Photo by: Bloomberg
TORONTO (miningweekly.com) – The TSX-listed stock of direct shipping iron-ore project developer Alderon Iron Ore on Thursday traded lower after the company announced late on Wednesday that lead debt financing arranger BNP Paribas had terminated its involvement, allowing Alderon to change its financing tactic.
Vancouver-based Alderon noted that it had appointed Endeavour Financial to act as its financial adviser regarding the project-financing process and that it intended to form a club syndicate of international banks to provide the senior debt financing facility for its $1.3-billion Kami project, in western Labrador.
The process with BNP had identified several domestic and international banks, including Chinese banks, which provided letters confirming their interest in participating in the senior debt financing facility.
Terminating BNP's engagement would allow Alderon to move forward in forming this club syndicate of banks, with the assistance of Endeavour Financial.
Alderon revealed that it had already made substantial progress with the structuring of the financing facility and the required due diligence.
"We have made significant progress working with BNP Paribas on the debt financing process and in our view the due diligence reports that have been completed demonstrate the [high] quality of the Kami project," Alderon executive chairperson Mark Morabito said on Wednesday.
"We have decided that the best path forward for the debt financing process would be to focus on a club syndicate transaction. We have informed BNP of this decision and they have agreed to terminate the BNP engagement. The team from Endeavour Financial has an excellent record in assisting companies to complete debt financings and with the significant amount of work that has already been accomplished, I am confident that we will deliver on our financing plan,” he added.
Alderon clinched an offtake deal last month, with global miner and commodities purveyor Glencore, for the balance of iron-ore output from the Kami project that had not been allocated to offtake partner Hebei Iron & Steel Group.
Glencore had agreed to buy 40% of the Kami project's actual yearly output from The Kami Mine Limited Partnership (Kami LP) once it had started commercial operations.
This would entail a maximum of up to 3.2-million tonnes of the first eight-million tonnes of iron-ore concentrate produced each year. The term of the offtake agreement would continue until Kami LP had delivered to Glencore 48-million tonnes of iron-ore concentrate, which was expected to be 15 years after declaring commercial production.
Alderon’s TSX-listed stock on Thursday lost C$0.12 a share to trade at C$1.23 apiece.