Profiles: PROSPECTIVE IRON ORE PRODUCERS
Augyva Mining Resources Inc. (TSX: AUV) owns a 35-per-cent interest in the Duncan Lake Joint Venture which owns a 100-per-cent interest in the Duncan Lake Iron Ore Project. Century Iron Mines Corporation (TSX: FER) (Century) is Augyva’s principal Joint Venture partner. The other two are WISCO International Resources Development & Investment Limited (WISCO) and MinMetals Exploration & Development (Luxembourg) Limited (Minmetals). In addition to its interests in Duncan Lake, Augyva owns three other undeveloped mining properties.
The Duncan Lake Iron Project is located 45 kilometres south of the town of Radisson in the James Bay area of Quebec, and is accessible by road. The deposit has a measured and indicated resource of 1.05 billion tonnes of Fe at 24.4 per cent. Augya aims to develop an open pit mine and concentrator at the mine site, producing for twenty years at a planned volume of 12 million tonnes per year. Concentrates are planned to be moved to port through a 140-kilometres pipeline. At the port, concentrates are planned to be manufactured into pellets, which would be loaded aboard Capesize vessels for shipment to clients in China and Europe. The port at James Bay is expected to be ice-free 150 days per year.
Augya contracted Met-Chem Canada Inc. to produce a Preliminary Economic Assessment of the Duncan Lake iron ore property, which was released on March 31, 2013 and concluded that using a discount rate of 8 per cent, a capital cost of $3.8 billion, operating costs of $59.17 per tonne, and a selling price of $134/tonne cfr China for pellets at 66.3 per cent Fe, the project’s net present value was $4.1 billion, with a payback period of 4.2 years and an internal rate of return of 20.1 per cent.
On May 20, 2008, Century entered into an option and joint venture agreement with Augyva in respect of the Duncan Lake property. Currently, Century has earned a cumulative 65 per cent interest in the JV, having met its agreed upon project funding commitments. Century has entered into a Joint Venture Agreement with WISCO pursuant to which WISCO may earn a 40-per-cent joint venture interest in Century’s interest in the Duncan Lake JV in exchange for an aggregate investment of $40 million. Century, with Head Offices in Toronto, is partnering with state-owned Chinese companies WISCO and Minmetals.
WISCO is a part of Wuhan Iron and Steel Group Corp., China’s second-largest steel producer and the fourth largest worldwide. Majority-owned by the state of China, Wuhan Iron and Steel Corp.’s shares are traded on the Shanghai Stock Exchange. Its steel production in 2012 exceeded 40 million tonnes, and the company is planning to increase production to 60 million tonnes by 2015. Minmetals is a Beijing-based, state-owned international metals and mining company with global operations and more than 17,000 employees. Century is a Toronto-based iron ore exploration and development company with interests in a number of properties in the James Bay area and Labrador Trough.
It is expected that Century, WISCO and MinMetals would jointly agree to purchase up to 70 per cent of the production from the Duncan Lake Project at fair market value.
As of May 31, 2013, Augyva had cash and receivables on hand of $9.0 million, and current liabilities of $125,000.
According to its published schedule, Augyva expects to reach a construction decision by the end of 2013, start construction in early 2014, and commence production in 2017.