Agreements struck recently by Labrador Iron Mines in Canada over future production have had a very beneficial impact on its UK listed shareholder Anglesey Mining.

Anglesey holds a strategic 15.3% stake in LIM and Bill Hooley, the UK group’s chief executive, reckons the recent deals should be beneficial for it and the Canadian iron ore group.

LIM sailed into very difficult waters at the tail end of last year as the iron ore price fell through the floor. When it shut down production for the winter in November, there was a question mark over whether operations would begin again in the spring due to a slump in the iron ore price.

But now both firms must be breathing a huge sigh of relief. Not only has the iron ore price come back up but the LIM deals most definitely put the Labrador operation, now and in the future, on a firmer footing.

An enthusiastic Mr Hooley said that "We've managed to bolster the cash of the company (LIM) and put it in good shape to go off and do two million tonnes of iron ore this year, which is really what we wanted to do. We fell into a hole last year and had a cash shortfall. We've replenished that and now I think we're on the way up again."

Under the sales deal, the Iron Ore Company of Canada which operates the port will buy all of LIM's production for the next two calendar years 2013 and 2014.

Meanwhile, an off take agreement with international trading commodity house RB Metalloyd Limited sees LIM receive an advance payment of USD 35 million to be credited against future sales of a minimum of 3.5 million tonnes during 2013 and 2014.

Crucially, this provides LIM with working capital and increased liquidity and will enable it to ramp up 2013 production and complete its processing investment plans. It also fires the starting gun on LIM's growth aspirations to increase production from its Schefferville mines going out further to 2015 to 2016.

Mr Hooley said that "We've got our stage 1 operations up and running now and that's supported by this cash flow. That's going to give us 2 million tonnes a year for the next 5 or 6 years out of all the resources around the current plant adding that stage 2 of the operation based around the Houston deposit, 30 kilometers south of the James mine is now clearly targeted.

He said that this will boost the production up to about five million tonnes per year. Clearly to do that, we've got to get some more capital to make this Houston project work and we can get some of that internally or we can look for JV partners and we are examining all our options for that.

Mr Hooley said that an outright sale of the stake is definitely not on the Anglesey agenda. We certainly have no current intention of selling it, or doing anything with it, other than holding our interest and keeping whatever influence we might be able to on Labrador.

He said that "We are the largest shareholder and I think we would like to stay there. If there are to be any transactions involving LIM and again, there's nothing we know about but if there were, I think we would like to be at the table."