Life in Labrador iron ore scene – by Daniel Gleeson (Mining Journal – March 1, 2017)

The latest bulletin came from Alderon Iron Ore (CN:ADV), which published the results of a preliminary economic assessment on the Rose deposit, part of its 75%-owned Kami project, in western Labrador. This followed close on the heels of Champion Iron (CN:CIA) updating its own Bloom Lake project economics and Rio Tinto’s (LN:RIO) majority-owned Iron Ore Company of Canada announcing plans to push ahead with its C$79 million (US$59 million) Wabush 3 project.

There is an obvious reason all three of these companies have chosen now to come out with their news: the iron ore price. Hovering around a two-and-a-half year high – at just over US$90 per tonne – the 62% Fe price has confounded analyst expectations in the first two months of the year.

This has allowed all three companies to set out business plans at much higher prices than they would have done a year earlier when a tonne of ore was changing hands at a level closer to US$50. For Alderon, this is a real coup, allowing the company to announce what it calls a “reboot of the Kami project”.

The company has been in hibernation mode for the past few years, thanks to a comparatively weak iron ore price, a dearth of financing options, and a lack of progress on state-led infrastructure plans in the region. This put the company’s ambitious US$1.27 billion plan to build an 8 million tonne per annum mine operating at a cash cost of US$42.17/t on the back burner.

In October – with the iron ore price remaining strong – the company announced it was looking to reassess the project by adding assets from the idled Scully mine, 10km away, to its base case. It was hopeful the amendment to its project plan would have a significant impact on the capital and operating forecasts for Kami.

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