Cyclone Metals and Vale partner to develop Iron Bear iron ore project in Canada

Cyclone Metals (ASX: CLE) has signed a memorandum of understanding (MoU) with Vale, one of the world’s largest producers of iron ore and iron ore pellets, to collaborate on developing its Iron Bear iron ore project in Canada.

The strategic partnership will advance the Iron Bear project to decision to mine (DTM) status and outlines a two-phased investment pathway for Vale to earn a controlling interest in Iron Bear.

Cyclone chief executive officer Paul Berend described Vale as “[…] a powerhouse in the production of ultra-clean iron ore products, including DR pellets and their proprietary cold briquettes—they are an ideal partner for us and we look forward to leveraging [their] extensive operational and financial resources to realise the full potential of Iron Bear.”

Phased development

Under Phase 1 of the MoU, Vale will contribute approximately $28 million to fund Iron Bear’s development activities including a preliminary feasibility study, mineral resource drilling and environmental baseline studies.

Once Phase 1 is complete, Vale may elect to commence Phase 2 and form a corporate joint venture (JV) with Cyclone to initially earn a 30% equity interest.

Vale can then increase its ownership in the JV to 75% upon making the DTM or when its total contribution reaches $186m, even if DTM has not yet been achieved.

100%-ownership option

Once DTM is achieved, Vale will have the right to acquire Cyclone’s remaining 25% JV equity interest or elect to loan-carry Cyclone’s share of CapEx, with repayment from Cyclone’s share of future operating profits, allowing Cyclone to retain its 25% stake.

Vale has maintained a strong presence in Canada since acquiring the International Nickel Company in 2006.

Its base metals business employs more than 6,000 people, with main assets including the Voisey’s Bay nickel mine and refinery and the Sudbury integrated mining and processing complex, which produces nickel, gold, copper, cobalt and platinum group metals.

Direct reduction pellets

Iron Bear completed a pilot pellet production run in October, producing world-class direct reduction (DR) pellets.

This initial run serves as a precursor to the company’s plans to start shipping bulk samples of DR pellets and other products to potential offtake clients in the Middle East and Europe by Q3 2025.

From there, the company aims to establish commercial sales agreements in these regions.