Anglesey Mining's associate, Labrador Iron Mines (LIM), has signed a two-year agreement with the Iron Ore Company of Canada (IOC) for the sale of all of LIM's iron ore production in the 2013 and 2014 calendar years.
IOC will pay for the iron ore progressively, as the ore is resold, with the price calculation based on the monthly average of the market index, which should decrease LIM's exposure to market volatility experienced in the past two years during its previous agreement with IOC.
"We are very pleased to be able to continue our working relationship with IOC as we head into our third year of production from our Schefferville area iron ore mines" said John Kearney, LIM's Chairman and Chief Executive Officer.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
"In addition, extending the contract for the next two years and fixing the price to be calculated based on the monthly average of the market index are two important improvements over previous years."
LIM has also announced that it has entered into an off-take financing deal with RB Metalloyd, an international commodity trading house. Under the agreement, LIM will be paid $35m which will be credited against future sales of a minimum of 3.5m tonnes of iron ore.
LIM began its third year of direct shipping iron ore production from its Schefferville area iron ore mines in Western Labrador in April 2013 and is targeting production of 1.75m to 2.0m tonnes of sinter fines and lump in 2013. The first Capesize shipment of 2013 is expected to be loaded around the end of May, the group added.
Shares in the company leapt 35.7% to 15:00 on Tuesday.
NR
