Name and Location
Kamistiatusset (Kami) iron-ore project, Labrador, Canada.

Client
At the end of March 2013, China’s largest steel producer, Hebei Iron & Steel Group, completed its initial strategic investment of C$182.2-million in the Kami iron-ore project for a 25% interest in the Kami Mine Limited Partnership, of which Alderon Iron Ore owns the remaining 75%.

Project Description
The Kami iron-ore property is located next to the mining towns of Wabush, Labrador City and Fermont. The property includes 305 claims in Labrador for a total of 7 625 ha.

The project’s mineral resource is contained within two zones, Rose Central and Mills Lake.

Rose Central contains measured and indicated resources of 544.4-million tonnes, with a grade of 28.9% total iron and inferred resources of 160.7-million tonnes, with a grade of 28.9% total iron.

Mills Lake contains measured and indicated resources of 181.3-million tonnes, with a grade of 29.8% total iron and an inferred resources of 74.8-million tonnes, with a grade of 29.3% total iron.

The proposed project, as stated in the feasibility study, includes:
• the Rose ore deposit and waste rock disposal areas;
• processing infrastructure, including a crushing and grinding circuit, spiral plant, magnetite plant and fine tailings thickener;
• a tailings management facility;
• ancillary infrastructure to support the mine and process plant, including a gate and guardhouse, a reclaim water pumphouse, a truck wash bay and repair shop, an electrical substation, administration/office buildings, maintenance offices, a warehouse area and employee facilities, conveyors, a load-out silo, stockpiles, sewage and effluent water treatment systems, mobile equipment and transmission lines;
• a temporary construction camp, located off site;
• rail infrastructure, including the rail line connecting to Quebec North Shore & Labrador Railway, the rail loop and the service tracks, comprising 25 km of new track passing to the south and east of Wabush; and
• a 315 kV transmission line.

The proposed project will produce eight-million metric tonnes of iron-ore concentrate a year and will ship concentrate to market through the Port of Sept-Îles facilities at Pointe Noire, in Quebec.

Ore processing will take place at the Kami site and will involve:
• the mining of ore from the openpit mine using conventional drill-and-blast techniques and transported by haul trucks;
• the hauling of ore to the primary crusher close to the pit, with the crushed ore to be delivered to the stockpile and the process plant by conveyor;
• the grinding, screening and gravity and magnetic concentration;
the pumping of tailings (process waste) to the tailings impoundment area south of the process plant; and
• the loading of iron-ore concentrate onto gondola rail cars for transportation to the Port of Sept-Îles, where it will be stockpiled and, in turn, transferred to ships for delivery to market.
The Rose deposit contains a proven and probable reserve of 668.5-million tonnes, with a grade of 29.5% total iron content.

A feasibility study completed on the development of the Rose Central deposit envisions a concentrate production rate of eight-million tonnes a year, with a grade of 65.2% iron.

Value
Capital costs are estimated at $1.27-billion.

Duration
The company has a 25-month construction plan for Kami and it hopes to start production from the mine in early 2016, with commercial production set to be reached in the first quarter of that year.

Latest Developments
The Canadian federal government has completed and approved the environmental assessment (EA) for the Kami iron-ore project, in western Labrador.

Canadian Environment Minister Leona Aglukkaq’s notice of the environmental assessment decision statement says the project poses no significant threat to the environment.

The decision statement sets out the Minister's conclusion that the Kami project is "not likely to cause significant adverse environmental effects".

As a result, the Kami project can proceed, subject to the terms and conditions included in any federal permits or authorisations.

On January 10, the Cabinet of Newfoundland and Labrador determined that the Kami project met the requirements of Part X of the Newfoundland and Labrador Environmental Protection Act and was released from the provincial EA process.

Combined with the favourable decision by the Federal Minister of Environment, Alderon can now proceed with plans to start construction.

However, before the board can approve construction of the $1.3-billion mine to begin, Alderon first has to complete financing for the project. Kami will be financed through a combination of project finance and equity.

A process, led by BNP Paribas, is currently under way to raise up to $1-billion in project finance, which leaves $300-million to be raised either from the public markets or from a combination of public markets and a strategic partner.

Alderon has already acquired the services of Chinese steel giant Hebei Iron & Steel as a strategic partner and the next partner will likely also be a steelmaker or a trader. The company is in discussions with steelmakers from Korea, Japan and Taiwan and also with traders from the Far East and Europe.

Alderon is fortunate to be in close proximity to infrastructure – another differentiator in the trough. The Kami project is about 15 km away from a multi-user rail line, which has about 50-million tonnes of spare capacity. Allocation at a federal port has been secured and it is about 16 km away from the high-voltage network, which will give it access to hydroelectric power.

Further, the Newfoundland and Labrador government has confirmed that it will build a third transmission line from Churchill Falls to Labrador West, ensuring ample electricity will be available for the Kami project.

Alderon will ship its iron-ore through a new multi-user deep-water dock at Port of Sept-Îles, in Quebec. The new $220-million facility is under construction and should be completed in the second quarter of this year.

Key Contracts and Suppliers
BBA and Stassinu Stantec (preliminary economic assessment), WorleyParsons Canada Services (engineering, procurement and construction management).

On Budget and on Time?
Too early to state.

Contact Details for Project Information
Alderon Resources, tel +1 604 681 8030, fax +1 604 681 8039 or email info@alderonmining.com.
WorleyParsons investor relations – general, Sharon Kelliher, tel +61 3 8676 3439 or email sharon.kelliher@worleyparsons.com .