UPDATE: MONDAY, AUGUST 25, 2008

Work continues at Iron Mountain in anticipation of the resumption of ore mining and shipping of the first run-of mine ore.  There are a number of contractors on the site at this time working in every aspect of mine development and preparation of the facilities.

RAILCARS AND TRACK

The first 17 temporary, or bridge, railcars are now at the site and sitting on the interchange tracks (Figure 1).  When all are received, we will have between 400 and 500 cars in service.

Figure 1: Temporary Railcars on Interchange Tracks

Upgrade of the spur line to Iron Springs is still moving ahead rapidly with the expected completion date to be September 7, 2008.  Contractors must first remove the old existing ties and then replace them with cement ties.  The cement ties provide better stability on the curves than wooden ties.  Once the ties and rail are in place, the ballast that was crushed on-site is dumped on the tracks (Figure 2) to ensure good stability and drainage. Only a few thousand feet of rail is being replaced, and only when we upgrade from 90 lb. rail to 133 lb. rail.

Figure 2: Ballast Over New Rail and Ties

Once ballast has been added, the track is then groomed in preparation for use.  Figure 3 shows a groomed portion of the track with new cement ties on one of the most critical curves on the line.  We have now installed approximately 1600 of the 5400 ties that will be replaced.

Figure 3: Groomed Track

THE MINE

We have started to remove (layback) the north pit highwall (Figure 4) for safety to assure we will not have any sloughing of material once mining begins below this area.  This is purely for safety of the mining crew and to give us better access to the area that will be mined below.  All material being removed is being trucked to build the crushing pad behind the primary crusher.

Figure 4: North Pit Highwill Layback

The drilling crew is currently mobilizing and getting set-up on site to begin blasting.  Powder magazines are currently in the blasting shacks (Figure 5) at the site adjacent to the mining area. 

Figure 5: Blasting Shacks

A pad was poured and the Prill (Anfo) storage silo has been installed at the site (Figure 6).  The silo sits adjacent to the blasting shacks and will be the main blasting site for the crew.  In the background of Figure 6 you can see the DM 50 Blast Hole Drill ready to move into position at the mine.

Figure 6: Prill Storage Silo with Drill in the Background

ELECTRICAL

All secondary power is now in-place and Rocky Mountain Power has now installed the meters on the main power lines.  Power to the site should be activated this week.

Figure 7: Power Meters on Main Power Line

ANNUAL GENERAL MEETING

The AGM will be held at 9am on September 17, 2008 at the Palladon Ventures office in Salt Lake City, Utah.  We would like to get some idea of those that are attending, so if you are planning to come please email us at info@palladonventures.com.  In addition, if you are planning to meet at the mine site on September 18, 2008 please let us know so that we can arrange clearance at the site.

UPDATE: MONDAY, AUGUST 18, 2008

TIPPLE

Progress this week centered on transportation and installation of the tipple to replace the old one that was damaged by vandals over the years of inactivity (Figure 1) and had to be demolished.  The tipple is an integral part of the plant as it is used to weigh the iron ore and deliver it to the rail cars.

Figure 1: Old Tipple Being Demolished

The tipple was manufactured at Gilbert Development’s crusher manufacturing facility approximately 40 miles south of the mine.  The first two sections were then transported to the site for installation (Figure 2 and Figure 3).

Figure 2: Moving Tipple On Hwy 56

Figure 3: Tipple Bottom Section Entering Through Gate

Once the sections were received, installation started immediately.  The bottom section was unloaded and moved into position on the foundation (Figure 4). 

Figure 4: Unloading Bottom Section of Tipple

The Bottom section was bolted into place and then the second section was moved above the bottom section for installation (Figure 5).

Figure 5: Second Level of Tipple Being Placed

With both sections mounted, the welders started to secure the facility.  The next phase will be to add the bin that will hold the material for loading into the rail cars, and then connecting the conveyor system and the weigh scales.

Figure 6: Welding the Bottom Two Sections Together

CRUSHER

The large primary crusher is currently being installed at the site (Figure 7).  The primary crusher will handle all 2M tonnes of the mined ore while the smaller crusher that is currently crushing ballast, will be used for supplemental crushing and during scheduled maintenance.  This is an 84” horizontal impact crusher and is the largest one in the world.

Figure 7: Primary Crusher Installation

EXPLORATION

Palladon has signed an agreement with EDCON-PRJ to obtain an ultra-light airplane aeromagnetic survey over the Iron Mountain Project.  The area of the survey will cover the entire Iron Mountain area and will include future potential resource areas.  The data will be acquired along flight lines oriented E-W with 200-meter line spacing. Tie lines will be oriented approximately N-S with 800-meter line spacing.  A high sensitivity optically-pumped magnetometer will be used with the magnetic data sampled and recorded digitally at 0.1-second increments to a resolution of 0.01 nT.

This will be the first aeromagnetic survey completed on the entire area and will utilized current state-of-the-art technology with high-precision and resolution.   Areas identified as potential resource sites will be evaluated by the geology staff and drilling performed where applicable.

The survey will be completed by September 30, 2008.

UPDATE: MONDAY, AUGUST 11, 2008

Welcome to the first of the weekly updates that will be presented on the Iron Bull website. We hope that through these, you will be able to see the progress at the mine and be able better understand how quickly work is progressing. Any major items that represent critical path accomplishments will still be reported through press releases.

