CoTec Holdings Corp. has announced that it has entered into an agreement to acquire a 15.8% equity interest in MagIron LLC for a US$2 million. MagIron is a U.S. based company that is in the process of acquiring a green iron ore project that it intends to refurbish and bring back into production. The investment includes terms customary for an investment of this nature, including Board representation subject to CoTec maintaining a 10% equity interest.
Julian Treger, CEO of CoTec commented; “We are very excited to support MagIron’s development and we believe it has the potential to be the first example of the successful implementation of CoTec’s model of acquiring interests in disruptive technologies in the mineral extraction industry and then applying them to various assets. It also underlies how we can create considerable value for CoTec shareholders by investing in undervalued assets and rapidly scaling the underlying business.”
“MagIron is acquiring the plant at a nominal value relative to its original cost of several hundred million dollars, providing a significant capital advantage to MagIron. With an appropriate funding structure, we believe that the plant has the potential to generate significant value for MagIron, and indirectly CoTec. This value could be further increased if we are able to successfully apply the technology developed by Binding Solutions Limited to the plant’s production process, which we are optimistic will be the case”, added Mr. Treger.
MagIron has entered into a purchase agreement for the acquisition of a dormant iron ore concentrator known as Plant 4 based in Grand Rapids, Minnesota and 2,483 acres of land in the Itasca and St. Louis Counties, Minnesota that contains fine and coarse iron ore tailings.
Following its restart, Plant 4 is expected to be able to produce DR grade iron ore concentrate at a reduced carbon footprint compared to traditional steel production techniques as it will recycle existing tailings rather than require new mining.
Larry Lehtinen, CEO of MagIron commented: “We are delighted to have a visionary investor like CoTec join MagIron. Through its Board representation and ongoing strategic guidance, CoTec will assist in developing the business via initiatives like the introduction of the BSL technology.”