Alderon Iron Ore Corp. (TSX:IRON)
("Alderon" or the “Company”) is pleased to
announce that it and The Kami Mine Limited Partnership
(“
Kami LP”) have entered into an agreement with
Sprott Resource Lending (“
Sprott”), a global
leader in resource asset investments, for a US$14 million loan
facility (the "
Loan Facility"). The Loan Facility
will provide sufficient funds to repay the loan due to Liberty
Metals & Mining Holdings, LLC (“
LMM”) and
provide additional runway for Alderon to continue the re-boot for
the Rose Deposit of the Kamistiatusset Iron Ore Property (the
“
Kami Project”) in western Labrador. This
transaction with Sprott comes as Alderon advances an Updated
Feasibility Study scheduled for conclusion this fall. Upon
completion, the Updated Feasibility Study is expected to
demonstrate that the Kami Project is well-positioned to pursue
project financing on account of the improved project economics
highlighted in the Updated Preliminary Economic Assessment released
November 7, 2017.
“We recognize and greatly appreciate the
confidence and support shown by Sprott in providing this financing.
We are pleased to be working with the Sprott team as we continue
the re-boot of the Kami Project, which will ultimately benefit all
of its stakeholders, including the many local and regional
interests,” stated Tayfun Eldem, President and CEO of Alderon. “The
loan from Sprott will allow Alderon to reduce its overall debt
position and provide an extended bridge to the completion of
project financing.”
The US$14 million Loan Facility has an initial
term of 18-months, maturing on December 31, 2019 (the
“Maturity Date”). The Loan Facility may be
extended for an additional six-month period subject to the
satisfaction of certain conditions. Altius Minerals Corporation
(“Altius”), through a wholly-owned subsidiary,
will be participating in the Loan Facility by providing US$2
million of the US$14 million principal. The proceeds of the Loan
Facility will be advanced to the Kami LP and Alderon is acting as
guarantor for the Loan Facility. The proceeds of the Loan Facility
will be advanced as a single draw on the closing date. The Loan
Facility shall bear interest at 10% per annum, payable monthly. The
proceeds of the Loan Facility will be used to repay the existing
LMM credit facility and to reimburse Alderon for amounts that are
pre-paid to LMM prior to closing.
The terms of the Loan Facility also require the
issuance by Alderon of a total of US$1,050,000 in common shares
(“Common Shares”) to Sprott and Altius on the
closing date (the “Closing Date”). The price per
Common Share shall be equal to a 10% discount to the lesser of the
volume weighted average trading price on the Toronto Stock Exchange
(“TSX”) for the five trading days prior to (A) May
7, 2018; and (B) the Closing Date. In the event that the Maturity
Date is extended in accordance with the terms of the Loan Facility,
an additional total of US$350,000 in Common Shares shall be issued
to Sprott and Altius on the Maturity Date and at a price per share
equal to a 10% discount to the volume weighted average trading
price on the TSX for the five trading days prior to the Maturity
Date. United States dollar amounts shall be converted into Canadian
dollars using the daily average exchange rate for the conversion of
United States to Canadian dollars set by the Bank of Canada as at
the business day immediately prior to the date of issuance of the
Common Shares. The Common Shares shall be issued based on a ratio
of 12/14th to Sprott and 2/14th to Altius.
The closing of the Loan Facility is subject to
the receipt of all regulatory, stock exchange and other third-party
approvals, and satisfaction of other customary closing
conditions.
“Alderon’s Kami Project has the potential to
create meaningful value for the steel industry by modernizing and
increasing the transparency of the supply chain,'' stated Narinder
Nagra, Managing Partner of Sprott. “As one of the largest investors
dedicated to the natural resource sector, Sprott is excited to
partner with Alderon on the reboot of Kami.”
Altius currently holds 51,838,916 Common Shares
(representing 39% of the Company’s current issued and outstanding
Common Shares). After the closing of Loan Facility, Altius
will be issued additional Common Shares as detailed above. However,
the exact amount will not be determined until the Closing Date and
will be disclosed at that time. The Loan Facility was approved by
the Company’s Board of Directors; however, Altius’ nominee (Mr.
John Baker) declared his interest in the transaction and did not
participate in the approval process for the Loan Facility.
Pursuant to Multilateral Instrument 61-101 -
Protection of Minority Security Holders in Special Transactions
("MI 61-101"), Altius’s participation in the Loan
Facility constitutes a "related party transaction" as Altius is a
related party of the Company. The Company is relying on an
exemption from the formal valuation and minority shareholder
approval requirements of MI 61-101 pursuant to exemptions contained
in sections 5.5(a) and 5.7(1)(a) of MI 61-101 on the basis that at
the time Altius’s participation in the Loan Facility was agreed to,
the fair market value of the Loan Facility insofar as it involves
Altius did not exceed 25% of the Company's market capitalization.
The Common Shares that will be acquired by Altius will be acquired
pursuant to an exemption from the prospectus requirement in section
2.3 of National Instrument 45-106.
The Company did not file a material change
report more than 21 days before the expected closing of this
transaction, as the details of the transaction were not finalized
until the present and the Company wishes to close the transaction
as soon as practicable for sound business reasons, including
lowering the Company’s overall debt obligations and improving the
Company’s financial position.
