Alderon adds second Chinese partner to Kami mine
Beijing-headquartered diversified group Tunghsu has signed a letter of intent to acquire a 26% to 38% interest in the Kami Mine Limited Partnership (Kami LP) from Alderon Iron Ore for between $15-million and $23-million, the TSX-listed iron-ore company announced on Tuesday.
Tunghsu will be the second Chinese partner for the proposed western Labrador iron-ore mine, with HBIS Group already owning a 25% interest in Kami LP.
Alderon said it would use a portion of the funds from the Tunghsu investment to repay the $14-million loan facility due to Sprott Resource Lending.
The parties intend to conclude the definitive agreement by March 15, 2020 and close the transaction by April 30, 2020.
Alderon said that increasing Chinese content of the Kami LP would better position the Kami project to obtain financing from Chinese banks and institutions. The removal of the loan facility would also remove the associated debt overhang.
The completion of the transaction is subject to a number of conditions, including the negotiation and execution of the definitive agreement and amended partnership agreements, receipt of regulatory and stock exchange approvals, consent of Sprott and continued agreement from Sprott to extend the loan facility to the date of closing of the transaction.
The proposed mine is located in the Labrador Trough and is surrounded by three producing iron-ore mines. Once developed, the Kami mine will operate for 23 years, producing an average of 7.84-million tonnes a year of premium-quality iron-ore concentrate with an iron content of 65.2%.
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