ALS.TO - Altius Minerals

[Liberty]

Email from Alderon:

http://alderonironore.com/_resources/news/2012-09-04-NewsRelease.pdf

Alderon Iron Ore Corp. (TSX: ADV) (NYSE MKT: AXX) (“Alderon” or the “Company”) is pleased to announce that it has closed the Alderon common share (“Common Share”) subscription component of the previously announced transaction with Hebei Iron & Steel Group Co., Ltd. (“Hebei”). Pursuant to the terms of the subscription agreement (as amended) (the “Subscription Agreement”), Hebei has acquired 25,858,889 Common Shares at a price of C$2.41 per Common Share for gross proceeds to the Company of approximately C$62.3 million, representing 19.9% of the issued and outstanding Common Shares. Alderon and Hebei have also executed the remaining definitive agreements, including the Investor Rights Agreement, the Off Take Agreement and the agreements required to form and operate the limited partnership that will own the Kami iron ore project (the “Kami Project”).

Concurrent with the Hebei closing, Liberty Metals & Mining Holdings, LLC (“LMM”), a subsidiary of Liberty Mutual Insurance, has acquired 3,816,181 Common Shares at a price of C$2.41 per Common Share for gross proceeds to the Company of approximately C$9.2 million, allowing LMM to maintain its relative proportionate interest in Alderon. Also concurrent with the Hebei closing, Alderon is repaying the $10.5 million bridge loan previously advanced by LMM.

Mark Morabito, Executive Chairman of Alderon, said “The closing of the private placement component of Hebei’s strategic investment in Alderon and its Kami Project is a major milestone for both parties. One of Alderon’s next milestones will be the completion of its Feasibility Study, which is expected in Q4 2012. Once Alderon delivers to Hebei a Feasibility Study that meets the required criteria, Hebei will contribute the remainder of its C$182.2 million investment. I would also like to acknowledge and thank Liberty for its continued support of Alderon.”

Hebei’s initial investment in Alderon and the Kami Project will total C$182.2 million. Pursuant to the terms of the definitive agreements, within 15 business days of Hebei receiving a feasibility study that meets certain criteria, Hebei will contribute the remaining C$119.9 million of the initial investment and Alderon will contribute the Kami Project and relevant properties to the newly formed limited partnership which is owned as to 25% by Hebei and 75% by Alderon.

Other transaction highlights include:
Hebei agrees to use its best efforts to assist in obtaining project debt financing for the Kami Project from financial institutions, including Chinese banks.
Alderon and Hebei will be required to contribute to capital expenditures for the development of the Kami Project not covered by initial capital contributions and project debt financing, in accordance with their respective interests.
Upon Hebei's acquisition of its 25% interest in the Kami Project, it will be obligated to purchase upon the commencement of commercial production, 60% of the actual annual production from the Kami Project up to a maximum of 4.8 million tonnes of the first 8.0 million tonnes of iron ore concentrate produced annually at the Kami Project. The price paid by Hebei will be based on the monthly average price per DMT for iron ore sinter feed fines quoted by Platts Iron Ore Index (including additional quoted premium for iron content greater than 62%) (“Platts Price”), less a discount equal to 5% of such quoted price. Hebei will also have the option to purchase additional tonnage at a price equal to the Platts Price, without any such discount.
Hebei has agreed to co-operate with Alderon in its efforts to attract additional off-take partners in respect of the annual production from the Kami Project that has not been committed to Hebei.
Alderon will be the manager of the Kami Project and will receive a fixed annual management fee during the construction period of the project. Once the Kami Project has reached commercial production, Alderon will receive a management fee on a per tonne of iron ore concentrate basis.
The entire C$182.2 million of investment proceeds from Hebei will be used for the exploration and development of the Kami Project, the repayment of the $10.5 million bridge loan from LMM and other relevant corporate expenses of Alderon.
Alderon has granted Hebei a pre-emptive right to maintain its interest in Alderon in certain circumstances.

As a term of the transaction, Hebei was entitled to nominate two directors to the Board of Alderon. Hebei has nominated Ms. Zheng Liangjun and Mr. Tian Zejun and they have been appointed to the Board of Alderon. The Board would like to welcome the new directors and looks forward to a long term and successful partnership.

Ms. Zheng, B.Eng., M.Eng., MBA, brings 21 years of international trade and investment experience to Alderon. Ms. Zheng was Deputy General Manager of Handan Iron and Steel Group Import & Export Co., Ltd., a subsidiary of Hebei from 2006 to 2008. Since 2009, she has been with Hebei Iron and Steel Group International Trade Corporation, also a subsidiary of Hebei. In 2011, she became Deputy General Manager of Hebei Iron and Steel Group International Trade Corporation, responsible for overseas investment and projects as well as equipment imports. Ms. Zheng received the title of Senior Engineer in 1999 and holds a Bachelor of Engineering degree from Hebei University of Technology, a Masters Degree from Wuhan University of Science and Technology and a Masters of Business Administration from Beijing Jiaotong University.

