Investor Presentation April 2018 IRON: TSX

Transcription

1 Investor Presentation April 2018 IRON: TSX

2 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. Forward looking information contained in this presentation includes, but is not limited to, statements with respect to: (i) the estimation of mineral resources; (ii) the market, demand for, and future price of iron ore and related products; (iii) estimates of future steel production; (iv) estimation of railway capacity; (v) the negotiation, conclusion and potential terms of infrastructure contracts; (vi) potential economic benefits of the Kami Project; (vii) future freight costs, (viii) the potential advantages of iron ore concentrate produced from the Kami Project and (ix) the results of the Updated Preliminary Economic Assessment ( PEA ) including statements about future production, future operating and capital costs, the projected IRR, NPV, payback period, construction timelines and production timelines for the Kami Project. In certain cases, forward-looking information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Forward-looking information contained in this presentation is based on certain factors and assumptions regarding, among other things, the estimation of mineral reserves and resources, the realization of resource estimates, iron ore and other metal prices, the timing and amount of future exploration and development expenditures, the estimation of initial and sustaining capital requirements, the estimation of labour and operating costs, the availability of necessary financing and materials to continue to explore and develop the Kami Project in the short and long-term, the progress of exploration and development activities, the receipt of necessary regulatory approvals, the estimation of insurance coverage, and assumptions with respect to currency fluctuations, environmental risks, title disputes or claims, and other similar matters. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include risks inherent in the exploration and development of mineral deposits, including risks relating to changes in project parameters as plans continue to be redefined including the possibility that mining operations may not commence at the Kami Property, risks relating to variations in mineral resources, grade or recovery rates resulting from current exploration and development activities, risks relating to the ability to access rail transportation, sources of power and port facilities, risks relating to changes in iron ore prices and the worldwide demand for and supply of iron ore and related products, risks related to increased competition in the market for iron ore and related products and in the mining industry generally, risks related to current global financial conditions, uncertainties inherent in the estimation of mineral resources, access and supply risks, reliance on key personnel, operational risks inherent in the conduct of mining activities, including the risk of accidents, labour disputes, increases in capital and operating costs and the risk of delays or increased costs that might be encountered during the development process, regulatory risks, including risks relating to the acquisition of the necessary licenses and permits, financing, capitalization and liquidity risks, including the risk that the financing necessary to fund the exploration and development activities at the Kami Project may not be available on satisfactory terms, or at all, risks related to disputes concerning property titles and interest, environmental risks, and the additional risks identified in the Risk Factors section of the Company s Annual Information Form for the most recently completed financial year or other reports and filings applicable with Canadian securities regulators. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information is made as of the date of this presentation. Except as required by applicable securities laws, the Company does not undertake any obligation to publicly update or revise any forward-looking information. Additional Information For further information on the Kami Project please refer to the Technical Reports entitled Update to the Re-Scoped Preliminary Economic Assessment of the Kamistiatusset (Kami) Iron Ore Property, Labrador dated effective November 7, 2017 and An Analysis of the Economic Impacts Associated with the Kami Iron Ore Project: A 8 Mtpa, 26 Year Project effective November 25, 2017 (the Reports ) that are available on SEDAR at NI Qualified Person The technical information presented in this presentation is from the Report. The Report was prepared under the supervision of Mr. Angelo Grandillo, P.Eng, of BBA, a Qualified Person as defined by NI , with contributions from Gemtec Limited and Watts, Griffis and McOuat ( WGM ). Mr. Grandillo is a Qualified Person as defined by NI and Mr. Grandillo is independent of Alderon. Mr. Grandillo has reviewed and approved the technical information contained in the Report, with the exception of the mineral resource estimate. Mr. Michael Kociumbas, P.Geo. with independent firm, Watts, Griffis and McOuat Limited, is a Qualified Persons as defined by NI and is responsible for reviewing and approving the mineral resource estimate and the QA/QC associated with the mineral resource estimate. Mr. Kociumbas is independent of Alderon. 2

3 What Sets Us Apart Location Infrastructure Partners Product Labrador Trough Ideally Located Strategic Partnerships Premium Iron Ore Safe & stable jurisdiction Long history as a mining region 14.5 km to common-carrier railway with +80Mtpa capacity HBIS Group Altius Minerals Glencore High Fe Content at 65.2% Low phosphorus Hydro-electric power at competitive rates Access to skilled labor 15.5km to high voltage grid power agreement signed Agreement in place to ship year-round via deep-water port Low alumina 100% of production committed Underpinned by 1.27 billion tonnes at 29.8% iron of Measured & Indicated resources Measured: % TFe, Indicated: % TFe, & Inferred: % TFe 3

