Funding Uncertainty Looms as Cyclone Metals Advances Iron Bear Scoping Study

Overview of the Iron Bear Scoping Study

Cyclone Metals Limited (ASX – CLE) has announced the completion of a Class 5 AACE compliant Scoping Study for its flagship Iron Bear magnetite iron ore project, located in the Labrador Trough, Canada. The study evaluates three staged production scenarios, 12.5 Mtpa (low case), 25 Mtpa (base case), and 50 Mtpa (high case), with a focus on producing high-grade blast furnace (BF) and direct reduction (DR) concentrates and pellets.

The base case scenario, targeting 25 million tonnes per annum, is underpinned by a substantial mineral resource of 16.66 billion tonnes at 29.3% iron content, with 2.15 billion tonnes classified as Indicated Resources. The study projects an 18-year mine life with a net present value (NPV) of approximately USD 9.79 billion and an internal rate of return (IRR) of 18.5%, assuming iron ore prices of USD 90 per tonne (IODEX62 benchmark) in 2035.

Technical and Environmental Highlights

Metallurgical test work confirms the ability to produce premium iron ore products, including BF concentrates grading 69.8% Fe and DR concentrates grading 71.0% Fe, both with low silica content. The project design incorporates conventional open-pit mining with a low strip ratio of 0.34, and processing flowsheets employing magnetic separation and reverse flotation to achieve product specifications.

Environmental considerations are central to the project’s design, with plans for 100% renewable energy use sourced from a combination of hydropower and wind farms. Tailings management will utilize dry stacking and progressive pit backfilling, minimizing environmental footprint. The project also emphasizes social responsibility, including engagement and workforce development with local Indigenous communities.

Infrastructure and Logistics

Iron Bear benefits from access to existing rail infrastructure connecting the mine site near Schefferville to the deep-water ports of Sept-Iles and Pointe Noire in Quebec. The study evaluates rail transport as the preferred logistics solution, with alternative slurry pipeline options also assessed. The project’s location within a well-established iron ore mining district supports operational synergies and infrastructure sharing.

Power infrastructure planning includes staged development of renewable energy sources, with a 60 MW hydroelectric facility at Menihek complemented by a 280 MW wind farm, and potential high-voltage transmission lines from Churchill Falls to meet increasing power demands as production scales.

Strategic Partnership and Funding Outlook

A key milestone underpinning the project’s advancement is the binding Development Agreement with Vale S.A., one of the world’s largest iron ore producers. Vale has committed USD 18 million to Phase 1 activities, including the Pre-Feasibility Study and environmental baseline studies, with an option to fund up to USD 120 million in Phase 2 to progress the project to Decision to Mine. Upon completion of Phase 2, Vale may earn up to a 75% equity interest in the Iron Bear Joint Venture.

Cyclone Metals anticipates that the high-quality concentrate specifications and robust economics will facilitate securing the substantial pre-production capital investment estimated at approximately USD 4.4 billion. However, the company cautions that funding beyond Phase 1 depends on Vale’s decision to proceed and that alternative financing routes will be pursued if necessary.

Risks and Next Steps

The Scoping Study is preliminary and includes significant inferred resources, which carry geological uncertainty. Environmental and regulatory approvals remain to be secured, and market conditions for DR pellets are evolving. The company plans to advance to a Pre-Feasibility Study targeted for completion by Q2 2026, which will refine technical, economic, and environmental parameters.

Overall, the Iron Bear Project presents a compelling opportunity to develop a large-scale, low-cost, and environmentally responsible iron ore operation in a first-world jurisdiction, aligned with the global transition to low-carbon steel production.