlet port site where stockpiles and
cape-sized dock will be located on islands gt36
metre water depth
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Steensby Port And Loading Facility
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Shipping Route

• Ice-strengthened ore carriers have been proven
  cost effective and reliable for well over 20
  years at Arctic mines including Polaris,
  Nanisivik, Raglan and Voiseys Bay

Polaris Mine
Nanisivik
Mine Site
Greenland
Steensby Inlet
Nunavut
Raglan
Steensby Rotterdam 3,100 nautical
miles Brazil Rotterdam 5,000 nautical miles
Voiseys Bay
Quebec
Rotterdam
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Definitive Feasibility Study Highlights February
2008

• Pre-tax NPV 0 C18.1 billion and pre-tax NPV
  7 C4.9 billion and a pre-tax IRR of 20.5 and
  payback period of 3.7 years
• After-tax NPV 0 C11.2 billion and after-tax
  NPV 7 C2.7 billion and an after-tax IRR of
  15.9 and payback period of 4.3 years
• Based upon the following
• Proven and Probable Reserves of 365 million
  tonnes grading 64.7 Fe
• Capital Costs C4.1 billion
• Operating Costs C14.62 per tonne
• Price assumptions US67 per tonne for lump
• US55 per tonne for fines (sinter feed)
• Long-term price assumption equates to 2007
  prices
• Mine-Life 20.3 years at 18 million tonnes per
  year (reserves only)
• Exchange rate assumption of US1.00C1.00 during
  construction period, US0.85C1.00 thereafter

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Capital Cost Summary
21
Operating Cost Summary
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Bulk Sample Program

• 113,000 tonne bulk sample shipped to European
  steel mills for production trials in blast
  furnaces of steel mills in H2/08
• Peaked at 390 people at Mary River, Milne,
  Mid-Rail and Steensby camps
• Expected to confirm high quality of Mary River
  lump iron ore as a direct charge to the blast
  furnaces and Mary River fines as high quality
  sinter feed
• Bulk sample delivered to European steel mills of
  ArcelorMittal and ThyssenKrupp
• Shipped in September through October 2008

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First Barge Loading at Milne Inlet

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Federal Franklin Loading at Milne Inlet
25
Baffinland Trial Cargos Land in
Europeexceptional results
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Credible and Experienced Partners

• Partnered with leading engineering and
  transportation firms
• and some of the worlds largest steel companies

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Advancing Development Program

• Delineate World Class Reserve and Resource ?
• Complete Definitive Feasibility Study ?
• Establish Infrastructure for Bulk Sample ?
• Roadmap to Development ?
• Collect Bulk Sample and Negotiate Off-Take
  Agreements Ongoing
• Optimization of Engineering Ongoing
• Minority Strategic Partnering and Arrange
  Financing Ongoing
• License to Operate Ongoing

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Arctic Operations

• Arctic mining proven through success of many
  other operations
• Railroads over permafrost have been built
• Ice-strengthened bulk carriers have been operated
  for decades by Fednav (MV Arctic and Umiak 1)

ArcticCircle
North Pole
Mary River
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Key Corporate Activities

• Strategic Partnering
• Land based
• Ocean shipping
• Bulk Sample
• Convert off-take Letters of Intent with steel
  mills to long term contracts
• Global debt providers have expressed strong
  interest in financing of Mary River
• December private placement targeting C25
  million focused on infill drilling of Deposits
  Nos. 2 3 with the objective of upgrading
  inferred resources to indicated resources

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Experienced Management Team
 
Gordon McCreary President CEO

• 30 years experience in gold, iron ore, base
  metals, coal and industrial minerals
• VP of Kinross from 1993 to 2004 with
  responsibility for corporate development and IR

Michael ZurowskiExecutive VP

• 20 years experience in the management and
  evaluation of advanced projects including 15
  years with the Rio Tinto Group

Rodney CooperVP Operations COO

• 25 years experience with engineering and
  operations of projects in northern regions
• Former VP, Technical Services for Kinross

Gwen GareauVP CFO

• A Chartered Accountant who has spent her career
  working in the mining industry.
• Before joining Baffinland as Controller in April,
  2008, she worked as an audit manager with
  PricewaterhouseCoopers LLP in the mining practice.

Derek ChubbVP Sustainable Devel.

• 15 years experience in the environmental and
  sustainability aspects of business
• Expertise in northern mining and development in
  both consulting and industrial settings

Sonya Stark VP Corp. Secretary

• 15 years experience directing corporate
  governance, regulatory compliance, legal affairs
  and acting as Corporate Secretary for Canadian
  and U.S. public companies

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Board of Directors
 
Gordon McCreary President CEO

• 30 years experience in gold, iron ore, base
  metals, coal and industrial minerals
• Previously VP of Kinross from 1993 to 2004 with
  responsibility for corporate development and IR

Richard McCloskeyChairman

• Over the last 30 years he has been a director
  and/or officer of numerous TSX and TSX Venture
  Exchange listed companies, including Sutton
  Resources and Canico

