Cyclone Metals acquires world’s largest proven undeveloped magnetite iron ore project

Cyclone Metals has acquired the Block 103 project in Canada, is the largest undeveloped magnetite iron ore project in the world with an initial NI 43-101 compliant mineral resource of over 7.2 billion tonnes grading 29.2% iron 

Block 103 covers 7,275 hectares in the Labrador Trough, one of the largest iron ore belts in the world accounting for 99% of Canada’s iron ore.

Over $35m has been spent on the project thus far, including extensive drilling campaigns, metallurgical test work and engineering studies which outline two zones of high potential mineralisation on the property;  the Northwest Zone and the Greenbush Zone

It’s a great pick up for Cyclone Metals (ASX:CLE), especially considering growth in global magnetite iron ore demand.

In 2021, the market was valued at US$23 billion and is expected to expand at a CAGR of 5.43% from 2022 to 2027, reaching US$31.6 billion.

Reducing the steel industry’s environmental footprint

Magnetite projects are normally costlier to build than hematite mines due to the need to process the lower grade ore into a concentrate.

But that concentrate is typically super-high grade, meaning it captures a significant premium over the 62% Fe benchmark and is much more amenable  to low carbon emissions steelmaking.

“The green transition and global targets towards net-zero carbon emission have made magnetite ore much  more desirable as it will be pivotal in emissions reduction for steel production ,” CLE executive director Tony Sage says.

“We see tremendous potential for Block 103 to become a crucial piece of the iron ore supply worldwide whilst promoting the reduction of carbon emissions in the steel industry.”

Tier 1 jurisdiction with operational opportunities

 The project is located in the world class iron ore province of Newfoundland and Labrador in Canada,  which  already includes numerous major iron ore producers including IOC (Rio Tinto), Tata Steel and Champion Iron.

“The Block iron 103 further benefits from being within 15 km of  established open access rail infrastructure and logistic services, which greatly enhances the development potential of the asset,” Sage says. “Also, this could also facilitate the potential rapid development a smaller scale Direct Shipping Ore Operation with low capital requirements to secure rapid cash flows”

“The presence of neighbouring mines run by Tier 1 producers including Tata Steel, likewise, offer many future strategic operational opportunities for Cyclone.”

 Acquisition details and placement planned

CLE will pay the vendor, private Aussie company Labrador Iron, 2.16 billion CLE shares at the deemed price of 0.25c per share.

Prior to completion of the transaction, Cyclone also proposes to undertake a capital raising of no less than $1 million with the potential for oversubscriptions up to $2 million at an issue price of $0.0025 per share.

Funds raised from the Placement will be applied toward initial work on the project, costs of the transaction and general working capital.

This article was developed in collaboration with Cyclone Metals Limited, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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