Sherritt (T.S) deal positions Altius Minerals (T.ALS) as significant royalty player

Stockhouse Editorial
0 Comments| January 7, 2014

Shares of Altius Minerals Corp. (TSX: T.ALS, Stock Forum) have been on a roll since the announcement last month that it has purchased a 51% interest in a portfolio of 11 producing coal and potash royalties in Alberta and Saskatchewan from Sherritt International Corp. (TSX:  T.S, Stock Forum).

Since the deal was announced on December 24th, 2013, Altius shares have jumped from $10.60 to a high of $14.42. After closing at $13.49 on Tuesday, Altius has a market cap of $373.8 million, based on 27.7 million shares outstanding.

The 52-week range is $14.42 and $9.09.

Altius will fund $233 million of the $460 million aggregate purchase price to acquire a 51% interest in the royalty streams, alongside Liberty Metals & Mining Holdings, a subsidiary of Boston-based Liberty Mutual Insurance, and other private parties.

In addition, Altius has agreed to acquire Sherritt’s 50% interest in Carbon Development Partnership (CDP). CDP holds coal projects with more than 7.2 billion tonnes of measured and indicated resources and approximately 4.7 billion tonnes of inferred resources. It also holds 2 billion tonnes of inferred potash resources in Saskatchewan, as well as a separate portfolio of production-stage royalties.

The purchase price for CDP will be $21 million. According to the company, the transaction positions Altius as a significant minerals royalty company with a diverse commodity, asset and operator exposure and with all assets located in Canada.

It also provides immediate cash flow from 11 low risk operating mine royalties (five coal and six potash) that collectively generated approximately $25 million revenue in the last 12 months, on a 51% pro forma attributable to Altius basis.

These are long life assets with an average reserve life of more than 20 years for the electrical coal assets and more than 70 years for the potash assets.

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