The primary investment by Metalo Manufacturing Inc. (MMI) (formerly Muskrat Minerals Incorporated), is Grand River Ironsands Incorporated (GRI). The key focus of MMI's investment centres on the development of a US$400 million pig iron plant, which is to be located in Canada. This plant will initially produce 425,000 tonnes annually, of a high purity pig iron, and will supply steel mills and foundries in North America. The development of the business model has taken nearly 7 years and more than US$30 million supporting the complexity of this accomplishment.
MMI owns 44.34% of GRI, who owns the rights to the pig iron manufacturing project. Effectively, MMI indirectly owns 26% of the project. The last two rounds of investment into the project were at a valuation of US$80 million.
The design criteria for the pig iron plant centred on using proven technologies, eliminating any technology risk. This ensured the ability to use low cost and even low grade raw materials. The pig iron is made by blending a low grade coal with iron ore to produce pig iron.
In locating the plant, it became imperative to find a balance between low cost natural gas and low cost electricity. The focus further set a high standard on emissions, with the goal of meeting or exceeding European emission standards, which are stricter than North American standards. The ability to have electricity produced from a non-fossil fuel will further strengthen the carbon foot print standards set for the plant.
Permitting has been initiated in one of the two jurisdictions for the final sites chosen. Bankable Feasibility is soon to be complete, and being managed by two world class engineering firms, with a goal to have it completed by Q1 2018. GRI has set a standard to be a low cost producer and able to compete with suppliers from Brazil, Russia, South Africa and Ukraine. Additionally, the ability to produce the highest purity metrics sought by foundries was also designed into the process. A significant cost edge by having a manufacturing plant located in North America will be the savings on shipping costs to the end users. This can be as much as $50/tonne. Pig iron for steel mills has traded as low as $180/tonne in the last 7 years and as high as $920/tonne.
Through MMI's shareholding in GRI, there is a mineral sands resource near Happy Valley-Goose Bay, NL (on a seaport). This mineral sands will be developed and serve as a hedge against any significant increases in iron ore. While this is not anticipated in the foreseeable future, the resource also contains other valuable minerals that are being further evaluated. The minerals of interest include magnetite, hematite, titanmagnetite, zircon, garnets, feldspars, silica, quartz, rutile, leucozene and ilmenite. Future efforts will focus on evaluating the economic potential of these minerals. On SEDAR, a technical report by SRK Consultants and Worley Parsons was published in June 2014.
MMI's shareholding in this project and manufacturing plant is significant as it will be the first major producer of pig iron in North America. Other than 50,000 tonnes produced in Quebec, 3-5 million tonnes annually must be imported. The project will use North American raw materials and add value to the coal and iron ore. The target for producing pig iron by Q1 2020 is the primary focus and target for MMI's future.