Alderon Iron Ore Corp. (TSX: IRON) ("Alderon" or the "Company") today announced that it has filed its National Instrument 43-101 Technical Report entitled "Re-Scoped Preliminary Economic Assessment of the Kamistiatusset (Kami) Iron Ore Property, Labrador", dated effective February 28 2017 (the "Report"), on the SEDAR website at www.sedar.com. The Report is with respect to Alderon's preliminary economic assessment ("PEA") for its Kami Iron Ore Project located in the Labrador Trough.
The Report was prepared as a result of the Company's efforts to re-scope the capital and operating costs of the Kami Project given market conditions over the past several years, changes in ownership and management of assets in the Labrador Trough, and the availability of the idled Wabush Scully Mine as a tailings management solution. The results of the PEA were announced in the February 28, 2017 news release and there are no material differences between the results announced in that news release and those contained in the final Report, as filed on SEDAR.
"The completion of the PEA represents a significant milestone and reflects how economic conditions in the Labrador Trough and the iron ore sector have improved considerably," said Mark Morabito, Chairman & CEO of Alderon. "In the coming months, we will focus our efforts on advancing development of the Kami project and demonstrating the positive economic impact that our project will provide the region."
The PEA replaces the Company's previous 2012 Feasibility Study, and demonstrates robust economics, including lower initial and sustaining capital costs as well operating costs.
Highlight of the Kami Project Preliminary Economic Assessment (US dollars)
- Estimated pre-tax Net Present Value (NPV) at 8% discount rate is $1.377 billion based on an average production rate of 7.8 million tonnes per year of iron ore concentrate at a grade of 65.2% iron, over the life of the mine;
- Total estimated capital cost (excluding sustaining capital) is $897.5 million, reduced from $1.3 billion in the 2012 Feasibility Study*;
- Average estimated operating cost is $31.08/tonne, reduced from $42.17/tonne in the 2012 Feasibility Study*;
- The FOB concentrate sales price used in the PEA is $65.30 per tonne. This price was derived using an iron ore price that is well below the current spot price;
- Estimated mine life of 24 years;
- Internal rate of return (pre-tax) for the project is 23.8%; and
- Projected payback period is 3.9 years.
*The 2012 Feasibility Study used an exchange rate of $1.00CDN = US$1.00 and was in constant Q4-2012 dollars. No escalation or inflation was applied to costs to bring them to Q1-2017 dollars. The exchange rate used in this current PEA is $1.00CDN = US$0.77.
On a post-tax basis, the PEA shows a NPV of US$712 million at a cash flow discount rate of 8%. The post-tax IRR for the project is 17.9% and the payback period is 4.7 years. The post-tax analysis is based on a number of assumptions fully set out in the Report.
Technical Report and Qualified Person
The Report was prepared under the supervision of Mr. Angelo Grandillo, P.Eng, of BBA, a Qualified Person as defined by NI 43-101, with contributions from Gemtec and WGM. Mr. Grandillo is a Qualified Person as defined by NI 43-101 and Mr. Grandillo is independent of Alderon. Mr. Grandillo has reviewed and approved the technical information contained in this news release. Mr. Grandillo has verified all the data underlying the technical information disclosed in this news release.