Altius

Telkwa Coal Project (BC, Canada)

Altius owns 55,208,356 representing ~14% of the outstanding shares of Allegiance Coal (AHQ:ASX) (http://www.allegiancecoal.com.au/) who is actively advancing the Telkwa Metallurgical Coal Project in British Columbia originally acquired by Altius as part of its Carbon Development Partnership ("CDP") and Prairies royalties acquisition from Sherritt in 2014.

Altius originally (2014) entered into an option agreement with a private group out of Australia being lead by Mr. Mark Gray but in 2016 and 2017 the agreement was modified to effectively sell 100% ownership of the Telkwa Project for a substantial shareholding in ASX listed Allegiance that became the public vehicle to advance the project. Altius retains a sliding scale gross sales royalty covering the project that ranges between 3% and 4.5% depending upon benchmark coal prices while the current agreement also ensures Altius further share payments of Allegiance at various milestones in its development of the Telkwa project to production. For additional information regarding Allegiance and the Telkwa project please visit http://www.allegiancecoal.com.au/.

Project Overview

The Telkwa metallurgical coal project (Project) is located on the western side of British Columbia. The Project enjoys simple access to rail and port and, from the Port of Prince Rupert, it is a comparatively short shipping distance to the Asian steel mills where Telkwa metallurgical coal will likely be sold.

The Project has been the subject of a significant amount of historical exploration and evaluation including most recently two pre-feasibility studies which delivered robust economic outcomes and determined that the Project would sit in the lowest five percentile of the global seaborne metallurgical coal cost curve. The global seaborne trade of metallurugcal coal is around 320 million tonnes per annum.

The Project contains 148 million tonnes of coal resource declared in accordance with JORC 2012 and NI 43-101. Of that total, 135 million tonnes representing 90 percent of the coal resource is in the ‘measured’ category confirming the very high level of geological confidence in the resource. Following the two pre-feasibility studies, 42.5 million tonnes of resource has been converted into saleable coal reserves (economically recoverable and saleable coal).

The coal is a metallurgical coal which will be used in blast furnace steel production. Steel delivers the goods and services that our societies need – healthcare, telecommunications, improved agricultural practices, better transport networks, clean water and access to reliable and affordable energy. Global steel production is dependent on coal. Seventy percent of steel produced today uses metallurgical coal, or coking coal.

Iron ore and coking coal are the two primary ingredients of steel. Iron occurs as iron oxide in the earth’s crust from which the ore is converted, or ‘reduced’, using carbon. The primary source of carbon is coking coal, a high grade and comparatively rare coal which has unique properties suitable for blast furnace steel production.

The blast furnace is fed with iron ore, coke and small quantities of fluxes (minerals, such as limestone, which are used to collect impurities). Air is heated to about 1200°C and blown into the furnace causing the coke to burn producing carbon monoxide which reacts with the iron ore and heats the ore to create molten iron. Thereafter the iron is refined to create the variety of steel products which society demands.

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