JOHANNESBURG (miningweekly.com) – JSE-listed Petmin will raise its stake in North Atlantic Iron Corporation (NAIC) to 40%, and then plans to exchange its equity in NAIC for a similar stake in a related company that would be listed in Toronto and Johannesburg.

Petmin, which had steadily invested R210-million in NAIC since 2011, would invest a further $6-million into the emerging Canada-based low-cost merchant pig iron producer following a positive pre-economic assessment.

NAIC, which showed an aftertax investment rate of return of up to 19.3%, aimed to produce 810 000 t/y of merchant pig iron from iron-ore sands from its deposit in Goose Bay, Newfoundland, or 915 000 t/y using fines bought from iron-ore producers, for sale primarily in North America, with Europe as a secondary market.

The overall project capital expenditure has been estimated to be $515-million for the fines case, while the operating expenditure has been estimated at $305/t of merchant pig iron, which would make NAIC one of the lowest-cost producers on a delivered basis in North America.

Petmin pointed out that NAIC’s competitors’ costs ranged between $375/t to $425/t of merchant pig iron.

EQUITY EXCHANGE
Petmin, which had an option to acquire a further 9.9% interest in NAIC, also planned to exchange its 40% equity in the pig iron producer, valued at about R300-million, for a 40% stake in Muskrat Minerals Incorporated (MMI).

MMI is listed on the Canadian National Stock Exchange and currently holds 40% of Grand River Iron Sand, which would own 60% of NAIC once Petmin made its final investment by the end of 2014.

Following the conclusion of the deal, MMI would list on a major Canadian stock exchange along with a secondary listing on the JSE.

Petmin would distribute the MMI shares to Petmin shareholders through a special dividend, with an estimated value of 50c a share.

The transaction would be completed once NAIC had sufficient capital to complete a $20-million bankable feasibility study.