Gearing up for 2011
2010 proved to be a very busy year for Alderon, which is impressive considering the company, in its current incarnation, is less than a year old. Since acquiring the Kami Project in March 2010, Alderon has not only completed its first drill program, but also spent the year putting together an inspiring team that now includes two additional key members: Matt Simpson, an ex-IOC mine manager, who is now Alderon’s COO as well as Ed Lyons, Alderon’s Chief Geologist, who was previously Chief Geologist for Consolidated Thompson’s Lamelee and Peppler deposits. Considering the project and the team that Alderon has, I’m not surprised that the company had such a great year and with all the great news in the last month, I anticipate 2011 to be even better!
Highlights include:
1. On December 8th Alderon announced the completion of the first drill program at Kami:
• 25,749 metres (73 holes) have now been drilled
• Earn-in of 100% interest in the Kami project now complete
• An initial resource estimate, aimed at delineating 400 – 500 million tonnes at a grade around 30% iron, is currently underway and expected by the end of Q1
2. Alderon is set to commence the 2011 winter drill program later this month:
• 5,000 metres of drilling at North Rose (new zone)
• An updated resource, with the goal of increasing the initial resource to 600-800 million tonnes at a grade around 30% iron, is expected by the end of Q2 2011
• A scoping study has also been planned for Q2
3. On December 16th, Alderon announced that it had closed a $20 million private placement which will allow the company to carry out definition drilling (25,000 metres), further metallurgical tests, feasibility studies and detailed engineering in addition to the winter drill program.
4. Alderon now has full analyst coverage from 3 firms and their initial resource estimate is not even complete.
Meeting Expectations
• In March, the company announced that they wanted to complete 20,000 metres of drilling in 2010. In December the company announced that they had completed almost 26,000 metres!
• According to the Option Agreement with Altius Minerals, Alderon was required to spend $5 million by November 2011 in order to acquire 100% interest in the Kami Property. On December 8th, 2010, almost a year ahead of schedule, Alderon announced that the earn-in was complete!
Alderon had set aggressive goals for 2010. Not only did they meet each one of these goals, in many cases they surpassed them. The initial resource estimate, expected to be complete in the first quarter of this year, is aimed at delineating 400-500 million tonnes and I have full confidence that this company can deliver.
Surpassing Expectations
With 2010 now behind us, it’s time to start looking ahead to 2011. By the end of January, Alderon should have begun its $2.5 million 2011 winter drill program. The program, which should consist of 5,000 metres of drilling, will target North Rose, an area that was never drilled by the previous operator. Based on results from the 2010 program, it is expected that North Rose could add an additional 200 million tonnes to the resource. That means that in less than a year, and with only 30,000 metres of drilling complete, Alderon will have captured roughly 600 – 800 million tonnes – which should be more than enough to take the company to production in an area that already has four producing iron mines.
Once the winter drill program is complete, an updated resource estimate is expected to be carried out and to be complete by the end of the second quarter. A scoping study is also expected at this time. Talk about a busy year – and that’s only the first half.
$20 Million Financing Complete
In December, Alderon announced the closing of a $20 million bought deal private placement. Although Alderon already had the funds for the winter drill program, this recent financing should allow them to carry out a further 25,000 metres of drilling in the summer of 2011, as well as further metallurgical testing and to commence feasibility studies and detailed engineering. With everything that Alderon achieved in 2010 and considering the plans that they have for 2011, I anticipate this to be another successful year for the company. And I love the fact that Alderon doesn’t even have to think about raising money in 2011.
Initiating Coverage
I have been very bullish on this company since it formed, even going as far as calling it the ‘Next Consolidated Thompson’. It seems that I am not the only one who sees where this company appears to be heading.
On November 18th, Haywood Securities Inc said, “We are initiating formal coverage of Alderon Resource corp. (ADV-TSX-V) with a 12-month target price of C$3.40 per share…Kami is ideally positioned to make use of the existing infrastructure established for the neighboring Labrador City, Fermont and Wabush townships that service several iron ore mines within 10-20 kilometres from Alderon’s property…Alderon has a clear strategy to advance Kami towards a production scenario, and host a strong board and management team that were in part responsible for progressing Bloom Lake through the development corridor and into production.”
Less than a month later Paradigm Capital Inc reported a target price of $4.20 and Casimir Capital L.P. reported a target price of $5.28. More impressive is that all of this coverage has appeared on the scene and the company has not even released its initial resource estimate yet.
Bottomline
Two resource estimates, a scoping study, a full metallurgical program, 30,000 meters of drilling – there certainly won’t be a shortage of news this year. A year ago when management said they wanted to take the company to a production decision within 12-18 months many people probably thought they were crazy. I think it’s safe to say that Alderon has proven that it can deliver. I’ve said it before and I’ll say it again, this looks like the son of Consolidated Thompson.
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