SITE PREPARATION

Palladon Iron along with its contract miner, Gilbert Development, has been working feverishly at the site in order to move into production. The first crusher (Figure 1) has been installed on-site and is in operation crushing ballast for the railroad refurbishment project. This crusher provides sufficient capacity to produce in excess of 2M metric tons of run-of-mine ore per year.

Figure 1: Crushing Plant

Ballast (Figure 2) is used on the track to provide a stable base and allow for good water drainage.  Not only was suitable ballast material found within the project area, eliminating the necessity of purchasing and delivering ballast from a third-party, it created a significant cost savings. When crushing the rock, two products are achieved,

Figure 2: Ballast Pile with Road Base Pile Behind

the ballast, and a fine product.  The fine material created when crushing the ballast has proved to make for a good road base and is being spread on all roads for tire protection (Figure 3). 

Figure 3: New Road Base being Distributed

The gravel has also been spread around the substation where it provides for a good solid base and excellent drainage to pull the water away from the electrical equipment.

Figure 4: Completed Substation with Gravel Base

An additional crusher, that will provide complete redundancy in crushing capability, will also be installed.  This is actually a larger crusher and will be utilized at times where we will be pushing tonnage, or when we are doing maintenance on the original crusher.  The second crusher also allows us to move to 4M metric tons per year as soon as that is approved through the railroad and the port.

Additionally, the stacker (Figure 5) has been installed and is ready for connection to permanent power.  The stacker is used to build up the stockpile for loading into the rail cars.  The radial stacker has a 48-inch belt that allows for blending while stacking.

Figure 5: Installed Stacker Ready for Positioning

Underneath the stockpile is a tunnel (Figure 6) that allows for the run-of-mine material to drop onto the belt and then be transported to the tipple where it will load the rail cars.  The stockpile tunnel has been installed with the belt to be installed shortly.

Figure 6: Conveyor System Under Stockpile

The tipple (Figure 7) is a structure that holds the material from the stockpile and loads it into the train.  There is a weigh-scale on the belt so that accurate loading of all material can be achieved and to insure that railcars are within the weight restrictions imposed by the Federal Railway Administration. This is a robust structure that sits across the railroad tracks such that the material drops directly into the cars through three ports above the car.  The cars are also weighed leaving the tipple structure so we have an accurate measurement of the weight in each car.  The foundation has now been poured which will be followed by lying of the tracks across the surface, and the erection of the tipple structure.

Figure 7: Tipple Foundation

Palladon Iron Corporation (Iron Bull Mining & Milling) has received approval of the Amended Notice of Intention to Commence Large Mining Operations, from the Utah State Division of Oil, Gas and Mining, pending payment of a small additional reclamation bond.  This approves the new dump designs and allows Palladon Iron to resume all mining activities.

RAILROAD

Palladon Iron signed a contract with Mountain States Contracting to replace 4,280 feet of 90-lb. rail with upgraded heavy duty 133-lb. rail (Figure 8) and 5,400 ties on the existing 14.6 mile short-line from the mine load-out facility to the interchange tracks at Iron Springs.  In this phase, about one-third of the ties will be replaced for added safety as loaded trains are moved down the two-percent grade track to the interchange.  Two additional phases of refurbishment are planned that will replace 100% of the ties over the next two years.

Figure 8: New Rail Ready for Installation

Mountain States is currently replacing the old weathered ties and the 90-pound rail (Figures 9 and 10) and estimate that it will be completed by the first week of September.  The maintenance work does not preclude operation on the tracks whenever it is deemed necessary.

Figure 9: Replacing Ties on the Rail

Figure 10: Tie and Rail Replacement

Palladon Iron has formed Palladon Iron Corporation Railroad (“PICR”) to act as the operating company of the shortline railroad. PICR is a wholly-owned subsidiary of Palladon Iron.

PICR and the Union Pacific Railroad have signed a track lease contract for the “Comstock Subdivision” of the UP effective August 1, 2008.  Through this agreement, PICR will be able to move all loaded and empty trains between the load-out facility at Iron Mountain and the interchange tracks. 

The Operating Agreement between the short-line operator and the PICR was signed August 1, 2008.  This allows our shortline operator to move all rail cars on the tracks and to interface with the UP.

The new test car is now on-site (Figures 11 and 12) and testing is underway today on the newly designed bottom-dump system.  Preliminary results of the first test have been very successful.  Once complete, the car will be sent to the port for additional testing.

Figure 11: Test Car From National Steel Car

Once all testing is complete, National Steel Car Company will then immediately begin construction of the permanent railcars for Palladon. It is estimated that the cars will be received in about 16 weeks.  Temporary cars will be used in the meantime.

Figure 12: Test Car with Bottom Dump Open

Other Highlights

All aspects of the project are in constant movement and we hope to have weekly updates on the progress.  Updated pictures and discussions will be presented.  We have been asked about investor visits to the site.  Unfortunately, with the amount of work in progress at the site and our concerns for safety, we will not hold any tours until after the AGM on September 17, 2008.  This will allow us to complete construction and start shipping before visitors arrive.  We appreciate your consideration in this matter.