Hopes Advance on new iron ore project in Nunavik
November 21, 2012
Tiny Oceanic Iron Ore Corp (ticker FEO on TSX) has cobbled together an attractive project to mine iron ore near tide water on Ungava Bay.
Oceanic Iron Ore’s Hopes Advance project is located on Ungava Bay, in the far north of Quebec (area called Nunavik). The project is interesting for a number of reasons:
- The company is very small, having a market cap of about $24M. While the proposed project is very large, with an approximate CAPEX cost of $2.85 B. Obviously, the company needs a partner with deep pockets. The company is actively seeking a partner, but has made no announcement. A Chinese or Korean partner would make sense. AcelorMittal, the worlds largest steel producer, already has its hands full with its Mary River project in Nunavut.
- The project is right near tidewater, eliminating the need for rail transportation, and opening a new route for iron ore from Quebec to the market. The ore would be shipped by pipeline to tidewater.
- The resource is very large with production of 10-20 million tonnes per annum over a 30 year mine life. Deposits nearby also look promising. The project looks attractive in comparison to iron ore peer projects - particularly low production cost per tonne.
- Oceanic has completed a pre-feasibility study with NI 43-101 resource estimates. A feasibility study is slated for 2013, with construction as early as 2014.
- The new PQ government in Quebec does not mention Plan Nord, as this was previous government’s Plan. As well, some intellectuals question the logic in spending scarce resources on northern infrastructure. « On ne peut pas savoir si le plan sera rentable », a lancé Jacques Fortin, professeur de sciences comptables à HEC Montréal.
The Hopes Advance project seems compelling on paper. There is the excitement of a large project that could involve billions of dollars of investment and hundreds of good-paying jobs. However, $3 billion is a lot of money to invest in a weak global economy, ie. the project is risky. The Oceanic shareholders may be the beneficiaries if they can find a party willing to pony up some or all of the $3 billion.
- c) see video at http://oceanicironore.com/projects/videos/