Oceanic Iron Ore Corp. said last week that it had received a Letter of Intent from the Quebec’s ministry of Finance and Economy about its interest in becoming a minority partner in the Hopes Advance project.
The Hopes Advance project is to mine iron ore at a site near tidewater on Ungava Bay in Nunavik (northern Quebec). The project’s capital cost is $2.85 billion — into which Oceanic plans to sink in another $1.61 billion in 2025 and 2026 — consists of the construction, operation and decommissioning of several open-pit iron ore mines. These will generate between 10 million and 20 million tonnes of high-grade iron ore concentrate product every year for up to 48 years.
For the shipment of the iron ore to European and Asian markets, Oceanic also wants to build a deep water port facility on Ungava Bay with a 330-metre loading wharf, a tug moorage area, a commercial wharf and a causeway. The concentrate would then be pumped to port through a 26 km-long slurry pipeline. Oceanic plans to ship its ore directly from Hopes Advance Bay to China on huge carrier ships during summer and through trans-shipment during winter.
The money that Quebec wants to plow into the project comes from the province’s mining and oil capital fund with $750 million for investment in the non-renewable natural resources sector. That fund was announced in November 2012 in Quebec’s 2013-2014 budget speech. In November 2012, an independent evaluation of the economic benefits of the Hopes Advance project, led by KPMG Secor, projected the creation of added economic value of $1.9 billion for Quebec in addition to job creation estimated at 22,000 person years, providing employment benefits to Inuit in Nunavik and other regions.
Oceanic (ticker FEO on TSX) trades at $0.09/share and has a market cap of only $18 M. The company has completed a pre-feasibility on the Ungava project. It is working towards a feasibility study with a view to finance construction 2015-2017.
The company has a massive high grade iron ore deposit near tide water. The challenge will be for a company that is worth $18M to raise $2.8 B.