4 Investment Highlights Iron ore market is improving with Chinese demand for higher grade product expected to remain strong Premium product with high Fe content of 65.2% and ultra-low deleterious elements Ideal location in Canada s premier iron ore district with secured access to low cost utilities and transport Shovel-ready project with robust economics (USD) $1.8B NPV % IRR C1 cost = $29.94 Capex = $999.4M 4

5 Located Canada s Premier Iron Ore District with Established Access to Global Markets Local Skilled Workforce 100% Product Sold 24 Year Life of Mine Port + Power Agreements Concluded Strategic Partnerships High-Grade Product, Low Impurities Access to Highway and Railway Year-round Access to Global Market Location in Labrador Trough provides low cost access to utilities, transportation and skilled labor 5

6 Power and Port Agreements Concluded, Railway Access Guaranteed Construction of C$220M multi-user dock at Port of Sept-Îles 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 availability confirmed by Crown Utility (Nalcor) Power Purchase Agreement signed Province s new industrial rates policy creates a level playing field among industrial users Nearby common carrier railway with +80Mtpa capacity guaranteed access 6

7 Strategic Partnerships in Place 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 equity for 19.9% of Alderon common shares Altius Minerals owns 39% of the outstanding shares of Alderon Exploration and project generation company with focus on Newfoundland & Labrador Multiple successful investments in the Labrador Trough Glencore will purchase 40% of annual production One of the world s largest global diversified natural resource companies Partners will purchase 100% of annual production 7

8 Differentiated Product to Supply an Evolving Iron Ore Market Premium Iron Ore Product High Fe content with ultra-low impurities Increasing demand and price support underpinned by tougher environmental standards Platts Index now includes premium iron ore with significant price spread *From Macquire Research Recovering Iron Ore Prices Driven by Continued Demand in China and Future Demand in India Chinese steel production remains robust Low quality, high cost Chinese domestic supply has been curtailed India positioned to drive next wave of steel intensity growth Iron ore consumption expected to peak by mid to late next decade, , with a CAGR of 0.4% 58% Fe 62% Fe 65% Fe *From Accenture Strategy Incremental scenario likely due to disruptive factors China s drive for emissions reduction and India s steel intensity growth 8 will spur continued demand

9 Superior Quality Concentrate Relative to Australian and Brazilian Sinter Fines Fe %* P %* Al 2 O 3 %* 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 (lower cycle time and heat loss) Low alumina Improves blast furnace operation Lowers slag fluidity Protects tuyeres Premium product allows end users to improve productivity, reduce costs and meet stringent environmental standards * Platts & Company Disclosures 9

10 Updated PEA Highlights PEA Updated November 2017 US$1.8B NPV % IRR Capital and operating costs significantly reduced from 2012 bankable feasibility study US$999.4 M estimated Initial Capital Cost Nationalization of port assets by Quebec government a significant enabler 10

11 Robust project with strong financials* Updated PEA Results: Nov Annual Production (65.2% Fe con) Initial CAPEX Cash operating cost (FOB) Capital Intensity Average annual cash flow Payback period Measured and Indicated Resources Mine life *Pre-tax, USD 7.8Mtpa $999.4M $29.9/t ~$130/t +$300M 3.7 years 29.5% TFe 24 years 11

12 Reduction in Capex due to Re-scoping of Project Comparison Points 2017 Updated PEA* 2012 Feasibility Study* Annual Production (65.2% Fe con) 7.8Mtpa 8.0Mtpa Initial CAPEX $999.4M $1,272.9M Cash operating cost (FOB) $29.94/t $42.17/t Projected Payback Period 3.7 years 3.1 years Measured and Indicated Resource of the Rose Deposit (COG=15%, 29.6% TFe) Mt Mt Estimated Mine life 24 years 30 years Iron Ore Price Determination (per tonne of Fe concentrate) $ Base price based on Platts IODEX 62% (3yr trailing avg.) + $ Fe premium for Kami concentrate grading 65.2% Fe and superior product quality (%SiO 2, %Al 2 O 3 and %P) - 3.8% discount blend of HBIS (5%) and Glencore (2%) discounts - $14 shipping costs from Port of Sept Iles to Chinese Port ($13.35 net considering moisture) Factors resulting in reduced Capex & Opex Government of Quebec now owner of facilities at Pointe-Noire area of Port of Sept Iles, cancelling need to build own stockyard Considerably slower project activity in the region Lower ocean freight rates Weaker Canadian dollar $86.23 CFR selling price $72.23 FOB price Port of Sept Iles Cash operating costs reduced by ~29% *Pre-tax and in United States dollars. The 2012 Feasibility Study used an exchange rate of $1.00CDN = US$1.00 and was in constant Q dollars. No escalation or inflation was applied to costs to bring them to Q dollars. 12

