Alderon Iron Ore Corp · OTC:AXXDF
Alderon Iron Ore — Investor Presentation (May 2017)
34 slides from Alderon Iron Ore's investor presentation, May 2017
Slide 1: Re-booting the Kami Project
Re-booting the Kami Project Investor Presentation ‖ May 2017 ‖ IRON: TSX
Slide 2: Disclaimer
Disclaimer Special Note Regarding Forward-Looking Information This presentation 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. For
Slide 3: What Sets Us Apart…
What Sets Us Apart… Location Infrastructure Partners Product Labrador Trough Ideally Located Strategic Partnerships Premium Iron Ore • Safe & stable • 14.5 km to • HBIS Group • High Fe Content at jurisdiction common-carrier 65.2% railway with 80Mtpa • Liberty Metals & • Long history as a capacity (5
Slide 4: In Canada's Premier Iron Ore District
In Canada’s Premier Iron Ore District • Labrador Trough known for high grade and low impurities • Local skilled workforce of ~15,000 people • Government support is unparalleled • Foreign steelmakers and traders have been active investors in the region in recent years • Low access cost to paved highw
Slide 5: Access to Infrastructure
Access to Infrastructure • Construction of C$220M multi-user port complete • Secured access to the facility in return for a C$20M investment • Multi-user platform in deep water up to 23 meters, suitable for large cape-size vessels (250,000dwt) • Loading capacity of 50 to 60Mt per year • Power availa
Slide 6: Strong Support from Partners and Investors
Strong Support from Partners and Investors • HBIS Group (formerly Hebei Iron & Steel) is China’s second largest steelmaker and has invested a total of C$182.2M to date & will purchase 60% of annual production • C$119.9M in project equity for 25% interest in the Kami Project • C$62.3M in corporate eq
Slide 7: Board of Directors
Board of Directors ▪ Over 20 years’ experience in public markets with strong focus on junior mining, including capital-raising and Mark J. Morabito corporate development B.A. J.D. ▪ Founding partner in Alderon - led team that struck an off-take agreement with HBIS Group, China’s second largest Chair
Slide 8: Future of Iron Ore
Future of Iron Ore • Increased supply was significant factor on the weakening of the iron ore price • Majors need to strike balance between oversupply and threatened margins • Urbanization in developing nations is driving demand for steel, led by strong growth in China - Globally, roughly 2 billion
Slide 9: New PEA Highlights
New PEA Highlights • Capital and operating costs significantly reduced $1.4B from 2012 bankable feasibility study • $897.5M estimated Initial Capital Cost (USD) • Utilization of idled neighbouring assets NPV @ 8% discount rate • Nationalization of port assets by Quebec (USD) government 9
Slide 10: Capital Savings at the Mine Site
Capital Savings at the Mine Site Tailings Management Facility • No dam construction for the first 10 years • Large reduction in pipe and pump requirement $374.5M Railway, Roads, and Bridges • Ability to access existing roads and bridges • Conveyor will be built to existing Wabush Lake Railway Capita
Slide 11: Reduction in Capex due to Re-scoping of Project
Reduction in Capex due to Re-scoping of Project Comparison Points 2017 Re-Scoped PEA* 2012 Feasibility Study* Annual Production (65.2% Fe con) 7.8Mtpa 8.0Mtpa Initial CAPEX $897.5M $1,272.9M Cash operating cost (FOB) $31.05/t $42.17/t Payback period 3.9 years 3.1 years Measured and Indicated Resourc
Slide 12: Sensitivity Analysis
Sensitivity Analysis Initial CAPEX Selling Price OPEX Base Case +25% -25% +25% -25% +25% -25% $1,122M $673M $81.62/t $48.97/t $38.85/t $23.31/t IRR 23.8% 19.2% 31.2% 35.4% 10.7% 17.6% 29.7% NPV NPV NPV NPV NPV NPV NPV 0% $4,688M $4,464M $4,912M $7,570M $1,806M $3,274M $6,102M 5% $2,151M $1,936M $2,3
Slide 13: Lower Capex Supports Kami Re-Boot
Lower Capex Supports Kami Re-Boot 2017 PEA (USD) 2012 FS (USD(1)) Direct Costs Mine (Including Pre-Stripping) $91.8 $52.7 Mineral Processing, Site Infrastructure and Utilities $482.2 $585.1 TMF Area $0 $47.4 Kami Rail Spur $0 $57.8 Port Facility $0 $152.2 Total Direct Costs $574.0 $895.2 Total Indir
Slide 14: Summary of Capex & Opex
Summary of Capex & Opex Estimated Average LOM Operating Costs Estimated Capital Costs (M$ US) (US $/t Dry Concentrate) Mine (Including Pre-Stripping) $ 91.8 Mining $ 11.16 Mineral Processing $ 286.3 Mineral Processing $ 5.55 Site Infrastructure and Utilities $ 195.9 General Site $ 0.50 TOTAL DIRECT
Slide 15: Superior quality concentrate relative to Australian and Brazilian sinter fines
Superior quality concentrate relative to Australian and Brazilian sinter fines Fe %* P %* Al2O3 %* High Fe content Magnetite content • Lowers fuel cost for sintering Low phosphorus • Offers potential capital avoidance – no dephosphorization stage • Reduces operating costs, improves BOF efficiency (l
Slide 16: Kami's OPEX is Projected to be Lower than Bloom Lake
Kami’s OPEX is Projected to be Lower than Bloom Lake* OPEX/Tonne $50.00 $44.62 $45.00 $40.00 $35.00 $31.08 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Bloom Lake Kami Kami has 30.4% lower OPEX *Based on comparison of Champion Iron’s Feasibility Study announced February 16, 2017 and Alderon’s PEA
