Consolidated Thompson Announces US$240 Million Strategic Investment from Wuhan Iron and Steel Group

Consolidated Thompson Announces US$240 Million Strategic Investment from Wuhan Iron and Steel Group

March 30, 2009 Filed Under: Iron Ore Mining  

Consolidated Thompson Iron Mines Limited announce the signing of a letter agreement with Wuhan Iron and Steel (Group) Corporation, one of China’s largest steel producers, for a strategic investment by WISCO into Consolidated Thompson.

The letter agreement provides for WISCO to make a total investment in CLM of US$240 million and in return CLM will issue 29,748,897 common shares of Consolidated Thompson, which represents 19.9% of the issued and outstanding CLM shares post transaction. In addition, WISCO will receive not less than a 25% interest in a newly incorporated company that is to be established to operate the Bloom Lake mine, and will commit to purchase a similar percentage of iron ore production over the life of the mine. WISCO will also be entitled to other long-term off take rights at fair market value from both the initial production and future expansion of the Bloom Lake project as well as from CLM’s Lamelee and Peppler Lake projects. Under the agreement, various technology and personnel exchanges are contemplated and WISCO will be entitled to nominate a Director to the Board of Consolidated Thompson.

Richard Quesnel, the President and CEO of Consolidated Thompson, said “In addition to providing necessary capital towards the completion of construction at Bloom Lake, we view this investment as a key strategic step in developing a long-term partnership with an important consumer of iron ore that is one of China’s largest and most technologically advanced integrated steel groups. This partnership will also strengthen Consolidated Thompson’s potential to expand from the current mine plan of 8 million tonnes per year to 16 million tonnes of annual production of iron ore, which would position Consolidated Thompson as a significant iron ore producer with quality, low cost assets in Quebec.”

Brian Tobin, Co-Chairman of Consolidated Thompson, said “In this time of global economic uncertainty, China remains one of the strongest and most dynamic economies of the world. CLM is delighted to build this new partnership with WISCO, one of China’s most important steel groups.”

The agreement is conditional on approval by the Chinese Government as well as approval of regulatory authorities in both countries, including the Toronto Stock Exchange, WISCO completing due diligence and the negotiation and execution of definitive agreements, which CLM anticipates occurring before May 1, 2009.

The Balloch Group is acting as Financial Advisor to WISCO for this transaction.

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