Photo by: Alderon Iron Ore
TORONTO (miningweekly.com) – Canadian project developer Alderon Iron Ore has clinched an offtake deal with global miner and commodities purveyor Glencore for the balance of iron-ore output from the Kami project, in western Labrador, that had not been allocated to offtake partner Hebei Iron & Steel Group.
Vancouver-based Alderon said a subsidiary of Glencore had agreed to buy 40% of the Kami project's actual yearly output from The Kami Mine Limited Partnership (Kami LP) once it had started commercial operations.
This would entail up to a maximum of 3.2-million tonnes of the first eight-million tonnes of iron-ore concentrate produced each year. The term of the offtake agreement would continue until Kami LP had delivered 48-million tonnes of iron-ore concentrate to Glencore, which was expected to be 15 years after declaring commercial production.
"We are extremely pleased to have entered into the offtake agreement with Glencore. Glencore is one of the world's largest natural-resource trading companies and in Alderon's view, this commitment demonstrates the [high] quality of the Kami project and its management team,” Alderon executive chairperson Mark Morabito said.
"With 100% of the initial production from the Kami project now committed, we believe this enhances Alderon's ability to obtain the requisite financing required to start construction. The offtake arrangement with Glencore gives Kami concentrates global exposure and the multiyear agreement serves as another significant derisking milestone for the Kami project,” Alderon president and CEO Tayfun Eldem added.
Glencore would pay Kami LP a price 2% lower than the monthly average price for iron-ore sinter feed fines quoted for 62% iron content by Platts Iron Ore Index, as well as an additional quoted premium for iron content greater than 62%.
Alderon stock trading on the TSX on Tuesday closed up 7.75% at C$1.39 apiece.