Alderon, New­found­land and Labrador Hy­dro reach set­tle­ment

The Aurora (Labrador City) - - FRONT PAGE -

Alderon Iron Ore Corp. is­sued an up­date Sept.25 on re­cent cor­po­rate de­vel­op­ments re­gard­ing its in­ter­ests in New­found­land and Labrador.

In a news re­lease it stated the Kami Mine Lim­ited Part­ner­ship, Alderon’s af­fil­i­ate and the owner of the Kami Project, has reached a set­tle­ment with New­found­land and Labrador Hy­dro with re­spect to the $21-mil­lion letter of credit it posted for the con­struc­tion of a new trans­mis­sion line to the Labrador West area.

“As a re­sult of the set­tle­ment, Kami LP will be re­turned $11.5 mil­lion (plus ac­crued in­ter­est) from the re­lease of the letter of credit,” the re­lease read.

“In ad­di­tion, if con­struc­tion of the trans­mis­sion line re­sumes within the next five years, Kami LP will re­ceive an ad­di­tional $750,000 pay­ment as a re-start credit.”

Alderon also an­nounced it is work­ing with BBA, Inc. to up­date the re-scoped pre­lim­i­nary eco­nomic as­sess­ment (PEA) that was com­pleted in Fe­bru­ary of this year.

The Wabush Scully Mine was re­cently ac­quired by a third party who has stated its in­ten­tion to re­open the mine. As a re­sult, Alderon and BBA will up­date the PEA to re­move the com­po­nents re­lated to the Wabush Scully Mine. The use of the de­pleted pit at the Wabush Scully Mine was just one of the many cost sav­ings that were iden­ti­fied as part of the re-scope of the Kami Project and the up­dated PEA will still en­com­pass the other cost sav­ings as out­lined in the pre­vi­ous PEA.

The re­lease main­tains the Kami Project re­mains an at­trac­tive de­vel­op­ment prospect due to its high-grade iron ore con­cen­trate with low im­pu­ri­ties. Stricter en­vi­ron­men­tal reg­u­la­tion has driven de­mand for the premium prod­uct that will be pro­duced from the Kami Project, as it al­lows end users to meet more strin­gent en­vi­ron­men­tal stan­dards.

In par­tic­u­lar, China’s bid to re­duce emis­sions is see­ing an in­crease in do­mes­tic steel mills switch­ing to high-grade iron ore prod­ucts with fewer im­pu­ri­ties. For the type of iron ore con­cen­trate that the Kami Project will pro­duce (65 per cent Fe), there is al­ready a spread to the Platts iron ore in­dex price, cur­rently pegged at US $21 per tonne above the bench­mark prod­uct. This spread has widened over the last 18 months and prices for high-grade ore are ex­pected to con­tinue to in­crease as en­vi­ron­men­tal reg­u­la­tion be­comes more strin­gent.

FILE PHOTO

Two com­pa­nies reached an agree­ment with re­spect to the $21-mil­lion letter of credit Alderon posted for the con­struc­tion of a new trans­mis­sion line to the Labrador West area.

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