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Cyclone Metals Ltd (ASX:CLE) has taken a decisive step in joint development of its Iron Bear magnetite project in Canada, signing a binding commercial agreement with Vale S.A which could soon see the latter fund the project to the tune of up to US$138 million – in return for a 75% interest in the play.
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Vale will now provide the funding in two phases, then have the choice to push ahead to a Decision to Mine, in which case it could then acquire the remaining 25% of Iron Bear at fair market value, or carry Cyclone to the production stage.
During the first phase, funding of US$18M would support a preliminary feasibility study, mineral resource drilling, and environmental baseline studies; the second phase would see Cyclone and Vale form a joint venture to progress through a bankable feasibility study, environmental impact studies, establishment of IBAs (impact benefit agreements) with First Nations and generally de-risking activities.
During the second phase, Vale will provide US$120 million in funding to the joint venture, and once this is expended, will increase its share in the project to 75%.
Cyclone CEO Paul Berend went on to declare the company’s key project – located near the Provincial border of Newfoundland and Labrador and Quebec – was on the right path in terms of development.
“Project Iron Bear has now secured a clear pathway to get into production, and to become a world leader for the supply of low-cost and ultra-low carbon iron ore products,” he said.
“Vale dominates the rapidly growing market for low carbon and direct reduction iron ore products and is an ideal partner and future operator for the Iron Bear project.”
CLE shares last traded at 5.9c, a 1.72% increase since market open.
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