2 Min Read
By Susan Taylor
TORONTO, Dec 11 (Reuters) - Champion Iron Mine said Friday it will buy a Quebec iron ore mine for C$10.5 million ($7.65 million), just a sliver of the C$4.9 billion that Cliffs Natural Resources paid in 2011, when metal prices surged on booming Chinese demand.
The downturn in bulk commodities allowed Champion to negotiate a "competitive" bid, said Chief Executive Michael O'Keeffe in a statement, including C$10.5 million in cash, C$41.7 million for environmental reclamation and about C$1.1 million for bonds.
Champion shares jumped 30 percent after the announcement to 19.5 Canadian cents on the Toronto Stock Exchange, while Cliffs stock dipped 4.1 percent to $2.09 on New York.
The Bloom Lake mine and related rail assets, along with Quinto Mining Corp mineral claims, are being sold under Cliffs' restructuring of Canadian operations, which gave it creditor protection. The acquisition, subject to court approval, is expected to close in the first quarter of 2016.
Cliffs acquired the mine from Consolidated Thompson Iron Mines in 2011, a deal once seen as a key driver of its future growth. Iron ore prices, approaching $200 a tonne at the time, are now at a decade low of $38.
Cleveland-based Cliffs had planned to expand capacity and reduce operating costs, but slumping iron ore prices and cooling demand for the steel-making material were exacerbated by higher-than-expected operating and capital costs.
Just one year after the acquisition, Cliffs took a $1 billion writedown on the deal and in late 2014, recorded a $4.5 billion write down for Bloom Lake assets.
The iron ore and coal miner filed for creditor protection of its Canadian arm in January, after moving to cease production at the mine when it failed to find a minority stake buyer. ($1 = 1.3729 Canadian dollars) (Reporting by Susan Taylor; Editing by James Dalgleish)