champion iron (TSX: CIA) (OTCQX: CIAFF) has entered into a definitive purchase agreement to acquire the Pointe Noire iron ore pellet plant located in Sept-Îles, Quebec, directly adjacent to the port facilities that the company currently uses. The plant was commissioned in 1965 with an original design pellet capacity of 6 million tons per year, but was put into service and maintenance condition in 2013.
According to Champion, the pellet plant is expected to require significant capital investment before recommissioning, including structural works, rehabilitation and upgrading of existing equipment, to maximize productivity and energy efficiency while minimizing its impact. environmental, the company added. Nevertheless, it may provide an opportunity to restart pellet production quickly and at a reasonable cost.
Under the terms of the agreement, Champion will make a cash payment of $2.5 million to Société Ferroviaire et Portuaire de Pointe-Noire SEC (SFPPN). In addition to the cash consideration, SFPPN and the region are also expected to receive additional economic benefits as Champion plans to recommission the pellet plant.
In addition, Champion has signed a memorandum of understanding with a major international steelmaker to evaluate the recommissioning of the pellet plant and produce quality direct reduction pellets. The MOU establishes a framework for Champion and its partner to conduct a feasibility study, which is expected to be completed in 2023. Subject to positive results, the MOU outlines a framework for a joint venture to produce direct reduction iron ore pellets for sale. to third parties, including the partner steelmaker.
Champion is required to comply with various commitments related to the pellet plant, including a commitment to design and operate the project using only green energy sources, including electricity, natural gas, biofuels or renewable energies as the main sources of energy. The feasibility study will assess the investments required to recommission the pellet plant while integrating state-of-the-art pelleting and processing technologies.
“The proposed pellet plant acquisition represents a strategic opportunity for our company to further deploy its vision of contributing to the supply chain of green steel production. Our local support, our iron ore products purity, access to world-class infrastructure and our operational track record, enabled us to attract a major international steelmaker for a potentially large scale project in Quebec,” said Champion CEO David Cataford.
Earlier this month, the company made its first shipment of high-grade iron concentrate from the expanded Bloom Lake mine in Quebec. The expedition was made by rail between the Lac Bloom complex, located about 13 km north of Fermont, and the deep-water port of Sept-Îles.
For more details on Champion Iron’s Bloom Lake mine operations, visit www.championiron.com.