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 over 7 625 ha.

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

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 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 and 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:
• mining ore from the openpit mine using conventional drill-and-blast techniques and transported by haul trucks;
• hauling 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;
• grinding, screening, and gravity and magnetic concentration;
pumping tailings (process waste) to the tailings impoundment area south of the process plant; and
• loading 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
Alderon has announced that it expects further delays in completing its financing plan and starting construction of its flagship Kami direct shipping iron-ore project, citing the current depressed state of the iron-ore market and changes in ownership and management of assets in the Labrador Trough.

The company has also revealed a reshuffling of senior management, which will undertake a rescope of the capital and operating costs of the Kami project to identify project savings and evaluate strategic alternatives.

Should the market price of iron-ore remain at current levels, Alderon expects to have additional delays in completing its financing plan.

President and CEO Tayfun Eldem will transition to become the vice chairperson of the company, effective from August 24, while executive chairperson Mark Morabito will become nonexecutive chairperson and CEO.

The company stopped development of the project in December 2014 when it announced a comprehensive cash preservation programme that would enable the company to maintain a healthy working capital position into 2017 without having to access equity or debt financing, aside from the financing required to start project construction.

Eldem played a critical role in advancing Kami from the exploration stage to the stage where the necessary regulatory approvals had been received, contracts for port and power were secured and stakeholder agreements struck, as well as guiding the company through completing the required preconstruction engineering on the Kami projec, such that it was shovel ready.

Despite the low prices the iron-ore market is grappling with in recent months, stemming from a market glut because major iron-ore producers are ramping up output to maintain market share, Alderon has affirmed that it intends to start construction of the Kami project as soon as it has secured enough debt and equity financing to fund construction.

Morabito's primary priority will be to secure financing, while Eldem will be available to provide guidance in operational, technical and commercial matters as the company pursues its financing and value-engineering objectives.

Morabito and Eldem will work with project partner Hebei Iron & Steel Group (HBIS) to rescope the capital and operating costs of the Kami project to identify savings.

"Alderon management recently travelled to Beijing, China, to present and discuss its project rescoping plans with HBIS, Chinese government agencies and Chinese banks. HBIS has confirmed its commitment to the Kami project and Chinese banks continue to be interested in exploring the financing of the Kami project.

“As a result of these meetings, Alderon is going to proceed with a rescope of the project to identify savings resulting from the current market environment and HBIS and the Chinese banks have agreed to participate in the process. If cost savings can be identified in the rescope of the project, this will provide significant assistance in completing the financing plan for the Kami project,” Morabito has advised.

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 .