Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.
A Vancouver-based mining company looking to reopen the Griffith Iron Ore Mine near Ear Falls is temporarily scaling back operations after losing a potential partner in the project.
Ontario Iron Mining Inc. has notified Northern Iron Corp. that it will not conclude the purchase of Northern’s El Sol and Whitemud iron ore properties at this time.
Ontario Iron spokesman Jonas Struthers cited “difficult market and trading conditions in China’s steel industry” as the primary reason for pulling out of the proposed deal, despite satisfactory due diligence on the property.
“We believe in the location and established infrastructure of this project as being ideal for export to Asia in general and China in particular,” he said, adding that “there is still significant interest in the properties and in Northern Iron’s business plan, but the timing is not right for us to conclude the purchase.”
Northern Iron president Basil Botha noted that “this announcement is a disappointment for Northern and it’s shareholders.
“Fortunately, we have established good relationships with several other parties with whom we are discussing options ranging from direct investment to joint ventures and we continue to be well positioned to bring in an interested party in the not too distant future.
“In the meantime, we have taken a number of cost cutting measures that will ensure Northern retains sufficient cash to carry us through these difficult times. The cost cutting measures include salary cuts, layoffs, and a halt to work programs,” Botha said, adding that “going forward, our total focus will be on securing a strategic partner.”
Northern Iron had signed a memorandum of understanding with Ontario Iron Mining in March which outlined how both firms would have worked together to bring the Ear Falls area iron ore properties to the production stage.
Northern Iron owns five iron ore properties in the area, containing over 500 million tonnes of historical resources, including the past producing Griffith mine and the Karas property.