Please click on a question to read the answer.
Q: Do the Vancouver Island properties have potential for other minerals?
Q: What is the plan for the Ontario properties?
Q: What is iron ore? What is magnetite?
Q: What are the main end uses for iron ore, and magnetite in particular?
Q: What would be the main intended markets for the Corporation's iron ore?
Q: What are current market conditions for iron ore?
Q: How large is a typical iron ore mine?
Q: What type of mine would be built at the Pearson Project, if it is successful?
Q: What is National Instrument (N.I.) 43-101?
Q: Does Pacific Iron Ore intend to build a smelter for the Pearson Project?
Q: What are the options for transporting the iron ore to international markets?
A: Pacific Iron Ore's mandate and mission is to continue exploration of the Pearson iron ore prospect near Port Renfrew on Vancouver Island, with the goal to prove up sufficient reserves to support constructing a commercial magnetite mine. The Pearson Project represents the Corporation's strongest opportunity. Pacific Iron Ore also has seven properties in Ontario that are prospective for various metals, including gold, but these are not the immediate focus.
Q: Do the Vancouver Island properties have potential for other minerals?
A: Yes, but they are not considered significant relative to the iron ore deposits at the Pearson Project and are therefore not material to the Corporation's planning.
Q: What is the plan for the Ontario properties?
A: The Corporation intends to maintain the claims underlying the seven Ontario properties over the short to medium term, while minimizing further capital outlays. Over the longer term Pacific Iron Ore will consider seeking one or more joint venture partners to develop one or more of the properties.
Q: What is iron ore? What is magnetite?
A: Iron ore is a naturally occurring mineralized rock containing various concentrations of iron oxide mixed with other material. The two main minerals of iron are magnetite and hematite. Hematite is a reddish brown, black or grey iron oxide mineral with the chemical formula Fe2O3. Magnetite is a black magnetic iron oxide mineral with the chemical formula Fe3O4. Both are common and are mined worldwide. Hematite is the mineral generally associated with vast mega-project-sized mining operations, including surface or open-pit mines.
Iron ore on Vancouver Island often occurs as a "skarn" deposit of magnetite, formed by the interaction of intrusive rocks and limestone. This type of deposit is what Pacific Iron Ore is working to identify at the Pearson Project. Magnetite has advantages over hematite. Magnetite is ferro-magnetic, making it responsive to low-grade magnets and easier to mill through electro-magnetic recovery. Hematite is weakly magnetic, making it more challenging to recover unless it occurs naturally at very high concentrations. Magnetite concentrate is generally shipped at an iron concentration of approximately 65 percent, higher than hematite. This creates cost advantages in shipping and smelting and, therefore, price advantages for the magnetite producer.
Q: What are the main end uses for iron ore, and magnetite in particular?
A: There are good markets for magnetite around the world. The iron ore from the Pearson Project, if it proves commercially feasible, would be milled into a saleable iron concentrate that could be used in a number of iron and steel-making facilities, mainly in the Pacific Rim. Magnetite can be used either in a reducing blast furnace to make high-grade steel in a single stage, or it can be converted to "reduced iron" pellets that can be used in a melting furnace. Melting furnaces typically are used to re-cycle scrap iron to produce certain steel products. High-purity concentrate such as that proposed from the Pearson project is critical to managing the quality of the recycled iron.
Q: What would be the main intended markets for the Corporation's iron ore?
A: China, Korea, Japan, Malaysia, all of which are large importers of iron ore for steelmaking.
Q: What are current market conditions for iron ore?
A: Market conditions have strengthened substantially as part of the worldwide commodities boom, driven largely by rapid economic growth and industrialization in developing countries like China. Iron ore prices are generally set through annual contract negotiations between major buyers (like steelmakers) and producers, and are not as transparent as crude oil or natural gas prices. Contract prices are sometimes made public. In addition there are regional "spot" market sales representing a small percentage of the overall iron ore trade.
Pricing information available in September 2008 suggested that major iron ore contracts were being priced in the range of US$180-$200 per tonne, including trans-ocean shipping costs of US$60-$80 per tonne. The Pearson Project's economics are based on iron ore pricing of $120-$160 per tonne (including shipping). Contract prices have been increasing despite strong growth in worldwide iron ore production. The U.S. Geological Survey estimated global production at approximately 1.69 billion tonnes in 2006, up substantially from approximately 1 billion tonnes in 2001.
Q: How large is a typical iron ore mine?
