MONTREAL – Efforts to restart the idled Bloom Lake iron ore mine got a boost Thursday after the Caisse de depot pension fund manager and a mining lending group agreed to provide US$180 million in debt financing to a subsidiary of Champion Iron Ltd. (TSX:CIA).
The Caisse will provide US$100 million in subordinated debt partially tied to the price of iron ore while Sprott Resource Lending will provide US$80 million in the form of a five-year senior secured loan.
The iron ore mine in the Labrador Trough near Fermont, Que., is expected to reopen as early as the first quarter of next year. It shuttered in late 2014.
The Caisse said the deal is aligned with its strategy to support Quebec mining companies.
Quebec’s investment agency helped Champion’s Quebec Iron Ore Inc. subsidiary to purchase the Bloom Lake mine and a regional railway last year from an affiliate of Cliffs Natural Resources (NYSE:CLF) that was placed into creditor protection after ore prices tumbled.
A fund managed by Investissement Quebec, which owns 36.8 per cent of the subsidiary, has signed a letter of intent to provide C$27 million to support the resumption of operations. Champion will issue equity to raise its C$45-million contribution, subject to shareholder approval Aug. 18.
The Bloom Lake Mine is an open pit operation that can produce iron concentrate that will be transported by rail to a ship loading port in Sept-Iles.