Iron Bear’s Future Hinges on Vale’s Funding and Shareholder Approvals

Strategic Partnership Secured

Cyclone Metals Limited (ASX: CLE) has taken a significant step forward by signing a binding commercial agreement with global mining giant Vale S.A. to jointly develop the Iron Bear iron ore project in Canada. This agreement grants Vale the right to invest up to USD 138 million in the project, structured in two distinct phases, and to earn a controlling stake of 75% in the venture.

The deal not only provides Cyclone with critical funding but also aligns the project with Vale’s expertise in low carbon and direct reduction iron ore markets, a sector experiencing rapid growth. Cyclone’s CEO Paul Berend highlighted Vale’s dominant position in this niche, positioning Iron Bear to become a world leader in supplying ultra-low carbon iron ore products.

Phased Investment and Development Plan

The agreement outlines a clear two-phase investment approach. Phase 1 involves an USD 18 million contribution from Vale to fund preliminary feasibility studies, mineral resource drilling, and environmental baseline assessments. Completion of this phase allows Vale to decide whether to proceed to Phase 2.

Phase 2, with up to USD 120 million in funding, will see the formation of a joint venture between Cyclone and Vale. This phase focuses on bankable feasibility studies, environmental impact assessments, and establishing Impact Benefit Agreements with First Nations communities. Vale’s equity interest will increase to 75% upon full Phase 2 funding or upon Vale’s decision to advance to the Decision to Mine (DTM) stage.

Ownership and Governance Dynamics

Post-Phase 2, Vale will hold a majority on the joint venture’s board, reflecting its controlling interest. The agreement also includes provisions for Vale to acquire Cyclone’s remaining 25% stake at fair market value once DTM is reached, subject to shareholder approval. Alternatively, Vale can finance Cyclone’s share of production capital expenditure without diluting Cyclone’s equity.

Additional protections are embedded through rights of first refusal and tag-along and drag-along rights, ensuring both parties have mechanisms to manage third-party sales and maintain strategic control.

Project Location and Resource Highlights

The Iron Bear project boasts a world-class iron ore resource of 16.6 billion tonnes at 29.3% Fe, located less than 25 kilometres from heavy haul rail infrastructure connected to an open access export port in Canada. The project has demonstrated promising pilot plant results producing high-quality direct reduction grade concentrate with ultra-low impurities, aligning with the growing demand for low carbon steelmaking inputs.

Its proximity to hydropower potential and established regional infrastructure further supports a low-cost, environmentally conscious development pathway. Bulk samples of direct reduction and blast furnace concentrates are expected to be available for steel mill clients in early 2025, signalling rapid progress towards commercialisation.

Looking Ahead

This agreement marks a transformative milestone for Cyclone Metals, providing both the capital and strategic partnership necessary to advance Iron Bear towards production. The collaboration with Vale not only de-risks the project but also positions it to capitalize on the expanding market for sustainable iron ore products.

Investors will be watching closely as feasibility studies progress and key milestones such as the Decision to Mine approach, which will determine the ultimate ownership structure and production timeline.