Altius Acquires Part of Voisey's Bay NSRAltius to Acquire Part of NSR Royalty Interest in Voisey's
Bay
14:11 EDT Tuesday, June 03, 2003
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 an