ALDERON is set to become the newest producer in the Labrador Trough.

ALDERON is set to become the newest producer in the Labrador Trough.

Alderon Linked to Cliffs' Wabush Mine in Labrador Trough

Issue 74, February 2014

Alderon Iron Ore has been touted by analysts and politicians as a likely bidder for Cliffs Natural Resources’ Wabush mine in the Labrador Trough, Canada’s iron ore heartland.

Cliffs announced the closure of its Wabush mine last Tuesday, alongside a $183m impairment, the cancelled expansion of its Bloom Lake mine and the appointment of a new chief executive. Wabush is no longer viable, the company said, with 500 job losses for the local town.

Provincial cabinet ministers and opposition leader Dwight Ball flooded into Wabush on the news, holding emergency talks with Cliffs, Alderon and the unions concerned.

Alderon has seemed to capitalise on the crisis for Wabush, saying it can absorb those laid off and prompting a spate of government approvals for its neighbouring Kami project. Only two days after the announcement by Cliffs, the government of Newfoundland and Labrador said it would undertake a $300m power line to Kami, which also won federal approval on Wednesday.

“This area of the province will be an economic engine,” said minister Kevin O’Brien, “as it has been in the past. We won’t leave a rock unturned here.” Construction of the power line is due to begin immediately.

Analysts believe Alderon could also make a lowball bid for Wabush, offering Kami a readymade rail solution. Federal approval clears the company to move towards financial close for the project, slated to enter production at an initial rate of 8m tonnes per annum.

Alderon has engaged BNP Paribas to syndicate a $1bn senior debt facility, with total capital costs projected at $1.3bn. The company is also expected to sell a second off-take on the project; executive chairman Mark Morabito and chief executive Tayfun Eldem are both currently travelling in China.

Danny Williams, a former premier of Newfoundland and Labrador, meanwhile resigned from Alderon’s board this week on government approval, but remains a consultant to the company.

Kami’s march towards production promises a double windfall for royalty house Altius Minerals, which spun-off Kami into Alderon in 2010, retaining a 3 per cent royalty and 32m shares, now valued at C$62m ($56m). Alderon is also backed by Boston-based insurance group, Liberty Mutual. 

“We won’t leave a rock unturned here.”

RELATED NEWS

O'Keeffe's Buying Opportunity in the Labrador Trough

Two forces are at work in the Labrador Trough and they appear to be working together

............................................

Callinan Cash
Arms Dalton for
Further Deals

Market conditions have got
"even better" says Brian Dalton. "By better, I mean worse."

............................................

Labrador Iron Ore Royalty Kept in Irons

Grippingly close shareholder vote flies into panic after blunder
by Bruce Bone

............................................

............................................

Thiam: Guinea's
$200m Technocrat
from UBS

Mining minister on UBS & the $200m bribe he's accused of accepting by Rio Tinto

Altius Minerals:
Dalton's High Flying Royalty Machine

Run properly, exploration can be a profitable business, says Altius founder Brian Dalton