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. On June 17, 2020 the Newfoundland and Labrador Supreme Court appointed Deloitte Restructuring Inc. as receiver of Alderon and the Kami Mine Limited Partnership, with power to sell their assets and property. Altius retains a 3% gross sales royalty which comprises an interest in land and follows the Kami project into the hands of any purchaser from the receiver.
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.