Wednesday, 19 Jan 2011
Reuters reported that Adriana Resources reached a joint venture agreement with a unit of China Wuhan Iron and Steel Co Ltd in the latest in a series of deals in Canada's iron mining sector.
WISCO will pay CAD 120 million for a 60% stake in a joint venture company to develop Adriana Lac Orelnuk and December Lake iron ore properties in northern Quebec and help with future financing costs.
WISCO will also receive shares representing a nearly 20% stake in Adriana though a private placement. Although the deal was announced after the close of Canadian markets recently, Adriana shares on the TSX Venture Exchange had jumped more than 17% during the day before they were halted pending a news announcement.
News reports began circulating in November that Adriana and Wuhan, China third largest steel producer were in talks.
Wuhan currently owns a 19.2% stake in Consolidated and has offtake agreements with the miner. Adriana needs about CAD 6 billion to develop its Lac Otelnuk project in the same region.
Mr Peter Campbell Jennings Capital analyst of the project's steep price tag said "Iron ore is all about infrastructure and their deposit is quite a distance away from anything."
Chinese steel mills, consuming around 70 percent of seaborne ore, have been keen to invest in foreign ore resources to better control prices.
Sourced from Reuters
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