Brian ActonDirector

• 30 years experience in the mining industry
  focused on marketing coal, coke, and other bulk
  materials
• President and COO Oxbow Carbon and Minerals LLC

Donald CharterDirector

• President of 3Cs Corporation, director of
  IAMGOLD, Central Sun Mining, Lundin Mining,
  Dundee Real Estate Investment Trust and Great
  Plains Exploration
• Previously Executive VP for Dundee Corporation
  and Chairman and CEO of Dundee Securities

• Partner, Resource Capital Fund, Baffinlands
  largest shareholder
• Professional Geologist with over 20 years of
  experience , primarily in the areas of
  mining-oriented investments

Russ Cranswick Director

• Managing Director Scott Wilson RPA
• 33 years experience in the development,
  management and financing of open pit and
  underground mines ranging from the high arctic to
  the tropics

Graham Clow Director
Grant EdeyDirector

• Recently retired CFO of IAMGOLD Corporation
  and former CFO of Repadre Capital Corporation
• Currently a director of Breakwater Resources
  and Khan Resources

John Lydall Director

• Retired in 2003 as Managing Director and head of
  Mining Investment Banking at National Bank
  Financial
• Currently a Director of Dundee Precious Metals
  and Lead Director of FNX Mining

Gordon Watts Director

• Consulting Engineer with over 45 years experience
  in the mining industry in exploration,
  development and operations and son of the
  discoverer of the Mary River deposits

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Baffinland at a Glance
 

• Exploration and development company solely
  focused on advancing its wholly-owned Mary River
  Project on Baffin Island, Nunavut Territory,
  Canada
• TSX Stock Symbol BIM
• Share Price (08-Jan-09) C0.26
• 52-Week High-Low C4.40 - C0.105
• Basic Shares Outstanding 233.1 million (ex 22.2
  million RCF escrow)
• Fully-Diluted Shares 271.2 million (includes RCF
  escrow)
• Insider Ownership Fully Diluted 29.1 (including
  RCFs escrow)
• Market Capitalization C61 million
• Cash and Investments C50 million as of
  September 30, 2008
• No Debt

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Forward-Looking Statements

• This presentation contains forward-looking
  information within the meaning of securities
  laws. Forward-looking information may relate to
  managements future outlook and anticipated
  events or results, and includes statements or
  information regarding the future plans,
  intentions, beliefs and prospects of the Company,
  and can often be identified by forward-looking
  words such as anticipate, believe, expect,
  plan, intend, estimate, envision, may
  and will or similar words suggesting future
  outcomes, or other expectations, beliefs, plans,
  objectives, assumptions, intentions or statements
  about future events or performance. In
  particular, readers are cautioned that
  substantially all of the information contained in
  and/or derived from the DFS constitutes
  forward-looking information. Actual results may
  vary.
• In addition to assumptions regarding the general
  conduct of mining operations at the Mary River
  Project, the information contained in the DFS is
  also based on a number of assumptions regarding,
  among other things, mineral reserve and resource
  estimates, future annual production and shipment
  quantities, the grade and moisture content of
  iron ore produced from the Mary River Project,
  iron ore sale prices, currency exchange rates,
  the relative composition of lump ore and fines,
  estimated initial and sustaining capital costs
  and estimated operating costs. Many of these
  assumptions are described in this presentation,
  and readers are cautioned that while the Company
  considers these assumptions to be reasonable
  based on information currently available to it,
  they may prove to be incorrect.
• Without limitation, in estimating an initial
  capital cost for the project of 4.1 billion, the
  Company has assumed that current high
  construction input costs for labour, equipment
  and materials prevail over the construction
  period, that the current strength in the Canadian
  dollar prevails over the construction period,
  that Federal goods and services taxes are
  recoverable, that the Government of Nunavut fuel
  importation tax is recoverable, that the
  royalties imposed by the Federal Government and
  the QIA for the use of gravel do not change, that
  construction input costs do not escalate from
  this present time through to the end of
  construction, that financing costs are excluded
  from the capital cost estimate, that any payments
  required under the terms of the future Inuit
  Impact and Benefits Agreement do not exceed the
  allowance for such currently included in the
  capital costs, that the allowances made in the
  construction estimate to account for the effects
  of global warming prove to be adequate, that
  design criteria concerning the geotechnical
  conditions present at Mary River, Steensby Inlet
  and along the rail corridor prove to be adequate,
  that the construction cost for the dedicated
  cape-size ore carriers will be undertaken by ship
  owners operating through the Fednav shipping pool
  rather than by Baffinland, that there is no delay
  in the project timeline after mobilization of
  contractor equipment in 2009 that necessitates
  additional holding costs for said equipment and
  that, as a result of the regulatory process,
  costs in excess of those already included in the
  capital costs for regulatory compliance are not
  imposed.

