Released 10 October 2005
Anglesey Mining plc options Labrador iron ore property
Anglesey Mining plc, which holds the Parys Mountain zinc, copper, lead, silver and gold property in Wales, is pleased to announce that it has entered into an option agreement to earn a 70% joint venture interest in the Labrador Iron Mountain project in Labrador, Canada.
- Option agreement for 70% interest in 100 million tonnes of hematite iron ore in Labrador
- Former operations of the Iron Ore Company of Canada
- New direct shipping project producing lump and sinter ores
- Project already partially developed – short time to production - low capital expenditure requirements
- Existing rail transportation, deep water ports, shipping facilities and hydro power
- Target production of 2 million tonnes (“mt”) per year by 2008, increasing to between 3 and 5 mt after 3 years
- Potential mine life of more than 20 years
Subject to approvals and to financing, the option gives the company a unique opportunity to re-establish major iron ore mines previously operated by the Iron Ore Company of Canada (“IOCC”) with estimated remaining resources of over 100 million tonnes of hematite iron ore.
John Kearney, chairman of Anglesey Mining, said: "This agreement provides the company with a unique opportunity to diversify into an exciting new mining venture, with no acquisition cost and a relatively low initial investment. The Labrador Iron Mountain project will restart mining with a conventional and relatively modest direct shipping operation. As the partially developed project will not require major new infrastructure, and therefore involves manageable levels of capital, we are confident that we will unlock the significant value that this asset offers.”
The Labrador Iron Mountain Project
The Labrador Iron Mountain project is partially developed and has near term production prospects. Anglesey’s option is to earn a 70 per cent interest in most of the identified former IOCC deposits in Labrador, which comprise eight areas within 22 mining licences covering 92 mining claims, all subject to a 3 per cent royalty.
The agreement gives Anglesey the exclusive right to evaluate the project for a period of one year, during or following which Anglesey may exercise the option to earn the 70 percent interest by putting the project into production, producing high quality direct shipping lump and sinter iron ore, at a minimum rate of 2 million tonnes per year by 2007 or 2008. In order to maintain its 70 percent interest, Anglesey is required to have achieved commercial production by September 2010 and to have arranged the project financing by September 2008.
The company plans to undertake, within the next year, a feasibility study of the technical and economic viability of the project based on the creation of a new hematite iron ore project. Unlike the historic IOCC operations, it is planned to upgrade the ore by screening and washing, which will result in the production of two iron ore products - a premium grade lump ore with 67% Fe (iron) content and a sinter ore with a 63% Fe content.
The company expects to increase the initial production rate to 3 to 5 million tonnes per year after three years, with a potential mine life of about 20 years.
Forty eight of the mining claims are held by Energold Minerals Inc, a company controlled by John Kearney, chairman of Anglesey, and Energold has negotiated the rights to the other 44 mining claims from the underlying third party owners. John Kearney was responsible for staking the claims and securing the project; Energold will hold a 10 percent interest in the joint venture.
The agreement, and the exercise of the option, will be subject to receipt by Anglesey of all necessary approvals and consents. Anglesey may terminate the option at its sole discretion at any time without any liability.
The Iron Ore Market
Over the past two years global iron ore prices have more than doubled due to increased demand principally from China. A robust iron ore market with strong demand from the steel industry for lump products, fuelled by continued Chinese growth, supports the investment case. Anglesey’s Labrador Iron Mountain project will supply high quality lump and sinter iron ore products for delivery to niche markets among the European, Chinese or Japanese steelmakers.
The Iron Ore Company of Canada was formed in 1947 by Hollinger, M.A. Hanna Company and six major US steel companies to develop the iron ore reserves of the Labrador Trough, one of the largest iron ore resources in the world that lies on the boundary between the province of Quebec and the province of Newfoundland and Labrador. IOCC outlined about 400 mt of direct-shipping grade ore (DSO) averaging 55% iron, built a 350 mile (560 km) railway between Schefferville and Sept-Isles, a deep water port at Sept-Isles on the St. Lawrence seaway, two hydroelectric generating plants, an airport and the town of Schefferville.
Based on these deposits IOCC (and its subsidiary Labrador Mining and Exploration Company), grew into the largest iron ore company in Canada [www.ironore.ca]: its mines at Labrador City are today operated by RTZ. Between 1954 and 1982 IOCC mined more than 152m tons of direct shipping iron ore, containing 56%-58% Fe, which were sold from Schefferville to steel mills in the United States and Europe. Declining prices in the 1980s coupled with the discovery of major new higher grade deposits in Brazil and Australia and the development by IOCC of its Carol Lake, Labrador City deposits, led to a decision by IOCC to shut down their Schefferville operations in 1982. Much of the extensive infrastructure from the former operations remains intact.
Contacts J F Kearney + (1) 416 362 6686
Ian Cuthbertson + (44) 1248 361333
Cathy Malins / Annabel Leather,
Parkgreen Communications + (44) 20 7493 3713
|Anglesey Mining plc
Parys Mountain, Amlwch,
Anglesey, LL68 9RE, UK
|Phone +44 1248 361333