A recently-formed joint venture between Nevada Clean Magnesium (TSXV:NVM) and Norwegian company ScanMag AS is gaining traction after the two companies met in Norway for a tour of ScanMag’s dolomite deposit and to discuss synergies of the partnership.
Both Nevada Clean and ScanMag are working to develop deposits of dolomite, the key mineral used to produce magnesium, with ScanMag focused on its Granasan field in Nordland County, Norway, and Nevada Clean advancing its Tami-Mosi property in North-central Nevada. The latter has an inferred resource of 111 billion pounds of magnesium, contained within a high-purity dolomite block, according to a 2011 preliminary economic assessment, while the Granasan field is described as hosting “a large deposit of high quality dolomite”.
In October of this year, the two firms announced they had formed a joint venture partnership to produce magnesium for the North American and European industrial markets. Under the terms of the agreement, Nevada Clean and ScanMag negotiated a 51-49 percent ownership split of the Tami-Mosi property, with ScanMag paying Nevada Clean US$5 million, in return for Nevada Clean taking a 5 percent equity stake in ScanMag.
As part of its due diligence process, Nevada Clean’s management team visited the site that will process the dolomite, and met with officials from ScanMag. Edward Lee, Nevada Clean’s chairman and CEO, updated shareholders with a summary of the visit, an excerpt of which appears below:
“It is now abundantly clear to us that the synergy between our Company and ScanMag is ideal and our respective strengths and technical expertise are highly complementary. Together, we expect to make a formiddable team when it comes to helping to meet the prevailing global demand for high grade, low cost magnesium metal.”
Continuing, Lee noted, “While we were in Norway, we had the opportunity to tour and evaluate the site where we’ll be helping ScanMag to build out their dolomite processing facilities. The building in which the reduction operations will be constructed is well suited for this purpose and has essential infrastructure already in place, making installation and advancement to commercial operations a much less complex proposition than a typical greenfield site. More specifically, the plant site has been in use as a heavy industrial production facility dating back to 1918; there is a skilled workforce in place; and supporting service industries are also already in place and stand ready to serve.”
Nevada Clean Magnesium in August closed the third and final round of financing that yielded total proceeds of $236,000 from a non-brokered private placement first announced in December 2012.
A month later, Nevada Clean began trading on the TSX Venture Exchange, adding to its listings on the OTC Pink Sheets and Frankfurt stock exchanges.
The company said in its press release Tuesday that the joint venture with ScanMag is expected to be finalized in early 2014, conditional upon ScanMag closing a $30 million project financing and the approval of the TSX Venture. Investors seemed to like the news, with the stock jumping by 50 percent, or 3 cents, to close at $0.09 on Wednesday on the TSXV.
Also of note, Nevada Clean was mentioned as part of a Clean Mining Alliance launched in 2012 to promote advancements in clean technology in the mining industry. Magnesium Investing News reported that the alliance — whose other partners are American Manganese (TSXV:AMY), Kemetco Research, and CERM3 based out of the University of British Columbia — is promoting innovations that employ technologies to make mining safer, cleaner and less expensive.
Securities Disclosure: I, Andrew Topf, hold no direct investment interest in any company mentioned in this article.