Cyclone Metals, an Australian mineral development and investment company, has signed a binding commercial agreement with Brazilian mining giant Vale for joint development of the former's Iron Bear iron ore project located near the provincial border of Newfoundland and Labrador and Quebec, Canada, Cyclone announced on Monday. Last November, the pair signed a non-binding Memorandum of Understanding to collaborate on the project, Mysteel Global notes.
Under the terms of the new agreement, Vale will provide up to $138 million in funding for the Iron Bear Project in two phases to earn 75% interest in the project. The first phase includes pre-feasibility study, mineral resource drilling and environmental baseline studies that will require funding of $18 million from Vale.
In the second phase, the pair will establish a joint venture to develop Iron Bear, with Vale granted an initial 30% equity interest. In this phase, Vale will fund the JV's development activities up to $120 million.
Once the fund contribution is made or when Vale elects to proceed to Decision to Mine (DTM), its interest in the project will increase to 75%. With DTM achieved, the Brazilian miner can acquire the remaining 25% of the Iron Bear project at fair market value, or carry Cyclone Metals to production with no dilution, according to the announcement.
The Iron Bear iron ore project, 100% owned by Cyclone currently, has a massive mineral resource of 16.6 billion tonnes grading 29.3% Fe. Iron ore from the project was reported to be used in the production of high-quality Direct Reduction (DR) concentrates grading 71.3% Fe and 1.1% SiO2 and DR pellets at a pilot plant in Quebec last quarter.
The development of the project is still underway, with bulk samples of DR and Blast Furnace (BF) concentrates available for steel mill clients in the current quarter, while those of DR and BF pellets will be available in the next quarter, Cyclone added in the announcement.