Alderon Signs Definitive Subscription Agreement With Liberty Metals & Mining Holdings, LLC at C$3.42 per Share
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 05/30/12 -- Alderon Iron Ore Corp. (TSX: ADV)(NYSE MKT: AXX)(NYSE Amex: AXX) ("Alderon" or the "Company") is pleased to announce that it has signed a definitive subscription agreement (the "Subscription Agreement") with Liberty Metals & Mining Holdings, LLC ("LMM"), a subsidiary of Liberty Mutual Group. In connection with the C$194M subscription agreement recently signed between Alderon and Hebei Iron & Steel Group Co., Ltd. ("Hebei") (see news release dated April 13, 2012), LMM indicated to Alderon that it intended to exercise its pre-emptive right to maintain its relative proportionate interest in the Company. LMM has now re-confirmed this intention with the execution of the Subscription Agreement. Under the terms of this Subscription Agreement, LMM will acquire approximately 3,805,576 common shares at the subscription price of C$3.42 per share, for gross proceeds to the Company of C$13,015,070.
The subscription by Liberty will allow it to maintain its proportionate interest in the Company after the closing of the previously announced strategic partnership with Hebei, China's largest steel producer. Hebei will make a strategic investment into both Alderon and its Kami iron ore project (the "Kami Project") in an aggregate amount of C$194 million, in exchange for 19.9% of the outstanding common shares of Alderon (the "Hebei Private Placement") and a 25% interest in a newly formed limited partnership that will be established to own the Kami Project. The closing of the transactions with Hebei remain subject to approvals from the government of the People's Republic of China and are also subject to the approvals of the Toronto Stock Exchange and NYSE MKT.
The closing of the private placement with Liberty contemplated by the Subscription Agreement is conditional on the closing of the Hebei Private Placement. In addition, the Subscription Agreement is subject to the approvals of the Toronto Stock Exchange and the NYSE MKT.
In addition to the private placement with Liberty and the strategic partnership with Hebei, during the preceding 12 months the Alderon team has compiled an impressive list of accomplishments. Highlights include:
-- Completing an initial mineral resource estimate on North Rose, Rose
Central and Mills Lake of 490 million tonnes at 30.0% iron in the
Indicated category and an additional 598 million tonnes at 30.3% iron in
the Inferred category. Mineral resources that are not mineral reserves
do not have demonstrated economic viability.
-- Completing a Preliminary Economic Assessment ("PEA") of the Kami Project
which indicates a positive pre-tax NPV of US$3.07 billion (discounted at
8%); pre-tax IRR of 40.2%; payback period of 2.7 years and an annual
production of 8 million tonnes at 65.5% iron. The PEA is preliminary in
nature and it includes Inferred mineral resources that are considered
too speculative geologically to have the economic considerations applied
to them that would enable them to be categorized as mineral reserves.
There is no certainty that the conclusions reached in the PEA will be
realized.
-- Initiating the Federal and Provincial Environmental Assessment processes
and the Government of Canada and the Provincial Government of
Newfoundland and Labrador have issued draft environmental impact
statement guidelines for public review.
-- Adding former Newfoundland and Labrador Premier Danny Williams to its
Board of Directors.
-- Adding several senior former Iron Ore Company of Canada and Consolidated
Thompson executives to the management team, most notable appointing
Tayfun Eldem as President and CEO.
-- Completing a strategic investment with Liberty Metals & Mining Holdings,
LLC of approximately C$40 million.
-- Graduating to the Toronto Stock Exchange under the symbol ADV.
-- Commencing trading on the NYSE MKT exchange under the symbol AXX.
-- Successfully completing its final exploration drill program prior to the
preparation of a Feasibility Study on the Kami Project which consisted
of 32 holes, totaling 12,300 metres.
The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and accordingly, may not be offered or sold within the United States except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities requirements or pursuant to exemptions therefrom. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the Company's securities in the United States.
About Alderon
Alderon is a leading iron ore development company in Canada with offices in Vancouver, Toronto, Montreal, St. John's and Labrador City. Alderon's Kami Project is located within Canada's premier iron ore district and is surrounded by four producing iron ore mines. The Alderon team is comprised of skilled professionals with significant iron ore expertise to advance Kami towards production.
For more information on Alderon, please visit our website at www.alderonironore.com.
ALDERON IRON ORE CORP.
