Cyclone Metals Secures USD 138m Vale Funding, Advances Iron Bear Pilot Production

Strategic Partnership with Vale S.A.

Cyclone Metals Limited (ASX: CLE) has taken a major stride in advancing its flagship Iron Bear Project, located in the Labrador Trough region of Canada, by executing a binding commercial agreement with global mining giant Vale S.A. The agreement grants Vale the right to invest up to USD 138 million in two phases, enabling it to earn a 75% stake in the project. This partnership not only brings substantial capital but also the expertise of one of the world’s largest iron ore producers, positioning Iron Bear for accelerated development.

The initial phase involves a USD 18 million contribution from Vale to fund pre-feasibility and environmental studies, with the first tranche of approximately A$10 million already received by Cyclone. Subsequent funding will support a bankable feasibility study and impact benefit agreements with First Nations, culminating in a joint venture where Vale holds a 30% interest initially, increasing to 75% upon full Phase 2 funding or a Decision to Mine (DTM).

Pilot Production Success Signals Technical Viability

Complementing the funding milestone, Cyclone has successfully completed pilot production runs at its Quebec City pilot plant, delivering 400 kilograms of direct reduction (DR) concentrate grading 71% iron and 1.2% silica with an impressive 89% flotation mass yield. Additionally, 260 kilograms of high-quality DR pellets were produced, demonstrating excellent physical and metallisation properties suitable for low-carbon steelmaking processes.

This pilot work represents a significant improvement over previous yields and confirms the exceptional quality of the Iron Bear ore body, which boasts ultra-low deleterious elements. The company is finalising detailed metallurgical results expected in May 2025, which will further validate the project’s technical and economic potential.

Robust Infrastructure and Clear Development Pathway

Iron Bear benefits from strategic infrastructure advantages, including proximity to an open-access heavy haul railway and export port, as well as potential access to low-cost hydropower. These factors underpin a clear and funded pathway to a Decision to Mine, targeted for 2027 or 2028. Vale’s involvement is expected to de-risk the project through comprehensive feasibility and environmental studies, as well as establishing impact benefit agreements with local First Nations communities.

Diversified Exploration Portfolio Maintains Momentum

Beyond Iron Bear, Cyclone continues to advance exploration activities across its diversified portfolio. In New Zealand, the Grand Port Project is progressing with geological sampling and planning for integrated soil and seismic programs. In Australia, the Wee MacGregor copper project and the Nickol River gold project remain active, with encouraging exploration results reported by partners and ongoing negotiations for drill access.

These assets provide Cyclone with exposure to multiple commodities, including gold, lithium, and copper, complementing its iron ore focus and enhancing its growth prospects.

Financial and Corporate Developments

During the quarter, Cyclone issued shares and options as part of its capital management strategy, including performance rights linked to the Vale agreement. The company reported exploration and evaluation expenditure of A$1.64 million, primarily on Iron Bear and Grand Port projects, with Vale reimbursing A$1.23 million in expenses post-quarter. Cash on hand stood at approximately A$720,000 at quarter-end, supplemented by the funding received from Vale.

Payments to related parties, including directors’ fees and bonuses, were disclosed in line with ASX requirements, reflecting standard corporate governance practices.