Premium-Quality Kami Iron Ore Project
Kami Project Highlights
Alderon is developing its high-grade Kami Iron Ore Project to take advantage of improved iron ore prices, reduced CAPEX requirements and available infrastructure. The Kami Project has access to skilled labour, quality infrastructure and a high-grade iron ore deposit, and will deliver a quality product that is cost-effectively shipped to customers around the world. The Kami Project is held through The Kami LP, as to 75% by Alderon and 25% by HBIS Group Co. Ltd
Ideally located in Canada's premier iron ore district, the Labrador Trough
Year-round access to the global market through nearby railway and deep-water dock facility; paved highway and powerlines are also easily accessible
Strategic partnerships with 100% off-take agreements in-place
High-grade (65.2%-Fe) iron ore concentrate with ultra-low impurities and 100% of production committed
Location and Infrastructure
The Kami Project is strategically located next to the mining towns of Wabush, Labrador City, and Fermont, near the provincial borderline between Québec and Labrador
- Paved highway only 2.5km away
- Access to low-cost electricity with powerlines 15.5km away
- Common carrier railway, with over 80 million tonnes of capacity, 14.5km away to transport material to deep water port
- Multi-user deep-water port provides access year-round to global markets
Highlights of the updated September 2018 Feasibility Study include:
|Net Present Value (“NPV”) at 8% discount rate||$||1,698 M|
|Internal Rate of Return (“IRR”)||24.6%|
|Projected Years to Payback||4.0 years|
|Total Estimated Capital Cost (excluding sustaining capital and closure costs)||$||982.41 M|
|Average Estimated Operating Costs (loaded in ship Port of Sept-Îles)||$/dmt||30.72|
|CFR Concentrate Sales Price Forecast - based on three year trailing average CFR benchmark price of $63.30/dmt @ 62% Fe, adjusted for Kami Fe grade, and HBIS and Glencore agreement terms||$/dmt||CFR $89.67 (FOB $73.17)|
|Estimated Mine Life||23 years|
|Final Product Iron Grade (%Fe)||65.2%|
|Proven and Probable Mineral Reserves (COG=15%,28.8% Total Fe, 3.4% Dilution, 2.5% Ore Loss)||517.2 Mt|
|Annual Concentrate Production Rate (average life of mine, post ramp-up year)||7.84 Mtpa|
The updated FS replaces the November 2017 PEA as the current technical report on the Kami Project. For further information on the Kami Project please refer to the Technical Report entitled “Updated Feasibility Study of the Kamistiatusset (Kami) Iron Ore Property, Labrador” dated effective September 26, 2018 (the “Report”), that is available on SEDAR at www.sedar.com.
The Mineral Resources and Proven and Probable Mineral Reserves are reported in accordance with Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources and Mineral Reserves and their Guidelines, and are prepared in accordance with NI 43-101.
The Mineral Resource estimate for the Kami Project is set out below. Mr. Michael Kociumbas, P.Geo is a Qualified Person as defined by NI 43-101 and is responsible for reviewing and approving this Mineral Resource estimate and the QA/QC associated with the estimate. He has verified, reviewed and approved the technical data contained in this news release and underlying sampling, analytical and test data. The Mineral Resource estimate has been prepared using a 15% Total Fe cut-off grade, is effective December 17, 2012 and inclusive of Mineral Reserves.
|MagFe% = percentage of the Fe present as magnetite; HemFe% = percentage of the Fe present as hematite.|
The Mineral Resource estimate for the Kami Project was completed in GemcomTM using block sizes of 15 m x 15 m x 14 m for Rose Central and Rose North and 5 m x 20 m x 5 m for Mills Lake and is based on results from 209 diamond drill holes at Rose Central and Rose North (170 holes) and Mills Lake (39 holes) zones totaling 62,247 m. These holes were drilled within the iron mineralization for approximately 2,000 m of strike length and a range of 200 to 400 m of width for Rose Central and Rose North. The holes were drilled on section lines that were spaced 100 m apart for both deposits in the main area of mineralization. For the geological modelling, 3-D bounding boxes defining the maximum extents of the Rose and Mills Lake deposit areas were created. The boxes extended approximately 200 m along strike from the outermost drill holes in each area. Mineralized boundaries extended up to a maximum of about 400 m on the ends of the zones and at depth where there was no/little drill hole information, but only if the interpretation was supported by drill hole intersections on adjacent cross sections or by solid geological inference.