A: As a magnetite project the Pearson Project, if successful, would not be on the scale of the vast open-pit mega-projects of the popular imagination. These are generally hematite operations and can have annual shipments of 25 million tonnes per year or even greater. An economically viable mine at the Pearson Project could produce approximately 2 million tonnes per year of iron ore concentrate.
Q: What type of mine would be built at the Pearson Project, if it is successful?
A: The method of mining would be determined by the geology of the deposits and a number of economic factors. Details of mine design and site layout are premature during the current exploration phase. Having said that, the requirements for extracting ore from ground similar to that in the Pearson Project are well developed, and the recovery and upgrading processes for skarn-type materials are also well understood.
Q: What is National Instrument (N.I.) 43-101?
N.I. 43-101 Standards of Disclosure for Mineral Projects is a rule that governs public disclosure by issuers in the mining and mineral exploration industry. The Canadian Securities Administrators (CSA), an umbrella group of Canada's provincial and territorial securities regulators, developed the rule. It is applicable throughout Canada. The rule establishes standards for all public disclosure of scientific and technical information concerning mineral projects that an issuer makes. The rule extends to oral public statements, as well as written disclosure in news releases, prospectuses, annual reports and other corporate reporting and offering documents. It is intended to prevent false, misleading or exaggerated claims concerning a mineral deposit from being circulated among the public.
Pacific Iron Ore's recent technical report on the Pearson claim group on Vancouver Island conforms to the requirements of N.I. 43-101. Historical reserve estimates made by previous explorers in the area (including Noranda in 1957-1960) do not conform to these standards. Pacific Iron Ore is not relying on these historical estimates in its mine development plan, nor should investors rely on references to past reserve estimates in evaluating the upside and risks of the Pearson Project. Please click here for additional information on N.I. 43-101 provided by the British Columbia Securities Commission, including updates to the policy.
A: Regional economic expenditures to construct and operate a mine of the size envisioned for the Pearson Project, if exploration is successful, could be on the order of $100 million per year. Precise economic benefits and job creation remain uncertain until the mine configuration and scale are determined. Pacific Iron Ore is dedicated to maximizing economic benefits for people and businesses in the Port Renfrew and Vancouver Island areas.
A: If the project is shown to be feasible, current economic modelling suggests that an underground mine of the envisioned capacity could be constructed and brought into operation for approximately $200 million. This is comparable in scale to a similar-sized mine in western North America. This is a modest scale of capitalization in the mining sector. The capital could be raised through a combination of further issuances of publicly traded equity, various forms of debt and/or seeking an outside partner that would contribute capital in return for an equity position.
Q: Does Pacific Iron Ore intend to build a smelter for the Pearson Project?
A: No. There are no iron processing facilities in B.C. and all ore production would be shipped offshore in the form of iron concentrate. Iron smelters are very large and not suited to Pacific Iron Ore's business plans.
Q: What are the options for transporting the iron ore to international markets?
A: The Corporation has a number of options in identifying the most economical and environmentally compatible methods of transportation. The Pearson Project site lies close to tidewater, and existing port facilities are in nearby cities. Once loaded onto ocean-going ships, the iron ore could be transported to many markets worldwide.
A: There are no guarantees in resource development. The Pearson Project is an early-stage, exploratory, high-risk project that must clear a number of technical, economic and regulatory hurdles before it is successful.
A: Please see the section on Environmental Protection.
A: Pacific Iron Ore is working under the Mines Act, which provides specific protections for workers and the public. The 2008 exploration work program at the Pearson Project is limited in scope. It is occurring in a backcountry area at a distance from towns and other populated areas. It does not include blasting or construction of facilities, and involves minimal use of heavy equipment. It involves a careful drilling program using one diamond drilling rig. The operator is taking all appropriate safety measures and the Corporation is providing appropriate field supervision. Please also see the section on Health and Safety.
A: As a publicly traded company, Pacific Iron Ore provides significant information on the Corporation and its mining activities through this website, SEDAR and other public filings with regulators. As an early stage, exploratory venture, field activities at the Pearson Project are very limited, as is the requirement for dedicated public consultations.
As the project progresses and should it successfully identify minable iron ore deposits, consultations with the local population, interest groups and First Nations will be of significant importance. Pacific Iron Ore has entered into negotiations with the Pacheedaht First Nation concerning the Pearson Project. Please also see the section on First Nations Relations. If the Corporation is successful in identifying a sufficient iron ore reserve base, additional public consultations will be planned.
A: Pacific Iron Ore is very proud of its longstanding and constructive relations with the Pacheedaht First Nation.
