Kami Project Highlights
With the recent completion of an updated Preliminary Economic Assessment and Economic Impact Assessment, Alderon is effectively re-booting its Kami Project to take advantage of improved iron ore prices, reduced CAPEX requirements, and available infrastructure. With its access to skilled labour, quality infrastructure, and a high-grade deposit, Kami will deliver a quality product that is cost-effectively shipped to customers around the world.
Location: Ideally situated in the Labrador Trough, Canada’s premier iron ore district
Infrastructure: Year-round access to the global market through via nearby railway and deep-water dock facility
Partnerships: Strategic partnerships with 100% off-take agreements in place
Product: High-grade iron ore with low deleterious elements will fetch a premium price
Location and Infrastructure
The Kami Property is strategically located next to the mining towns of Wabush, Labrador City, and Fermont, near the provincial borderline between Quebec and Labrador
- Paved highway only 2.5km away
- Access to low-cost electricity with powerlines 15.5km away
- Common carrier railway with over 50 million tonnes of capacity only 14.5km away to transport material to the deep water port
- Multi-user deep-water port provides access year-round to global markets
Mineral Resource Estimate
The effective date of the mineral resource estimate is December 17, 2012. For further information on the mineral resource estimate please refer to the Company’s news release dated February 28, 2017 that is available on this website and on SEDAR at www.sedar.com.
NI 43-101 Mineral Resource Estimate
|Total Measured & Indicated||1,274.5||29.8|
Updated Preliminary Economic Assessment
Alderon released highlights of its updated Preliminary Economic Assessment (PEA) for its Kami Project on February 28, 2017. The updated PEA was prepared as a result of a re-scoping exercise to identify cost savings for the development of the iron ore Kami project. The cost savings were identified based on optimization initiatives and efforts to take into account new market conditions and the availability of idled assets in the Labrador Trough.
The completion of the updated PEA effectively marks the re-booting of the Kami Project, with key project metrics, including operating costs and CAPEX costs showing a marked improvement when compared against the company’s 2012 Feasibility Study.
The updated PEA uses an economic analysis based on an FOB concentrate iron ore price of US$69.40/tonne for 62% Fe, which is below the current spot price. The results of the PEA, and a comparison to the 2012 Feasibility Study, are set forth in the table below:
The results of the 2012 Feasibility Study are presented for comparative purposes with the results of the PEA in the table below (pre-tax and in USD):
|2017 PEA||2012 FS(1)|
|NPV at 8% discount rate||US$||1,377 M||3,244 M|
|Total Initial Capital Cost||US$||897.5 M||1,273 M|
|Average Estimated Operating Costs (loaded in ship Port of Sept-Îles)||US$||31.08||42.17|
|FOB Concentrate Sales Price Forecast Per Tonne||US$||65.30||102 - 107|
|Estimated Mine Life||24 years||30 years|
|Projected Years to Payback||3.9||3.1|
- The 2012 Feasibility Study used an exchange rate of $1.00CDN = US$1.00 and was in constant Q4-2012 dollars. No escalation or inflation was applied to costs to bring them to Q1-2017 dollars.
On a post-tax basis, the PEA shows a NPV of US$712 million at a cash flow discount rate of 8%. The post-tax IRR for the project is 17.9% and the payback period is 4.7 years. The post-tax analysis is based on a number of assumptions fully set out in the Report.
Despite the significant reduction in initial and sustaining capital costs as well as operating costs, the NPV and IRR are lower and the payback period is longer than the 2012 Feasibility Study in large part due to the 36% reduction in the long-term FOB concentrate sales price forecast per tonne.
The PEA was completed by BBA Inc. (“BBA”) located in Montreal, Quebec, Gemtec Limited (“Gemtec”) located in St. John’s, Newfoundland & Labrador and Watts, Griffis and McOuat Limited (“WGM”) located in Toronto, Ontario, and is effective as of February 28, 2017. Click here to view the news release dated February 28, 2017, announcing the PEA.
Economic Impact Assessment
Alderon released highlights of its updated Economic Impact Assessment (EIA) for its Kami Project on April 5, 2017. The Economic Impact Assessment was based on the production profile, operating cost assumptions and capital cost projections included in the technical report entitled “Re-Scoped Preliminary Economic Assessment of the Kamistiatusset (Kami) Iron Ore Property, Labrador”, dated effective February 28 2017.
