TMCR expands into iron ore with $133M Minnesota deal

The Metals Royalty Company (Nasdaq: TMCR), a spinoff from seabed miner hopeful The Metals Co. (Nasdaq: TMC), is buying a royalty on Mesabi Metallics’ iron ore project in Minnesota for $132.5 million, giving the financing firm near-term exposure to one of North America’s largest planned suppliers of direct-reduction steel pellets.

TMCR has agreed to acquire a 1% index-priced gross overriding royalty on production of as much as 8.5 million tonnes annually from the Mesabi project in Nashwauk, which is backed by India’s Essar Group. 

The royalty includes a revenue floor tied to iron ore pricing and is expected to generate as much as $13 million annually once production ramps up. First output is targeted for the second half of 2026, with full production expected in 2027.

TMCR shares fell more than 2% to $15.18 by midmorning trading in New York after the announcement, leaving the company with a market capitalization of nearly $888 million.

“The acquisition of a royalty interest on the Mesabi Metallics project represents a defining milestone for TMCR and the direct expression of our mission to finance America’s mineral security,” CEO Brian Paes-Braga said in the statement. He described Mesabi as “one of the most strategically significant industrial projects currently under development in the United States.”

Market expansion

The deal marks a major shift for TMCR, which debuted on the Nasdaq in April with a business model linked to deep-sea mining royalties. 

The company still has exposure to TMC’s NORI polymetallic nodule project through a 2% royalty and aims to diversify into industrial minerals tied to the green steel transition. 

TMCR said the acquisition aligns with growing US efforts to secure critical mineral and steel supply chains as Washington pushes to reduce dependence on imports. 

$10B in backing

The Mesabi project has drawn support from the US Export-Import Bank, which announced up to $10 billion in backing, while Essar has already invested more than $2 billion into the development.

The transaction will be financed through a $75 million private placement priced at $13 per share and a proposed $50 million senior secured credit facility. TMCR founders and insiders are contributing $15 million to the financing. The company also holds an option to buy an additional 1% royalty interest following closing.

Mesabi spans more than 16,000 acres and is expected to produce direct-reduction-grade pellets used in electric arc furnace steelmaking, a lower-emissions process increasingly favoured by steelmakers. TMCR said the project is about 93% complete and could become one of the continent’s lowest-cost DR pellet operations with a mine life exceeding 23 years.

TMC retains roughly a 25% stake in the royalty platform and options to repurchase portions of associated royalties over time.