We are betting on this iron ore deal to outperform Bitcoin and gold

Goldinvest.de announces that we have taken a pre-IPO stake in MaxIronBrazil https://maxironbrazil.com/. MaxIron is a spin-off of the listed copper company Max Resource (TSXV: MAX), which has a partnership with Freeport. As an independent subsidiary, MaxIron is to be floated on the Australian stock exchange via an IPO next spring. After a successful transaction, the parent company Max Resource is expected to hold 55% of the shares in the listed iron ore company. The IPO is expected to raise up to A$8 million. All costs (project acquisition, exploration, permits) up to this point are borne by the parent company Max Resource.

We believe that MaxIron and its Florália Hematite Iron Ore Project in Minas Gerais State, Brazil (DSO) meets all the criteria for a promising early-stage resource investment: the project is located in the heartland of the Brazilian steel industry in the mining-friendly state of Minas Gerais, just a few kilometers from several steel mills (Vale; Arcellor Mittal). Infrastructure, including roads and rail connections, is well developed. The iron ore on the project is naturally of such a high grade (41 channel samples yielded an average value of 58% Fe) that it is suitable for so-called direct shipping (DSO) of high-quality oxide (hematite).

Historic Floralia Mine; Source: MaxIron Brazil

The discovery originated from an illegal open-cut mine after road construction. The resulting pit is 160 meters by 140 meters in size and effectively corresponds to a bulk sample of an estimated 200,000 tons, which has already been processed locally. The open pit has uncovered the hematite horizon over a large area in terms of height and width, which has allowed for very good sampling (see channel samples) with accuracy exceeding that of drill holes. Initially, the project was estimated to contain 8 to 12 million tons of hematite. However, exploration work since September of this year has led MaxIron’s team to believe that the deposit’s potential is significantly greater. According to the latest estimates (see Max Resource’s press release dated November 15, 2024), the Florália Hematite Iron Ore Project has a substantial conceptual resource of 50 to 70 million tons of oxidic ore (hematite) and a further 130 million tons in the non-oxidic fraction below it. The resource is inferred from road cuts and geophysical surveys, among other things, and has not yet been demonstrated to JORC standards. This must now be followed by drilling, which is scheduled to start over the Christmas period. Compared to gold deposits, much fewer drill holes are needed to confirm a resource at an iron ore deposit of this type.

Project acquired from Jaguar Mining

The property was part of the portfolio of the gold producer Jaguar Mining (TSX: JAG), which has no interest in iron ore itself. MaxIron acquired the project in return for a payment of USD 1 million (at the time, Jaguar Mining assumed an 8 to 12 million ton project) and will pay a royalty to Jaguar in the event of production. According to initial estimates, the deposit requires no stripping of surface soil (zero stripping, the thin gravel layer is mined as well) and no blasting (with the corresponding permits) is required due to the soft material. As with comparable projects in the region, processing is to be done by simple screening. No water is required and no tailings are produced. MaxIron intends to start production in just two years with an initial capacity of 1.5 million tons per year. The estimated investment costs should be < AUD 10 million. We see the biggest advantage over Australian competitors in the fact that transport costs will be very low due to the short distances involved. For Australian producers, transport often accounts for up to 60 percent of operating costs.

Last but not least, the company has an excellent team (especially on the ground) that has already achieved a successful exit in the iron ore sector.

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