Alderon offers $1 million for part of Wabush Mines to use as tailings disposal for Kami
Part of the Wabush Mines complex in western Labrador may be running once again, albeit in a less glorified form that when it was Canada's third largest iron ore mine.
Last week Alderon Iron Ore Corp., (TSX:IRON) a Vancouver-based iron ore junior, said it made a binding offer to purchase assets related to the Scully Mine in Wabush, for the purpose of disposing tailings produced from its flagship Kami project, as described in a preliminary economic assessment (PEA).
Part of Wabush Mines, Scully Mine began operating in 1965, with iron concentrate railed to a pelletizing facility in Pointe Noire, Quebec, for shipment to Europe and throughout North America. Before it closed in 2014, a victim of low iron ore prices, Wabush Mines was Canada's third largest iron ore operation, with an annual capacity of 6 million tonnes. The site since then has been tied up in regulatory proceedings.
Alderon says it has offered to pay the Wabush Mine vendors – a collection of four companies and FTI Consulting – $1 million as well as assuming liabilities and obligations associated with owning and operating the Scully assets. The company has paid a deposit of $250,000, and the offer is subject to conditions including regulatory approvals. It's worth mentioning that back in December 2016, Wabush Mines was ordered by a Newfoundland and Labrador provincial court to pay CAD$30,000 for polluting the environment. Wabush Mines didn’t test the mine’s surroundings to determine whether there was any amount of waste being released that could harm rainbow trout. The company also failed to let an inspector know there was an unusual amount of deposit. All this happened in May 2015.
Alderon made the announcement about Scully at the same time as it released an Economic Impact Assessment of its Kami project, located in the Labrador Trough where much of Canadian iron ore is produced. The project is expected to create over 100,000 direct and indirect jobs as well as pump $4.4 billion into provincial and federal government coffers, and generate $19.5 billion in GDP over 26 years, including two years of construction.
The PEA has the mine producing 182 million tonnes of iron ore concentrate over a 24-year minelife.
"Completion of the EIA now paves the way for the next phase of Kami's development," said Alderon Chairman and CEO Mark Morabito, in a press release, adding: "Against a backdrop of improving iron ore sector fundamentals, our near-term focus will centre on gaining access to the idled Scully pit for use as a tailings facility and strengthening our leadership team."