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

Location
Western Labrador, Canada.

Project Owner/s
Champion Iron has agreed to buy the Kami project, which is only a few kilometres from its Bloom Lake mine, in Canada.

Until April, the project belonged to Alderon Iron Ore, but Sprott Resource Lending seized the project after the junior miner failed to repay a loan. Alderon was left in the lurch when Chinese group Tungshu withdrew its proposed investment in the project in March 2020, citing the uncertainty created by the Covid-19 pandemic.

Champion will buy the Kami project from Deloitte Restructuring, which is the receiver for Alderon, for a consideration of $15-million in cash, the extinguishment of about $19.4-million in secured debt of Alderon and an undertaking in favour of the receiver to make a finite production payment on a fixed amount of future iron-ore concentrate production from the project.

Champion has exercised an option to buy the secured debt from Sprott Private Resource Lending, causing the iron-ore miner to become a senior secured creditor of Alderon and its affiliates. As consideration for the secured debt, Champion will issue 4.2-million ordinary shares to Sprott and Altius Resources. If the acquisition is completed, the secured debt will be extinguished as partial consideration for the Kami project.

Project Description
The updated feasibility study on the Rose deposit of the Kami project, completed in September 2018, has demonstrated the strong economics of the project, which will produce a premium-quality iron-ore concentrate with higher iron content and ultralow impurities relative to the 62%-iron grade benchmark.

The project hosts proven and probable reserves of 517.2-million tonnes grading 28.8% total iron and will produce 7.84-million tonnes a year of 65.2% iron concentrate over a 23-year mine life.

Potential Job Creation
Not stated.

All-in Sustaining Costs/All-in Costs
Not stated.

Net Present Value/Internal Rate of Return
The project has a pretax net present value, at an 8% discount rate, of $1.70-billion and an internal rate of return of 24.6%, with a payback of four years.

Project Owner/s
The total estimated capital cost of the project is $982.41-million.

Planned Start /End Date
The project will take 26 months to construct.

Latest Developments
Champion plans to revise the project's scope and update its feasibility study. The company expects to secure an additional eight-million tonnes a year of port capacity, including a prepayment of port-related fees, at the multiuser berth of the Port of Sept-Îles, which it currently uses to export iron-ore concentrate from Bloom Lake.

Champion’s acquisition of the Kami project is expected to be completed in the fourth quarter.

Key Contracts, Suppliers and Consultants
Envest (equipment management and acquisition) and Schneider Electric (power infrastructure).

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