Roche Bay PLC Massive Resource, Exceptional Location
 
Roche Bay Tundra scene

Frequently Asked Questions

What is Roche Bay plc.?

Roche Bay plc is a single asset iron-ore holding company that owns extensive mining leases at Roche Bay on the Melville Peninsula in Nunavut, Canada. Roche Bay's holdings cover what is believed to be one of the largest known set of magnetite iron bodies in the world.

Roche Bay is first focused on developing its Eastern Deposits with the help of the operating and managing partner Advanced Exploration Inc. This JV refocuses Roche Bay into a holding company with an economic interest in the asset, but no management requirement.  This results in a very low estimated carry cost with less then 4 full time employees and no significant exploration expenses as the first project develops.

This however is offset by a lack of control over the asset, as long as Advanced Exploration develops the property they get to decide on the type and size of mine. They also get to decide what ore bodies to develop first. If Advanced Exploration does not advance the property Roche Bay could be back in the operators seat, but we do not see that happening.

The earn in Agreement gives AEI an option to acquire up to a 50% equity interest in Roche Bay's Eastern deposits and to become operator of the exploration and construction project. AEI assumes responsibility for raising financing and managing the completion of feasibility studies. Once these are completed, the agreement provides for formation of a joint venture, for which AEI will be responsible for the financing, design, build and operation of a mine and plant producing at least 6 million tonnes per year of iron concentrates or pellets. The agreement is subject to several conditions based on operational milestones being achieved.

The deposits are in two large groups. The Eastern deposits (49.9% Roche Bay) are five to ten kilometers from a natural harbour with 20+ meter depths, and the Western deposits 100% Roche Bay which are some 120 kilometers away on the western side of the peninsula.

Roche Bay plc has  signed an agreement with Corus Group plc regarding the development of the project whereby Corus has an option to buy between 2 and 3.5 million tonnes annually of iron ore concentrate/pellets from Roche Bay for ten years beginning in 2010. The option is contingent on Roche Bay's feasibility plan and ore quality meeting specified levels. Corus also has an option to acquire an interest in the project pending the results of the pre-feasibility and feasibility studies.

Roche Bay is an indirect majority-owned subsidiary of Borealis Exploration Limited, and is incorporated in Gibraltar. Our shares are publicly traded in the U.S. (symbol RCHBF) and we are currently planning to list the shares in London in the second half of 2007.

 

Who is on the Board of Directors?

Peter Vanderwicken, Chairman peterv @rochebay.gi
John W. Abernethy abernetj @rochebay.gi
Daniel M. Botes danie @rochebay.gi
Benjamin J. Cox bjc @rochebay.gi
Joseph J. Cox jcox @rochebay.gi
Moshe R. Cohen mcohen @rochebay.gi
Jonathan A. Gershlick jgershlick @rochebay.gi
William B. Johnston wbjohnston @rochebay.gi
Duncan Kretovich duncank @rochebay.gi

 

Where is Roche Bay located?
Roche Bay is found on the Melville Peninsula in Nunavut, Canada above the Arctic Circle. The initial deposits are only 5.31km from tidewater. 

 

 

How much resource is there?
Current estimates are being sought via the exploration and development deal with Advanced Exploration.  Prior estimates report that there is approximately 4.3 billion tonnes of ore with over 3 billion tonnes of that in the West and 1.1 billion tonnes in the East.  

 

 

Why is Roche Bay unique?
What makes Roche Bay unique is its location which is close to naturally deep tide water and its abundant resource. The distance from Roche Bay to Rotterdam, the European port of reference, is only 3050 nautical miles. Thus, Roche Bay's ore will only have to travel under 10km by land and 3050 nautical miles by sea to reach the European market. These short distances, particularly the overland distances, allow us to minimize one of the largest costs in ore production-transportation. The only ore producer closer to the European market is LKAB. Roche Bay also has good back haul of coal to Europe to result in a net shipping distance to China that makes us competitive with CVRD's ore into China.

 

 

