Mr. Mark Morabito reports
ALDERON SIGNS AGREEMENT WITH NALCOR TO PERFORM STAGE III ENGINEERING AND ASSESSMENT FOR THE SUPPLY OF POWER FOR ALDERON'S KAMI PROJECT
Alderon Iron Ore Corp. has entered into an agreement with Nalcor Energy whereby Nalcor will perform Stage III engineering and assessment related to providing transmission and electrical plant and services associated with supplying electrical power for Alderon's Kami project. Nalcor Energy is headquartered in St. John's. Its business includes the development, generation, transmission and sale of electricity, the exploration, development, production and sale of oil and gas, industrial fabrication, and energy marketing.
"Alderon commenced Nalcor's formal process for the provision of power to an industrial customer in Labrador in September, 2011, and we are very pleased to now be in the third and final stage of the engineering and assessment process," says Tayfun Eldem, president and chief executive officer of Alderon. "The third stage of the process will lead to the completion of detailed engineering and will also mark the start of the formal negotiations towards a mutually acceptable power purchase agreement."
Nalcor has established a formal process in advance of Nalcor or Newfoundland and Labrador Hydro being able to supply power to an industrial customer in Labrador. The technical process involves three stages: Stage I -- preproject phase; Stage II -- concept selection; and Stage III -- front-end engineering design. Alderon and Nalcor have completed stages I and II of the process. With the signing of the agreement, Stage III has commenced and it is expected to take six to eight months to conclude. Alderon financed all of the costs associated with Stage II and will also finance all Stage III costs, which are estimated to be $3.8-million. Commercial discussions will commence during Stage III of the process and once commercial terms are agreed upon, a formal power purchase agreement will be signed by Alderon and Nalcor subject to environmental and regulatory approvals. The commercial terms and rates for power, transmission and other infrastructure costs will be governed by a Labrador industrial rates policy framework.
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