Cyclone Metals Limited (ASX: CLE) has announced a significant Memorandum of Understanding (MoU) with global mining leader Vale S.A. The agreement focuses on the development of Cyclone's Iron Bear iron ore project in Canada, marking a major step forward for the company.

Strategic Partnership Overview

The MoU outlines a strategic two-phased investment framework for advancing Iron Bear to a Decision to Mine (DTM). Vale’s involvement signals a high level of confidence in the potential of this project.

Phase 1: Initial Development Investment

• Vale will contribute up to USD $18 million to fund preliminary feasibility studies, resource drilling, and environmental baseline work.
• This phase concludes when the funding is fully utilized or the planned activities are substantially completed.

Phase 2: Joint Venture Formation and Expanded Investment

• Upon completing Phase 1, Vale may form a joint venture with Cyclone, initially acquiring a 30% equity interest in Iron Bear.
• Vale’s ownership could increase to 75% through further investment, up to USD $120 million or upon reaching DTM.

Governance and Exclusivity Terms

During Phase 2, Cyclone and Vale will share equal representation on the Iron Bear JV board, with an independent chairman. Should Vale secure a 75% interest, the board’s structure will shift to Vale’s majority control.

The MoU includes a 90-day exclusivity clause, ensuring Cyclone engages only with Vale on this project during that period. The exclusivity clause reflects the commitment of both parties to finalizing a formal agreement.

Iron Bear Project Highlights

Cyclone’s Iron Bear project boasts a world-class iron ore resource of 16.6 billion tonnes, with superior-grade concentrate produced in pilot testing. Its strategic location near existing rail and port infrastructure enhances its commercial viability.

Other key highlights of the project include:

• Proximity to open-access heavy haul rail, connected to Sept-Îles port in Canada.
• Potential for low-cost hydropower within 70 kilometers.
• Anticipated production of low-carbon direct reduction (DR) pellets by mid-2025.

Insights from Leadership

Paul Berend, CEO of Cyclone Metals, expressed optimism about the partnership, stating:
"Vale is an ideal partner for advancing Iron Bear. Their expertise in producing ultra-clean iron ore products and their global operational strength will be instrumental in unlocking the project’s full potential."

About Vale S.A.

Vale is a global mining giant, producing over 300 million tonnes of iron ore annually. Known for its high-grade, low-impurity products, Vale has a strong presence in Canada, with operations spanning nickel, gold, copper, and cobalt. Their established infrastructure and market access provide a significant advantage for the Iron Bear project.

Next Steps

The MoU sets the stage for formalizing a binding agreement within the next 90 days. This agreement will define governance structures, investment timelines, and the roadmap for advancing the Iron Bear project.

With Vale’s extensive resources and expertise, Cyclone Metals is poised to position Iron Bear as a major source of premium-grade iron ore for the global market.