On January 5, Canada-based Consolidated Thompson Iron Ore Mines Ltd (CLM) announced that it has entered into an offtake agreement and a credit agreement with SK Networks Co. Ltd.(SKN), a subsidiary of the third largest South Korean conglomerate, SK Group.
Under the scope of the offtake agreement, SKN is to purchase annually, for a ten-year term, at fair market value and on commercially reasonable terms, one million mt of iron ore concentrate from CLM's Bloom Lake mine.
The credit agreement provides for a US$50 million unsecured five-year term credit facility which is expected to be available for drawdown prior to January 31, 2010. The facility is non-amortizing and carries a fixed annual interest rate of five percent payable on a semi-annual basis. The principal amount of the facility can be repaid by the company at any time. This credit facility will be used to fund potential expansion at Bloom Lake and for general working capital purposes.
According to CLM's press release, the agreements attest to the robustness of the Bloom Lake project and its attractiveness to some of the world's largest consumers of iron ore.
"We are very pleased to have reached long term agreements with a well recognized Korean Company such as SKN," stated Richard Quesnel, president and CEO of CLM.
Harp Capital Corp. acted as advisor to CLM on the credit agreement.