Name of the Project
Kamistiatusset (Kami) iron-ore project.

Location
Labrador Trough, Canada.

Client
The Kami project is held through the Kami Mine Limited Partnership (Kami LP), comprising Alderon Iron Ore with 75% and Hesteel with 25%.

Project Description
A rescoped preliminary economic assessment (PEA) on the Rose deposit at the Kami iron-ore deposit has demonstrated the robust economics of the project, including lower initial and sustaining capital costs, as well operating costs. The Rose deposit contains measured and indicated resources of 1.09-billion tonnes grading 29.6% total iron.

The current PEA replaces the company’s 2012 feasibility study; however, significant portions of the PEA remain unchanged from the feasibility study, including sections relating to geology, exploration, drilling, sampling and data verification, and the mineral resource estimate. The PEA includes the replacement of the port handling and terminal facilities in the Pointe-Noire area of Sept-Îles, Québec, with proposed access to the new multiuser terminal facility at the Port of Sept-Îles, which will be open to all market participants.

The PEA also proposes the integration of the Wabush Scully mine property, which operated from 1965 to 2014 as a tailings solution.

Waste rock and overburden stockpiles remain in the same location as in the 2012 feasibility study. Their profiles have been adjusted on the basis of the revised quantities determined in the mining study.

The Kami mine site and crusher area infrastructure design is based on the layout developed during detailed engineering.

The concentrator footprint is based on the process equipment layout developed during detailed engineering and has been conceptually located in an area between the Scully concentrator and the exhausted Scully pit.

A corridor for services has been defined at a conceptual level for connecting the Kami mine site to the Scully site. This corridor will provide right of way for the overland conveyor, the access road for the Kami mine site and the power lines for supplying power to the Kami mine site from the Scully substation.

Mineral processing and concentrate handling for the project will involve:
• the mining of the openpit and adjacent crushing plant at the Kami mine area;
• crushed ore being conveyed from the crusher to the crushed ore stockpile, ahead of the concentrator, located at Scully in a location adjacent to the existing Scully process plant;
• tailings being disposed of in the exhausted Scully openpit;
• a concentrate load-out facility located at the existing Scully rail loop; and
• the transportation of concentrate by rail from the Scully rail loop to the common port terminal facilities in Sept-Îles Quebec.

The project will have a yearly production rate of 7.8-million tonnes a year of 65% iron, compared with the eight-million tonnes estimated in the 2012 feasibility study.

The life-of-mine has also decreased from 30 years to 24 years.

Jobs to Be Created
Not stated.

Net Present Value/Internal Rate of Return
The project has an estimated pretax net present value (NPV), at an 8% discount rate, of $1.38-billion, compared with $3.24-billion in the 2012 feasibility study, based on an average production rate of 7.8-million tonnes a year of iron-ore concentrate at a grade of 65.2% iron, over the life of the mine.

The project has a pretax internal rate of return (IRR) of 23.8%, compared with 29% in the 2012 feasibility study, with a projected payback of 3.9 years, compared with 3.1 years in the 2012 feasibility study.

The NPV and IRR are lower and the payback period is longer than projected in the 2012 feasibility study, in large part because of the 36% reduction in the long-term freight-on-board concentrate sales price forecast per tonne.

Value
The total estimated capital cost, excluding sustaining capital, is $897.5-million, reduced from $1.3-billion in the 2012 feasibility study.

Two key changes have resulted in a significant reduction in initial and sustaining capital costs. The first is the rescoped tailings management facility, which proposes to use the existing Wabush Scully mine openpits for tailings disposal. In addition to the capital cost savings, this will provide a significant reduction in the greenfield footprint.

The second involves the port terminal facilities. The government of Quebec became the owner of rail, stockyard and terminal facilities located in the Pointe-Noire area of the Port of Sept-Ȋles in March 2016. It plans to use these assets to create a multiuser terminal facility that will be open to all market participants. The Kami LP’s ability to access the multiuser terminal facility will result in significant capital cost savings, as it will no longer need to build its own stockyard and materials handling facilities. 

Duration
The PEA estimates that the project will take 29 months to complete, compared with 24 months in the 2012 feasibility study.

Latest Developments
The current study was prepared as a PEA, not a feasibility study, owing to the proposed integration of the Wabush Scully mine property. The company does not have access to the Wabush Scully mine property to complete the additional engineering and technical work that is required for the preparation of a feasibility study.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
None stated.

Contact Details for Project Information
Alderon Iron Ore, Jennifer Patterson, tel +1 604 681 8030 ext 248 or email info@alderonironore.com.