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Alderon Iron Ore (TSX:ADV) — the company developing the Kami iron ore deposit in Canada’s Labrador Trough — took a big step forward on Friday with the announced winner of the engineering, procurement and construction contract.
The contract, won by Australia-based WorleyParsons Services (ASX:WOR), is worth $92.5 million and was based on a feasibility study delivered last January. WorleyParsons beat 9 other firms for the right to develop the deposit, which is 75 percent owned by Alderon and 25 percent by Hebei Iron & Steel Group. Ltd. The $1.3 billion project has a capex of $1.27 billion and is estimated to start commercial production in the fourth quarter of 2015. It would produce 8 million tonnes of iron ore per year graded 65.2% Fe, for a minelife of 30 years.
The beneficiated ore would be moved by rail and shipped through the Port of Sept Îles. The Montreal Gazette reported that Hebei, Alderon’s JV partner, will take up to 4.6 million tonnes of product annually at a 5 percent discount, and will backstop any project overruns.
Securities Disclosure: I, Andrew Topf, do not hold any equity positions in the above-mentioned companies.
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