Chinese company buys into Kami iron ore project
Alderon-owned property straddles Labrador-Quebec border
China's largest steel producer is making a $194-million investment in Alderon Iron Ore Corp. in exchange for almost 20 per cent of the company's stock and a 25 per cent interest in its Kami iron ore project.
Hebei Iron & Steel Group Co. Ltd. will also help in obtaining debt financing, including from Chinese banks, for the Kami project, which is on the Labrador-Quebec border.
Terms of the deal call for the entire $194 million of investment proceeds from Hebei to be used for the exploration and development of Kami and other relevant corporate expenses of Alderon, the Vancouver-based company said in a release.
"Alderon is delighted to build this new partnership with Hebei, China's largest steel group and the second largest steel group globally," said executive chairman Mark Morabito.
"China continues to be one of the strongest and most dynamic economies globally with significant expertise in the iron ore and steel industry. Alderon now has both the capital and the China market access to build a world-class company."
Hebei chairman Wang Yifang said his company sees the deal as "an important transaction in the push of China's iron and steel enterprises to invest into overseas mining assets."
"In addition to the potentially attractive investment returns, Hebei is able to lock up a long-term supply of high-quality iron ores to help improve our operational performance and ensure our long-term sustainable growth."
Alderon president and CEO Tayfun Eldem called the deal a "major catalyst for Alderon as it further validates and materially de-risks the Kami project."
"We believe that this partnership solidifies our ability to become the next significant iron ore producer in Newfoundland and Labrador," he said.
The Kami property is located near the mining towns of Wabush, Labrador City and Fermont and includes 305 claims in Labrador and five Quebec mining titles for a total of 7,625 hectares.