Editor's note: There is one image associated with this press
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Alderon Resource Corp. (TSX VENTURE: ADV)(OTCQX: ALDFF)(PINK
SHEETS: ALDFF) ("Alderon") is pleased to announce that it has
received the results of the Preliminary Economic Assessment ("PEA")
on the Rose Central Deposit of the Kamistiatusset ("Kami") Iron Ore
Property in western Labrador. The PEA was completed by BBA Inc.
("BBA") located in Montreal, Quebec and Stassinu Stantec Limited
Partnership ("Stantec") located in St. John's, Newfoundland &
Labrador and is effective as of September 8, 2011. The complete
report will be filed on SEDAR and Alderon's website within 45 days
of this news release.
Highlights of the Rose Central Kami Iron Ore PEA include:
-- Concentrate production rate of 8 million tonnes per year at a grade of
65.5% iron
-- Commercial production commencing in 2015 with a mine life of 15.3 years
-- Capital cost of US$989 million (excluding closure costs, sustaining
capital & leased equipment)
-- Pre-Tax IRR of 40.2%
-- NPV (discounted at 8%) of US$3.07 billion
-- Payback period of 2.7 years
-- Total operating cost (excluding royalties) of US$44.87/tonne concentrate
(averaged over the life of mine)
"We are very excited to see such a high NPV, especially since
this PEA is only based on the Rose Central zone of the Kami
Property. There is significant upside once we include North Rose
and Mills Lake," says Tayfun Eldem, President and CEO of Alderon.
"These positive results allow us to move directly to the
Feasibility Study phase and we expect that report by the third
quarter of 2012."
The PEA demonstrates very attractive project economics. Based on
a production rate of 8 million tonnes per year of iron ore
concentrate at a grade of 65.5% iron and an iron recovery of 82.8%,
the PEA shows a Net Present Value ("NPV") of US$3.07 billion at a
cash flow discount rate of 8%. The internal rate of return ("IRR")
for the project is 40.2%.
Alderon has a current indicated iron ore resource of 490 million
tonnes at 30.0% iron and an additional inferred resource of 118
million tonnes at 30.3% iron (refer to News Release dated April 5,
2011 for further details). This mineral resource is contained
within two zones, Rose Central and Mills Lake. The PEA is based
only on the development of the Rose Central deposit which has an
indicated iron ore resource of 376 million tonnes at 29.8% iron and
an inferred iron ore resource of 46 million tonnes at 29.8% iron.
The level of accuracy of the PEA is considered to be -20%/+30%.
Alderon is presently exploring the Rose North deposit which is
not developed sufficiently to be included in the PEA. As the Mills
Lake deposit is anticipated to account for a much smaller portion
of the overall resource, it has not been included in the PEA.
The PEA is preliminary in nature and it includes inferred
mineral resources that are considered too speculative geologically
to have the economic considerations applied to them that would
enable them to be categorized as mineral reserves. There is no
certainty that the conclusions reached in the PEA will be realized.
Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
Financial Analysis
Based on the assumption that commercial production would begin
in Q4 2015 and would continue for 15.3 years, the following results
were obtained:
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Table 1: Financial Analysis
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IRR 40.2%
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Discount Rate NPV (billion US$) Payback (years)
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5% 4.14 2.5
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8% 3.07 2.7
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10% 2.53 2.8
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Total capital expenditures (including contingency) are estimated
at US$988.9 million. The capital cost estimate excludes closure
costs and sustaining capital, which are expected to be in the order
of US$25.4 million and US$198.4 million respectively for the life
of the project.
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Table 2: Capital Costs (US$ Million)
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Mining 141.4
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Concentrator and Site Infrastructure 579.7
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Environmental and Tailings Management 19.8
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Rail Transportation 44.7
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Port Facilities 203.3
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TOTAL 988.9
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The PEA assumes a Concentrate selling price of US$115/tonne for
the life of the project and includes a 3% gross sales royalty on
iron ore concentrate to Altius Resources Inc., which is a
wholly-owned subsidiary of Altius Minerals Corporation (TSX: ALS).
Total operating costs, including annual costs for leasing of
equipment (valued at US$259.2 million) over the life of the leases,
are estimated at US$44.87/tonne of concentrate based on the
following:
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Table 3: Operating Costs (US$/tonne of concentrate)
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Mining 20.36
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Concentrator 6.28
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Site Infrastructure (incl. Garage) 0.55
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General Administration 1.77
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Environmental and Tailings Management 0.32
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Rail Transportation 13.51
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Port Facilities 2.08
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TOTAL 44.87
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Project Summary
The Kami Iron Ore Property is located approximately 10 km from
the town of Wabush in Western Labrador and approximately 6 km south
from the Wabush Mines mining lease owned by Cliffs Natural
Resources Inc. The proposed project at the Kami site, as stated in
the PEA, includes the following components:
-- The Rose Central ore deposit and waste rock disposal areas;
-- Processing infrastructure including a crushing and grinding circuit,
spiral plant, magnetite plant, concentrator and tailings thickener;
-- Tailings Management Facility;
-- Ancillary infrastructure to support the mine and process plant (gate and
guardhouse, reclaim water pumphouse, truck wash bay and repair shop,
electrical substation, administration/office buildings, maintenance
offices, warehouse area and employee facilities, conveyors, loadout
silo, stockpiles, sewage and wastewater treatment system infrastructure,
mobile equipment and transmission lines); and
-- A rail transportation component including a total of 19 km spur line
construction (17 km main track and loop and 2 km of yard track) to
connect the mine site to the Quebec North Shore & Labrador (QNSL)
Railway.
