Rivals join forces, close in on Mary River deal

Mary River is closer to having a new owner after the board of Baffinland Iron Mines gave its blessing to a joint takeover bid by two former rivals.

Baffinland’s board of directors urged shareholders Jan. 17 to sell to a joint bid from Luxembourg steelmaker ArcelorMittal, who are offering $1.50 per share.

After months of trying to outbid one another, the two companies chasing control of Baffinland and the Mary River iron ore project have joined forces on a $590-million dollar bid.

ArcelorMittal and Nunavut Iron Ore Acquisition Inc. announced Jan. 14 they’re together offering $1.50 per share for a 100-per cent stake in Baffinland. The new offer expires at midnight Jan. 25. ArcelorMittal would own a 70-per cent stake of Baffinland, while Nunavut Iron Ore would control 30.

The two companies already control more than one-third of all Baffinland shares. Nunavut Iron Ore owns 10.3 per cent of Baffinland, while ArcelorMittal has deals with Bafifnland’s largest shareholder and the company’s directors for a total of almost 25 per cent of shares.

Earlier, Baffinland released the results of a feasibility study on hauling ore from the first Mary River iron deposit by road. The study finds hauling the 60 million tons of ore at Deposit 1 by road could generate more than $3 billion in cash flow and a 30 per cent rate of return.

Baffinland says the earliest production could start at the site would be 2013.

The report says findings from a 2008 feasibility study on hauling iron ore by rail to Steensby Inlet are now out of date and will be updated later.