Canada’s Labrador to drive potential iron ore boom in the country

A remote geographic zone straddling Canadian Québec and Labrador areas is causing quite a stir in mining circles due to the large iron reserves waiting to be developed into mines, reports the Globe and Mail.

One of the companies looking at the more than 1,000-kilometre-long area, also known as the Labrador Trough or the New Quebec Orogen, is Labrador Iron Mines Holdings Limited (TSX: LIM). The miner announced today it has received environmental approval and project release from the Government of Newfoundland and Labrador for its Houston iron ore mining project in the area.

With provincial release, the company said it was one step closer to beginning site construction.

This is only one of the projects moving forward at the Labrador Trough, a finger-shaped landform that holds several iron ore deposits of substantial size and grade. The area has the potential to be a major global area for iron ore production, according to analyst Jackie Przybylowski, quoted in The Globe and Mail.

The expert at Desjardins Securities Inc., who has just issued a 64-page report devoted to the investment prospects of companies active in the region, initiated coverage on five of the area’s pure play iron ore prospects.

In its report, Desjardins chose Labrador Iron as “top pick” and set a one-year price target of $8.50, in the absence of a takeover, and even more if the company gets taken out by an acquirer.

“We believe Labrador Iron Mines is a potential acquisition target, given the company’s position as a pure play iron ore producer with no strategic partner or off-take agreement,” the report said. “Off take” is mining jargon for a deal to sell production from a mine to a major steel producer.

Mining has played an important if sporadic role in the economic, social, and cultural history of Newfoundland and Labrador.

The huge iron ore deposits of Labrador and neighbouring areas of Québec were discovered by Canadian surveyors in 1892.