The Bloom Lake Mine’s new owner earlier this month announced new cash for upgrades to the shuttered operation and an offtake agreement with a Japanese trading company to receive iron ore for steelmaking if the mine gets back into commercial production.
In December 2015 Champion Iron Ore (TSX:CIA), an iron ore explorer with offices in Canada and Australia, said it will buy the Bloom Lake operation along with its rail assets.
The mine’s former owner, Cliffs Natural Resources (NYSE:CLF), shuttered production in late 2014 as part of a greater plan to exit its money-losing Canadian operations. Cliffs, the biggest U.S. iron ore miner, purchased the mine for US$4.9 billion in 2011 at the top of the market for iron ore. However the company struggled to make a go of the operation and it sustained quarterly losses until Cliffs finally gave up on it turning a profit, as the price of iron ore tumbled.
The mine in northeastern Quebec was put on care and maintenance and placed into creditor protection to protect Cliffs from future closure costs. The deal was approved by the Québec Superior Court as part of restructuring proceedings.
Now a subsidiary of Champion, Quebec Iron Ore Inc., (QIO) announced on May 18 that it has arranged $40 million in bridge financing to restart operations at Bloom Lake. The money, a combination of $26 million in debt and $14 million in equity, will be put towards upgrades at the mine and processing facilities. The debt component consists of a $20 million loan from Sojitz Corporation, together with a $6 million loan from Ressources Québec Inc., which owns 36.8% of QIO. The equity share is split between Ressources Québec and the Quebec government.
As far as the offtake agreement, Sojitz has agreed to buy up to 3 million dry metric tonnes a year from Quebec Iron Ore upon the mine restarting. The agreement is for an initial five years, to be renewed in five-year terms.
“We are extremely pleased to have signed an off-take agreement with an exceptional and highly-reputed partner such as Sojitz, which predominantly serves the Japanese market and selected Asian steel mills,” Michael O’Keeffe, Champion and QIO’s chairman and CEO, stated in a press release. “This agreement marks a significant milestone for Bloom Lake and will ensure effective long-term access for our future high quality product to some of the world’s largest consumers of iron ore.”
According to Champion, the mine has already been given the okay to operate by federal and provincial authorities, having passed an environmental assessment in 2008. It also has an updated feasibility study, which is available under the company’s SEDAR profile.
Previous to the acquisition, through QIO, of the Bloom Lake mine in April 2016, which is now the company’s flagship asset, Champion Iron Mines was focused on its Fire Lake North Deposits located in Eastern Quebec, 250 kilometres from the port of Sept-Îles.
