CuFe to sell iron ore mine to Newcam Minerals
![CuFe says it will focus on progressing its suite of prospective assets including the advanced Tennant Creek copper and gold project and the Yarram iron ore project in the Northern Territory as well as a raft of prospective exploration projects.](https://australianminingreview.com.au/wp-content/uploads/2024/08/shutterstock_2021454443.jpg)
CuFe (ASX: CUF) will sell the iron ore rights to its WA JWD iron ore mine to Newcam Minerals for $12m cash, citing challenging conditions in the iron ore market.
The JWD mine will suspend operations while the ownership transition occurs to preserve the value of ore in the ground.
Iron ore prices have been declining all year from a peak of $141.45 per tonne at the start of CY24. As of August 19, 2024, iron ore was trading at $98.05 per tonne.
CuFe executive director Mark Hancock comments on the transaction.
“We are pleased to have entered this agreement with Newcam Minerals to divest the JWD project,” he said.
“CuFe has been operating at JWD since 2021 and the mine has assisted us in funding the acquisition of the broad portfolio of prospective assets we are blessed with today.
“With iron ore prices remaining volatile and with current price levels below our breakeven cost, we feel like now is the time to turn our focus to those assets which offer greater potential for value creation for our shareholders.
“JWD’s distance from port has always been its major challenge as it makes the mine an inherently higher cost producer, with haulage cost comprising more than 50% of the mine’s C1 cost.
“In their attempts to reduce costs we have seen other iron producers in the region who have long road haul components expand their business into the haulage space to lower this cost.
“For CuFe we don’t believe it’s the right step to take given the scale of JWD and the upfront capital cost associated with such a change.
“We could suspend the mine as we have done before and wait for the market to improve, but this consumes cash to ramp down and ramp up.
“Having had the experience of operating it for more than three years, we consider the scale of JWD means it is best run as a private business that is very flexible as to how and when the mine operates, which reflects Newcam’s model, so [we] believe this sale is the best way forward.
“We look forward to working closely with the Newcam team to finalise the transaction and transitioning operatorship and thank all of those who have supported our efforts to date at JWD.”