Australian miner Cyclone Metals has signed a binding commercial agreement with Brazilian mining giant Vale for a joint venture (JV) to advance the Iron Bear iron ore project in Canada.
Under the agreement, Vale will provide up to $138m (789.36m reais) in funding in two phases and may earn a 75% interest in the project, with options to acquire the remaining stake or carry Cyclone to production without dilution.
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In the first phase, Vale will contribute $18m for preliminary studies and drilling, with the option to initiate the second phase upon completion.
The second phase involves forming the Iron Bear JV, with Vale initially holding a 30% stake.
Vale will provide funding of up to $120m for further development activities during this phase, potentially increasing its interest to 75% in the Iron Bear JV.
Vale and Cyclone will each hold two board seats until Vale earns a 75% interest, after which Vale will nominate a majority of directors.
Once the decision to mine is reached, Vale can either buy out Cyclone’s remaining 25% interest at market value or arrange funding for Cyclone’s share of production costs, allowing Cyclone to maintain its stake without dilution.
Additionally, Vale has secured rights of first refusal and tag-along and drag-along rights concerning Cyclone’s interest in the JV.
Cyclone Metals CEO Paul Berend said: “Project Iron Bear has now secured a clear pathway to get into production, and to become a world leader for the supply of low-cost and ultra-low carbon iron ore products.
“Vale dominates the rapidly growing market for low-carbon and direct reduction iron ore products and is an ideal partner and future operator for the Iron Bear project.”
The Iron Bear project has an iron ore mineral resource of 16.6 billion tonnes (bt) at 29.3% iron. It is strategically located near infrastructure including a heavy haul railway and the Pointe Noire export port.
Pilot plant production at the project has already demonstrated high-quality direct reduction grade concentrate.
The region around Iron Bear is well-supported, with nearby hydropower potential and established producers such as Champion Iron, Iron Ore Company of Canada, ArcelorMittal and Tata Steel contributing to a robust mining ecosystem.