Mr. Tian, B.Eng., MBA, has 24 years of experience in mining, geological and metallurgical technology and management. Since 2010, Mr. Tian has been Deputy General Manager of Hebei Iron and Steel Group Mining Co., Ltd and General Manager of Laiyuan Non-ferrous Metals Co., Ltd., each a subsidiary of Hebei. Mr. Tian has served as a Standing Committee member and Deputy Secretary of Laiyuan County in Hebei province since 2009. Mr. Tian received the title of Senior Engineer in 1997 and holds a Bachelor of Mining Engineering degree from Xi’an University of Architecture and Technology and a Masters of Business Administration from the University of Texas at Arlington.

Stepping aside from the Alderon Board to allow for the appointment of the Hebei nominees is Mr. Stan Bharti. Mr. Bharti was one of Alderon’s founding directors and he has been instrumental in attracting the necessary capital to support its development. Mr. Bharti, through Forbes & Manhattan, Inc., will continue to advise Alderon on a consulting basis and Alderon will retain the benefits of his experience and expertise. The Board would like to acknowledge and thank Mr. Bharti for his significant contributions to the Company’s development to date.

[jjsto]

Grandich Update:

http://www.grandich.com/2012/09/grandich-client-alderon-iron-ore-11/

[SouthernYankee]

Has anyone visited these areas like Labrador and/or the rest of Newfoundland? The pictures on the Altius website are beautiful, but I am trying to comprehend the amount of land that is up there!

[FFHWatcher]

Has anyone visited these areas like Labrador and/or the rest of Newfoundland? The pictures on the Altius website are beautiful, but I am trying to comprehend the amount of land that is up there!

Ever been to Wyoming?  Labrador is 20% larger by area.   Wyoming is desolate.  Wyoming is the least populous state with 2nd least population density and Labrador makes Wyoming look like New York City.  Wyoming has 568,000 people.  Labrador has about 30,000.  Biggest city is Labrador City with something like 7,500 which is close by the Kami project. 

Unless you are a geologist, you haven't visited Labrador City, as a guess.

[LTVALUE]

China continues to move along......


http://www.reuters.com/article/2012/09/07/markets-ironore-idUSL4E8K707L20120907

[naboo]

China won't stop the construction in the near term.  There are still a lot of projects need to be done.

 http://www.businessweek.com/news/2012-09-06/china-approves-plan-to-build-new-roads-to-boost-economy

".....................The approvals on Sept. 5 for a total of 25 new subway and inter-city rail projects are worth more than 800 billion yuan ($126 billion), or 1.7 percent of 2011 gross domestic product, according to HSBC. The spending will run from the second half of the year to 2018, it said. "

[LTVALUE]

It is my belief that a significant percentage of the increased iron ore production coming on line will either be delayed or stopped due to political factors, cost overruns, underlying commodity price decline, etc. 

A major strength of Altius is their ability and discipline regarding when to invest capital.  Many of the royalty deals in the past couple of years will only be successful if the underlying commodity appreciates in price. Altius being value investors, only look at deals where preservation of capital exists and returns are looked at with an understanding that future outcomes fall under a number of scenarios.  In other words they model their own probability distribution for each deal and only act when the least favourable outcomes still promise preservation of capital and a suitable rate of return to accommodate the necessary risk.  i.e. limiting their investment in Alderon to the initial $2 million!  At present Altius is being rewarded/penalized based on their iron ore exposure.  Altius' value is comprised of much more....IMHO their iron ore properties will still prove of great value and if they don't work out they are still in a position to capitalize on future uncertainty.

Here is an interesting article regarding the future of Chinese steel demand:

http://ftalphaville.ft.com/blog/2012/03/21/930311/steel-demand-is-endless/

[Dazel]

We see a huge window of opportunity...this what Thompson Consolidated did...they built during the low price environment and cashed in at the high...deja vu all over again.

As for Altius we are hoping they are doing or have done some buying of other companies lately...all commodities are now rallying...iron ore will join the party.

As Rogers said it is just a blip...get to work Alderon...Hebei is an obvious believer....

For us...our other investments are moving up quickly...it may work out Perfectly to add to Altius and Alderon here.

Dazel.

[Dazel]

http://www.abc.net.au/news/2012-09-12/iron-ore-prices-continue-rebound/4256692?section=business


Funny  negativity always steals (pardon the pun!) the headlines....the rebound in iron ore prices is  hard to find! Whoever, picked up the 4 or 5 million shares of Alderon during the latest drop is going to make a killing...hopefully Altius added.

Dazel.

[Dazel]

http://www.miningweekly.com/article/rcr-sees-potential-uranium-supply-gap-emerging-2012-09-12


Paladin will be looking at the 2015 uranium demand as china brings on their 26 nuclear reactors....if you were to add the 18 japaneese reactors potentially brought back on line things could get very interesting for uranium prices.

Dazel.