Alderon Iron Ore
Terms: Altius owns a 3% Gross Sales Royalty (GSR) on Kami Project, along with ~40% of the common share equity.
On April 1, 2020 Alderon announced that the company is in default with respect to a US$14 million loan facility, due mainly to Sprott Resource Lending, with Altius being the lender of approximately US$2 million. Sprott has not yet made a determination regarding the enforcement of its security while Alderon continues to evaluate potential strategic alternatives.
Highlights of the 2017 Kami project Preliminary Economic Assessment (PEA): Estimated pre-tax Net Present Value (NPV) at 8% discount rate was US$1,377 million based on an average production rate of 7.8 million tonnes per year of iron ore concentrate at a grade of 65.2 per cent iron over the life of the mine. Total estimated capital cost (excluding sustaining capital) is US$898 million with average estimated operating cost of US$31.08 per tonne and a mine life of 24 years. Pre-tax internal rate of return (IRR) for the project came at 23.8% with projected payback period of 3.9 years. On a post-tax basis, the PEA shows an NPV of US$712 million at a cash flow discount rate of 8%. The post-tax IRR for the project came at 17.9% with a payback period of 4.7 years.
Altius entered into an agreement with respect to the Kami iron ore project in November 2009, as part of its merchant-banking like approach to jointly form a new public company to explore and advance the Kami IRON ORE Project in western Labrador. The agreement resulted in the restructuring and financing of Alderon Iron Ore Corp. (ADV:TSX), which fulfilled its option agreement terms with Altius to earn 100% interest in the Kami iron ore project by issuing Altius 32,285,006 payment shares of Alderon. Altius also created the 3% gross sales royalty relating to the project as part of the project sale.
Further details on Alderon's development plans for Kami project can be found here.