newfoundland and labrador, canada
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Newfoundland and Labrador, Canada
December 2009From iron sands to iron making in Eastern Canada
- massive heavy mineral sands deposit located next to sea port
Our immediate goal….We seek an equity partner with $30 million
The Company with over 300 drill holes has solved the 113 year old challenge facing this deposit. The breakthrough has produced a viable economic model.
The Company at a minimum will produce iron (e.g. pig iron or iron nuggets) – the possibility of producing steel makes economic sense and will be evaluated.
The $30 million will see the project through to mining lease (Bankable Feasibility, Environmental and Resource Delineation). Portion will be used to expand resource size as well as a pilot plant using electricity for iron making.
The final phase will raise $400 million (with the possibility of Canadian government providing 50%)
i. Interest in debt in exchange for off-take rightsii. Interest in IPO from major global investment banker (post feasibility)iii. Likely control interest from largest operator of electric arc furnaces in US
Key Business SensitivityPrice of pig iron
◦ Currently selling for $310-325/tonne◦ Speculation from forecasters is wide ranging but typically
$400/tonne is common forward price targetManaging against price
◦ Pig iron is a raw material required to make steel – very few can match our cost of production (top 10% of low cost producers)
◦ Focused on reducing shipping and handling◦ Focused on supplying markets within 7 days shipping –
closer targets than Russia and Brazil ◦ Targeting firms that value pig iron made under solid
environmental conditions
Location - Northeast CanadaDirect access to US and Europe by sea (less than 7 days) – resource covers more than 600 square kilometres – river and land.
Happy Valley – Goose Bay
Ironsands DepositHappy Valley-Goose Bay, Labrador
• Unique Canadian Mineral Project – nature has done the work
• Dredging, gravity and magnetic separation – environmentally safe mining and processing
• Adjacent to a full service community and workforce – population 7,600
• Port Community
• Low Cost Hydro Power ~$0.05/kWh
• Enormous resource body
Ironsands in Raised Dunes in river
Grand River Ironsands Incorporated (GRI) Private Company with 93 shareholders including major shareholders - Innu
First Nation and Chinese investor/advisor – Grand Overseas Economic Development
Company has been developing the claims since 2000; new management and board in 2007
16.5 million shares fully diluted
8 person Board – including Band Chiefs from the two Innu First Nation communities in Labrador
Operating focus is balancing geology, metallurgy and economic considerations
Have invested approximately $5 million over past 9 years understanding and advancing the mineral resource and business model
What we believe GRI will be an environmental leader in mining – using gravity, water and magnets –
Nature has done blasting and crushing over the past 7,000+ years
Low Cost Production◦ Iron ore concentrate at under $20 per tonne◦ pig iron (96-97% Fe) production cost under $200 per tonne◦ Steel billets for approximately $300 per tonne
Locational benefits – rare in the world to have all on one footprint – full service community, port, low cost power, large resource, workforce
Using robust environmental controls we will be able to produce a high quality pig iron at an operating cost under $200 per tonne – only a few globally can do lower
Iron making◦ Coal-based approach meets or exceeds environmental standards◦ Electricity-based approach will generate carbon credits – will be an environmental leader in
iron making
What we have achieved to date… For the first time in 113 years – when deposit was discovered – we have established a
productive use for the resource – confirmed by various technical experts
We have developed, with industry (geology, mining, iron making and investment bankers) a financial model that supports viability
We have drilled approximately 300 holes on the river targets and more than 40 on land targets. Moreover, we understand how the deposit was created and predictive models for optimal targeting.
We have researched and begun melt tests on the likely approaches to iron making
Have developed solid relationships with all levels of government, the Innu First Nations (land claim owners), local people in host community, environmental groups and industry participants – investment bankers, steel producers, pig traders, etc.
