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| 1.   | PREAMBLE AND DEFINITIONS |
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| (a)   | "Act" means the Income Tax Act (Canada) as amended from time to time. |
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| (b)   | "Affiliate" means an affiliate of the Corporation as the term "affiliate" is defined in the Securities Act (British Columbia). |
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| (c)   | "Affiliate’s Board" means the Board of Directors of an Affiliate. |
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| (d)   | "Annual Remuneration" means: |
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|   | (a) | in respect of each Director, all amounts payable to a Director by the Corporation or an Affiliate in respect of the services provided to the Corporation or an Affilliate by the Director in a calendar year, including without limitation (i) the annual base retainer fee for serving as a Director, (ii)  the annual retainer fee for serving as a member of a Board committee or an Affiliate’s Board committee; (iii)  the annual retainer fee for chairing a Board committee or an Affiliate’s Board committee, and (iv)  if applicable, the fees for attending meetings of the Board or Board committees or Affiliate’s Board or Affiliate’s Board committees, but, for greater certainty, excludes amounts received by a Director as a reimbursement for expenses incurred in attending meetings of the Board or the Affiliate’s Board (as applicable); and |
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|   | (b) | in respect of the Management Members, all amounts payable as discretionary bonuses to the applicable Management Members in respect of the services provided to the Corporation by the respective Management Member as an employee of the Corporation in a calendar year. |
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| (e)   | "Board" means the Board of Directors of the Corporation. |
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| (f)   | "Cease Trade Order" means an order issued by a Stock Exchange requiring that trading of Shares be suspended. |
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| (g)   | "Cease Trade Period" means a Trading Day or period of consecutive Trading Days on which a Cease Trade Order is in effect. |
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| (h)   | "Code" means the U.S. Internal Revenue Code of 1986, as amended. |
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| (i)   | "Code Section 409A" means Section 409A of the Code and all interpretive guidance issued thereunder by the U.S. Internal Revenue Service. |
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| (j)   | "Committee" means the Compensation Committee of the Board. |
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| (k)   | "Corporation" means Alderon Iron Ore Corp. and any successor corporation whether by amalgamation, merger or otherwise. |
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| (l)   | "Deferred Share Unit" or "DSU" means an amount expressed as a bookkeeping entry on the books of the Corporation, the monetary value of which shall on any particular date be equal to the Market Value. |
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| (m)   | "Deferred Share Unit Account" means an account maintained for a Director or Management Member in accordance with Section 5.1. |
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| (n)   | "Director" means an individual who is a director of the Corporation or an Affiliate or who is a member of the Board or the Affiliate’s Board. |
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| (o)   | "Effective Date" has the meaning ascribed thereto in Section 1.1. |
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| (p)   | "Fiscal Year" means fiscal year of the Corporation, which until changed by the Corporation, shall be the twelve month period commencing on January 1 and ending on December 31 in any calendar year. |
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| (q)   | "Management Members" means the management of the Corporation or its Affiliates which includes, without limitation, employees of the Corporation or its Affiliates such as the Executive or Non-Executive Chairman, the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Vice-Chairman, President, Vice-President in charge of a principal business unit, division, or function (including Executive VP Project Execution, Executive VP Government and Community Affairs, Executive VP Human Resources, Vice President Corporate Communications, and VP Asia Pacific Affairs) or Corporate Secretary. |
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| (r)   | "Market Value" means, with respect to a particular date, the weighted average of the prices for the Shares on the Stock Exchange for the five (5) Trading Days immediately prior to that date or, in the event a Cease Trade Order applies, such other value as may be determined pursuant to Section 5.2(a) or Section 6.4. |
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| (s)   | "Plan" means this Deferred Share Unit Plan for Directors and Management Members of the Corporation. |
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| (t)   | "Quarter" means a fiscal quarter of the Corporation, which, until changed by the Corporation, shall be the three month period ending March 31, June 30, September 30 or December 31 in any calendar year. |
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| (u)   | "Redemption Date" has the meaning ascribed thereto in Section 6.1. |
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| (v)   | "Redemption Deadline" has the meaning ascribed thereto in Section 6.1. |
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| (w)   | "Share" means a common voting share of the Corporation and such other share as is substituted therefore as a result of amendments to the articles of the Corporation, reorganization or otherwise, including any rights that form a part of a common voting share or substituted share but not including any other rights that are attached thereto and trade therewith or any other share that is added thereto. |
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| (x)   | "Stock Exchange" means the Toronto Stock Exchange, or if the Shares are not listed on the Toronto Stock Exchange, such other stock exchange on which the Shares are listed, or if the Shares are not listed on any stock exchange, then on the over-the-counter market. |
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| (y)   | "Stub Year" means the period commencing on the Effective Date and ending on December 31, 2014. |
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| (z)   | "Termination Date" means the day on which the Director or Management Member dies or ceases to be a Director or Management Member of the Corporation and all of its Affiliates, provided that if the Director or Management Member is a U.S. Participant, the Termination Date shall be the date the Director or Management Member has experienced a separation from service as determined under Section 409A of the Code and applicable regulations and guidance thereunder. |
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| (aa)   | "Trading Day" means any date on which the Stock Exchange is open for the trading of Shares and on which one or more Shares actually traded. |
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| (bb)   | “U.S. Participant” means a Director or Management Member whose benefit under this Plan is subject to U.S. federal income tax. |
