JOHANNESBURG (miningweekly.com) – South African diversified miner Petmin plans to increase its stake in a Canadian iron sands and pig iron joint venture (JV) project by a further 40% through a $25-million investment, the JSE- and Aim-listed miner announced on Wednesday.
This follows a deal signed in September 2010, which gave Petmin the option to invest in North Atlantic Iron Corporation (NAIC), which owns the project in Canada's Newfoundland and Labrador province.
Petmin director responsible for international expansion Bradley Doig said the investment increased the company’s exposure to the steel value chain and commodities, which underpin urbanisation and infrastructure development.
The miner aims to be a low-cost producer of quality pig iron, and he added that the NAIC met all its project investment criteria.
Petmin may acquire a further 9.9% share of NAIC at its discretion, at a price to be negotiated.
Petmin has already invested $3.5-million for a 10.714% share in the NAIC JV project, owned by Petmin and a privately owned Canadian junior explorer.
Its investment plan enables it to have the option to invest a further $1.5-million for 4.3% share, $6-million for 7.5% and $8-million for 10%.
It is hoped that the project, which potentially has a life of more than 50 years, would produce 500 000 t of pig iron per year during its first phase.
The NAIC project was supported by good infrastructure, located close to hydroelectric power and a deep-water port.
“It is a long-life asset in a mining-friendly jurisdiction, with access to clean low-cost hydroelectric power and a port which is less than seven days sailing time from most of the US steel industry," said Doig.
Petmin said exploration to date has been positive, with results expected by the first quarter of 2012. The first round of drilling started in March and would continue through to October 2011.
During its exploration phase, NAIC is targeting a minimum of 250-million tons of iron sands, on 14 km2, with a heavy mineral content of about 10%. This represents drilling on less than 3% of current claims.
Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
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