Kami project moving along

Alderon Resources Corp. will invest $7 million into its Kamistiatusset ("Kami") iron ore project this year, an investment that will give Alderon 100 per cent ownership.

The 2,125-hectare property south of Labrador City and Wabush was staked by Altius in 2004.

"There was a whole bunch of things we needed to do to exercise our option to get that property 100 per cent for ourselves," Alderon's president and CEO Mark Morabito said in a telephone interview with the Aurora last week. "All those things are done except the one thing that needs to be done is spend $5 million on work. Our program this year is to spend $7 million, so at some point before Santa Claus comes again we will have hit that $5 million mark and we will own that property 100 per cent. Altius will then exchange the ownership for an equity position in our company and they will become the single largest shareholder. Right now the single largest shareholder is me."

Three zones

The Kami Property currently contains three zones of iron ore: Rose Lake, Mart Lake and Mills Lake. Based on drilling to date, the Rose and Mills Zones may contain approximately 200 to 250 million tonnes with grades between 28 - 35 per cent iron.

"It's very, very similar to Consolidated Thompson's Bloom Lake," said Morabito. "It's all pretty much the same. We are a magnetite predominant iron ore deposit where theirs is hematite. The thickness of the iron formations is also very similar to Bloom Lake's up to 200 metres. We range from 50 to 300 metres in thickness. And our preliminary recoveries are 88 per cent, which is bang on with Bloom Lake as well."

Solid leadership

Morabito says he is very confident and having two people on Alderon's board of directors with a significant background in the Bloom Lake development is definitely a great asset.

Stan Bharti held several positions with Consolidated Thompson between 2005 and 2009 including CEO.

Bruce Humphrey served as Chairman of Consolidated Thompson.

"We have these people who've already proven they can take a company from exploration right into production stage," said Morabito. "Bruce and Stan were both integrally involved in the development of Consolidated Thompson and their record speaks for itself."

Summer plans

The exploration work will begin by June. Most of it, according to the CEO, will involve drilling. There will be 20,000 metres of drilling in 54 delineation holes. That really is to fill in the spaces between the holes that Altius drilled and 20 exploration holes in areas where they haven't drilled. So that is about five million of the seven, the rest of it is on ground geophysics, the local infrastructure and metallurgical work.

Though still in the exploration stage, bringing the project to development could happen in just a few short years.

"What we are looking at is this in terms of milestones," he explained. "We are looking at having enough work done-a preliminary economic analysis, all your drilling substantially complete and the metallurgical work done-those three things complete in order to make a production decision within 24 to 36 months. Now that is fast considering the stage we are at today."

Some possibilities

Although Alderon will run the company as if it will take it to production, there are other possibilities when the project has advanced to that level.

"We got two natural suitors in the area, you got two mills nearby, you got Bloom Lake, you've got Wabush," said Morabito. "The folks at Wabush have high manganese content in their reserves and could use some lower-manganese content to blend down. Then there's always the option of constructing our own facility depending on how much tonnage we prove up, if we get 500 million tonnes this year and we still got more blue sky then we are potentially looking at target as big as Bloom Lake at 900 million tonnes certainly that could justify its own facility.

On the other hand we've got two companies in Consolidated Thompson and Cleveland Cliffs that might be able to use this ore so there are a number of possibilities. We have to run this company as if we are going to be taking it to production ourselves; if you don't do that you never can get full value."

Plenty of confidence

Morabito says there is a lot to be optimistic about when it comes to the steel industry and the demand for iron ore staying strong.

"I know you've had your booms and busts there over the years," he said of Labrador West and the varying market conditions. "But the difference this time is, what is happening is the party is going on with iron ore and the demand for steel without the United States. And that's unheard of, it never happened before. We've always been dependent on whether the US is firing on all cylinders or not. Now here we have a whole iron ore sector that's on fire without the US there because they've been in a deep recession and demand is off on all commodities for them. So imagine what it's going to be like when they [US] do show up."

In the meantime, Morabito has a team in place to get in on the ground again this year. He assures his company will prove to be a good corporate citizen and takes its obligations to community and the environment quite seriously.

Five per cent of the Kami property is located on the Fermont, QC side of the border and 95 per cent is on Labrador ground.

Kami project: based on drilling to date, the Rose and Mills Zones may contain approximately 200 to 250 million tonnes with grades between 28 - 35 per cent iron. Photos courtesy of Alderon Resources Corp.