Cashed-up Century Iron exploring Quebec, Labrador

Vancouver – Backed by deep-pocketed investors, Century Iron Mines (FER-V) has launched as a new iron play in Quebec and the Labrador Trough.

The company ended its first trading day on May 24 at $3 a share after completing a reverse takeover and share consolidation of a capital pool company, but the debut was preceded by three years of deal-making as a private company. Sandy Chim, CEO of Century Iron, spent that time setting up the company to be best exposed to Chinese capital while retaining Canadian ownership.

The result was that Wuhan Iron & Steel (WISCO) paid $60.9 million for a 25% interest in the newly-structured company and MinMetals Exploration and Development paid $12.2 million for a 5% stake. The two investments came on top of Century’s brokered private placement at $2.50 that netted $32.5 million and a non-brokered $7 million financing. Together the deals had Century Iron coming out of the gates with a cool $115.5 million.

And while start-up capital can be sometimes difficult to secure, Chim explained in a recent meeting with The Miner that securing capital to develop projects was his biggest concern. To solve that, Chim signed on WISCO as a 40% joint venture for a further $120 million, but the key part of the deal was that WISCO has agreed to secure 70% of future capital costs through debt financing.

If Century Iron Mines goes into production, WISCO will get a 40% share of the production, plus a 20% off-take at market prices and MinMetals with have a 10% off-take at market prices.

With full coffers, Century Iron can fully concentrate on completing its option agreements and moving projects forward.

The most advanced is the Duncan Lake project, sitting far away from the Labrador Trough at only 120 km east of James Bay. Century Iron has 51% interest in the project while joint-venture-partner Augyva Mining Resources (AUV-V) holds the rest. Century has an option to increase its stake to 65% by spending $14 million developing the project or completing a feasibility study.

The 46-sq.-km property, characterized by granite intrusions, currently hosts 5.7 million measured tonnes and 25.6 million indicated tonnes, both grading just over 23% iron, while the inferred resource stands at 821.1 million tonnes grading 24.56% iron, all using a 16% cut-off.

The project benefits from the relatively nearby infrastructure of Hydro-Quebec, including a regional airport 10 km away, a paved highway that runs from Matagami through the property to the town of Radisson 50 km north, and of course lots of low-cost electricity.

To get the product to market, the joint venture partners have proposed a 150-km-long slurry pipeline from the future plant in Radisson to an envisioned deep-water port on James Bay. The pipeline would cost around $300 million, but Chim noted that operating costs would only be around US$1 to US$1.25 per tonne compared with much higher rail freight costs.

Once on James Bay, the product would still need to circumnavigate Quebec and Labrador, but all-year shipping channels have been established from Churchill and Deception Bay in recent decades. Chim said the company would ship about 60% of the concentrate during the 150-ice-free days while the rest would require somewhat more expensive shipping due to the need for stronger ice-breaking ships.

In the more near-term, the joint venture partners completed 8,000 metres of drilling on Duncan Lake and have planned for a minimum of 50,000 metres in the program as the companies work to upgrade and expand the tonnage on deposits 3, 4, and 6 of the project.

Century Iron also has an option agreement to earn a 60% interest in the Attikamagen iron project in the Labrador Trough from Champion Minerals (CHM-T) for a total consideration of $13 million. The 310-sq.-km land package, sitting 15 km east of Schefferville, is still early stage but Century Iron recently completed 2,000 metres of diamond and reverse circulation drilling.

Results from the Joyce Lake direct shipping target on the project included 139 metres grading 52.8% iron from 3 metres depth, 91 metres averaging 52.46% iron from 12 metres downhole, 111 metres grading 37.20% iron from 3 metres and 123 metres carrying 46.64% iron from 2 metres.

At the Hayot Lake taconite targets, drilling returned 111 metres grading 32.3% iron from 87 metres metres, 72 metres averaging 32.56% iron from 3 metres downhole, and 97 metres carrying 32.46% iron from 13 metres depth.

Century’s wholly owned Sunny Lake project covers 240-sq.-km in two sections about 40 km northwest of the Attikamagen project. The company acquired the properties by staking in 2009.

The company currently has 92.8 million shares outstanding, with WISCO and MinMetals representing 30% and founding shareholders and management holding 55%, leaving a scant 15% in the public sphere.

Since listing in May, Century’s share price has largely hovered around $3 on thin volume. Chim said the company is qualified to list on the TSX main board and is simply waiting for approval.