Alderon Iron Ore Corp.: Provides Corporate Update
VANCOUVER, March 26, 2020 - Alderon Iron Ore Corp. (TSX: IRON) ("Alderon" or the “Company”) announces an update with respect to transaction and corporate matters. Alderon previously announced a letter of intent (the “LOI”) with the Tunghsu Group Co., Ltd. (“Investor”) with respect to an investment transaction (the “Transaction”) (see press release dated February 18, 2020). Since the announcement of the Transaction, Alderon and Tunghsu have been negotiating the terms of the definitive agreements for the Transaction and have made substantial progress. Unfortunately, during this period, the outbreak of the novel coronavirus (COVID-19) has developed into a pandemic and this is having a material adverse effect on global economic conditions. Citing the volatility and uncertainty created by the COVID-19 pandemic, both in the global financial markets as well as the iron ore market, Tunghsu has advised Alderon that it is terminating the Transaction.The Company intended to use a portion of the funds received from the Transaction to repay the US$14 million loan facility, plus accrued interest and fees, (the “Loan Facility”) due to Sprott Resource Lending (“Sprott”). Sprott previously agreed to an extension of the maturity date of the Loan Facility to March 31, 2020. The Company’s obligations under the Loan Facility are secured against the Kami Project. Any failure to meet any of the payment obligations under the Loan Facility will trigger an event of default and a demand for full immediate repayment of all amounts outstanding under the Loan Facility. In particular, unless the Company completes additional financing or further amendments to the Loan Facility, the Company will be unable to continue to adhere to the terms of the Loan Facility when it becomes due on March 31, 2020. If the Company is unable to repay all amounts outstanding under the Loan Facility on March 31, 2020, Sprott may realize on its security and the Company could lose its interest in the Kami Project.
The Company does not currently have any available funding sources to repay the Loan Facility prior to March 31, 2020. The Company is evaluating potential alternatives, including a renegotiation of the Loan Facility terms with Sprott, however, there is no certainty that any alternative will be realized or that Sprott will be prepared to renegotiate the terms of the Loan Facility. The Company will provide additional updates on this matter via press release when available.
The Company also announces that it is relying on the exemption provided in BCI 51-515 (and similar exemptions provided by other Canadian Securities Regulators) to delay the filing of the following continuous disclosure documents (collectively the “Documents”):
- The Company’s Annual Audited Financial Statements for the year ended December 31, 2019.
- The Company’s Management Discussion & Analysis for the year ended December 31, 2019.
- The Company’s Annual Information Form for the year ended December 31, 2019.
Members of the Company’s management and other insiders are subject to a trading black-out policy that reflects the principles in section 9 of National Policy 11-207. The Company expects to file the Documents on or before the end of the available 45 extension period. An update on material business developments since the filing of the Company’s interim financial reports has been provided in prior press releases and are noted above in this press release.
The Company also announces that Mr. Mark Morabito and Dr. Andrew Furey have resigned from the Board of Directors of the Company.
About Alderon Iron Ore Corp.
For more information on Alderon, please visit our website at www.alderonironore.com.
Alderon Iron Ore Corp.
On behalf of the Board
"Tayfun Eldem"
President & CEO, Director
For further information please call:
1-604-681-8030 ext 285
info@alderonironore.com
Cautionary Note Regarding Forward-Looking Information
This press release contains "forward-looking information" within the meaning of the U.S. Private Securities Litigation Reform Act and Canadian securities laws concerning anticipated developments and events that may occur in the future. Forward-looking information contained in this press release include, but are not limited to, statements with respect to (i) the renegotiation of the Loan Facility or availability of alternatives; (ii) the potential loss of the Kami Project to Sprott; and (iii) the timing for filing of the Documents.
In certain cases, forward-looking information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Forward-looking information contained in this press release is based on certain factors and assumptions regarding, among other things, receipt of governmental and other approvals, the impact of COVID-19 on global economic conditions, the estimation of Mineral Resources and Mineral Reserves, the realization of resource estimates, iron ore and other metal prices, the timing and amount of future development expenditures, the estimation of initial and sustaining capital requirements, the estimation of labour and operating costs, the availability of necessary financing and materials to continue to explore and develop the Kami Project in the short and long-term, the progress of exploration and development activities, the ability of the Company to use the multi-user terminal facility at the Port of Sept-Îles, the receipt of necessary regulatory approvals, the estimation of insurance coverage, assumptions with respect to currency fluctuations and exchange rates, environmental risks, title disputes or claims, and other similar matters. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include risks inherent in the exploration and development of mineral deposits, including risks relating to changes in project parameters as plans continue to be redefined including the possibility that mining operations may not commence at the Kami Project, risks relating to variations in Mineral Resources and Mineral Reserves, grade or recovery rates resulting from current exploration and development activities, risks relating to the ability to access rail transportation, sources of power and port facilities, risks relating to changes in iron ore prices and the worldwide demand for and supply of iron ore and related products, risks related to increased competition in the market for iron ore and related products and in the mining industry generally, risks related to current global financial conditions, the risks of COVID-19 causing a material adverse effect on global economic conditions, uncertainties inherent in the estimation of Mineral Resources and Mineral Reserves, access and supply risks, reliance on key personnel, operational risks inherent in the conduct of mining activities, including the risk of accidents, labour disputes, increases in capital and operating costs and the risk of delays or increased costs that might be encountered during the development process, regulatory risks, including risks relating to the acquisition of the necessary licences and permits, financing, capitalization and liquidity risks, including the risk that the financing necessary to fund the exploration and development activities at the Kami Project may not be available on satisfactory terms, or at all; risks related to disputes concerning property titles and interest, risks related to disputes with Indigenous governments and organizations, risks related to insufficient capacity being available for the Company to access the multi-user terminal facility at the Port of Sept-Îles, risks related to a default under the Loan Facility, environmental risks and the additional risks identified in the “Risk Factors” section of the Company’s Annual Information Form for the most recently completed financial year, or other reports and filings with applicable Canadian securities regulators. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information is made as of the date of this press release. Except as required by applicable securities laws, the Company does not undertake any obligation to publicly update or revise any forward-looking information.