In a significant development for North America's iron ore sector, Cyclone Metals Limited has announced a strategic partnership with mining giant Vale through a Memorandum of Understanding for the development of its Iron Bear Project in Canada. The agreement, revealed on November 15, 2024, outlines a comprehensive two-phase investment strategy that could see Vale invest up to $120 million to secure a controlling interest in the project.
The Iron Bear Project, situated just 25 kilometers from Schefferville, boasts an impressive mineral resource of 16.6 billion metric tons at 29.3% Fe, with 14.51 billion metric tons classified as Inferred and 2.15 billion metric tons as Indicated under JORC 2012 compliance. Recent pilot plant testing has demonstrated the project's capability to produce premium DR1 grade concentrate with 71.3% Fe content and remarkably low impurity levels of 1.1% SiO2, positioning it as a potential major player in the global iron ore market.
The partnership structure involves two distinct phases. In Phase 1, Vale will contribute up to $18 million to fund preliminary feasibility studies, mineral resource drilling, and environmental baseline studies. Following successful completion of Phase 1, Vale can proceed to Phase 2, initially acquiring a 30% equity stake in the Iron Bear Joint Venture, with the potential to increase to 75% upon reaching Decision to Mine or when total investment reaches $120 million.
The agreement includes several strategic provisions protecting both parties' interests. Vale will have the option to acquire Cyclone's remaining 25% stake at fair market value once the Decision to Mine is achieved, subject to shareholder approval. Alternatively, Vale can choose to loan-carry Cyclone's share of capital expenditure, recoverable from future operating profits, allowing Cyclone to maintain its 25% stake in the venture.
The project's strategic location offers significant logistical advantages, with access to open-access heavy haul railway infrastructure connected to deep-water port facilities at Pointe Noire. The proximity to the Menihek hydropower facility, approximately 70 kilometers away, presents opportunities for cost-effective, sustainable power supply, crucial for modern mining operations.
Paul Berend, CEO of Cyclone Metals, expressed enthusiasm about partnering with Vale, highlighting the mining giant's expertise in producing ultra-clean iron ore products, including DR pellets and proprietary cold briquettes. Vale's extensive operational experience in Canada, including its successful base metals operations at Voisey's Bay and Sudbury, adds significant credibility to the partnership.
The 90-day exclusivity period provided in the MoU allows both parties to finalize detailed terms in a Formal Agreement, establishing project governance structures and funding schedules. This partnership represents a significant milestone in the development of North American iron ore resources and demonstrates growing interest in high-grade, low-impurity deposits capable of supporting the transition to cleaner steelmaking technologies.