About Sprott
Sprott is an alternative asset manager and a
global leader in precious metal and real asset investments. Through
its subsidiaries in Canada, the US and Asia, the company is
dedicated to providing investors with best-in-class investment
strategies that include Exchange Listed Products, Alternative Asset
Management and Private Resource Investments. The company also
operates Merchant Banking and Brokerage businesses in both Canada
and the US. Sprott is based in Toronto with offices in New York,
Carlsbad and Vancouver and its common shares are listed on the
Toronto Stock Exchange under the symbol (TSX:SII). For more
information, please visit www.sprottinc.com.
Sprott Resource Lending is a globally recognized
leader in natural resource financing and specializes in providing
flexible debt solutions to mining companies. Since joining Sprott,
the team has financed more than $1.0 billion in bespoke private
debt investments. For more information, please visit
www.sprottlending.com.
About Alderon Iron Ore
Corp.
Alderon is a leading iron ore development
company in Canada. The Kami Project, owned 75% by Alderon and 25%
by HBIS Group Co. Ltd. (formerly Hebei Iron & Steel Group Co.
Ltd.) (“HBIS”) through The Kami Mine Limited Partnership, is
located within Canada’s premier iron ore district, the Labrador
Trough, and is surrounded by two producing iron ore mines. Its port
handling facilities are located in Sept-Îles, the leading iron ore
port in North America. HBIS is Alderon’s strategic partner in the
development of the Kami Project and China’s second largest steel
producer.
For more information on Alderon, please visit our website at
www.alderonironore.com.
ALDERON IRON ORE CORP.On behalf
of the Board"Tayfun Eldem"Director &
CEO
Alderon is part of the King & Bay group of
companies. King & Bay is a merchant bank that specializes in
identifying, funding, developing and supporting growth
opportunities in the resource, aviation, and technology
sectors.
Cautionary Note Regarding
Forward-Looking Information
This press release contains "forward-looking
information" within the meaning of the U.S. Private Securities
Litigation Reform Act and Canadian securities laws concerning
anticipated developments and events that may occur in the future.
Forward-looking information contained in this press release
include, but are not limited to, statements with respect to (i) the
closing of the Loan Facility; (ii) future demand for production
from the Kami Project; (iii) the next steps in the development of
the Kami Project; (iv) the completion of project financing; and (v)
the market and future price of iron ore and related products.
In certain cases, forward-looking information
can be identified by the use of words such as "plans", "expects" or
"does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might" or "will be taken", "occur" or "be achieved"
suggesting future outcomes, or other expectations, beliefs, plans,
objectives, assumptions, intentions or statements about future
events or performance. Forward-looking information contained in
this press release is based on certain factors and assumptions
regarding, among other things, receipt of governmental and other
approvals, the estimation of mineral resources, the realization of
resource estimates, iron ore and other metal prices, the timing and
amount of future development expenditures, the estimation of
initial and sustaining capital requirements, the estimation of
labour and operating costs, the availability of necessary financing
and materials to continue to explore and develop the Kami Project
in the short and long-term, the repayment of the secured note held
by Liberty Metals & Mining Holdings LLC that is due December
31, 2018 (the “Liberty Note”), the progress of exploration and
development activities, the ability of the Company to use the
multi-user terminal facility at the Port of Sept-Îles, the receipt
of necessary regulatory approvals, the estimation of insurance
coverage, assumptions with respect to currency fluctuations and
exchange rates, environmental risks, title disputes or claims, and
other similar matters. While the Company considers these
assumptions to be reasonable based on information currently
available to it, they may prove to be incorrect.
Forward-looking information involves known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
information. Such factors include risks inherent in the exploration
and development of mineral deposits, including risks relating to
changes in project parameters as plans continue to be redefined
including the possibility that mining operations may not commence
at the Kami Project, risks relating to variations in mineral
resources, grade or recovery rates resulting from current
exploration and development activities, risks relating to the
ability to access rail transportation, sources of power and port
facilities, risks relating to changes in iron ore prices and the
worldwide demand for and supply of iron ore and related products,
risks related to increased competition in the market for iron ore
and related products and in the mining industry generally, risks
related to current global financial conditions, uncertainties
inherent in the estimation of mineral resources, access and supply
risks, reliance on key personnel, operational risks inherent in the
conduct of mining activities, including the risk of accidents,
labour disputes, increases in capital and operating costs and the
risk of delays or increased costs that might be encountered during
the development process, regulatory risks, including risks relating
to the acquisition of the necessary licences and permits,
financing, capitalization and liquidity risks, including the risk
that the financing necessary to fund the exploration and
development activities at the Kami Project may not be available on
satisfactory terms, or at all, the risk that funds are not
available to repay the Liberty Note; risks related to disputes
concerning property titles and interest, risks related to disputes
with Aboriginal groups, risks related to insufficient capacity
being available for the Company to access the multi-user terminal
facility at the Port of Sept-Îles, environmental risks and the
additional risks identified in the “Risk Factors” section of the
Company’s Annual Information Form for the most recently completed
financial year, or other reports and filings with applicable
Canadian securities regulators. Accordingly, readers should not
place undue reliance on forward-looking information. The
forward-looking information is made as of the date of this press
release. Except as required by applicable securities laws, the
Company does not undertake any obligation to publicly update or
revise any forward-looking information.
For further information please call:
Mishka Gounden
1-604-681-8030 ext 289
info@alderonironore.com
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