Stelco selling stake in iron ore mine

Stelco Inc. said Wednesday it will sell its stake in the Wabush iron ore mining joint venture to Consolidated Thompson Mines Ltd.

The joint venture includes the Scully mine near Wabush, N.L., and a processing facility in Quebec.

The sale of Stelco's 44.6 per cent stake in the joint venture will see Consolidated Thompson pay $44.4 million in cash and assume an estimated $94.6 million in liabilities. Stelco will also get approximately 1.9 million warrants to purchase shares of Consolidated Thompson valued at $1.7 million.

Consolidated Thompson will also supply $22.7 million ofiron ore pellets to Stelco until December 31, 2009. Stelco will retain its share of the Wabush iron ore inventory, which is valued at approximately $35.7 million.

Stelco president and CEO Rodney Mott said the sale will improve the Hamilton steelmaker's financial position.

The Wabush joint venture's other partners include Cleveland-Cliffs Inc., which has a 26.8 per cent stake, and Dofasco Inc., which owns 28.6 per cent.

"The Wabush mine requires some redevelopment work which has an associated capital requirement," Mott said, adding that Consolidated Thompson is in a better positionto complete the work given becauseit has neighbouring mining interests.