Alderon Iron Ore Corp. (ADV.TO) announced that Hebei Iron & Steel Group Co., Ltd. has confirmed receipt of all necessary Chinese regulatory approvals for the previously announced transaction. Now that all Chinese regulatory approvals have been received, both parties will work to close the transaction shortly.
On 16th August 2012, Alderon Iron Ore announced that it has amended its subscription agreement with Hebei Iron & Steel Group Co., Ltd. dated April 13, 2012 to reduce the aggregate investment in Alderon and the Kami iron ore project from $194 million to $182.2 million.
Hebei's initial investment in Alderon and the Kami Project will now be an aggregate amount of C$182.2 million in exchange for 19.9% of the outstanding common shares of Alderon and a 25% interest in a newly formed limited partnership that will be established to own the Kami Project.
While the investment proceeds for 19.9% of the outstanding common shares of Alderon have been reduced from $88.3 million to $62.2 million, the investment proceeds for the 25% interest in the Kami Project have been increased from $105.7 million to $120 million.
As per the terms of the amended Subscription Agreement, Hebei will subscribe for common shares at a price per share equal to C$2.41. Upon closing of the Private Placement, Hebei will acquire approximately 25,828,305 common shares for gross proceeds to the Company of C$62.2 million representing 19.9% of the issued and outstanding shares of Alderon.
As a result of the reduction in the common share subscription price, Hebei's direct investment in the limited partnership will increase from C$105.7 million to C$120 million.
Hebei will contribute the C$120 million and Alderon will contribute the Kami Project and relevant properties to a newly formed limited partnership which will be owned as to 25% by Hebei and 75% by Alderon.
Hebei has also agreed to co-operate with Alderon in its efforts to attract additional off-take partners in respect of the annual production from the Kami Project that has not be committed to Hebei.
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