On behalf of the Board
Mark J Morabito, Executive Chairman
Cautionary Note Regarding Forward-Looking Information
This news release contains "forward-looking information" concerning anticipated developments and events that may occur in the future. Forward-looking information contained in this news release includes, but is not limited to, statements with respect to (i) the estimation of inferred and indicated mineral resources; (ii) success of exploration activities; (iii) the upgrade of the current mineral resource estimate; (iv) the completion of the Feasibility Study; (v) the completion and timing of the environmental assessment process; (vi) the results of the 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 Property; (vii) the closing of the transactions with Hebei and Liberty; and (viii) the funding by Hebei of costs of developing 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 news release is based on certain factors and assumptions regarding, among other things, receipt of governmental and other approvals, receipt of a feasibility study that meets the requisite criteria, the estimation of mineral 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 Property in the short and long-term, the progress of exploration and development activities, the receipt of necessary regulatory approvals, the completion of the environmental assessment process, 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 Property may not be available on satisfactory terms, or at all, risks related to disputes concerning property titles and interest, risks related to disputes with Aboriginal groups, 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 with applicable Canadian securities regulations.
Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information is made as of the date of this news release. Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking information contained in this news release is expressly qualified by this cautionary statement. Except as required by applicable securities laws, the Company does not undertake any obligation to publicly update or revise any forward-looking information.
Cautionary Note Concerning Reserve and Resource Estimates
This news release uses the terms "resources", "measured resources", "indicated resources" and "inferred resources". United States investors are advised that, while such terms are recognized and required by Canadian securities laws, the United States Securities and Exchange Commission (the "SEC") does not recognize them. Under United States standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Mineral resources that are not mineral reserves do not have demonstrated economic viability. United States investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves. Inferred Resources are in addition to measured and indicated Resources. Further, inferred resources have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. It cannot be assumed that all or any part of the inferred resources will ever be upgraded to a higher category. Therefore, United States investors are also cautioned not to assume that all or any part of the inferred resources exist, or that they can be mined legally or economically. Disclosure of "contained ounces" is permitted disclosure under Canadian regulations, however, the SEC normally only permits issuers to report "resources" as in place tonnage and grade without reference to unit measures. Accordingly, information concerning descriptions of mineralization and resources contained in this release may not be comparable to information made public by United States companies subject to the reporting and disclosure requirements of the SEC.
National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") is a rule developed by the Canadian Securities Administrators, which established standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Unless otherwise indicated, all reserve and resource estimates referred to in this news release or released by the Company in the future have been or will be prepared in accordance with NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum Classification System. The requirements of NI 43-101 are not the same as those of the SEC and any reserves reported by the Company in compliance with NI 43-101 may not qualify as reserves under the SEC's standards.
Alderon has not yet completed a Pre-Feasibility Study or Feasibility Study to demonstrate the economic viability of the Kami Property. Furthermore, no Mineral Reserves have been established on the Kami Property. Any statements regarding planned production rates, projected cash flows, payback period, IRR, NPV, construction timelines or the expected commencement of commercial production in Q4 2015 assume that Alderon is or will be able to complete all of the required steps to bring the Kami Property into commercial production including the completion of a Feasibility Study to demonstrate the economic viability of the Kami Property, the completion of the environmental assessment process, the conclusion of infrastructure agreements for railway transportation, power and access to port facilities and that Alderon obtains the necessary project financing to pay for the capital costs to develop and construct a mine at the Kami Property. There is no certainty that Alderon will be able to complete any or all of these steps and reference should be made to the "Risk Factors" section in Alderon's Annual Information Form for the most recently completed financial year.
Contacts:
Alderon Iron Ore Corp.
Konstantine Tsakumis
Investor Relations
1-866-683-8030 ext. 232
info@alderonironore.com
www.alderonironore.com
Alderon Iron Ore Corp.
Montreal Office
514-281-9434
514-281-5048 (FAX)
Alderon Iron Ore Corp.
St. John's Office
709-576-5607
709-576-7541 (FAX)
Alderon Iron Ore Corp.
Labrador City
709-944-4820
709-944-4827 (FAX)
Alderon Iron Ore Corp.
Toronto Office
416-309-2138
416-861-8165 (FAX)
Alderon Iron Ore Corp.
Vancouver Office
604-681-8030
604-681-8039 (FAX)
