Michael Beley and Richard Barclay are one of the most successful partners in the mining business. They have created billion dollar mining companies. We were fascinated to learn of the progress they have made in developing Adriana Resources into “The New Player in Iron Ore”

This past August, Adriana Resources announced it had reached an agreement with ArcelorMittal, the world’s leading steel company, to construct an iron ore port in Rio de Janeiro, and eventually become a “fully integrated iron ore producer,” Now, “The New Player in Iron Ore” is poised to establish its Brazilian venture as a major thoroughfare for its main mineral. In a recent meeting, Metalsnews.com sat down with CEO Michael Beley and Richard Barclay, CFO of Adriana to hear what they have stirring in South America.

“One of the biggest changes happened in the last year is that we now have a partnership with ArcelorMittal,” explains Beley. “This is the concept we had at the very beginning, a direct result of thinking outside the box. We knew very well that in order to get into the iron business in Brazil, we’d have to acquire a port first.”

Enter ArcelorMittal, on the heels of their recent acquisition of London Mining, and recognizing an essential opportunity to partner with another company making serious waves in the iron ore industry. It was around the time Adriana made its move to acquire the land for their port and organize the capital that ArcelorMittal came knocking, interested in moving their newly secured goods. “A serious level of credibility was now introduced from the largest iron ore producer in the world,” remarks Beley.

Barclay said “So, it was in August 2008 that a deal was struck with ArcelorMittal, who took $6.5 million of a $10 million private placement in Adriana. This injection of capital enabled the junior mineral company not only to advance the port permitting and engineering, but also to seek out a hard asset in Brazil”.

“Part of the deal with ArcelorMittal is they have an option to purchase 80 percent of our port for $40 million. And then we’re buying out minority shareholders, which will represent about 25 percent of our Brazilian affiliate,” Beley notes. “That’ll give the company the cash it requires to go forward. It’s a great partnership with the largest steel company in the world.”

According to Barclay “The parties will each fund their pro rata portion of the Port development costs estimated to total approximately $250 million USD for the 10 million tonne per annum ("Mtpa") port;

ArcelorMittal will assist Adriana in sourcing funding for Adriana's portion of the Port development costs ("Port Debt");
The parties will share in the capacity of the Port, in proportion to their ownership and Adriana expects to have a minimum of 2 million tonnes iron ore throughput with the planned development of the Port to 10Mtpa.”

Barclay states that ArcelorMittal and Adriana have agreed to investigate future strategic and mutually beneficial world-wide opportunities. Upon closing the Port Agreement and related financings, Adriana expects to have over $65 million CDN in working capital inclusive of the above referenced private placements with ArcelorMittal.

Both Beley and Barclay agree that with this current financial downturn, the whole metal industry is experiencing the necessity to cut back. But as they foresee the global economy shifting back around over the next six months to a year, Barclay agrees that, together with ArcelorMittal, “Adriana’s going to move forward in a prudent fashion on developing the port and getting ready to export iron ore resources into the world market from Brazil.” Case in point: The two are working overtime with the Canadian ambassador to Brazil to introduce their component to the South American country’s government.

“It was initially very low profile,” admits Beley. “We were looking at constructing a port that might have a capacity in the order of 10 million tons a year and using a transshipping concept. With the announcement that we were involved with ArcelorMittal, that’s created the whole concept at a much higher level. Now that we have the involvement of the Canadian government through the Canadian ambassador and the Canadian consulate down there, they’ll be able to assist us further in the credibility of this project.”

Initiating awareness about its goals to the Brazilian people and government moves Adriana closer to establishing a facility that will work out best for everyone involved, from ArcelorMittal on down to the independent miners.

“We believe we have the best port proposal on the table, and even more so due to the fact that it’s the farthest to the West, so it doesn’t introduce new levels of congestion in the eastern portion,” Beley confirms. “By considering other options, for instance, tunnels instead of building bridges and conveyors over the surface, we’ve minimized the environmental impact. And so these are all criteria. The village wants us to be there so they can benefit from us tax wise, job wise and so on. So we’re garnering support from the grassroots level as well.”

Beley and Barclay are optimistic that in no more than six months, their project will begin to take shape, and in about two years Adriana can expect to see their port up and running. By that time, they anticipate they’ll be in the perfect position when the economy has recovered. In the meantime, it’s crucial that they accomplish the necessary things to stake their claim as a high-profile iron ore company. That ArcelorMittal is a sure bet in hoisting its share of the agreement is a no-brainer for investors.

“One of the key aspects with the ArcelorMittal deal is that they are responsible for 80 percent of the construction cost of the port,” assures Barclay. “Being the size company they are, they’re going to head out and organize a debt financing to-do list, and we’re going to be responsible for 20 percent. Since it seems to be a foregone conclusion that they’re going to be able to finance, our shareholders don’t have that burden.”

For more information, visit http://www.adrianaresources.com/