Profiles: IRON ORE PRODUCERS
Labrador Iron Mines Holdings Limited (LIM) is Canada’s only independently owned iron ore producer. The company is focused on the development and production from its twenty direct shipping (DSO) iron ore deposits. Over the past two years, LIM has sold 13 Capesize shipments of iron ore (approximately 2 million tonnes) through Iron Ore Company of Canada (IOC), to clients in China.
Location and Resource identification
LIM’s iron ore properties are located in the western central part of the Labrador Trough. The properties are variously located within 2 to 65 kilometres from Schefferville and represent deposits discovered by IOC during the period it operated direct shipping ore near Schefferville (1954- 1982). At March 31, 2013, LIM’s total measured and indicated mineral resources totalled 59.5 million tonnes grading 56.7 per cent Fe, a 33-per-cent increase from a year earlier.
LIM’s operations involve the extraction of ore from surface mines, starting with the James Mine, which commenced initial production in June 2011. LIM contemplates mining its twenty DSO deposits in stages. The company is currently in the first phase of Stage 1 with production from the James mine, located in the Central zone. Subject to detailed assessment, mine planning and permitting, mining of adjacent Stage 1 deposits within the Central zone is planned for near-term production.
LIM transports ore to IOC’s port facilities in Sept-Îles on an existing 565-kilometre railway between Schefferville and SeptÎles. LIM has life-of-mine rail agreements with both railway owners, namely Tshiuetin Rail Transportation Inc. and Quebec North Shore and Labrador Railway, a wholly owned subsidiary of IOC. Once at the port, the ore then goes directly into IOC’s terminal, where IOC employees handle the discharge of the railcars and the loading of ocean-going vessels.
LIM enhanced long-term rail and port access for its iron ore by securing 5 million tonnes of ship-loading capacity at the new multi-user dock under construction at the Port of Sept-Îles, which is expected to be open for business by March of 2014.
For the first quarter ended June 30, 2013, LIM suffered a loss of $28.5 million on sales of $17.9 million. The cash loss from operations was $9.4 million, compared with $25.4 million during the first quarter of the previous year. As of June 30, 2013, unrestricted cash on hand and receivables amounted to $56.9 million, while accounts payable and accruals totaled $43.8 million.
LIM, which commenced its third year of direct shipping iron ore in April, is currently targeting sales of 1.7 million tonnes of sinter fines and lump in 2013. LIM recently entered into a renewed iron ore sales agreement with IOC for the sale of all of LIM’s iron ore production for calendar years 2013 and 2014. LIM also entered into an off-take financing agreement with RB Metalloyd Limited, an international commodity trading house, under which LIM has received an advance payment of US$35 million to be credited against future sales of a minimum of 3.5 million tonnes of iron ore during 2013 and 2014.
In March of 2013, LIM announced a strategic partnership with Tata Steel Minerals Canada (TSMC) involving joint cooperation on various operational and non-operational initiatives. TSMC also agreed to pay $30 million to purchase a 51-per-cent stake in LIM’s Howe deposit.
LIM’s long-term objective is to ramp up production and sales to 5.0 million tonnes by 2020.