The Kamistiatusset (Kami) project in Labrador west has entered another phase of its long saga. The iron ore project was put back into limbo earlier this year when the owners, Alderon Iron Ore, defaulted on a $14-million loan and went into receivership.
Now, Australia-based Champion Iron Ltd., the operators of the nearby Bloom Lake project just across the border in Quebec, has picked up the gauntlet on the sizable iron deposit in the Labrador Trough.
Champion was the successful bidder on the project to the tune of $34 million, which also covers the cost of Alderon’s secured debt. The deal was approved by the Supreme Court of Newfoundland and Labrador this week.
MHA wants assurances
Labrador West MHA Jordan Brown said he wants to sit down and have some talks about where the project is going and assurances from government the resources will benefit Labradorians.
Alderon had always touted a potential $1-billion project in Kami, with 300-400 local jobs projected. Brown said he wants to make sure that work stays on the Labrador side of the border and that the benefits of the resource goes to this province.
“A lot of people hope and want the project to go ahead, and be a mine that uses a local workforce, minimizes fly-in fly-out operation, things like that. I just want to make sure this resource benefits Labradorians as the resource is in Labrador.”
Brown said he wants to have that conversation with Champion, and make sure those concerns are front of mind as they proceed.
Too early to say: Champion
Michael Marcotte, vice-president of investor relations with Champion, told SaltWire they’re very excited about the possibility of the project but don’t know where it will go until they complete a feasibility study.
“We’ll have to look into a standalone project to some extent, see how we can benefit the infrastructure we currently have, but the way it will be structured and the scale, it’s too early to say,” he said.
Marcotte said the company has hired people to start a study, work on that for several months, and then come back to the local communities and see what the potential plan would look like. But at this point it’s to early say how or if the project will proceed.
He said Bloom Lake is a great anchor for Champion, with an expansion announced to that project last week, and they think Kami is positioning the company for another phase of growth.
As part of the purchase, Champion will get an additional eight million tonnes annually of port capacity in Sept-Isles, Que., where they currently send the iron ore concentrate from Bloom Lake. Marcotte said they won’t have the extra capacity at Bloom Lake to integrate the iron ore from the Kami project so that will be something they will be studying.
The Kami project has had a couple of near starts over the years, one as recently as 2019. Alderon had announced it hoped to start construction in 2020 but was unable to secure funding, citing the uncertainty of the COVID-19 pandemic, and lost the project and assets to Sprott Lending Corp. The project then went up for sale.
Champion also picked up Bloom Lake at a time when the project seemed unlikely to be profitable, buying it from Cliffs Québec Iron Mining ULC for $10.5 million in 2016. Marcotte said it shows that they have a track record of exceeding expectations.
“We think we have a secret sauce and the recipe is working at Bloom,” he said. “We’re excited to bring our know how to the region and hopefully have a benefit to the region.”
Altius Minerals has had its hand in the Kami project pretty much since it began. The Newfoundland based company did the initial drilling program that identified the Kami site in 2008 and later sold it to Alderon, holding a 37.3 per cent equity holding in the company at the time of its demise. Altius is receiving 600,000 shares in Champion as part of the current deal and expects to receive a portion of the cash Champion paid for the project once the details are worked out.
“In some ways it’s bittersweet,” Altius CEO Brian Dalton said when asked about the deal. “It’s tough to attract that kind of capital with a junior mining company so I was disappointed Alderon wasn’t able to get across the line.”
He said timing was against Alderon, but he has a lot of faith in Champion and people shouldn’t underestimate their ambition or their ability to execute.
Dalton said he wouldn’t expect to see any major changes to the scope of the project, since Alderon already had a lot of the permitting and approvals in place and a major change of the scope would mean starting a lot of processes over.
Evan Careen is a Local Journalism Initiative reporter covering Labrador for the SaltWire Network
