Cap-Ex Ventures focuses on Labrador iron

Vancouver – With several recent high-profile iron ore acquisitions in eastern Canada, Cap-Ex Ventures (CEV-V) has picked an opportune time to re-launch as a Labrador trough-focused exploration company.

Cap-Ex only truly started trading after it announced in January that it would acquire a group of iron ore properties near Schefferville on the Quebec-Labrador border, having entered an option deal on a Yukon gold property last August for its qualifying transaction.

The initial iron properties consist of block 103, block 44 and Lac Connelly for a total of 90 sq. km, all within 30 km of the town of Schefferville. In February the company added an option agreement on the Redmond properties, consisting of 2,800 ha sitting 12 km southeast of the town.

The properties are in close proximity to Labrador Iron Mines‘ (LIM-T) and New Millennium Capital‘s (NML-V) main iron ore projects.

Block 103 is the most advanced, with Adriana Resources (ADI-V) having contracted 670 line km of airborne survey in 2008 before giving up on its option deal in mid-2010. Cap-Ex picked up where Adriana left off and had the data modeled and interpreted, reporting in late January that the results indicate that “block 103 covers some of the most intense positive magnetic responses in the iron ore belt.”

The Redmond properties cover roughly 6.5 km of strike of historic iron ore occurrences, while on Block 44 encouraging iron ore content has been identified but not followed up yet.

The deposits are composed of Lake Superior-type iron formations consisting of banded sedimentary rocks. The bands consist primarily of iron oxides, magnetite and hematite within quartz-rich rock, with variable amounts of silicate, carbonate and sulphide lithofacies.

Adding further to its property holdings, Cap-Ex announced in early March that it had staked 10,124 ha of land over six properties in the area. Three properties abut block 103, two adjoin the Redmond property and the final property is several km northwest of Redmond.

Maintaining its momentum, Cap-Ex has already closed a $12.7 million financing to fund exploration work this year. The company sold 9.2 million non-flow-through units at $1.05 each plus 2.4 million flow-through units at $1.25 each. Both unit types included a share and a half warrant, with full-warrant exercise prices of $1.30 and $1.35 respectively. With the financing Cap-Ex now has 41 million shares outstanding or 58.2 million fully diluted.

For 2011 the company plans to drill 10,000 metres on Block 103 while Redmond and Block 44 will see airborne surveys, sampling and geophysics. The $6.1 million budged also includes a preliminary resource estimate and metallurgical test work.

To secure blocks 103 and 44 Cap-Ex paid $275,000 and issued 5 million shares to Mandu Resources, Bedford Resources Partners and a numbered company, who retain a 1.8% royalty on iron ore produced from the properties. For the Redmond properties, Cap-Ex has to pay $100,000 in cash plus $1 million in shares and $1 million in exploration over 3 years, while vendor Kal Malhi keeps a 2% net smelter royalty. The company is no longer optioning into the Yukon property.

Cap-Ex is led by Brett Matich as president and CEO as of mid-March. As managing director of Aztec Resources in Australia, he identified and advanced an old iron mine until the company was acquired by Mount Gibson Iron (MGX-A) in 2006, and in 2002 he identified and returned to production an old nickel mine.

The company enters the Labrador trough area just as a number of major projects are set to come on line. Labrador Iron Mines expects to start its direct shipping ore operation sometime this year, while New Millennium has signed a binding development deal with Tata Steel for its Taconite project in which the major has committed to finance up to $4.85 billion.

Also on the Quebec-Labrador border, Cliffs Natural Resources (CLF-N) bought Consolidated Thompson Iron Mines for $4.9 billion in January for its Bloom Lake mine and associated projects, while a little further afield AccelorMittal (MT-N) and Nunavut Iron Ore engaged in a bidding war for Baffinland Iron Mines’ Mary River project that ended in both companies getting a stake.

All the activity in the sector has helped ensure interest in new players in the area. Cap-Ex’s share price climb from 35¢ when the first Schefferville deal was announced to a high of $1.50 in early March before announcing its financing, while the company’s share price ended March at $1.25.

Labrador Iron Mines and New Millennium have, however, encountered resistance from the Quebec Innu who claim virtually all of Labrador as ancestral territory. The two companies have now reached agreements with the local bands, but not before roadblocks and protracted negotiations.