Wednesday 30th September 2020

Resource Clips

Frontier prudence

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Last March Alderon Iron Ore TSX:ADV closed the final $119.9 million of a total $182.2-million investment by China’s largest steel-making company, Hebei Iron and Steel. Having achieved feasibility in January, Alderon’s Kami project is now undergoing its environmental assessment. But the company still has to meet Kami’s $1.27-billion capex.

Also in March, Labrador Iron Mines TSX:LIM announced it intended to sell a 51% interest in its Howse deposit to a subsidiary of Tata Steel Minerals Canada for $30 million. If consummated, the deal would be part of a strategic alliance involving co-operation on their adjacent projects in the Trough. TSMC is a joint venture held 80% by Indian giant Tata Steel and 20% by New Millennium Iron TSX:NML. Tata owns about 26.3% of New Millennium. The previous month Labrador Iron Mines announced an oversubscribed $28.98-million equity financing.

On June 24 the company announced a maiden resource for its Elizabeth taconite project, about four kilometres from LIM ’s James mine and five klicks from Schefferville, about 150 kilometres north of Labrador City. Elizabeth’s inferred category shows 620 million tonnes averaging 31.8% iron (Fe). In May the company announced that measured and indicated totals for all its projects as of March 31 came to 59.5 million tonnes averaging 56.7%, a 33% increase over that date last year.

Some other recent milestones in the Trough include a preliminary economic assessment from Cap-Ex Iron Ore’s TSXV:CEV Block 103 property announced June 27. Using an 8% discount rate the pre-tax net present value came to $7.38 billion with a 19.3% internal rate of return. The mine, about 30 kilometres northwest of Schefferville, would require $5.98 billion to build. The company has engaged the services of other firms to find sources of equity financing, debt financing and off-take or acquisition agreements.

Another PEA came the previous month from Century Iron Mines’ TSX:FER Joyce Lake project, 15 kilometres northeast of Schefferville. Again using an 8% discount rate, the study forecasts a pre-tax $90.4-million NPV and a 37% IRR. The capex came to $96.6 million. In a June company update, Century extolled its “two key strategic partners,” WISCO International Resources and Minmetals Exploration & Development, “both state-owned Chinese companies with the financial and technical resources to assist the company with funding and technical expertise.”

Also in May New Millennium announced a resource for its Howells Lake-Howells River North properties. Its 100%-held Howells Lake showed 6.5 billion tonnes averaging 30.31% Fe indicated and 734 million tonnes averaging 30.07% inferred. Figures for its 80%-held Howells River North came to 1.13 billion tonnes grading 30.87% indicated and 2.58 billion tonnes grading 29.77% inferred.

With or without a third rail line, the Trough boasts incomparably better infrastructure than Ontario’s Ring of Fire. In other July 2 news, the Ontario government appointed former Canadian Supreme Court justice Frank Iacobucci as the province’s lead negotiator with the region’s natives. His mandate will include environmental protection, infrastructure planning and revenue sharing, according to a government statement. Iacobucci headed a government inquiry that last February reported natives suffer from discrimination in criminal justice and government services.

Iacobucci’s counterpart will be Bob Rae, former leader of the federal Liberal Party, who’ll represent nine native governments.

Read more about Labrador Trough transportation proposals here.

Read more about Ontario’s Ring of Fire here and here.

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