Alderon Iron Ore Corp.

Alderon says it will voluntarily remove its shares from the NYSE MKT (expected Form 25 filing October 13, 2015, effective about 10 days later) and file a Form 15F to end its SEC reporting obligations, expected effective 90 days after filing. It ties this to an ongoing cash conservation program (releases of December 9, 2014 and August 11, 2015), lower listing and legal costs, and NYSE MKT minimum share price rules. Shares stay on the TSX, where most trading occurs; OTC quotation in the US is expected but not assured. The Kami Project is still described as 75% Alderon and 25% HBIS.

listing compliance notice

Kami LP signed the Power Purchase Agreement with NL Hydro (Feb 25, 2014), resolving the power thread, after the province confirmed on Feb 13, 2014 it will build the third transmission line. Kami LP must post US$65.0M of letter-of-credit security deposits; the first (stated as $21.0M in one place and $22.0M-loan-funded; the remaining deposits are described as $44.0M) was funded by a $22.0M loan from Liberty Metals & Mining at 8% interest, secured by a mortgage over the Kami Project, maturing Dec 31, 2018, and convertible into Alderon shares at $2.376 from 12 months after issue. Convertible debt could dilute shareholders if converted; the company calls the PPA critical to the previously announced debt financing, which is not yet described as secured.

debt financing

The federal Minister of Environment's decision, posted February 18, 2014, concluded the Kami Project is not likely to cause significant adverse environmental effects, so with the provincial release of January 10 the company says it can move ahead with plans to start construction; this resolves the federal EA thread. Separately, director Danny Williams resigned from the Board (he served since March 2012) but stays on as a consultant and special advisor.

regulatory community update

On January 10, 2014 the Newfoundland and Labrador Cabinet released the Kami Project from the provincial environmental assessment, resolving the provincial approval that was awaiting Cabinet in December. Federal release is still needed, with the Minister's decision due in February 2014 under the Project Agreement, and the company says it now looks to a provincial decision on the new Churchill Falls to western Labrador transmission line.

regulatory community update

Alderon says a power purchase agreement with NL Hydro is ready to sign but waits on the provincial government's decision to expand transmission capacity from Churchill Falls to Labrador West. The CEO says that approval is critical to securing the previously announced debt financing. Environmentally, the provincial decision awaits Cabinet and the federal review ended November 27, 2013 with no new issues found; a federal decision is expected early Q1 2014 (no later than 12 weeks from November 27). Premier Dunderdale's support is reported via a news interview, not a commitment in a filing. This ties the power agreement and financing to a government decision still outstanding.

regulatory community update

Alderon says the Newfoundland and Labrador environment minister gave a final decision on the EIS on September 30, 2013, finding no further work needed, with a recommendation to Cabinet next. The federal report is due for a 30-day review before end of October, and a final federal decision is due within 12 weeks after that. Alderon has bids for the primary crusher, Pointe-Noire car dumper and stacker/reclaimer, and plans more long-lead equipment orders; it targets production by end of 2015. Project financing, rail and power agreements are described as still being advanced, not completed.

regulatory community update

Alderon thanked the federal government for helping with the Hebei deal and said the $119.9 million Hebei financing has recently closed, resolving the open question about whether the deal had closed. The release also cites an independent study estimating economic benefits (e.g. C$10.0B in incomes, C$7.2B in tax revenues) and about 800 peak construction jobs and 500+ full-time jobs. It says power is sufficient for the currently planned development, citing a January 10, 2013 release. Closing details (date, share issuance, LP formation) are not given in this filing.

regulatory community update

Alderon released its Kami Feasibility Study (Rose Deposit, effective Dec 17, 2012): 8 Mt/yr of concentrate at 65.2% iron, pre-tax NPV (8%) US$3.244 billion, pre-tax IRR 29.3%, initial capital US$1,272.9 million, operating cost US$42.17/t, 30-year mine life, payback 3.8 years. Compared with the 2011 PEA, capital is higher (US$989M before), IRR is lower (40.2% before) and mine life is longer (15.3 years before); NPV is slightly higher (US$3.07B before). For the first time it states Proven and Probable Reserves of 668.5 Mt at 29.5% iron, resolving the earlier 'no reserves' position, and Measured and Indicated resources of 1,093.2 Mt (15% cut-off). Plant start-up is still projected for Q4 2015, with permits and construction start expected around November 2013; the company says the results meet all threshold criteria under its Hebei agreements, which is the trigger for Hebei's C$120M partnership funding (the filing text does not state the closing status or payment timing).

resource reserve update

Alderon submitted its Environmental Impact Statement (over 5,000 pages) for the Kami Project to the federal and provincial governments, on the Q4 2012 timetable (earlier than Q4 in the sense of being filed in September). The governments next post it and open a public review period; this is a submission, not an approval.

regulatory community update

Alderon confirmed that Hebei has received all needed Chinese regulatory approvals for the share placement and Kami partnership deal, and both sides will work to close it shortly. The deal still needs Toronto Stock Exchange and NYSE MKT approval, so it has not yet closed.

regulatory community update

Alderon cut the Hebei deal's total from C$194 million to C$182.2 million: the share price fell from C$3.42 to C$2.41, so the 19.9% share placement (still about 25,828,305 shares) now raises C$62.2 million instead of C$88.3 million, while Hebei's payment for the 25% Kami partnership interest rose from C$105.7 million to C$120 million. Liberty Metals & Mining's matching purchase of about 3,805,576 shares is expected to fall to C$9.2 million. Hebei said it expects the last outstanding Chinese approval (SAFE) by August 20, 2012; TSX and NYSE MKT approvals are still needed. Less cash comes in at closing than first announced, though the share count is unchanged.

regulatory community update

Alderon released its final resource estimate for the Kami Project: Measured and Indicated 1.1 billion tonnes at 29.8% iron, plus Inferred 277.4 million tonnes at 29.5% iron (20% cut-off, based on 209 drill holes, effective July 11, 2012). This completes the upgrade the 2012 drilling was aiming for: the earlier estimate was Indicated 490Mt and Inferred 598Mt, and the Inferred figure has fallen as much of it moved into the higher-confidence categories. The CEO says these resources will form the basis of the Feasibility Study, now expected before the end of 2012 (previously Q3 2012). No reserves are stated.

resource reserve update

Alderon announced that the Hebei Iron & Steel subscription agreement signed April 13 is now accompanied by agreed terms for all other material agreements, which will be signed when the share placement closes. The release repeats the earlier terms (C$194 million, 19.9% of shares at C$3.42, 25% of a new Kami partnership, 60% of output up to 4.8 million tonnes at Platts less 5%). It adds that the C$194 million is to be used for Kami exploration and development and other corporate expenses, and that Hebei will use best efforts to help obtain project debt financing, including from Chinese banks. Chinese government, TSX and NYSE Amex approvals are still required, so the deal has not closed.

joint venture update

Alderon signed a subscription agreement with Hebei Iron & Steel Group for a total investment of C$194 million, in exchange for 19.9% of Alderon's shares (at C$3.42 per share) and a 25% interest in a new limited partnership to own the Kami Project. Hebei would also buy 60% of annual Kami production, up to 4.8 million tonnes, at the Platts price less 5%. Existing shareholders face dilution from the new shares, and the deal still needs Chinese government, TSX and NYSE Amex approvals; Liberty Metals & Mining intends to use its pre-emptive right to buy about 3.8 million shares (C$13.0 million).

joint venture update