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| 2.   | CONSTRUCTION AND INTERPRETATION |
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| 3.   | ELIGIBILITY |
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| 4.   | DEFERRED SHARE UNIT GRANTS AND ELECTIONS |
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| (a)   | for the Annual Remuneration entitled to be received by the Director or Management Member during the Stub Year, no later than thirty (30) days after the Effective Date; and |
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| (b)   | for the Annual Remuneration entitled to be received by the Director or Management Member for any Fiscal Year following the Stub Year, no later than December 31 of the immediately preceding Fiscal Year. |
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| (a)   | 25% of the Annual Remuneration in the form of Deferred Share Units; |
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| (b)   | 50% of the Annual Remuneration in the form of Deferred Share Units; |
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| (c)   | 75% of the Annual Remuneration in the form of Deferred Share Units; or |
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| (d)   | 100% of the Annual Remuneration in the form of Deferred Share Units. |
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| 5.   | ACCOUNTS, DIVIDEND EQUIVALENTS AND REORGANIZATION |
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| (a)   | Deferred Share Units granted to a Director pursuant to Section 4.5, shall be credited to the Deferred Share Unit Account, as of the last day of each Quarter, in an amount determined by dividing (i) the portion of the Annual Remuneration for the applicable Quarter to be satisfied by Deferred Share Units by (ii) the Market Value on the last Trading Day of the applicable Quarter. In the event the Deferred Share Units are granted to a Director pursuant to Section 4.5 during a Cease Trade Period or within five (5) Trading Days following a Cease Trade Period, the amount of Deferred Share Units shall be determined by dividing (i) the portion of the Annual Remuneration for the applicable Quarter to be satisfied by Deferred Share Units by (ii) the Market Value on the last Trading Day before the Cease Trade Period. |
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| (b)   | Deferred Share Units granted to a Management Member pursuant to Section 4.5, shall be credited to the Deferred Share Unit Account, as of March 31 of each Fiscal Year, in an amount determined by dividing (i) the portion of the Annual Remuneration for the applicable Fiscal Year to be satisfied by Deferred Share Units by (ii) the Market Value on last Trading Day immediately preceding March 31 of applicable Fiscal Year.  In the event the Deferred Share Units are granted to a Management Member pursuant to Section 4.5 during a Cease Trade Period or within five (5) Trading Days following a Cease Trade Period, the amount of Deferred Share Units shall be determined by dividing (i) the portion of the Annual Remuneration for the applicable Fiscal Year to be satisfied by Deferred Share Units by (ii) the Market Value on the last Trading Day before the Cease Trade Period. |
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| 6.   | REDEMPTION ON RETIREMENT OR DEATH |
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| (a)   | where the Redemption Date is not more than 365 days after the last Trading Day before the Cease Trade Period, the value of each Deferred Share Unit redeemed shall be equal to the Market Value on the last Trading Day before the Cease Trade Period; and |
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| (b)   | where the Redemption Date is after the date that is more than 365 days after the last Trading Day before the Cease Trade Period, the value of each Deferred Share Unit redeemed shall be based on the fair market value of a Share determined on an informed, reasonable and equitable basis by the Committee, and if the Committee no longer exists, the fair market value of a Share shall be determined on an informed, reasonable and equitable basis by the Board, in either case, after receiving the advice of one or more independent firms of investment bankers of national repute. |
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| 7.   | CURRENCY |
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| 8.   | SHAREHOLDER RIGHTS |
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| 9.   | ADMINISTRATION |
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| 10.   | ASSIGNMENT |
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| 1.   | He or she has received and reviewed a copy of the terms of the Plan and agrees to comply with them. |
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| 2.   | Notwithstanding this election, the Committee retains discretion to decline to grant DSUs, in which case he or she will receive their Annual Remuneration in cash. |
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| 3.   | He or she will not be entitled to cause the Corporation or any Affiliate thereof to redeem DSUs granted under the Plan until no longer either a Director and/or Management Member of the Corporation or an Affiliate. |
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| 4.   | When DSUs credited to his or her account pursuant to this election are redeemed in accordance with the terms of the Plan (after he or she is no longer either a Director and/or Management Member of the Corporation or any Affiliate), income tax and other withholding requirements will arise and the Corporation will make all source deductions as are required by law. |
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| 5.   | The value of DSUs is based on the value of the common voting shares of the Corporation and  is therefore not guaranteed. |
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| 6.   | No funds will be set aside by the Corporation to guarantee the payment of DSUs.  The obligation of the Corporation to pay DSUs will remain an unfunded and unsecured liability recorded on its books. |
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| 7.   | This election will be in effect until he or she makes and delivers a revised election and cannot be retroactively changed. |
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| 8.   | In the event of any discrepancy between the terms of the Plan and the terms of this Election Notice, the terms of the Plan shall prevail.  All capitalized expressions used herein shall have the same meaning as in the Plan unless otherwise defined herein. |
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| 9.   | Neither the Plan nor anything contained herein constitutes tax or employment law advice to him or her and he or she is responsible for seeking independent counsel in all such matters. |
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| 1.   | Notwithstanding Sections 5.3 and 6.1, if a Director or Management Member, who is a UK Taxpayer, ceases to be a Director or Management Member of the Corporation due to his or her dismissal by the Corporation with cause or removal from the Board as a result of the Director being disqualified to hold a position as a Director under the British Columbia Business Corporations Act, then all such Deferred Share Units held by such Director or Management Member (whether vested Deferred Share Units or not) shall immediately be null and void upon such dismissal or removal. |
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