On March 30, Consolidated Thompson Iron Mines Limited (CLM), a North American exploration and mining development company, announced the signing of a letter of agreement with Wuhan Iron and Steel (Group) Corporation (WISCO), one of China's largest steel producers, for a strategic investment by WISCO in CLM.
The letter of agreement provides for WISCO to make a total investment in CLM of $240 million and in return CLM will issue 29,748,897 common shares of CLM, which represent 19.9 percent of the company's shares post transaction.
In addition, WISCO will receive not less than a 25 percent interest in a newly incorporated company that is to be established to operate the Bloom Lake mine, and will commit to purchase a similar percentage of iron ore production over the life of the mine. WISCO will also be entitled to other long-term off-take rights at fair market value from both the initial production and future expansion of the Bloom Lake project as well as from CLM's Lamelee and Peppler Lake projects.
Under the agreement, various technology and personnel exchanges are contemplated and WISCO will be entitled to nominate a director to the board of CLM.
The agreement is conditional on approval by the Chinese Government as well as approval of regulatory authorities in both countries, including the Toronto Stock Exchange, WISCO completing due diligence, and the negotiation and execution of definitive agreements, which CLM anticipates occurring before May 1, 2009.