Kami

Commodity
Iron

Location
Labrador, Canada

Operator
Champion Iron Limited

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. 

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. On November 16, 2020 Champion Iron Limited was approved to acquire the asset by the Supreme Court of Newfoundland and Labrador following a competitive bidding process. Under the Acquisition, Altius will receive 600,000 Champion Iron shares as consideration for the sale of its portion of secured debt of Alderon. It also expects to receive a portion of the $15 million cash consideration and the future production-based payments stemming from its 37.3% equity holding in Alderon.

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 2018 Kami project Feasibility Study:

• Estimated pre-tax Net Present Value (NPV) at 8% discount rate was US$1,698 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$982 million with average estimated operating cost of US$30.72 per tonne and a mine life of 23 years. 

• Pre-tax internal rate of return (IRR) for the project came at 24.6% with projected payback period of 4.0 years. On a post-tax basis, the FS shows an NPV of US$866 million at a cash flow discount rate of 8%. The post-tax IRR for the project came at 18.3% with a payback period of 4.9 years.

Champion Iron has announced their plans to revise the project's scope in an updated Feasibility Study including Kami's capability to produce Direct Reduction grade pellet feed. This study is expected to be completed in H1 2023 (per Champion Iron Annual Meeting presentation Aug 24, 2022).