Alderon signs deal worth more than $400M with Chinese steelmaker

Daniel
Daniel MacEachern
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Wang Yifang, chairman of Hebei Iron and Steel (left) and Mark Morabito, executive chairman of Alderon Resource Corp., sign an agreement announced Friday that will see Hebei acquire 19.9 per cent of Alderon and a 25 per cent share of Alderon's Kami iron project for $194 million.

Alderon Iron Ore Corp. has signed a multimillion-dollar deal with Chinese steel producer Hebei Iron and Steel to develop the junior mining company's Kami project in the Labrador Trough.

The agreement, announced Friday, sees Hebei acquire 19.9 per cent of Alderon's outstanding common shares plus a 25 per cent interest in a newly formed limited partnership that will own the Kami project, for $194 million.

Tayfun Eldem, Alderon's president and CEO, called the agreement a major catalyst for the company.

"In terms of a junior mining company, where development is concerned, it is one of the most significant steps in the de-risking of a project, where we have a financial partner, as well as a partner that is committed to taking 60 per cent of our production," he said.

"So it essentially says, A, we have the financial backing to develop the project, as well as B, once the project goes into operation, there is an outlet for our product, so those are the two most significant parts of our deal."

Hebei is also China's largest steelmaker, and No. 2 in the world, said Eldem, so the deal also bodes well for Newfoundland and Labrador.

Hebei's commitment to fund 25 per cent of the remaining capital costs of the project - Alderon estimates the project will cost about $! billion to build - means the deal is worth more than $400 million from the Chinese company.

"It's a fantastic day for us and we're very pleased with the outcome," Eldem said.

"Hebei is a very strong and significant partner for us."

The Kami property is close to Wabush, Labrador City and Fermont, Que. Spread over 7,625 hectares, the property includes 305 claims in Labrador and five Quebec mining titles.

Alderon expects to begin commercial production in 2015 and produce eight million tonnes per year at a grade of 65.5 per cent iron.

The company estimates the project will create 1,500 full-time jobs over 20 years, including 268 jobs at the mine and concentrator, with the rest provided indirectly through local service and support industries.

The company also estimates the project will create more than 750 jobs during construction.

dmaceachern@thetelegram.com Twitter: TelegramDaniel

Organizations: Alderon Iron Ore

Geographic location: Newfoundland and Labrador, China, Wabush Fermont, Que Quebec

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Recent comments

  • Ahhh Sooo
    April 17, 2012 - 17:22

    I always tunk that big capitalist multi-national business were just pockets of communism in our democratic culture. And I can certainly see why the board of directors at alderon suddenly see things eye to eye with this business adventure. That was dannys style when he was ruler of NL, remember?. At least I finally know what the "C" stood for in that government! Just look at it now, what its become! . And I say once the clock is hooked up at the mile one, we'll need muskratfalls just to operate it. Ohhhh the times in which we live.

  • Randy
    April 15, 2012 - 09:28

    Danny Williams should get a good cut of this , for sending out unprocessed material to China. He sits on the board.. What ever happened to his slogan "no more give aways " Out the window now ,that he sees dollar signs for himself. Why do you think Jarome Kennedy has changed his tune on Muskrat falls,and is considering power lines to the projects in Labradour

    • wayne badcock
      April 16, 2012 - 13:51

      there are going to be no more give aways in this province until the next one !

  • William Daniels
    April 15, 2012 - 08:28

    The rich get richer, the poor ........... A way of life in NL.