Cyclone Metals, Vale sign $138M deal to develop Iron Bear project

Australia’s Cyclone Metals (ASX: CLE) has signed a $138 million agreement with Vale (NYSE: VALE) for the joint development of the Iron Bear iron ore project in Canada.

Under the agreement, Vale will provide funding for the project in two phases to earn a 75% interest in Iron Bear. If the Brazilian miner proceeds with a decision to mine, it will have the option to acquire the remaining 25% at fair market value or carry Cyclone through to production without dilution.

According to Cyclone, the first phase will see $18 million allocated to a preliminary feasibility study, mineral resource drilling and environmental baseline studies.

In the second phase, the parties will form a joint venture to advance through a bankable feasibility study, as well as to conduct environmental impact studies, establish impact benefit agreements (IBAs) with First Nations and undertake de-risking activities. Vale will provide $120 million in funding during this phase.

The Iron Bear project is located in Newfoundland and Labrador, less than 25 km from an open-access heavy-haul railway connected to an export port at Schefferville. Other large-scale iron ore operations in the region include Rio Tinto’s (58.7% owned) Iron Ore Company of Canada, Champion Iron and Tata Steel, all of which share the same rail and port infrastructure.

Cyclone reported last year that pilot plant production at Iron Bear has confirmed a high-quality direct reduction concentrate grading 71.3% iron due to an orebody with exceptionally low impurity. The project is estimated to contain a mineral resource of 16.6 billion tonnes grading 29.3% iron.

“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,” stated Paul Berend, CEO of Cyclone Metals, in a news release Monday.

Development of the project is progressing, with bulk samples of direct reduction and blast furnace concentrates expected to be available for steel mill clients in the first quarter of 2025, followed by pellet production in the second quarter, Cyclone said.