Each one in plain English, with the numbers worked through for a shareholder.
16 Apr 2012joint venture update▲ GoodMajor
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.
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).
Alderon filed a combined technical report merging its September 2011 Preliminary Economic Assessment (Rose Central) and October 2011 resource estimate; it says it contains no new material information and supersedes the earlier reports. Indicated resources are 490 million tonnes at 30.0% iron and Inferred 598 million tonnes at 30.3% iron (20% cut-off). The PEA is unchanged: 8 Mt/year of concentrate, capital cost US$989 million, pre-tax NPV (8%) US$3.07 billion, pre-tax IRR 40.2%, production expected to begin Q4 2015. No reserves have been established and no feasibility study is complete; a feasibility study is expected in Q3 2012, and a 2012 winter drill program of up to 18,000 metres is under way.
Alderon furnished the full NI 43-103 technical report on the Kami property (effective October 26, 2011), with consents from four qualified persons. The visible part is a table of contents and tables list; the filing text shown does not state resource figures, so see the March 21 news release for the headline numbers.
The federal and Newfoundland and Labrador governments issued draft environmental impact statement guidelines for the Kami Project for public review. Alderon plans public information sessions in March 2012, a permanent Labrador West office, and says its Environmental Impact Statement is scheduled for submission in Q4 2012. This is a step in the environmental assessment process that Alderon started in October 2011, not an approval.
