Consolidated Thompson looks to consolidate

Consolidated Thompson Iron Mines (CLM-V) may be looking to consolidate iron ore projects along the Quebec and Labrador border.

The Toronto-based company with its major asset The Bloom Lake project in northeastern Quebec has signed an exclusivity agreement so it can conduct a due diligence review of Wabush Mines.

Wabush, is located just 39 km east of Bloom Lake, on the Labrador side of the border and is currently owned by Stelco (STE-T) with 44.6%, Dofasco (DFS-T) with 28.6% and Cleveland Cliffs (CLF-N) with the remaining 26.8%. Cliffs Mining, a subsidiary of Cleveland-Cliffs, is the mine operator.

Wabush mines specular hematite which is concentrated at Wabush’s Scully Mine in Labrador and shipped to a pelletizing plant in Quebec.

Wabush first produced iron ore pellets in 1968, and while it has turned out over 200 million tonnes of pellets since that time, operational difficulties have resulted in production falling off lately. For the nine months ending Sept. 30, production was at 2.9 million tonnes compared with 3.8 million tonnes for the same period in 2005.

Consolidated’s exclusivity period ends on January 12, 2007.

In April of this year Consolidated completed a feasibility study on Bloom Lake and issued roughly 15 million warrants to raise over $42 million. The company says it will look to take on debt and further share issuance to raise the funds needed for the US$270 million capital costs at Bloom Lake.

Bloom Lake is expected to produce 5 million tonnes of 66% iron concentrate per year starting in 2008. The deposit has a resource of over 635 million tonnes grading 29.76% total iron.

The company estimates total operating cost of US$ 20.96 per tonne concentrate.

In Toronto on Nov. 22, Consolidated shares were steady at $3 on over 1 million shares traded.