What is the Joint Venture Agreement with Advanced Explorations Inc. (AEI)?
Roche Bay plc and AEI entered into an agreement whereby AEI can earn up to 50.1% interest in the mineral leases for the Eastern Deposits provided the following conditions are met:
  • On or before March 31st, 2007 raise a minimum of $5,000,000 of working capital
  • Within 5 business days of TSX Venture Exchange (the "Exchange") approval of the agreement, AEI shall pay Roche Bay $250,000
  • Within 5 business days of Exchange approval, AEI shall issue 10,000,000 warrants to Roche Bay and its shareholders (the "Warrants"), the exercise of which shall be subject to the following restrictions:
  • The Warrants shall have a minimum 2 year term (3 year term to be requested);
  • The Warrants will have a strike price of $0.30 in the first year and will increase to $0.50 in the second year (and third year, if applicable);
  • The exercise term and pricing of the Warrants shall be subject to TSX Venture Exchange approval;
  • The Warrants may not be exercised if the warrantholder together with any other party acting in concert would hold more than 20% of the issued and outstanding shares of AEI. Further, no individual or entity can sell more than 500,000 shares in any 90 day period without AEI approval;
  • The above restrictions cease to apply in the event of Change of Control of AEI or events that would impose undue hardship in restricting Roche Bay to exercise it full rights
  • Any third party obligations of Roche Bay will be discharged or resolved to the mutual satisfaction of the parties.
Exploration Milestones:
Exploration Milestone Time for Completion Interest Acquirable by AEI Aggregate Interest
(a) Complete 7,500 meters of drilling on the Leases On or before 18 months after the date of Exchange Approval 0 0
(b) Completing both of:
(i) a total of 30,000 meters of drilling on the Leases; and
(ii) a NI 43-101 compliant Pre-Feasibility Study by an independent contracting company agreeable to both Parties, based on an envisioned minimum 6 million tonne per year ("Mtpy") mining operation. To satisfy this Exploration Milestone, the Pre-Feasibility Study shall contain a resource estimate of at least 750,000,000 tonnes of iron ore in the aggregate among the "measured" and "indicated" categories		 On or before the 3rd anniversary of the date of Exchange Approval 30% 30%
(c) Completing a NI 43- 101 compliant Feasibility Study by an independent contracting company agreeable to both Parties, based on an envisioned minimum 6 Mtpy mining operation On or before the 5th anniversary of the date of Exchange Approval 10% 40%
Attaining a mining permit (the "Mining Permit") to construct a mine which is situated on the Property and which meets the Minimum Mine Specifications On or before the 7th anniversary of the date of Exchange Approval 10.1% 50.1%


All Exploration Milestones are to be 100% funded by AEI. AEI will be the operator and have complete control of its programs during the completion of the Exploration Milestones. Once the Joint Venture is formed AEI will remain as operator subject to not defaulting on the agreement.

Mine Development Expenditures:
If a decision to build a mine proceeds after the formation of the Joint Venture, AEI will be responsible for funding the first $2,000,000,000 of expenditures for the mine development. This amount will include Roche Bay's $1,000,000,000 share. Of this amount, AEI will provide on behalf of Roche Bay, at no cost, recourse or obligation to Roche Bay, $250,000,000 (the "Free Carried Interest"). The balance of $750,000,000 will be financed by AEI (the "Non-Carried Interest"). The Non-Carried Interest will bear interest and will be repaid from dividends and distributions payable to Roche Bay from the Joint Venture until the entire amount (plus interest) is repaid.  The first $125,000,000 contributed by AEI on behalf of Roche Bay will be allocated to the Free Carried Interest. The next $875,000,000 will be allocated pro rata between the Free Carried Interest and Non-Carried Interest on a 1:6 ratio
 
Termination or Default:
Prior to the formation of the Joint Venture, if AEI decides to cancel the agreement it may do so with 120 days notice.
During the term of the agreement, if AEI:
  • fails to complete the Exploration Milestones required to earn a 30% interest in the leases or otherwise defaults under the agreement prior to achieving the 30% interest, Roche Bay may terminate the agreement;
  • after acquiring a 30% interest in the leases, fails to complete any of the remaining Exploration Milestones required to earn up to 50% of the leases, or otherwise defaults, Roche Bay will have the right to purchase 10% (if AEI has earned a 30% interest) or 13% (if AEI has earned a 40% interest) of AEI's earned interest in the leases;
  • fails to provide the capital contributions required by the Joint Venture to commence development of the mine after the issuance of the Mining Permit, Roche Bay will have the right to purchase 17% of AEI's interest in the leases;
  • fails to spend a minimum of $1,000,000 per year on the property, it will be required to pay Roche Bay a penalty of US$250,000 (if AEI fails to do this more than once during the term of the agreement, it will be in default).
  • other events constituting a default by AEI include bankruptcy and insolvency and a change in control of AEI. However, if AEI is acquired by a company with a market capitalization of $1,000,000,000 or more and an annual iron ore production rate of less then 12 Mt/y, it will not be considered a change in control.

 

 

What product will Roche Bay offer customers?
Roche bay will not be selling ore to customers, we are a holding company.  If you are interested in product please contact Advanced Exploration Inc.  

Who are Roche Bay's competitors?
Three producers and two countries command the bulk of the worldwide sea-borne iron ore market. The major producers of iron ore include CVRD, Rio Tinto and BHP. These three producers control approximately 75%+ of the world market for seabourne ore. CVRD and Rio Tinto control the vast majority of the Brazilian and Canadian production headed to Europe. These companies' market share is growing.

 

How can I invest?
Roche Bay is publicly traded on www.pinksheets.com and our stock symbol is RCHBF. We will be moving onto London Mainboard in the second half of 2007.

 

Where can I get more information?
If there are further questions, they may be directed to pr@rochebay.com.