In a strategic international partnership, Alderon Iron Ore has signed a definitive subscription agreement with China’s biggest steel producer for a major investment in its Kami project in Canada.

Hebei Iron & Steel Group will invest Can$194 million in Alderon and its iron ore project in return for a 19.9% stake in the company, as well as a 25% share in the newly formed limited partnership established to own the Kami project. The entire Can$194 million investment will be used for exploration and development of the project.

The terms of the agreement include Hebei purchasing iron ore concentrate produced at the Kami project. Upon Hebei’s acquisition of 25%, it will be obligated to purchase 60% of the project’s actual annual production. It will also use its best efforts to assist in obtaining project debt financing for Kami from financial institutions, including Chinese banks.

Alderon’s executive chairman Mark Morabito says, “Alderon is delighted to build this new partnership with Hebei, China’s largest steel group and the second largest steel group globally. Alderon now has both the capital and the China market access to build a world-class company.”

The company’s president Tayfun Eldem says, “This transaction with Hebei is a major catalyst for Alderon as it further validates and materially de-risks the Kami project. We believe that this partnership solidifies our ability to become the next significant iron ore producer in Newfoundland and Labrador.”

Hebei’s chairman Wang Yifang says, “The company believes it will be a valuable partner to Alderon and is equally committed to assisting in securing all necessary resources for the development of the Kami project including its financing. I firmly believe the cooperation between two strategic partners will successfully develop Kami into a world-class iron ore mine.”

Under the terms of the agreement, which is subject to government and stock exchange approval, Hebei will pay Can$3.42 for each common share and once the private placement is closed, will be entitled to nominate two directors to the board of Alderon.

Alderon will be the manager of the project and will receive a fixed annual management fee during the construction period of the project. Once the project has reached commercial production, it will receive a management fee on a per tonne of iron ore concentrate basis.

www.alderonironore.com

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