Each one in plain English, with the numbers worked through for a shareholder.
12 Feb 2013resource reserve update● Neutral
CN is terminating its feasibility study for a new multi-user rail line and terminal in northern Quebec, citing anticipated delays in mine development projects in the Labrador Trough. Alderon says this does not affect the Kami schedule because its study is based on the existing QNS&L railway, and it will continue rail tariff discussions with QNS&L. Under its agreement with CN, the $1.5 million Alderon contributed last year is to be refunded. This ends the CN rail commitment made in August 2012.
Alderon announced it filed the Feasibility Study technical report on SEDAR and said there are no material differences between the results in the January 9 news release and the final report. This confirms the earlier headline numbers rather than changing them.
Alderon filed the full NI 43-101 technical report for the Feasibility Study (effective December 17, 2012), with consents from the qualified persons, as exhibits. It is the detailed version of the results announced on January 9; no new figures are summarised in the visible portion.
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).
Alderon said it would release the results of its Feasibility Study on the Rose Deposit of the Kami property before market open on January 9, 2013, with a conference call at 8:00am EST that day. This is only a scheduling notice; no study results are in it. It follows the Feasibility Study timing previously pushed to before the end of 2012.
Alderon committed to join a feasibility study with Canadian National Railway (CN) for a proposed multi-user rail line and port terminal facility linking the Labrador Trough to Sept-Iles, and will fund $1.5 million over the next twelve months to secure capacity on the new line; the funds would be refunded in certain circumstances. It says it remains committed to concluding an initial agreement with the existing Quebec North Shore and Labrador Railway and Chemin de fer Arnaud. This is a step on the open rail question, not a signed rail agreement.
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.
Alderon said it finished its final pre-feasibility drill program on April 30, 2012: 32 holes totalling 12,300 metres, infill drilling at North Rose (below the up-to-18,000 metres previously planned). Results are still being used to try to upgrade resources, and the feasibility study remains expected in Q3 2012. The release also recaps the past year, including the pending Hebei deal and the roughly C$40 million Liberty Metals & Mining investment, and notes federal funding of up to C$55 million for a new dock at Sept-Îles.
Alderon released the first assay results from its 2012 infill drilling, mostly at North Rose, with intervals such as 255.2 metres at 30.1% iron and 129.4 metres at 32.6% iron. All results fall within the existing resource estimate (Indicated 490Mt at 30.0%; Inferred 598Mt at 30.3%); the drilling aims to upgrade resources to Measured and Indicated ahead of the feasibility study expected in Q3 2012. This continues the winter drill program and does not change the resource figures.
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.