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Forward-Looking Statements continued

• In estimating that operating costs for all
  facilities at Mary River and Steensby Inlet will
  be 14.62 per tonne, excluding taxes and
  financing costs, the Company has assumed that
  Baffinland will operate all facilities
  constructed on land for the project, that current
  high operating input costs for labour, equipment
  and materials return to more moderate historical
  levels over the operational period, that the
  Canadian dollar returns to more moderate
  historical levels over the operational period,
  that Federal goods and services taxes are
  recoverable, that the Government of Nunavut fuel
  importation tax is recoverable, that the
  royalties imposed by the Federal Government and
  the QIA for the use of gravel do not change, that
  operational input costs do not escalate from this
  present time through to the end of the production
  period, that financing costs are excluded from
  the operating cost estimate, that any payments
  required under the terms of the future Inuit
  Impact and Benefits Agreement do not exceed the
  allowance for such currently included in the
  operating costs, that the allowances made in the
  operating cost estimate to account for the
  effects of global warming prove to be adequate,
  that the ocean freight costs paid by Baffinland
  as the long-term charterer of the dedicated ore
  carrier fleet will be fully reimbursed by
  Baffinlands customers through long-term off-take
  agreements that reflect DES sales terms, that
  Baffinlands customers will view the ocean
  freight costs imposed by Baffinland are
  competitive throughout the operating period such
  that no freight equalization payments are
  required, that there is no delay in the delivery
  of the dedicated ore carrier fleet such that the
  start of commercial production is delayed, that
  the early delivery of the dedicated ore carrier
  fleet will not impose additional costs on the
  project, that as a result of the regulatory
  process, costs in excess of those already
  included in the capital costs for regulatory
  compliance are not imposed.
• In making statements concerning the planned
  engineering and construction schedule of the Mary
  River Project, including the timing of completion
  of basic engineering and project construction,
  the Company has assumed, among other things, that
  it will obtain in a timely fashion all of the
  financing, regulatory approvals and other
  authorizations required to enable the continued
  exploration and development of the Mary River
  property, and the mining activities required in
  order to complete such activities.
• By its nature forward looking-information is
  subject to certain factors, including risks and
  uncertainties that could cause actual results to
  differ materially from what is currently
  expected. These factors include risks inherent in
  the exploration and development of mineral
  deposits, risks relating to changes in iron ore
  prices and the worldwide demand for and supply of
  iron ore, uncertainties inherent in the
  estimation of mineral reserves and resources,
  risks relating to the remoteness of the Mary
  River property including access and supply risks,
  reliance on key personnel, construction and
  operational risks inherent in the conduct of
  mining activities, including the risk of
  increases in capital and operating costs,
  regulatory risks, including risks relating to the
  acquisition of the necessary licenses and
  permits, financing, capitalization and liquidity
  risks, including the risk that the financing
  required to fund the required exploration and
  development activities may not be available on
  satisfactory terms, or at all, environmental
  risks and insurance risks.

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Forward-Looking Statements continued

• In particular, the key sensitivities of the
  conclusions reached in the DFS relate to
  Baffinlands ability to obtain regulatory
  approvals that do not materially change the
  project timeline, that construction contractors,
  equipment, materials and labour are available at
  the appropriate time, in adequate quantity and
  with adequate quality, and at similar cost to the
  assumptions reflected in the DFS, that weather,
  ocean, and ice conditions allow for the
  mobilization and execution of the construction
  plan in general agreement with the assumptions in
  the DFS, that future decisions on the part of
  regulators are consistent with assumptions
  included in the DFS , that the Inuit Impact and
  Benefits Agreement negotiated with the QIA is
  consistent with the assumptions included in the
  DFS, that the ocean shipping market and
  ship-building market continue to function in
  accordance with assumptions included in the DFS,
  that the terms and conditions associated with the
  abandonment and restoration of the project site
  remain in accordance with the assumptions in the
  DFS.
• Although the Company has attempted to identify
  important factors that could cause actual
  results, performance or achievements to differ
  materially from those described in
  forward-looking statements, there may be other
  factors that cause results, performance or
  achievements not to be as anticipated, estimated
  or intended. Readers should be aware that these
  statements are subject to known and unknown
  risks, uncertainties and other factors that could
  cause actual results to differ materially from
  those suggested by the DFS, and are cautioned not
  to place undue reliance on such information. By
  its nature, forward-looking information involves
  numerous assumptions, inherent risks and
  uncertainties, both general and specific, that
  contribute to the possibility that the
  predictions, forecasts, projections and various
  future events will not occur. While the Company
  may elect to update publicly or otherwise revise
  any forward-looking information, the Company
  undertakes no obligation to do so, whether as a
  result of new information, future events or other
  such factors which affect this information,
  except as required by law.
• Other Cautionary Notes
• Mineral resources which are not mineral reserves
  do not have demonstrated economic viability. Due
  to the uncertainty that may attach to indicated
  mineral resources, there is no assurance that
  mineral resources will be upgraded to proven and
  probable ore reserves. Inferred mineral resources
  are considered too speculative geologically to
  have the economic considerations applied to them
  that would enable them to be categorized as
  mineral reserves.

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Our World Class Project ...Our World Class Team
Deposit No. 1
Deposit No. 2
Deposit No. 3
www.baffinland.com