Scully Royalty puts $4m into Labrador Iron Mines
NYSE-listed merchant bank Scully Royalty has made a $4-million strategic investment in OTC-listed Labrador Iron Mines (LIM) and will collaborate with the company to advance the Houston project with the aim of delivering a prefeasibility study (PFS) next year.
“Scully’s strategic investment and partnership represents a significant milestone for LIM and a strong endorsement of the company. Leveraging Scully’s extensive iron-ore mining experience and relationships in the Labrador Trough will be invaluable to our advancement of Houston,” said LIM chairperson and CEO John Kearney.
Scully will subscribe for 13.04-million shares of the company at $0.23 a share for gross proceeds of $3-million and hold about 7.4% of the company’s shares on closing.
In addition, through a subsidiary, Scully will provide an unsecured, convertible $1-million credit line to the company with a five-year term, at an interest rate of 6.8%, and convertible at $0.31 a share.
To develop the Houston project, near Schefferville in the Labrador Trough, LIM will establish Labrador Iron Mines Limited Partnership (LIMLP), which will hold the project. LIM will be the general partner and project operator and a subsidiary of Scully will be the limited partner of LIMLP.
Scully will have the first right to propose project debt financing for the development of Houston.
Scully CEO Samuel Morrow will be appointed to the LIM board.
Scully’s core asset is a net revenues-royalty interest in the Scully iron-ore mine, located at Wabush in Newfoundland and Labrador, Canada. The Wabush mine has a capacity of six-million tonnes a year and produces what is considered a premium iron-ore product with iron content of more than 65%. It uses the same rail and port, Sept-Iles, as LIM plans to use for the Houston project.
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