TORONTO (miningweekly.com) – Canada's Labrador Iron Mines (LIM) will aim to complete plant construction and installation at its Labrador project before the end of the year, after a blockade by local first nations was lifted, allowing access to the site.

Harsh weather conditions mean that the operation will only run eight months of the year, and so first production is expected in April 2011, CEO John Kearney said at the company's annual shareholders meeting in Toronto on Wednesday.

The company expects to produce two-million tons of iron-ore next year, but has yet to decide on sale arrangements for its output, he said.

Kearney said that while the real demand growth for the steelmaking ingredient is in Asia, Europe is a lot closer to the Sept Iles, Quebec, port, from which production will be shipped.

He also noted that, while the traditional annual benchmark contracts were abandoned earlier this year for quarterly price negotiations, more and more iron-ore purchases are being done on a spot basis.

LIM currently has resources of some 150-million tons at its Labrador and Quebec properties, which it plans to develop in stages, and expects to be mining for at least the next 20 years.

Other iron-ore producers in the region include Cliffs Natural Resources, Rio Tinto's Iron Ore of Canada and Consolidated Thompson Iron Mines.

Plant construction and installation was delayed this year after the Innu Matimekush–Lac John – one of four First Nations groups with claims on land affected by the project – erected barriers blocking access from the town of Schefferville to nearby mining properties.

The barriers were lifted earlier this month after negotiations between the company and the community, as well as the Quebec and Newfoundland and Labrador provincial governments.

Kearney emphasised though that the company still needs to negotiate and sign impact-benefits agreements with two of the four first nations groups, one of which has launched legal action against the government of Newfoundland and Labrador, claiming that it was not properly consulted and challenging the permits awarded to LIM for the mine.

Still, construction work is now back in full swing, and the company hopes to get everything completed before midwinter, he said.

Mining will start in the James pit, which, together with the Redmond pit, is fully permitted and represents the first of four production stages in LIM's project plan.

The company then expects to begin output from 'stage-two' pits, in Quebec, in 2013, Kearney said.

Production will likely ramp up to three-million tons in 2012, five-million tons by 2014 and then continue at a steady six-million tons a year until at least 2028, if all goes to plan.

Shares in LIM slipped 1,12% on Wednesday, to C$6,20 apiece by 15:54 in Toronto.

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