Century Global Commodities Corporation (TSX:CNT) has provided an update regarding its plan to spin out the Joyce Lake DSO Iron Ore Project in order to raise the necessary funding to advance the project towards development.
After a careful study of the various options of a spin-out, the company said it has determined that the best market to spin Joyce to is the Australian Stock Exchange (ASX) given the quality and the liquidity of the exchange, particularly in the iron ore sector.
As such, it has signed a mandate with Empire Capital Partners, a Perth-based corporate advisory and investment bank to execute the spin out. The mandate authorizes Empire to identify a pre-IPO investor or group of investors to raise initial seed funding in a special purpose vehicle holding 100% of Joyce.
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After this successful pre-IPO fiinancing, Empire is then mandated to be the lead manager of the IPO transaction on the ASX. Customary terms and fee structure are also covered in the mandate, and listing will be subject to all necessary board and regulatory approvals.
“We are very pleased with the completion of this step of going to the ASX in the spin out plan as it is a market that understands direct-shipping iron ore projects very well. Joyce, being such a project in a tier-one jurisdiction like Canada, is expected to perform favorably in the ASX compared to other capital markets.” Sandy Chim, Century Global Commodities CEO said in a statement.
The Joyce Lake DSO Iron Ore Project Joyce Lake, Century Global Commodities' most advanced project, is a DSO (direct shipping ore) project in Newfoundland and Labrador, close to the town of Schefferville, Quebec which is serviced by a rail link directly to ocean shipping iron ore ports at Sept-Iles. A new 43 kilometre dedicated haul road will be used from the Joyce Lake project to the rail link.
The company has completed feasibility and permitting studies and can be brought to production within approximately 30 months. Following an expenditure of more than $40 million, the project has total proven and probable reserves of 17.72 million tonnes at 59.71% iron ore based on estimates included in the 2015 NI 43-101 Feasibility Study dated April 14, 2015.
The NI 43-101 Study contemplates an open-pit mine of 2.5 million t/a over a 7-year life-of-mine producing both lump and fines from crushing and screening with no tailings generated. The study financial analysis used a base case long term price of US$95 per tonne, a capital cost of $259.6 million and operating costs of $58.25 FOB the port at Sept-Iles, which generated an NPV8% of $61.4M million after-tax and $130.8 million before tax.
Century Global Commodities is primarily a resource exploration and development company with a large portfolio of multi-billion tonne iron ore projects in Canada, mostly discovered by its own exploration team. It also owns 100% of the Joyce Lake Direct Shipping Ore project, its most advanced project. It has other non-ferrous metals properties under exploration as well as a well-established food distribution business in Hong Kong (Century Food).
Century Food is a subsidiary operation of the company which it started a few years ago and is a value-adding marketing and distribution business of quality food products sourced from such regions as Europe and Australia and sold in the Hong Kong market.
Contact the author at jon.hopkins@proactiveinvestors.com