Expressions from the provincial government of tax credits totaling an possible $150 million over first 20 years; a Federal government that has expressed an interest in providing 50% f debt for coal based approach; governments interested in funding a portion of $30 million pilot plant using electricity
Simple Business Model One footprint approach
◦ Mine, produce iron ore concentrate and make pig iron all in same immediate location – reducing shipping and handling costs
Ship less volume of a higher value product◦ Rather than shipping 1.6 tonnes of iron ore concentrate (cost of $20/t that sells for
$60/t) – we will ship 1 tonne of pig iron (cost of $175/t that sells for $325/t) – that is 37% less shipping weight (at $0.50/t/day at sea)
Co-locating with key infrastructure◦ Port, full service community (hospitals, recreation, homes, schools, suppliers, airport,
etc.), low cost hydro power and workforce
Resource supply for generations – to make 500,000 tpa of pig iron◦ If mining areas with 11% heavy mineral concentrations will need to mine
approximately 1 square km per year to 10 metres depth◦ If mining areas with 22% heavy mineral concentrations will need to mine 300 X 300
metres X 20 metres depth ◦ Overall resource area is estimated at more than 600 square kilometres
Key decisions in 2010…
Finalize investment partners and approach – the next round of $25 million of investment may chose that path in whom we partner with:◦ Steel producers (seek pig iron as a raw material) ◦ Pig Iron traders (seek to re-market to mills and foundries)◦ Investment banker (Public Offering)
Select technical team for Bankable Feasibility
Determine primary mining targets – land or river
Select the iron making technology1. SLRN (Outotec) coal based system to fuel kiln – Rotary kiln + electric furnace to
make pig iron, or2. Cardero Resources – electricity based system – from briquette to pig iron casting
(or molten iron if steel making is desired end product)
China (Dalian Port) would be 25 days by sea at a speed of 20 nautical miles or 42 days at a speed of 12 nautical miles
Mineral Sands – Cost AdvantageNo blasting, no crushing – lower capital cost and minimal impact to land reducing environmental remediation costs – dark strands are heavy minerals
The Mining Process – Dredging SandsDredger capable of extracting 5,000 tonnes of sand per hour – low tech and proven approach
Low Cost Separation and ConcentrationSpiral Separation (water and gravity) and Wet Magnetic Separators to produce final products – low tech and proven technologies for separation
First Pass Spiral – Gravity SeparationHigh Grade Magnetite at 68.3% FeTi-Mag is 56.68% Fe and 7-11% TiO2
Dredge and conveyor to the processor and a return circuit after separation of valuable minerals
100 % of River Sands
Sands (dried) from the river after dredging
Gravity Spiral—Uses WaterSilica Sands (returned to the river or land)
77-88% of River Sands
Magnetite (66.1 - 68.3% Fe)
Heavy Mineral Concentrate
12 - 23% of River Sands
Magnetic Separators and Rare Earth Drum Rollers— extracts magnetite & titanmagnetite and two other products of value
Titanmagnetite GarnetZircon
Overview of Producing Iron Ore Concentrate (Magnetite and Titanmagnetite)
Magnetite + Titanmagnetite =Iron Ore Concentrate to make Pig Iron
Magnetite (66-68% Fe from River – 1% of head feed)
Titanmagnetite (56% Fe and 7-11% TiO2 from River – 4% of head feed)
+
Pig Iron/Iron ProductsTakes 1.6 tonnes of iron ore concentrate to produce 1 tonne of pig – the cost edge starts with iron ore concentrate at $20 per tonne
SLRN (Outotec)Coal-Based - 50+ plants
BlueScope Steel (formerly New Zealand Steel)
The ironsands of Grand River are superior to the chemistry of NZ
Mining LifeNot yet quantified due to enormous size
Generally we know/believe:
1. River Claim is 144 square Kms
2. Land Claim is 475 square kms
To produce 500,000 tpa of pig iron requires 800,000 tpa of iron ore concentrate
River will be mined to 20 metres; land to 30-50 metres depth
800 ktpa of iron ore concentrate To 10 metres = < 1 sq km To 20 metres = < 0.5 sq km
1
2
Goose Bay
*Port
Financial Model Scenario - Pig Iron CapEx $368mm (50/50 Debt:Equity)
◦ Mining - $83 million◦ Iron Making - $285 million
Revenue $200 million◦ 500,000 tpa @ $400/t
EBIDTA $112 million
EBT (earnings before taxes) $78 million
IRR is 30% (at $400/tonne)◦ potential for 20 years of tax credits to increase IRR to 36%
Model doesn’t include potential revenues from garnet, zircon, titanium or carbon credits sales
Next Steps… Finalize the $30 million investment to fulfill requirements to
build out the project ($400 million)
Complete resource delineation (NI 43-101); environmental permit; bankable feasibility study for iron making and securing approval for mining lease
Key considerations for success◦ Iron making technology (coal or electricity)
If coal fired approach; there is immediate interest in financing if electricity, will require pilot plant to first prove up
◦ Canadian government is prepared to provide up to 50% of CapEx in form of loan◦ Interest from NL Hydro and Province in attracting electric smelting to HVGB –
project is next to the proposed $12 billion Lower Churchill Hydro project (2,800 MW generation)
Our goals… To secure an operating partner that has a need for the end products produced (pig iron
or billets)
◦ Pig Iron with 95-97% Fe; 3-4.5% Carbon; Sulfur <0.05-1.0%; Silicon <0.1-0.5%; P <0.05-0.1%; Mn – Trace; TiO2 <0.1%(Right: pig button from river sands + TiO2 slag)
Successfully proving Phase I of producing 500,000 tpa of iron making (pig iron) to enhance future phases. Resource base and markets can easily support increasing to 2 mtpa.
To focus on value-add as promised to the community and Innu partners.
Be an environmental leader in mining, processing and iron making and subsequent benefits (carbon credits). The ideal model would focus on using electricity-based model.
www.grandriverironsands.comThank you!
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