The proposed site plan for the Kami Property, as prepared by
BBA, can be viewed below or at:
http://alderonmining.com/_resources/kami/SitePlan.pdf
To view the Alderon site plan associated with this press
release, please visit the following link:
http://www.marketwire.com/library/20110907-adv98.jpg
Facilities at the port will include:
-- A rail transportation component consisting of a Sept-Iles Junction
interchange, railway spur line and staging tracks
-- A car dumper
-- A stacker/reclaimer system
-- A concentrate storage area with a capacity of 800,000 tonnes
-- A conveyor system feeding the common deep water shiploading facility,
capable of loading high capacity vessels destined for Asia, operated by
the Port of Sept-Iles
The proposed project will produce eight million metric tonnes of
iron ore concentrate from the mine per year and will ship
concentrate to market via the Port of Sept-Iles facilities at
Pointe Noire, Quebec. Ore processing will involve the following
steps:
-- Ore will be mined from the open pit mine using conventional drill and
blast techniques and transported via haul trucks;
-- Ore will be hauled to the primary crusher in proximity of the pit and
the crushed ore will be delivered to the stockpile and to the process
plant via conveyor;
-- The process plant will include grinding, screening, and gravity and
magnetic concentration;
-- Tailings (process waste) will be pumped to the tailings impoundment area
south of the process plant; and
-- Iron ore concentrate will be loaded onto gondola rail cars for
transportation to the Port of Sept-Iles where it will be transferred to
ships for delivery to market.
Technical Report
An NI 43-101 Technical Report will be filed on SEDAR and on
Alderon's website within 45 days of the date of this news release.
The report will include a summary of the Preliminary Economic
Analysis. The report is being prepared under the supervision of
Angelo Grandillo, P.Eng., of BBA, a Qualified Person as defined by
NI 43-101, with contributions from Stantec and Watts, Griffis and
McOuat Ltd.
Qualified Person
The PEA was prepared under the supervision of Angelo Grandillo,
P.Eng., with BBA. Mr. Grandillo is a Qualified Person as defined by
NI 43-101 and Mr. Grandillo is independent of Alderon. Mr.
Grandillo has reviewed and is responsible for the technical
information contained in this news release. Mr. Grandillo has
verified all the data disclosed in this news release.
Additional information about the Kami Project can be found in
the technical report filed on SEDAR at www.sedar.com entitled
"Technical report and Mineral Resource Estimate on the
Kamistiatusset property, Newfoundland and Labrador for Alderon
Resource Corp." dated May 20, 2011.
About Alderon
Alderon is a leading iron ore development company in Canada with
offices in Vancouver, Toronto, Montreal and St. John's. The 100%
owned Kami Project is located within Canada's premier iron ore
district and is surrounded by four producing iron ore mines. The
Alderon team is comprised of skilled professionals with significant
iron ore expertise to advance Kami towards production.
For more information on Alderon, please visit our website at
www.alderonmining.com.
ALDERON RESOURCE CORP.
On behalf of the Board
Mark J Morabito, Executive Chairman
Cautionary Note Regarding Forward-Looking Information
Information set forth in this news release may involve
forward-looking statements under applicable securities laws.
Forward-looking statements are statements that relate to future,
not past, events. In this context, forward-looking statements often
address expected future business and financial performance, and
often contain words such as "anticipate", "believe", "plan",
"estimate", "expect", and "intend", statements that an action or
event "may", "might", "could", "should", or "will" be taken or
occur, or other similar expressions. All statements, other than
statements of historical fact, included herein including, without
limitation; statements about future production, future operating
and capital costs, the projected IRR, NPV and payback period for
the Kami property, details about infrastructure requirements, and
future exploration on and the development of the Kami Project are
forward-looking statements. By their nature, forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause our actual results, performance or
achievements, or other future events, to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include,
among others, the following risks: the need for additional
financing; operational risks associated with mineral exploration;
the possibility that the testwork may not be demonstrated on a
larger scale; the need for permits; fluctuations in commodity
prices; title matters; environmental liability claims and
insurance; reliance on key personnel; the potential for conflicts
of interest among certain officers, directors or promoters with
certain other projects; the inability to conclude contracts for
rail, port and power infrastructure; disputes with First Nations
groups; the absence of dividends; competition; dilution; the
volatility of our common share price and volume and the additional
risks identified in the "Risk Factors" section of the Company's
Annual Information Form for the year ended December 31, 2010 other
reports and filings with the TSX Venture Exchange and applicable
Canadian securities regulations. Forward-looking statements are
made based on management's beliefs, estimates and opinions on the
date that statements are made and Alderon undertakes no obligation
to update forward-looking statements if these beliefs, estimates
and opinions or other circumstances should change, except as
required by applicable securities laws. Investors are cautioned
against attributing undue certainty to forward-looking
statements.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Alderon Resource Corp. Mark J. Morabito Executive
Chairman 604-681-8030 604-681-8039 (FAX) info@alderonmining.com
www.alderonmining.com Investor Relations Konstantine Tsakumis
1-866-683-8030
Alderon Iron Ore Corp (TSXV:ADV)
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