Altius to Acquire Part of NSR Royalty Interest in
Voisey's Bay
ST. JOHN'S, NEWFOUNDLAND--Altius Minerals Corporation ("Altius")
has entered into an agreement to acquire part of the 3% net
smelter return ("NSR") royalty interest in the Voisey's Bay
nickel-copper-cobalt project in Labrador, Canada. The NSR is
currently held by Archean Resources Limited ("Archean"), who made
the initial discovery of nickel-copper-cobalt near Voisey's Bay.
Archean is a private, Newfoundland and Labrador-based mineral
exploration company, wholly at arms length from Altius. Inco
Limited and its wholly owned subsidiary, Voisey's Bay Nickel
Company Limited, are currently developing the Voisey's Bay
project.
Altius considers the acquisition of this NSR to represent both an
attractive and rare opportunity for its shareholders to
participate in a world-class mineral project. Recent feasibility
study results released by Inco Limited suggest that the Voisey's
Bay deposit has the potential to be one of the largest and
lowest-cost nickel producers in the world.
Upon the closing of the proposed acquisition a limited
partnership will be formed by Archean and Altius. Archean will
contribute the NSR to the limited partnership and Altius will
acquire a 7.5% interest in the limited partnership. In addition,
Altius will receive an escalating 3 1/2 year option to increase
its interest in the limited partnership to 10%.
The acquisition price for Altius' interest in the limited
partnership will be C$9.75 million and 750,000 common share
purchase warrants in Altius. The warrants may be exercised at
escalating prices ranging from C$2.00 to C$4.00 over the next 3
1/2 years.
To fund the cash portion of the proposed acquisition, Altius has
engaged a syndicate of underwriters co-led by Haywood Securities
Inc. and Canaccord Capital Corporation and also including Pacific
International Securities Inc. This syndicate will place 6,250,000
units, on a best efforts basis, for proceeds of C$10 million.
Each unit will be priced at C$1.60 and include one half of one
share purchase warrant. The warrant exercise price and term will
be set in accordance with TSX Venture Exchange policies and
regulations. The proceeds of the placement will be held in escrow
pending successful closing of the acquisition.
Closing conditions include completion of final partnership
agreements, regulatory approval, completion of financing and
waiver by Voisey's Bay Nickel Company Limited of a first right of
refusal it holds concerning any sale or transfer of the NSR by
Archean. While Voisey's Bay Nickel Company Limited has indicated
its willingness to provide this waiver, any such waiver will be
subject to the satisfaction of certain terms and conditions
requested by Voisey's Bay Nickel Company Limited, including a
right of first offer granted to Voisey's Bay Nickel Company
Limited covering future sales or transfers of the limited
partnership units or the NSR. While Altius and Archean believe
they are capable of satisfying all such terms and conditions,
such terms and conditions are subject to negotiation and must be
satisfactory to Voisey's Bay Nickel Company Limited.
The Voisey's Bay project is currently expected to occupy a very
low position on the cost curve for global nickel projects. Inco,
in a March 20, 2003 press release, announced results of a
bankable feasibility study for the initial phase of the Voisey's
Bay project that projected life-of-mine finished nickel
production cash costs, based upon certain nickel and other metal
and exchange rate assumptions, of approximately US$1.10 to
US$1.15 per pound. Annual nickel prices over the past 25 years
have ranged between US$1.76 and US$6.25 and the current London
Metal Exchange cash quoted price is slightly more than US$4.00.
Assuming a 10% partnership interest, a 25-year life for the
Voisey's Bay project, and Inco's year-end 2002 reported estimates
of mineral reserves and resources, Altius has internally
estimated its life-of-project average annual royalty revenue
would be well in excess of C$1 million per year. This estimate
has been developed exclusively by Altius and has not been
reviewed by any third party. Inco's current scheduling
anticipates commencement of production from the Voisey's Bay
deposit in either late 2005 or early 2006.
Considerable change and refinement to the modeled estimate is
likely as more specific information becomes available concerning
factors that include start-up timing, metal recoveries,
production rates and grade scheduling, and smelting and refining
charges, among other items. The revenue stream is expected to be
most sensitive to the price of nickel. A long-term average nickel
price of US$3.25 per pound was utilized for the estimate
described above.
Additional information concerning the Voisey's Bay project can be
accessed by visiting the corporate websites of Voisey's Bay
Nickel Company Limited (www.vbnc.com) and Inco Limited
(www.Inco.com). Inco's 2002 annual report is available for
download at the latter and contains a section that provides
mineral reserve and resource estimates as at year-end 2002.
Altius Minerals Corporation
Altius has established a proven 5-year track record under its
business plan of generating innovative exploration projects and
attracting mining company joint venture partners. Thus far, 29
properties have attracted direct project financing from companies
such as Barrick Gold, BHP-Billiton, Cameco Corporation, Inmet
Mining, Sudbury Contact Mines, and Teck-Cominco, among others. As
part of these agreements, Altius normally receives cash payments
and retains the flexibility to hold direct property interests or
to convert to production royalties.
Altius presently has approximately $2.5 million in working
capital and no debt. This year, for the fifth successive year,
exploration expenditures by partners are projected to be higher
than previous year levels.
Upon closing of this transaction, Altius will be positioned to
grow its portfolio of mineral property and royalty interests and
will continue to seek opportunities of merit within the sector.
This News Release includes certain "forward-looking statements"
as such term is commonly understood. Other than statements of
historical fact, all statements in this release, including,
without limitation, statements regarding mineral reserves and
resources estimates, commencement of production, potential
ranking of the Voisey's Bay deposit amongst global nickel
projects, projected annual royalty revenue and future plans and
objectives of the Company, are forward-looking statements that
involve various known and unknown risks, uncertainties and other
factors. There can be no assurance that such statements will
prove to be accurate. Actual results and future events could
differ materially from those anticipated in such statements.
Readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of the date of this
announcement. Important factors that could cause actual results
to differ materially from the Company's expectations include,
among others, the ongoing results of current exploration
activities, conclusions of any pre-feasibility or feasibility
studies, start up timing, metal recoveries, smelting and refining
charges, long term demand for and supply of nickel, copper and
cobalt, exchange rates, the accuracy of mineral reserves and
resources estimates, the provincial tax regime, environmental and
political developments, changes in project parameters and future
metal prices, as well as those factors discussed herein and
elsewhere in the Company's documents filed from time to time with
the TSX Venture Exchange, Canadian securities regulators and
other regulatory authorities. All subsequent written and oral
forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by
this notice. While the Company anticipates that subsequent events
and developments may cause the Company's views to change, the
Company specifically disclaims any obligation to update these
forward-looking statements. These forward-looking statements
should not be relied upon as representing the Company's views as
of any date subsequent to the date of this release.
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FOR FURTHER INFORMATION PLEASE CONTACT:
Altius Minerals Corporation
Brian F. Dalton
(709) 576-3440
or
Altius Minerals Corporation
Chad Wells
(709) 576-3440
