Profiles: PROSPECTIVE IRON ORE PRODUCERS
Oceanic Iron Ore Corp. (TSX: FEO) is focused on development of its Ungava Bay iron properties in Nunavik, Quebec, at the northernmost tip of the Labrador Trough. These properties comprise three project areas, namely Hopes Advance, Morgan Lake and Roberts Lake, covering more than 147,000 hectares over 300 kilometres of iron formation and are located within 20 to 50 kilometres of tidewater. These three project areas were extensively explored during the late 1950s through the mid-1960s. Interest in these deposits decreased after the middle 1960s due to the extensive development of new iron ore operations further south in the Wabush/Labrador City area in Labrador and in the Upper Great Lakes region in the United States. The deposits were acquired by Oceanic in November 2010.
Hopes Advance
Since its acquisition of the Ungava Bay iron properties, the company has fast-tracked the development of the Hopes Advance project through to feasibility stage with the results of a pre-feasibility study released in September 2012, revealing proven and probable reserves of 1.36 billion tonnes grading 32.2 per cent iron.
The company estimates first production in 2017 at a rate of 10 million tonnes per annum of iron ore concentrate grading 66.5 per cent. Capital costs of $2.85 billion are projected. It is management’s expectation that cash flow from operations will provide the necessary capital to allow it to increase its annual production rate to 20 million tonnes after the first ten years of production. Oceanic expects cash costs of $33.17/tonne for the first eight years of production, when it expects to be operating with self-generating power before getting connected to Hydro Quebec’s network, which management anticipates will reduce its cash costs to $29.57 per tonne. Anticipated mine life is in the order of 30 years.
Concentrate from the mill is planned to be transported to the planned port site at Ungava Bay via a 26-kilometre slurry pipeline. The lack of a proposed rail connection and the short distance between the mill and the port are significant contributing factors to Oceanic’s low expected cash operating expenses.
Several options are being considered for a port site. Challenges include high tidal surges (up to 16 metres). Year-round shipping is expected to be possible, using ice-strengthened vessels.
Financial
As of March 31, 2013, the company had cash and receivables on hand of $7.1 million. Current liabilities amounted to $3.7 million.
Outlook
Oceanic has engaged a strategic advisor to help secure a China-based strategic partner.
Current plans include completion of a feasibility study in 2014, commencement of construction in 2015, followed by first production in 2018.