Consolidated Thompson Drops Wabush Plans Following Dofasco Decision
09/04/2007 - Consolidated Thompson says it will not proceed with its purchase of a majority interest in the Wabush Mines Joint Venture following Dofasco’s notification that it will exercise its option to purchase Stelco’s and Cleveland Cliffs’ interests.
Consolidated Thompson Iron Mines Ltd. announced that it will not proceed with its previously announced purchase of a majority interest in the Wabush Mines Joint Venture following Dofasco Inc.’s notification that it will exercise its option to purchase Stelco’s and Cleveland Cliffs’ interests in the joint venture.
“The recently announced transaction between Stelco and U.S. Steel and the decision by Dofasco/Mittal to exercise its right to acquire Wabush suggest that both consolidation in the iron ore and steel industry and the demand for iron ore continues be strong,” stated Bruce Humphrey, Chairman. “Management believes that both of these trends will eventually benefit CLM and our Bloom Lake Deposit.
“We are making rapid progress at Bloom Lake with over $100 million already committed and almost half the engineering completed. At full production of 7 million tonnes per year, it will be one of the lowest-cost producers in the Quebec/Labrador camp,” said Humphrey. “We will continue to explore consolidation opportunities in this
Camp and look for potential synergies with both Iron Ore Company of Canada, Wabush and Quebec
Cartier. This is an exciting time for Bloom Lake and the iron ore industry."
Richard Quesnel, President & CEO, stated: "During the last three months, the company has advanced the Bloom Lake project on a dual-track basis—with and without Wabush. With today's clarification regarding Dofasco's intent, we are proceeding with the Bloom Lake project on a stand-alone basis. The expansion of output from 5.0 million to 7.0 million tonnes of iron ore concentrate per year accounts for most of the accretion in all of the upgrade scenarios that have been evaluated to date. As consolidation is occurring in the iron ore industry, we will continue to review opportunities while keeping the focus on developing Bloom Lake as a world class operation and adding value to our shareholders."
Consolidated Thompson continues to develop its Bloom Lake property as scheduled, with detailed engineering 45% completed, procurement of critical equipment in place with Cdn$50 million committed, and a definitive agreement in place with Worldlink Resources Limited to sell 5.0 million tonnes of iron ore concentrate/year. Discussions have been advanced with the common-railway carrier regarding detailed haulage arrangements, and with a third party to build and operate harbor and port facilities.
The company has also completed a private placement equity financing of CDN$200 million, and is in advanced discussions on debt financing for up to $240 million. The company expects to have these facilities in place by year end.
As permitting progresses, pre-production work on the property is scheduled to start in early fall of 2007 and will include building road access, power lines and clearing timber. The company continues to target the commencement of production at Bloom Lake in the first quarter of 2009.
Consolidated Thompson Iron Mines is an exploration and development company. CLM holds the Bloom Lake Iron Ore Property located on the south end of the Labrador Trough (approximately 400 km north of Sept-Iles). The Bloom Lake deposit is situated approximately 10 km north of the Mount-Wright iron ore mining operation of Quebec Cartier Mining Co.
