ADV – Alderon Iron’s Kami Project Gets Go Ahead from Feds, Financing Imminent

POSTED ON February 19, 2014 BY Travis McPherson
CATEGORY Alderon Iron Ore, Companies, Iron Ore, Mining, Stories,

Alderon's Kami project will produce iron at an average grade of 65.2% Fe for +30 years (Photo: Dadang Tri/Bloomberg)

Last Thursday, Alderon Iron Ore (ADV:TSX) announced that the government of Labrador and Newfoundland had approved the building of third power line from Churchill Falls to Labrador West. This meant that Alderon would be able to negotiate a power agreement with the government for their Kami iron ore project and represented a significantly positive step in the approval process of the project. Since then, investors have been awaiting the decision by the federal government on the Environmental Assessment for the project. This morning, the company received the news that the project got the go ahead from the Feds. The Federal Minister of the Environment concluded that the Kami project is "not likely to cause significant adverse environmental effects".

"The positive decision of the Federal Minister of Environment marks another enormous milestone for Alderon as we move forward with the development of the Kami Project," says Tayfun Eldem, President and CEO of Alderon. "We now have the green light from both the Provincial Cabinet and the Federal Minister and can move forward with our construction plans."

Kami sits next to some of Canada's largest iron ore mines (Image: Alderon Iron Ore Corp.)

This represents the final step in the permitting process and now the company is free to begin construction of their iron ore project. The company has already secured a significant portion of their initial 8Mtpa production in Hebei Iron and Steel. In April 2012, they secured $195 in financing for a 19.9% stake in Alderon, a 25% stake in the project and a 60% offtake agreement with Hebei.

Now that Alderon has received their major environmental permits, the financing package can be completed. They have a remaining 40% of production that is unspoken for from any off takers. They should be able to find off takers for part or all of this shortly, which will help alleviate some of the financing overhang on the stock. The final financing package for the project is likely to come in the form of 60/40 debt-to-equity. The company has engaged BNP Paribas to source a $1 billion senior secured debt package for the project.

The Kami project has a $1.27 billion price tag in order to produce 65.2% Fe at 8Mtpa for over 30 years. On the equity side of the equation, Hebei is responsible for 25%, the remaining 40% of the off take could be spoken for which would reduce the market raise and then the remaining would be in the form of an equity financing. The company is immediately looking for someone to takeover 15% of the off take which would represent 1.2-1.5Mtpa.

Alderon also announced that Danny Williams has resigned from the Board of Alderon but will remain on as a special advisor to the company.

Read: Alderon Iron Ore Corp.: Kami Project Receives Positive Environmental Assessment Decision from Federal Minister of Environment and Changes to the Board Take Effect

Travis McPherson

trav@ceo.ca

Travis McPherson

trav@ceo.ca

Disclaimer:

Readers are advised that the material contained herein is solely for information purposes. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities. The information contained herein is based on sources which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available data. Any opinions expressed are subject to change without notice. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. They may from time to time have a position in the securities of the companies mentioned herein, and may change their positions without notice. (Any significant positions will be disclosed explicitly. This article is not intended to meet your specific individual investment needs and it is not tailored to your personal financial situation. Nothing contained herein constitutes, is intended, or deemed to be — either implied or otherwise — investment advice. Thomas Humphreys, Pacific Website Company Inc., and other entities in which he has an interest, employees, officers, family, and associates may from time to time have positions in the securities or commodities covered in these publications or web site. We reserve the right to buy and sell such securities or commodities without notice to readers. While the information herein is believed to be accurate and reliable it is not guaranteed or implied to be so. The information herein may not be complete or correct; it is provided in good faith but without any legal responsibility or obligation to provide future updates. Neither Thomas Humphreys, nor anyone else, accepts any responsibility, or assumes any liability, whatsoever, for any direct, indirect or consequential loss arising from the use of the information in these publications or web site.

Forward-Looking Statements: This article may include certain "forward-looking information" within the meaning of Canadian securities legislation. Forward-looking statements include predictions, projections and forecasts and are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "forecast", "expect", "potential", "project", "target", "schedule", budget" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions and includes the negatives thereof. All statements other than statements of historical fact included in this release, including, without limitation, statements regarding the potential of the Company's properties are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are based on a number of material factors and assumptions. Important factors that could cause actual results to differ materially from Company's expectations include actual exploration results, changes in project parameters as plans continue to be refined, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, uninsured risks, regulatory changes, delays or inability to receive required approvals, and other exploration or other risks detailed herein and from time to time in the filings made by the Company with securities regulators. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ from those described in forward-looking statements, there may be other factors that cause such actions, events or results to differ materially from those anticipated. There can be no assurance that forward-looking statements will prove to be accurate and accordingly readers are cautioned not to place undue reliance on forward-looking statements which speak only as of the date of this article. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Always do your own due diligence. We seek safe harbor.