Proven and Probable Mineral Reserves
The mining engineering work performed for this updated FS was based on the 3-D block model provided by Alderon. Pit optimizations were performed on the Measured and Indicated Resources and the pit shell that resulted in the maximum discounted NPV was selected as a guide for the pit design. The final Mineral Reserves were estimated after applying engineering and operational design parameters and include mining dilution and ore losses. BBA is of the opinion that the Mineral Reserve estimate derived in this updated FS reasonably quantifies the economical ore mineralization of the Rose Deposit. The Mineral Reserve estimate is effective as of August 12, 2018. The Proven and Probable Mineral Reserves presented in the table below are derived from the December 17, 2012 Mineral Resource estimate set out above. Only the Measured and Indicated Resources within the Rose Central and the Rose North Deposits have been considered in the updated FS and have been used for the estimation of Proven and Probable Mineral Reserves. The Mineral Resources within the Mills Lake Deposit have not been considered in the FS.
|Proven Mineral Reserve||392.7||29.0||34.7||15.0||20.8|
|Probable Mineral Reserve||124.5||28.2||32.0||11.1||15.3|
|Total Mineral Reserve||517.2||28.8||34.1||14.1||19.4|
|TFe = total Fe grade; WREC% = the weight recovery; MagFe = Fe present as magnetite; MAG% = the percentage of magnetite in the Proven and Probable mineral reserves.|
Updated Preliminary Economic Assessment
Alderon released highlights of the Updated Preliminary Economic Assessment (Updated PEA) for its Kami Project on November 7, 2017. The Updated PEA is an update to a re-scoped preliminary economic assessment on the Kami Project that was issued on March 14, 2017. The March 2017 PEA was prepared based on a plan to use the depleted pit at the Wabush Scully Mine as part of a tailings solution for the Kami Project. The Wabush Scully Mine was acquired by a third party who has stated its intention to re-open the mine. As a result, the Updated PEA has been prepared to remove the components related to the Wabush Scully Mine.
Economic Impact Assessment
Alderon released highlights of the Updated Economic Impact Assessment (EIA) for its Kami Project on November 29, 2017. The Updated Economic Impact Assessment was based on the production profile, operating cost assumptions and capital cost projections included in the Updated PEA: “Updated to the Re-Scoped Preliminary Economic Assessment of the Kamistiatusset (Kami) Iron Ore Property, Labrador”, effective November 7, 2017. All figures include direct, indirect and induced effects from the Kami Project.
Alderon was released from both the Federal and Provincial Environmental Assessment (EA) Processes for the Kami Iron Ore Project in Q1 2014. A timeline of the EA process milestones is shown below. Alderon engaged with stakeholders throughout the EA process and public input influenced the resulting project plan.
EA process documentation is available for viewing using the links below:
Environmental Impact Statement Plain Language Summary, Labrador (September 2012) - English
Environmental Impact Statement Plain Language Summary, Labrador (September 2012) - French
Environmental Impact Statement Plain Language Summary, Quebec (September 2012) - English
Environmental Impact Statement Plain Language Summary, Quebec (September 2012) - French
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 Formation, also known as the Wabush Iron Formation, is the ore-bearing formation in the Wabush Lake-Mount Wright area. It consists of mainly semi-massive bands or layers and disseminations of magnetite and/or specular hematite in recrystallized chert and interlayered with bands of chert with iron carbonates and iron silicates. The Sokoman Formation 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 iron-carbonate (i.e. siderite, ankerite and ferroan-dolomite), and/or iron silicate ( i.e. grunerite, cummingtonite, actinolite, garnets), and/or iron-carbonate-silicate units. Mixtures of these units can occur both vertically and laterally. This member may contain iron ore locally.
The Middle Member (MIF) forms the principal iron ore unit and 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 the alteration of iron carbonates. Pyrolusite (MnO2) was also observed in all members of the Sokoman Formation and is typically associated with surficial or supergene enrichment, extending to depth along and
1970's: airborne surveys
1978: lake bottom sediment geochemical program by LM&E
1979: limited four line (3,500m) ground magnetic survey in Mills Lake area; one hole (28m) in Elfie Lake area by LM&E
1982: 51m hole drilled with 2m of iron oxide formation intersected
1985: limited field work by LM&E in northern part of Altius ground
2001: airborne geophysical survey by IOCC; although the Altius claim area was recommended by SRK as a high priority area, no follow-up work is recorded