Slide 17: Tailings Management Facility ("TMF")
Tailings Management Facility (“TMF”) Opportunity exists for 100% of Kami Cost of environmental and tailings Tailings to be put in Scully pit* management expected to be US$1.04/t 22.9 Mtpa of ROM material expected to produce a Use of Scully Mine will produce cost - 7.8 Mtpa of concentrate savings - 1
Slide 18: Kami Land Status Map
Kami Land Status Map • Close proximity to idled Scully Pit • Material will be transported from Kami to Scully via conveyor 18
Slide 19: Kami Project Optimization
Kami Project Optimization Scully Now Kami Flowsheet Assumptions Rose Pit Pit TMF • Rose Pit and Kami crusher designs remain Kami Scully Crusher Crusher • Kami concentrator built adjacent to Scully concentrator Kami Kami Scully Scully • Overland conveyor extended to Tailings Concentrator Concentrator
Slide 20: Kami Will Create Jobs and Tax Revenue
Kami Will Create Jobs and Tax Revenue $7.6B Incomes to Workers and Businesses across Canada $4.4B Federal and Provincial Government Revenues $19.5B GDP over 26-year period >100,000 Direct, Indirect and Induced Jobs $2.2B in Total Incomes to Workers and Businesses in Newfoundland and Labrador 20
Slide 21: Kami is De-risked
Kami is De-risked Project • Procurement planning; orders for long lead items (complete) Development • Construction permits (on track) • Port of Sept-Iles Agreement (complete) Infrastructure • Power Purchase Agreement (complete) Agreements • Rail Agreements (access assured through common carrier stat
Slide 22: Capital Structure
Capital Structure Share Structure as of April 19, 2017 Shares Outstanding (IRON: TSX) 132,134,061 Options 4,860,000 Share ownership Warrants 5,241,436 Fully Diluted 152,211,253 Cash & Cash Equivalents CDN $8.8M Insiders, 27% Retail, 39% (as of March 31, 2017) 52-week Share Price Range $0.08 - $0.80
Slide 23: Investment Highlights
Investment Highlights Improved market Iron ore market is improving fundamentals with Chinese demand and lower capex requirements expected to remain strong with re-scoped project through 2020 Ideal location with access to Premium iron ore with high Fe low cost utilities, transport and content of 65.2
Slide 24: Contact Information
Contact Information Joe Racanelli (National Equicom) Phone: 416-586-1943 Email: info@alderonironore.com Mailing Address 1240 – 1140 West Pender Street Vancouver, BC V6E 4G1 www.alderonironore.com IRON: TSX 24
Slide 25: Appendix
ALDERON 1RON ORE COR P
Slide 26: Conventional Flowsheet
Conventional Flowsheet High quality product Drill and Blast Load and Haul Gyratory Crusher Primary Grinding %Fe 29.5% Fe Rec % 100% Wt % 100% Gravity Separation Magnetic Separation Spiral Tails Final tails Regrind Final Concentrate Spiral Concentrate Mag Concentrate %Fe 65.2% Rail %Fe 65.0% %Fe 66.0
Slide 27: Quality of Kami concentrate offsets freight disadvantage over Brazil
Quality of Kami concentrate offsets freight disadvantage over Brazil Parameter Kami Brazil Australia Platt’s Target % Fe 65.5% 65.05 61.5% 62.0% %P 0.007% 0.020% 0.090% 0.075% Al2O3 0.10% 1.20% 2.25% 2.0% 4,300kT 700kT 5,000kT Quality Fe 62.0% + = P 0.080% Al2O3 2.10% 4,400kT 600kT 5,000kT Quality F
Slide 28: Freight To China
Freight To China Freight cost only marginally higher than Brazil to China rate C3 • No published index for Sept-Iles to China freight • Sept-Iles to Qingdao freight typically averages 15% above C3 (Brazil to China) Source: SSY, BMO Capital Markets (March 2014) 309 capesize vessels on order through 2
Slide 29: Actual data confirms freight from Sept-Iles to Qingdao averages 14.5% higher than C3
Actual data confirms freight from Sept-Iles to Qingdao averages 14.5% higher than C3 Baltic Index During drastic swings, data is difficult to correlate due to time lags Actual fixture data over given time period Overall gap: – 14.5% Summer – 12.6% (80% of cargoes shipped) Winter – 22.1% (20% of carg
Slide 30: Kami differs from Bloom on many fronts
Kami differs from Bloom on many fronts* Kami Operating Cost Estimate • Extensive regional operating experience and (2017 PEA FOB Sept-Iles) learnings from Bloom have been incorporated $/t – Over 100 years of hands-on operations and project Mining 11.16 experience in the Labrador Trough Processing 5.
Slide 31: General Site Plan for Kami Mine Area & Scully Site
General Site Plan for Kami Mine Area & Scully Site 31
Slide 32: Selling Price Sensitivity
Selling Price Sensitivity 32
Slide 33: Kami Project Resource Estimate
Kami Project Resource Estimate NI 43-101 Mineral Resource Estimate (15% cut-off grade) Zone Category Tonnes (Million) Tfe% Rose Central Measured 249.9 29.4 Indicated 294.5 28.5 Total M&I 544.4 28.9 Inferred 160.7 28.9 Rose North Measured 236.3 30.3 Indicated 312.5 30.5 Total M&I 548.8 30.4 Inferred
Slide 34: In-Pit Mineral Resources
In-Pit Mineral Resources Material Mt TFe% WREC% MTFe MAG% Mn% Measured 399.9 28.9 34.6 15.2 21.0 1.19 Indicated 136.9 27.9 31.9 11.8 16.2 1.08 Total 536.8 28.6 33.9 14.3 19.8 1.17 Waste Rock 570.0 OB 128.5 Total Stripping 698.5 Strip Ratio 1.3 34