Vale-backed Cyclone Metals is forging down the pathway to production at its flagship Iron Bear magnetite project in Canada, thanks to a compelling economic case outlined in a scoping study this month.

Cyclone is poised to launch straight into a pre-feasibility study, to be completed by the second quarter of 2026, funded through the phase-one US$18 million portion of a $138 million development deal struck with the iron ore major in February.   

The scoping study provides a blueprint for a sustainable and low-cost operation in the iron ore heartland of the Labrador Trough, powered by renewable energy, using a dry tailings solution, a focus on Indigenous input and access to existing infrastructure.

Cyclone evaluated 192 operating scenarios to determine the best five strategies for the scoping study.

The base case shows a post-tax NPV8 of almost $10 billion, an internal rate of return of 18.6% and payback within seven years.

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Iron Bear is set to produce 16Mtpa of Blast Furnace magnetite concentrate and 9Mtpa of what CEO and managing director Paul Berend dubs the project's "Holy Grail" – Direct Reduction (DR) pellets, which typically attract double the benchmark iron ore price.

Cyclone's estimated opex for DR pellets is $68.70/t and they are currently worth about $200-$250/t, more than twice the conservative $90/t benchmark iron ore price used in the study.

The base case 18-year mine life is also conservative, using just 9% of Iron Bear's overall 16.7 billion tonne resource. Further drilling is planned in the coming months to improve resource confidence and the potential minelife.

"There are still numerous scenarios that we're exploring, but what these scenarios tell us is that we'll be able to pick what is both the most sustainable and the most profitable for our shareholders," Berend said.

"I think that's a very powerful combination."

The project's pre-production capex of $4.6 billion is comparable to the Iron Bridge magnetite operation ramping up in Western Australia, but Berend notes a key difference is Iron Bear's premium DR pellet offering.

Green vision

With steelmaking accounting for about 7% of the global energy sector's carbon dioxide emissions, there's a push within the industry towards a lower-carbon future, made possible by using DR pellets in electric arc furnaces.

"This is really important for us from a climate perspective and the bottleneck is the very short supply of DR quality pellets," Berend said.

"A project like Iron Bear could really have a huge impact, because it enables this very clean steelmaking.

"It's very exciting and I think we have a duty to push these low-carbon, sustainable solutions, particularly when they make so much sense in terms of profitability."

Sustainability is the cornerstone

Berend said Iron Bear would showcase what good mining is, leveraging all the best technologies and practices available.

Iron Bear's three key ESG highlights were access to renewable energy, chosen mining method and social acceptability.

Cyclone's recent comprehensive power study demonstrated how Iron Bear's mining and concentrator complex could run on 100% renewable energy, from wind and hydro power in the region.

"That's unique," Berend said.

"This is very cheap energy … the cost of our power will be a tenth of that of a similar project in the Pilbara, and it's highly sustainable."

Cyclone is looking to be the first iron ore mine in Canada based on dry stack tailings, a mining method Vale is similarly investing in.

Berend is also committed to winning the trust of local communities and involving them in decisions on making the long-term project socially acceptable.

"We're committed to backfilling and rehabilitation as we mine … we won't be leaving any gaping holes in the ground or polluted lakes or rivers," he said.

"It's a big commitment and it's expensive but it's been factored into the numbers.

"This strikes the right balance between serving the communities and the environment and serving our shareholders."