13 Summary of Capex & Opex Estimated Capital Costs (M$ US) Mine (Including Pre-Stripping) $ Mineral Processing $ Site Infrastructure and Utilities $ General Services and Indirects $ Estimated Average LOM Operating Costs (US $/t Dry Concentrate) Mining $ Mineral Processing $ 5.40 General Site $ 0.50 General Administration $ 2.26 Pre-Operational Capitalized Costs $ 19.6 Owner s Costs $ 31.0 Environmental and Tailings Management Rail Transportation and Port Services $ 0.39 $ TOTAL $ TOTAL $ Capex & Opex estimates show robust project economics 13

14 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 Regrind Final tails Spiral Concentrate %Fe 65.0% Fe Rec tot % 62.8% Wt % of feed 28.6% % of total concentrate 81% Mag Concentrate %Fe 66.0% Fe Rec tot % 14.9% Wt % of feed 6.5% % of total concentrate 19% Final Concentrate %Fe 65.2% % SiO 2 4.3% Fe Rec % 77.7% Wt % 35.1% %Mn 0.81% P um Rail 14

15 Our Role in Sustainability Alderon as a Corporate Citizen Focus on responsible business behaviors and sustainable practices Be part of bettering the community Be proactive in environmental stewardship Be a catalyst for economic growth Environmental Responsibility Community Involvement Economic Growth 15

16 Kami Represents Significant Benefits for Federal & Provincial Economies Economic Impact Analysis Performed by Dr. Wade Locke of Memorial University Published in November 2017 Assessment focused on employment, GDP and treasury impacts Covers construction and operations Spans project lifecycle of 26 years 16

17 Kami Will Create Jobs and Tax Revenue $7.6B Incomes to Workers and Businesses across Canada $5.1B Federal and Provincial Government Revenues $21.3B National GDP contributions over 26-year period >100,000 Direct, Indirect and Induced Jobs $5.5B in Total Incomes to Workers and Businesses in Newfoundland & Labrador and Quebec 17

18 Economic Impacts *Direct, indirect, and induced economic impacts 18

19 Economic Impacts *Direct, indirect, and induced economic impacts 19

20 Sustainable Development Fully released from Federal and Provincial Environmental Assessment; permitted for construction start Completed baseline studies of geology, plants, soils, water, and wildlife Developed plan for progressive and closure rehabilitation and reclamation at mine site Concluded stakeholder agreements Provincial benefits agreement with Newfoundland and Labrador Municipal agreements with Labrador City and Wabush Impact/benefit agreement with two aboriginal groups 20

21 Community Engagement Committed to creating long-term, mutually beneficial relationships based on trust and respect Project Consultation Plan involves engaging community residents and groups, local businesses, and government regulators Aboriginal Relations Policy involves information sharing, engagement, and traditional land and resource use studies More than simply engaging, we strive to acknowledge, value, and give consideration to the diverse knowledge and needs of our stakeholders 21

22 Company Profile Ticker IRON: TSX Board of Directors Management Shares Outstanding as of Mar 31, ,471,850 Options as of Mar 31, ,685,000 Warrants as of Mar 31, ,241,436 Fully Diluted as of Mar 31, ,706,567 Cash & Cash Equivalents (as of Dec 31, 2017) CDN $15.8M 52-week Share Price Range $ $0.48 Current Share Price as of Apr 4, 2018 $0.25 Mark Morabito Chairman Tayfun Eldem Ian Ashby Adrian Loader David Porter Wang Jinhui (Jeff) Andrew Furey Tayfun Eldem CEO Kate-Lynn Genzel - CFO Gary Norris Executive VP Government & Community Affairs Xinneng (David) Li VP Asia Pacific Affairs Olen Aasen Corporate Secretary Shareholder Distribution Major Shareholders in Alderon Iron Ore Corp. Altius Minerals 39% HBIS Group 19.6% Insiders* ~2% Insider Ownership & Strategic Partners, 61% Retail, 39% *Source: SEDI 22

23 For more information, please contact: Phone: Corporate Head Office Labrador City Office St. John s Office Montreal Office West Pender St. Vancouver, BC V6E 4G1 PO Box 214 Labrador City, NL A2V 2K Church Hill, Suite 201 St. John s, NL A1C 3Z Autoroute Transcanadienne 4ieme étage/4 th Floor Pointe-Claire, QC H9R 0A5 IRON: TSX