Alderon Resource Corp.
With offices in Vancouver and Toronto, Alderon Resource Corp. is an exploration and development company that is currently slated for near-term production on its Kammistiatusset (Kami) iron ore project. The project is located in Western Labrador, Canada, “where 99.8 percent of Canada’s iron ore production comes from,” President and CEO Mark Morabito says.
The company has two elements necessary for success: a highly prospective project in a mining friendly jurisdiction with great potential for significant mineral resources and strong reserves of industry expertise. As declared by Project Manager Doris Fox: “It all comes down to the people.”
For instance, COO Matt Sampson has worked in the iron ore business for 15 years, and the company’s team includes a number of veteran iron ore geologists. “We have a strong experience base in iron ore and in mining,” Fox says.
The Alderon team is led by Morabito. A corporate finance and securities lawyer by profession, Morabito discovered the Kami property while managing and leading Crosshair Exploration & Mining Corp., a uranium exploration company. At the time, Crosshair had an active project on the eastern side of Labrador that had more than 70 people working on it.
Around the time the uranium market experienced a downturn, the local Inuit government declared a mining moratorium. “It almost destroyed Crosshair,” Morabito recalls. “We were able to keep the nucleus of the team together through deployment of an aggressive cash conservation strategy.”
At the same time, Morabito discovered the Kami project in the inventory of project generation company Altius Minerals Corp. and entered into a contract to purchase the rights to it.
“I then put that contract into Alderon in exchange for a founder’s position and then set about recruiting a fantastic management and board team,” he says.
This group includes co-founders Bruce Humphrey, Stan Bharti and Brad Boland, who also managed Consolidated Thompson Iron Mines Ltd.
Today, Morabito remains the executive chairman of Crosshair, in addition to his duties at Alderon. He has a group of 22 employees at Alderon that include many others who he has worked with in the past. “I’m very happy with the way things worked out,” he says.
“It’s fun to take a project that’s nothing but bare ground with the same group of people you’ve been working with for a number of years and get things moving very quickly. We have developed a methodology for start-up ventures,” he continues. “We’re able to get things moving quickly in a very positive way, advancing projects very quickly by working together as a team.”
Location, Location, Location
The Kami project is located within an existing iron ore district and is surrounded by producing iron ore mines.
For instance, “Wabush is about 6 kilometers from our deposit,” Fox says. “About 15 kilometers [away] on the other side of us is the Consolidated Thompson Bloom Lake deposit. That means there is good infrastructure that we can tie into.”
Fox notes the importance of the project’s proximity to strong infrastructure as deposits are only considered economic if they can tie into a strong infrastructure.
Due to the Kami project’s location, Alderon also has the ability to draw upon a labor pool with industry know-how, Morabito explains.
“The communities of Labrador City and Wabush, which are adjacent to us, were built to serve the existing iron ore mine,” Morabito says. “[This is a] work force that’s very experienced in iron ore mining operations.”
With these resources, “We’re able to move production and develop tonnage in a remarkably short period of time,” Morabito says.
He further elaborates that the typical development timeline is seven to 10 years but Alderon’s goal is to significantly compress this schedule for the development of the Kami project.
“We anticipate that we’ll be able to take this project to production by 2014, which is just three short years away,” Morabito says. “Alderon will be a success as long as we execute our project development plan and achieve our project milestones on time.”
Plans for the Year
Last year, Alderon completed more than 25,000 meters of drilling on the Kami project. The program, which had a budget of $7.5 million, also included metallurgical testing, a ground geophysics survey and a number of local infrastructure upgrades.
This year, the company has a $16 million budget for an exploration program. In describing the 2011 program, Morabito noted that it includes two resource updates, a scoping study and a large definition drill program, as well as the completion of a comprehensive metallurgical program.
Fox notes that the 2011 program will include follow-ups on zone testing. “The results of that program will be added into our deposits,” she says, noting that this will allow the company to define and potentially expand a mineral resource estimate. “We can better understand the composition of what we’re dealing with.”
Alderon expects an initial NI 43-101 resource estimate is expected in early March 2011. The goal for the initial resource is to delineate 400 million to 500 million tonnes at a grade between 28 to 32 percent iron ore.
After the completion of the initial resource estimate, Alderon expects an updated resource estimate will be completed in June 2011. The goal for the updated resource is to delineate a total of 600 million to 800 million tonnes at a grade between 28 to 32 percent iron ore.
Watts, Griffis and McOuat Ltd. has been commissioned to provide this resource estimate and has already completed the required site visits and sampling program. Alderon Resource explains the potential tonnage and grade are conceptual in nature, there has been insufficient exploration to define a mineral resource at the site and it is uncertain if further exploration will delineate a mineral resource.
The Sole Focus
As Alderon moves forward, one challenge on the Kami project is the weather, Fox explains.
“The weather in Labrador can throw a wrench in our plans at any time,” she says, noting that in the winter, the temperatures can drop to minus 50 F.
“Aside from that, there’s not really many challenges, per se,” she admits. “We don’t have the same challenges as a project in Africa or a project in South America. We have good expertise already on the ground.”
In addition, Morabito explains that Alderon has access to capital, noting the company is working fast to get to production and take advantage of a 10-year window of strong iron ore prices that have been predicted.
Morabito says the company does not plan to acquire any other projects as of yet. “Our objective is to develop Kami into a producer, the same way Consolidated Thompson was developed from a prospect into a producer,” he says.
“We have a lot of the former Consolidated Thompson people on board,” he explains. “They would like to do it even faster than they did it last time.
“That is our sole focus – the development of this project.”