Commodity
Iron
Location
Labrador, Canada
Operator
Royalty Details
Altius owns a 3% Gross Sales Royalty (GSR) on the Kami Project
Overview
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 Project in western Labrador. The agreement resulted in the restructuring and financing of Alderon Iron Ore Corp. ("Alderon"), which fulfilled its option agreement terms with Altius to earn 100% interest in the Kami iron ore project. The environmental review and permitting process is projected to started in Q2 of 2024, extending through to early 2026.
Altius owned a large equity position in Alderon and was a lender in concert with Sprott Resource Lending, with Altius lending roughly US$2 million of the US$14 million loan facility. Alderon went through receivership in 2020, and at the end of that process, Champion Iron Limited acquired the asset following a competitive bidding process. Altius received 600,000 Champion Iron shares as consideration for the sale of its portion of secured debt, and in 2023 received an additional cash distribution of approximately $3 million which represents cash being distributed to the equity holders as ordered by the Supreme Court of Newfoundland and Labrador in the restructuring.
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.
Asset Highlights
Highlights of the 2024 Kami Project Study:
- 25-year life of mine with average annual Direct Reduction (DR) quality iron ore concentrate production of approximately 9.0M wmt per annum at above 67.5% Fe.
- Project construction period is estimated at 48 months, following a final investment decision, and it benefits from permitting work completed by the Project's previous owner.
- Total capital expenditures of $3,864 million, resulting in a Net Present Value (NPV) of $541 million and Internal Rate of Return (IRR) of 9.8% after-tax, based on conservative pricing dynamics compared to prevailing iron ore prices; NPV of $2,195 million and IRR of 14.8% after-tax, based on the previous three calendar year average of the P65 index price.
- The Project is expected to have an emission intensity of approximately 6.7 kilogram of CO2 per tonne of DR grade pellet feed iron ore produced, positioning the Project as potentially one of the lowest emitting producers of DR grade pellet feed iron ore locally and globally.
In June 2024, high purity iron ore was added to Canada's Critical Minerals List, potentially increasing the value of Kami.
Following this decision, in December 2024, Champion Iron announced a 51/49% partnership with Nippon Steel, one of the largest steel producers globally, and Sojitz Corporation, a prominent Japanese trading company with operations spanning over 50 countries. The partnership aims to advance the definitive feasibility study and potential development of the Kami Project, with the two Japanese partners expected to contribute up to $490 million prior to Champion requiring additional capital to fund its pro-rata share.
