Proactiveinvestors is a leading multi-media news organisation, investor portal and events management business with offices in New York, Sydney, Toronto, Frankfurt and London.
Friday, 4 October 2013
Century Iron Mines moves to simplify Attikamagen ownership structure by acquiring Champion's stake
Century Iron Mines (TSE:FER) has agreed to acquireChampion Iron Mines' (TSE:CHM) remaining interest in the Attikamagen Lake project, giving it and its joint venture partner WISCO International - one of China's leading steelmakers - a 100 per cent stake in the asset, and simplifying the structure of the property.
After the transaction is complete, the project, near Schefferville, Quebec, will be owned completely by Labec Century, a joint venture between WISCO and Century, in which Century holds a 60 per cent stake and the Chinese company holds the remainder.
Under the terms of the deal, Century Iron will issue 2.0 million common shares and 1.0 million warrants, with different stipulated prices based on the date of exercise. In addition, Champion, which previously held a 40 per cent interest in the property, will get a 2% net smelter return royalty on iron and minerals produced from the project.
Century Iron president and CEO Sandy Chim in a release Thursday said he is quite pleased to have concluded the deal with Champion to own 100 per cent of Attikamagen Lake.
"This is a major advancement of the project following the further $20 million investment in the project by WISCO announced last week. WISCO has invested a total of $40 million to date to complete its earn-in of its full 40% interest," he said, adding that the transaction is accretive to shareholders and to the company's strategic partners.
"Now the project can be developed more effectively to fruition on a simplified 60/40 basis between Century and WISCO."
The deal, which has been approved by Century's board, still needs approval from the Toronto Stock Exchange.
"Over the course of the last few years, we have made substantial investments in exploring and developing the project with excellent results," Chim said, referring mostly to the Joyce Lake direct shipping ore (DSO) deposit - the most advanced part of the project, where a preliminary economic assessment was completed in April, and is now moving toward the feasibility study stage.
The preliminary economics showed a pre-tax net present value of $94.5 million at an 8 percent discount rate at Joyce Lake. The internal rate of return was pegged at 35 percent pre-tax, with initial project capex estimated at $96.6 million including contingency, and a projected payback period of just less than three years from production start-up.
The joint venture is also carrying out a fall drilling program at Joyce Lake and expects to expand and upgrade the resource base used in the preliminary study, with the feasibility report due out next year.
Direct shipping ore refers to iron ore that can be shipped directly to a steel furnace, with these mines typically rarer than magnetite-bearing banded iron formations, but considerably cheaper to mine and process as they require less beneficiation due to the higher iron content.
Century Iron, which is aiming to become a major iron ore producer, is one of the largest iron ore companies in Canada, in terms of number of claims by area. It has 6,493 claims and titles, covering some 198,779 hectares in the provinces of Québec and Newfoundland & Labrador. It has interests in four iron ore projects, none of which yet generate revenue.