Ex-Baffinland CEO 'more confident', still sees Chinese interest

By: Liezel Hill17th January 2011
TORONTO (miningweekly.com) : Gord McCreary, who resigned from the board of Baffinland Iron Mines in November, after the company agreed to support a takeover bid from ArcelorMittal, said at the weekend he is still working to get a better offer on the table.
McCreary is focused on a specific, unidentified Chinese State-owned company, which he says has shown strong interest in Baffinland and its Mary River iron-ore project.
“I am more confident now than I have been in the past, yes,” he said in an interview from Beijing on Saturday.
There is “very definitely” still interest in China in Baffinland and its asset, he said.
“I can't quantify it in percentage terms in terms of likelihood and that sort of thing, all I can do is keep my head down and go as hard as I possibly can to get there.”
McCreary, who owns about 2,3-million shares of Baffinland, had dismissed successive offers from ArcelorMittal and hostile bidder Nunavut Iron Ore Acquisition as too low, and told Mining Weekly Online he was also not impressed by the announcement on Friday that the former rivals have agreed on a new joint offer for Baffinland.
Even in the absence of another offer, McCreary said he would not tender his stake in Baffinland to the new C$1,50 a share offer, which he described as a “sweetheart deal” for Nunavut.
The new offer is scheduled to close on January 24, which, unless there are any more surprises, gives McCreary a 'hard' deadline for his plan to get an alternative bid on the table.
Shares in Baffinland declined 2,6% on Monday, to C$1,51 apiece by 14:18 in Toronto.
Baffinland's board of directors said earlier in the day it has recommended the joint ArcelorMittal-Nunavut offer to shareholders, and added that it had not received any third-party acquisition proposals.
ROAD HAULAGE
Besides the new joint offer, another significant piece of news emerged last week in the form of a feasibility study published by Baffinland on the potential to start production from Mary River on a smaller scale, using trucks to transport ore to port.
The road haulage project would require an initial capital of C$605-million if the company hired a contractor to operate the project, while the C$740-million figure assumes it would be owner operated.
That is significantly lower than the $4-billion estimated for the original project plan, which includes rail and port infrastructure.
Operating costs are estimated at C$29/t under the project owner, or C$63/t if a contractor were brought in, and production from the road-haulage project could start in 2013, with about one-million tons of iron-ore being shipped, Baffinland said.