Kami’s Economic Impact Estimated for Newfoundland and Labrador
- $2.2 billion in direct, indirect and induced incomes to workers and local businesses;
- Approximately 32,000 person years of direct, indirect and induced employment during construction and operations;
- Approximately $1.8 billion in treasury contributions from total direct, indirect and induced taxes; and
- $14 billion in contribution to the provincial GDP through incomes generation and the production undertaken.
Kami’s Economic Impact Estimated for Quebec
- $3.2 billion in direct, indirect and induced incomes to workers and local businesses;
- 42,260 person years of direct, indirect and induced employment during construction and operations;
- $459 million in treasury contributions through direct, indirect and induced taxes; and
- $3.2 billion contribution to the provincial GDP.
Kami’s Economic Impact Estimated for Canada
- $7.6 billion in direct, indirect and induced incomes to workers and local businesses;
- 100,405 person years of direct, indirect and induced employment during construction and operations;
- $4.4 billion in total treasury contributions, including $2.0 billion in total contributions to the Federal treasury, through direct, indirect and induced taxes; and
- $19.5 billion in contribution to the national GDP through income and production.
The Kami property includes 305 claims in Labrador for a total of 7,625 hectares.
Alderon acquired a 100% interest in the Kami Project from Altius Minerals Corporation by issuing 32,285,006 common shares to Altius as well as appointing John Baker (Chairman of Altius) and Brian Dalton (CEO of Altius) to the Alderon Board of Directors. Altius will also retain a 3% gross sales royalty on iron ore concentrate from the Kami Project.
In March 2013, HBIS Group Co. Ltd. (formerly Hebei Iron & Steel Group) contributed C$119.9 million in exchange for a 25% interest in the Kami Limited Partnership which was established to own the Kami Project. Alderon has the remaining 75% interest.
The Sokoman Fm. also known as the Wabush Iron Fm. is the ore-bearing formation in the Wabush Lake-Mount Wright area. The formation conformably overlies the Wishart Fm. quartzite where it is present, but also locally shares its basal contact with the Denault Fm. dolomite. The Sokoman Fm. is subdivided into Lower, Middle and Upper Members.
The Lower Member (LIF) consists of a 0 - 75 m thick sequence of fine to coarse grained banded quartz - carbonate, and/or quartz - carbonate - magnetite, and/or quartz-carbonate (i.e. siderite, ankerite and ferroan-dolomite) - silicate ( i.e. grunerite, cummingtonite, actinolite, garnets), and/or quartz - carbonate - silicate - magnetite, and/or quartz -magnetite - specularite units. Mixtures of these units can occur both vertically and laterally. This member may contain iron ore locally.
The Middle Member (MIF) which forms the principal iron ore unit consists of a 45 - 110m thick sequence of quartz-magnetite, and/or quartz-specularite-magnetite, and/or quartz-specularite-magnetite-carbonate, and/or quartz-specularite-magnetite anthophyllite gneiss and schist units. Actinolite and grunerite rich bands can be present in this member. Martite can also occur in weathered zones by alteration of magnetite.
The Upper Member (UIF) consists of a 45 - 75 m thick sequence similar in composition to the Lower Member and can generally only be differentiated through their contact relationships with the overlying and underlying formations supported by detailed structural interpretations. The hydrous iron oxides, limonite and/or goethite, have been observed in all members of the Sokoman Fm. Limonite and/or goethite are present in weathered and fractured zones and are derived primarily from alteration of carbonates. Pyrolusite (MnO2) was also observed in all members of the Sokoman Fm. and is typically associated with surficial or supergene enrichment, extending to depth along and adjacent to fault and fractured zones.
Airborne surveys were carried out in the 1970s and in 1978 LM&E carried out a lake bottom sediment geochemical program. In 1979, a limited four line (3,500 m) ground magnetic survey was carried out in the Mills Lake area and in 1979 LM&E completed one hole, (28m) in the Elfie Lake area. In 1982, a 51 m hole was completed in the same area with 2 m of oxide iron formation intersected. In 1985, LM&E carried out limited field work in the north part of the Altius ground. In 2001, IOCC carried out an airborne geophysical survey and although the Altius claim area was recommended by SRK as a high priority area, no follow-up work is recorded.