Profiles: PROSPECTIVE IRON ORE PRODUCERS
Century Iron Mines Corporation (TSX: FER) is an exploration and development company of iron projects in eastern Canada. It has significant interests in several properties in western Québec and in the prolific iron ore-producing Labrador Trough in eastern Québec and western Newfoundland & Labrador.
Century has two strategic partners in WISCO International Resources Development & Investment Limited and Minmetals Exploration & Development (Luxembourg) Limited, both state-owned Chinese companies with the financial and technical resources to assist the Company with funding and technical expertise for the exploration and development of its projects. Century has interests in the following mineral exploration projects:
1.The Duncan Lake Iron Project in which Century currently has earned a 65 per cent interest under an option and joint venture agreement with Augyva Mining Resources Inc. Century has entered into a Joint Venture Agreement with WISCO pursuant to which WISCO may earn a 40 per cent joint venture interest in the Duncan Lake Iron Project;
2.The Attikamagen Project, a Joint Venture with Champion Iron Mines Limited, in which Labec Century Iron Ore Inc. (a subsidiary of Century) has earned a 56 per cent interest and in which it has the option to earn a further 4 per cent interest;
3.The Sunny Lake Project, which is a joint venture between Century and WISCO under the Sunny Lake Joint Venture Agreement; and
4.The Astray, Grenville, Menihek and Schefferville projects acquired from Altius Minerals Corp. are 100 per cent owned by Century, except that Century has sold 80 per cent of its interest in the Astray project and retained a 20 per cent interest only.
Duncan Lake property
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. Century 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-kilometre 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.
Met-Chem Canada Inc. was contracted 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.
The Attikamagen Iron Project includes claims located in Québec (the Hayot Lake taconite target) and claims located in Labrador (including the Joyce Lake DSO Project), about 20 kilometres northeast of Schefferville, and covers a total area of around 34,350 hectares.
The current resource estimate for the Joyce Lake DSO deposit is 10.0 million tonnes measured and indicated at a grade of 59.5 per cent Fe, and an additional 5.6 million tonnes in the inferred category grading 55.78 per cent Fe. The resource estimate for the Hayot Lake deposit is 1.72 billion tonnes inferred at a grade of 31.25 per cent. The proposed DSO project is projected to produce up to four million tonnes of product per year. Projected capital costs are $96.6 million, with operating costs fob Sept-Îles estimated at $62.80/tonne. The payback period, based on anticipated revenues of $136/tonne cfr China, is anticipated at 2.5 years. Ore will be transported to the existing railway owned by Tshiuetin Rail Transportation Inc. for transportation to the port of Sept-Îles. Initial production is targeted for 2015, and it is expected that WISCO will purchase 60 per cent of DSO production.
Sunny Lake property
The Sunny Lake Iron Project is located on the extreme western margin of the Labrador Trough in the Schefferville area. Included in these properties is the Full Moon deposit, which has an indicated resource of 7.3 billion tonnes of ore grading 30.2 per cent Fe, and an inferred resource of 8.7 billion tonnes grading 29.86 per cent Fe. The Full Moon deposit is characterized by very thick layers of iron ore, in places in excess of 200 metres. A Preliminary Economic Assessment is expected to be available by late 2013.
Century and WISCO have formed a Joint Venture company (Labec Century Iron Ore Inc.) through which they hold their interests in the Attikamagen, Sunny Lake and Duncan Lake properties. WISCO owns 40 per cent of the Joint Venture company, while Century owns 60 per cent. WISCO owns approximately 25 per cent of the shares of Century, and MinMetals owns approximately 5 per cent of the shares of Century. Century has a direct 100 per cent ownership of three of the four Altius properties.
WISCO is 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 Group 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.
As of March 31, 2013, Century had cash and receivables on hand of $47.3 million, and current liabilities of $3.5 million.