Altius Minerals Corporation (ALS:TSX) (ATUSF: OTCQX) ("Altius" or the "Corporation") reports that it has been informed by Deloitte Restructuring Inc., the Receiver overseeing the disposition of assets formerly held by Alderon Iron Ore Corp. ("Alderon"), that an acquisition proposal by Champion Iron Limited (the "Acquisition") has been approved by the Supreme Court of Newfoundland and Labrador following a competitive bidding process. The primary asset involved in the Acquisition is the advanced stage Kamistiatusset ("Kami") iron ore project located in the Labrador Trough geological belt in western Labrador.
Altius's Project Generation team completed an initial drilling program that broadly outlined the Kami high-grade iron ore deposits in 2008. Altius subsequently sold the project to Alderon in exchange for a significant equity shareholding in the company and retention of a direct project interest through a 3% gross sales royalty, which has not been impacted by the receivership process. Altius then acquired additional Alderon equity in early 2018 through a purchase from a third-party shareholder and soon after that also became a minority participant in a Sprott Private Resource Lending LP secured debt funding syndicate.
Under the Acquisition, Altius will receive 600,000 Champion Iron shares as consideration for the sale of its portion of secured debt of Alderon. It also expects to receive a portion of the $15 million cash consideration and the future production-based payments stemming from its 37.3% equity holding in Alderon. The amount of cash consideration will be dependent on the Receiver's approval process for any additional creditor claims, which will rank in priority over any amounts payable to equity holders. This process remains ongoing, but the Receiver has stated that it believes there will be a substantial recovery to Alderon shareholders.
Closing of the Acquisition is subject to the consent of the Ministry of Industry, Energy and Technology of Newfoundland and Labrador, as well as other customary closing conditions. The Acquisition is expected to be completed in the fourth quarter of calendar 2020.
Brian Dalton, Altius CEO commented, "We are excited to learn that the Kami project has found its way to a new owner that has the proven operating experience and financial depth necessary to further its advancement to potential production. The project is located adjacent to available infrastructure and features high-quality iron ore of a type that is in increasing global demand owing to its low impurities and inherently lower emissions profile during the steel making process. In addition to achieving a recovery on our loan principal and benefitting from our significant equity interest in Alderon, we are excited about the renewed possibility for development of the Kami project and the implications of that relative to our fully preserved royalty interest."