SALT LAKE CITY, UTAH -- 04/01/08 --
Palladon Ventures Ltd. (TSX VENTURE: PLL)(FRANKFURT: PV-1) announces that its private subsidiary, Palladon Iron Corporation (PIC), has signed a long-term sales agreement with China Kingdom International Minerals & Metals Co., Ltd (CKI). The recent commodity price increases have made the sale of run-of-mine iron ore financially attractive, enabling PIC to contract for the immediate sale of run-of-mine iron ore, rather than await the financing and construction of a processing plant.
The five-year contract provides for the purchase by CKI and its Australian operating subsidiary, China Kingdom International Australia, of run-of-mine iron ore at an initial annual rate of 2,000,000 metric tonnes. Pricing is fixed through March 31, 2009, and will adjust for future annual periods based on changes in the World Benchmark Prices for iron ore. The contract price is quoted FOB a west coast U.S. port, with CKI responsible for all ocean-going freight including the contracting and scheduling of ocean vessels.
The contract price for the initial period exceeds PIC's anticipated per ton operating and shipping costs, and the run-of-mine sales are expected to generate meaningful free cash flow for PIC. PIC estimates initial capital investment to be less than $5 million, with shipments expected to commence in the third quarter of this year. PIC is in the process of finalizing its mining plan and logistics plans for the start of operations at its Iron Mountain project in southwestern Utah. The electrical sub-station facility has been installed, grounded, and charged, and is ready to be connected to the Cedar City power grid. Mobilization for mining and shipping will begin shortly in anticipation of the pending shipping dates.
It is anticipated that PIC will reinvest some of the cash flow from the run-of-mine sales into a formal feasibility study to help finance the eventual construction of a processing plant on-site. When an iron ore concentrate processing plant is completed at Iron Mountain, the agreement with CKI contemplates modification to reflect the new product and pricing.
Based in Beijing, CKI is one of China's leading importers of iron ore, with close ties to major global iron ore producers and Chinese steel manufacturers.
"We are very excited to be working with CKI. CKI gives us access to customers and shipping that we could not have achieved on our own, and we expect CKI will be a great strategic partner for PIC for many years to come," said Donald G. Foot, Jr., President and CEO of Palladon Ventures Ltd. "The latest global benchmark pricing increases enable us to export unprocessed iron ore profitably while we build a processing plant to produce high-grade iron concentrates. The significant cash flow generated from this contract should provide for a robust future for Palladon and our shareholders."
On Behalf of the Board of Directors,
Donald G. Foot, Jr. President and Chief Executive Officer
About Palladon
Palladon Ventures Ltd. is a junior resource company focused on redeveloping the Iron Mountain project in Iron County, Utah. Palladon also holds interests in gold exploration projects in Nevada, Utah and Argentina.
The TSX Venture Exchange has not reviewed and does not take responsibility for the adequacy or accuracy of the contents hereof.
Contacts:
Palladon Ventures Ltd.
Hamish Greig
Vice President
(604) 484-7088
(604) 484-7044 (FAX)
Email: info@palladonventures.com
Website: www.palladonventures.com
Palladon Ventures Ltd.
Frank Dolce
Vice President
(801) 521-5252
(801) 521-5454 (FAX)
Email: frank.dolce@palladoniron.com
Website: www.ironbullmining.com
