Alderon Iron Ore (TSX: IRON) has lost its interest in the Kami iron ore project in the Labrador Trough after failing to repay a $14 million loan to Sprott Resource Lending due at the end of March.
As a result, Sprott would seize control over the project, which is also 25% owned by China’s HBIS Group.
Earlier this year, Tunghsu Group entered into a letter of intent with Alderon to acquire a 26% to 38% interest in the Kami project, adding a second Chinese partner to the fold. At that time, Alderon said the investment would help the company repay the Sprott loan.
However, Tunghsu withdrew its proposed investment in the project later in March, citing uncertainty created by the covid-19 pandemic.
Alderon said it had explored “all available alternatives” over the past 18 months, including a corporate transaction or a further extension with Sprott under a care and maintenance scenario.
Company board members and executives including CEO Tayfun Eldem and COO Kate Lynn Genzel have all resigned from their positions, leaving the iron ore miner’s future uncertain.
Last year, Alderon officials indicated that they were hoping to break ground on the Kami project sometime this year. The proposed mine is surrounded by three producing iron ore mines.
Once developed, the Kami mine is expected to operate for 23 years, producing 7.84 million tonnes of iron ore concentrate annually with an iron content of 65.2%.