Century Iron Mines Corp (TSE:FER) and Wisco International, a unit of Wuhan Iron & Steel, also known as China's third-largest steel producer, have completed the formation of their joint venture for Century's Sunny Lake iron ore property in Quebec, as per an agreement signed in December of last year.
The deal provides that Wisco will make a total investment of $40 million into the Sunny Lake project, in exchange for a 40 per cent stake in the venture.
The investment will be made through reimbursing Century for some exploration expenses incurred on the project so far, as well as through the funding of new exploration costs.
After the $40 million is spent, Century will hold 60 per cent of the venture going foward, and Wisco will own the remainder, with each party funding expenses on a pro rata basis according to their respective interests.
The Sunny Lake project, which covers around 24,000 hectares, consists of two separate areas - Lac Le Fer and Rainy Lake. Late last month, Century crossed another milestone as it announced a first mineral resource statement for its Rainy Lake iron deposit, also known as the Full Moon prospect.
The Full Moon deposit is now estimated to contain an indicated mineral resource of 7.26 billion tonnes grading an average of 30.18% total iron. This is on top of an inferred resource of 8.69 billion tonnes grading an average of 29.86% total iron, both at a cut-off grade of 20% total iron.
The NI 43-101 compliant resource estimate was prepared by SRK Consulting, and was based on data acquired by Century in 2011 and 2012, comprised of 124 core boreholes
"We have made substantial progress in advancing our exploration programs at the Sunny Lake Project with the investment commitment of WISCO International," said Century president and CEO Sandy Chim. "These exploration programs have led to our first resource statement on the Full Moon deposit that we announced on October 22, 2012.
"The proceeds of WISCO's investment under the Sunny Lake Joint Venture Agreement will help to both advance our exploration at the Sunny Lake Project and enable us to complete a preliminary economic analysis on the Full Moon deposit and explore the direct shipping ore (DSO) targets on the property.
"We continue to believe that the Full Moon Deposit and the DSO targets offer the potential to be a strategic development project well positioned to fulfill the needs of WISCO International as our strategic end user, and that the closing of the Sunny Lake Joint Venture today is consistent with that belief."
Direct shipping ore (DSO) refers to iron ore that can be shipped directly to a steel furnace.
DSO mines are typically rarer than the magnetite-bearing banded iron formations, but are considerably cheaper to mine and process as they require less beneficiation due to the higher iron content. Export-grade DSO ores are generally in the 62 to 64 percent iron range.
The Full Moon deposit, however, is being developed for its taconite iron potential.
Taconite is a variety of iron formation, which is an iron-bearing sedimentary rock, and has been mined in North America for a number of decades as its constancy of ore characteristics on a very large scale has been an important source of iron supply for the US steel market for many years.
Century said that it has formed a management committee with Wisco for the Sunny Lake joint venture, which will oversee the exploration and development of the project.
Century Iron Mines is Canada's largest holder of iron ore land claims in a public company, with interests in several properties in the Provinces of Quebec and Newfoundland & Labrador.
In late September, the company released the initial mineral resource statement for its Hayot Lake iron deposit in Quebec on the Attikamagan iron project, calling it a "defining milestone".
In a seperate letter Thursday, the company said that today, it has 8.31 billion tonnes of measured and indicated resources, and 10.98 billion tonnes of inferred resources under management.
This is up from 31.3 million tonnes of measured and indicated resources and 821.1 million tonnes of inferred resources as of August 26 this year.
The company is backed by two Chinese strategic partners through financing and off-take agreements: MinMetals and Wisco International. Support from these two massive Chinese conglomerates, which are ranked among the Forbes Global 500 and are two of China's largest mining companies, must mean Century Iron has the goods to back itself up.
In 2010, the Wisco group produced 36 million tonnes of crude steel, ranking as the fourth-largest steel mill in China and the fifth-largest in the world.
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