Rail Co-operation Agreement advances Schefferville Project

Labrador Iron Mines Holdings Limited has signed a Rail Co-operation Agreement with New Millennium Capital Corp. regarding the reconstruction of the "Timmins Extension" rail spur line that will run from the TSH Railroad main rail line near Schefferville, Quebec, approximately 2.5 miles to LIM's planned processing center at Silver Yards and on a further approximately 13 miles to NML's planned processing center at the Timmins mining area.

The Rail Co-operation
Agreement provides the framework under which both LIM and NML have agreed to
co-operate in the development of the transportation facilities for their direct
shipping iron ore projects in the Schefferville area and which will enable each
company to rebuild the necessary rail infrastructure in their respective
operating areas, including the construction of passing tracks and sidings in
common areas.

"The Rail
Co-operation Agreement with New Millennium represents a positive step forward
which recognizes the common interests of both companies," said John F.
Kearney, Chairman of Labrador Iron Mines. "This Agreement will advance the
development and construction of the rail facilities required to meet LIM’s
planned production start-up in mid 2010.

The Timmins Extension
rail line will be laid on a 16-mile-long existing rail bed that extends from
Mile 353 on the TSH main line to the Timmins train turning circle. The Timmins
Extension spur line, which passes from Labrador into Quebec and back into
Labrador, was previously used for iron ore mining operations. The rails and
ties were removed when the previous mining operations ceased in 1982, but the
rail bed itself remains in place. Reconstruction of the Timmins Extension will
only require relaying new rails and ties and replacement of some ballast.

Each of LIM and NML will
enter into the requisite agreements with third parties to design and construct
their respective portions of the Timmins Extension to standards required to
transport the iron ore to be extracted from their DSO deposits. LIM intends to
commence construction on the first 2.5 miles connecting to LIM’s Silver Yards
planned processing area immediately upon the issue of the necessary permits.
The spur line to the Silver Yards processing area is included in LIM’s Environmental
Impact Assessment, which is currently under review by the Department of
Environment and Conservation of the Province of Newfoundland and Labrador.

Under the Rail
Co-operation Agreement the parties jointly agree to apply to government
authorities for all required rights of way and/or surface rights and for the
grant to each party of the rights on a specific portion of the Timmins
Extension, along with rights of access to, construction on and use of such
specific portions as are mutually granted by one party to the other party.

The Parties have agreed
to negotiate and enter into a Rail Operating Agreement, which will provide the
terms of access to and use of the Timmins Extension and the tariff to be paid
by each party with respect to its use of the portion of rail line for which the
other party holds the rights of way and have also agreed to collaborate to
determine the most expedient means to refurbish the TSH Railway main line to
standards required to carry out the transportation of minerals extracted from
the DSO deposits.

The 355-mile main rail
line between Schefferville and Sept-Iles, which was originally constructed for
the shipment of iron ore from the Schefferville area, has been in continuous
operation for more than 50 years. Tshiuetin Rail Transportation Inc., a consortium
of three local Aboriginal First Nations, owns and operates the 129-mile main
line track between Schefferville and Ross Bay Junction, where it connects to
the Iron Ore Company of Canada’s Quebec North Shore and Labrador Railroad,
which runs the remaining 224 miles to Sept-Iles. TSH currently operates
passenger and light freight service between Schefferville and Sept-Iles twice
per week. Some refurbishment of the rails, ties and culverts of the TSH main
line track will need to be carried out to enable it to continuously carry large
volumes of iron ore traffic.

During 2008 LIM
transported iron ore bulk samples by rail from Schefferville to Sept-Iles over
both the TSH track and the track operated by QNS&L, which was the first
iron ore shipped by rail from the Schefferville area in more than 25 years.

Labrador Iron Mines
Holdings Limited is developing direct shipping iron ore deposits on properties
in the Labrador Trough of Canada’s main iron ore producing region in the
Province of Newfoundland and Labrador near Schefferville, Quebec. The company’s
properties are part of the historic Schefferville area iron ore district from
which more than 150 million tons of direct shipping iron ore was previously
mined by the Iron Ore Company of Canada from 1954 to 1982. Labrador Iron Mines
is working to reactivate direct shipping iron ore operations in the region with
plans to commence production by mid-2010.