Consolidated Thompson aims to buy out Wabush Mines trio

Looking to grow its iron ore presence in eastern Canada, Consolidated Thompson Iron Mines (CLM-T) has tabled a US$120-milion offer to buy a 100% interest in the Wabush Mines joint venture from its three owners U.S. Steel Canada, ArcelorMittal (MT-N) subsidiary ArcelorMittal Dofasco and Cliffs Natural Resources (CLF-N).

Wabush Mines owns and operates iron ore mining and pellet facilities in Labrador and Quebec, in the same region where Consolidated Thompson is developing its substantial Bloom Lake iron ore deposit.

Wabush Mines’ integrated assets including the Scully iron ore mine, the Point-Noire pelletizing facilities, a harbour and port facilities at Sept-Iles, integrated railway facilities and other related assets situated near the town of Wabush.

U.S. Steel (with a 44.6% interest in Wabush Mines) and ArcelorMittal (28.6% interest) have already accepted the offer.

However, Cliffs (26.8% interest) has not yet responded and has a right of first refusal to acquire each of U.S. Steel and ArcelorMittal’s interest in the Wabush Mines joint venture on the terms offered by Consolidated Thompson.

The right of first refusal expires Oct. 19, 2009. Consolidated Thompson says if Cliffs does not exercise its right of first refusal and does not accept its offer, the Consolidated Thmpson will have a binding agreement to acquire the two willing sellers’ collective 73.2% interest in the Wabush Mines JV for an aggregate US$87.8 million.

Consolidated Thompson says it would pay for the Wabush purchase using existing cash and credit lines, and that UBS Securities Canada is acting as its financial advisor.

Consolidated Thompson has 226.8 million shares and closed Friday at $5.86, prior to the offer being made public.