Alderon suspends work on its Kami project

Here’s my interpretation of Alderon’s June 30, 2014 press release (PDF) issued today.  The key piece of material information is sandwiched between two slices of public relations spin:

[…] Alderon has temporarily suspended any further work by its Engineering, Procurement and Construction Management (“EPCM”) contractor, WorleyParsons Canada Services Ltd. (“WorleyParsons”).

The press release later quotes the CEO:

We have the in-house experience and expertise to continue with the next steps, but expect WorleyParsons to resume its role as the EPCM contractor for the Kami Project once a decision to commence construction is reached.  [emphasis mine]

So, it seems that Kami has suspended engineering work by its EPCM to conserve cash.  This implies that there are doubts as to whether or not Kami will become fully financed.  This leads me to believe that:

  1. I was lucky to sell my shares of Altius Minerals when I did, since Altius owns Alderon shares and a royalty on the Kami deposit.
  2. Altius’ recent secondary offering made a lot of sense.
  3. Brian Dalton, Altius’ CEO, probably saw this bad news from Alderon coming because (A) he’s really smart and (B) he sits on Alderon’s board of directors.

*Disclosure:  I sold out of my positions in Altius and Alderon.  I have no position in either stock, long or short.

EDIT (7/2/2014): WorleyParsons is publicly traded on the ASX under the symbol WOR.  Their statement says that the “EPCM contract […] has been temporarily suspended pending completion of the financing plan for the project.”

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2 thoughts on “Alderon suspends work on its Kami project

  1. You sound like you have the mentality of a goat..a smart goat. Don’t comment on something of which you have no clue!

  2. Speculation: Until a new rail line is built, they would need to build their line across Cliffs Wabush mine’s property (royalty?) Addtionally, with the closing of Wabush on the horizon, they could conserve cash and maybe buy it, get the power, equipment and rail line they need…to say nothing about the Grandfathered tailings contract Wabush mine holds with the NL government, Alderon might not be so lucky with the treatment of their own tailings…. However now that MFC offered the USW a new contract, which they accepted, it’s a whole new ball game between: Cliffs, Casablanca, MRC Industrial and of course the NL government.

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