04/03/14 – Petmin to lift stake in North Atlantic Iron

PETMIN is to invest $8m to lift its stake in North Atlantic Iron Corporation from 30% to 40%, and is looking at creating a separate listing for the pig iron project on both the Toronto Stock Exchange and the JSE.

So far, Petmin has invested R144m in North Atlantic and has the right to acquire a further 9.9% of the shares at a market-related price, which would bring its total shareholding to 49.9%. Petmin has joint management control of North Atlantic with Canadian partner Grand River Iron Sands, which owns the balance of the equity.

North Atlantic is a private Canadian firm looking at developing a low-cost merchant pig iron business.

Petmin business development director Bradley Doig said North Atlantic’s preliminary economic assessment would be published by the month-end and “will indicate that Petmin’s investment in North Atlantic has the potential to materially enhance shareholder value “.

Mr Doig said the decision to go for a separate listing was based on the fact North Atlantic did not fit in with the rest of the group’s mining operations and little value was being attributed to the project by investors. “This is not a junior mining business, it’s an industrial business.”
Mr Doig said North Atlantic’s future was linked to the “reindustrialisation of the US”. He said: “We are already seeing these developments happening on the ground. They are being driven by the availability of very cheap electricity, which, in turn, is being made possible by the availability of cheap supplies of gas.”

North Atlantic has carried out three successful smelt campaigns at its production facility in Pennsylvania under the auspices of independent consultant Hatch. Mr Doig said North Atlantic would be one of the lowest-cost producers of merchant pig iron in the world on a delivered basis to the electric-arc steel industries of the US and Europe, with costs estimated at being 25% below the current lowest-cost producer.

He said the structure for the separate listing involved Petmin exchanging its 40% of North Atlantic for 40% of a Canadian firm that would own 100% of North Atlantic and would be listed on the Toronto Stock Exchange and JSE. Petmin would then unbundle these shares to its own shareholders.

Source – BDLive.co.za