Cyclone Metals (ASX:CLE) has signed a binding commercial agreementwith global iron ore leader Vale (NYSE:VALE) through which the parties will jointly develop the Iron Bear asset in Québec, Canada.
The partnership aims to leverage Vale’s extensive resources and expertise to advance Cyclone’s Iron Bear project.
Cyclone and Vale first announced a memorandum of understanding for Iron Bear in November 2024. It outlined key terms for the partnership, but was non-binding except for exclusivity and confidentiality clauses.
“Project Iron Bear has now secured a clear pathway to get into production, and to become a world leader for the supply of low cost and ultra-low carbon iron ore products,” Cyclone CEO Paul Berend said in Monday’s (February 17) release.
The company’s agreement with Vale outlines a collaborative framework with two phases. The arrangment will see Vale provide technical and financial support to expedite the development of Iron Bear.
Under the deal, Vale will contribute US$18 million for Phase 1 of a work program at Iron Bear. It will include a prefeasibility study, as well as mineral resource drilling and environmental baseline studies.
Vale can choose to trigger Phase 2 once Phase 1 is complete; completion will occur either when Cyclone receives Vale’s full Phase 1 contribution, or when the Phase 1 work program at Iron Bear has been ‘substantially completed.’
When Phase 2 begins, the companies will form a joint venture to develop Iron Bear, with Vale receiving a 30 percent equity interest in the entity. Vale will put as much as US$120 million toward the joint venture’s activities, which will include a bankable feasibility study, environmental impact studies and impact benefit agreements with First Nations.
Vale’s interest in the joint venture will rise to 75 percent when it has made its total contribution for Phase 2, or when it makes a decision to mine at Iron Bear. Vale will have the right to acquire the remaining 25 percent once the decision to mine has been made; if it does not do that, it will be able to set up non-dilutionary production CAPEX funding for Cyclone.
Located near the border between Québec and Newfoundland and Labrador, Iron Bear is positioned less than 25 kilometres from an open-access heavy haul railway, allowing transportation to export markets. It has a resource of 16.6 billion tonnes at 29.3 percent iron, positioning it as a potential key player in the global iron ore supply chain.
Mitsui joins Rhodes Ridge iron ore joint venture
In another sign of increasing interest in getting new iron ore projects off the ground, Mitsui & Co. (TSE:8031) has agreed to acquire a 40 percent stake in Rio Tinto’s (ASX:RIO,NYSE:RIO,LSE:RIO) Rhodes Ridge joint venture.
The Japanese conglomerate will pay US$3.34 billion to buy VOC Group’s 25 percent stake in the joint venture, plus another US$2 billion to purchase a 15 percent interest in the joint venture from AMB Holdings.
According to Mitsui, Rhodes Ridge is one of the largest undeveloped iron ore deposits in the world, with a resource of 6.8 billion tonnes. It is located in Western Australia’s Pilbara region, and first ore is expected in 2030. Mitsui’s annual share of output is expected to be 16 million tonnes initially, expanding to 40 million tonnes down the line.
Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.