All-Canadian royalty portfolio
Voisey's Bay Royalty (NL, Canada)
Royalty - 10% of a 3% NSR (effective 0.3%)
Nickel, Copper, Cobalt (Ni-Cu-Co)
|LTM (as of January 31, 2016) Royalty Revenue||$2.2 million|
|Annual production capacity||~2.0 mt|
|Estimated Mine Life||19 years|
Altius has a 10% interest in the Labrador Nickel Royalty Limited Partnership ("LNRLP"). The LNRLP holds a 3% net smelter return royalty over the Voisey's Bay nickel-copper-cobalt project in Labrador that is owned and operated by Vale INCO NL.
Altius acquired the royalty interest in mid-2003 using a conservative long term nickel price of US$3.25 per pound for a total purchase cost of $13.6 million and by mid 2010 Altius had recognized cumulative revenue in excess of $15 million, achieving payback. In fiscal 2012 Altius realized $4.15 million in revenue and expects several decades of comparable annual royalty revenue at the current nickel price of $8-$10 per lb.
The Voisey's Bay project and district is arguably at a very early stage of its exploration and development history compared to other world-renowned nickel districts like Sudbury and Norilsk which dramatically grew in scale over the initial decades following discovery.
As of January 31, 2017, Vale continues to deduct capital costs associated with construction of its Long Harbour processing facility against the net smelter return royalty calculation, which has reduced the royalty to $nil. Altius disagrees that the royalty agreement allows for the deduction of capital related costs against royalty payments and through the Labrador Nickel Royalty Limited Partnership (“LNRLP”) is pursuing a legal claim asserting its position and its royalty entitlements.
The LNRLP legal claim against Vale also includes assertions that all previous royalty payments made to it have been inadequate on the basis that the sales of material from the mine to other operating subsidiaries of Vale were completed at lower than fair market prices. Altius is a 10% unit holder in LNRLP while Royal Gold is the General Partner holding the remaining 90%. During the current quarter, the Corporation accrued legal fees of USD $219,000 in relation to its share of the legal expense to date. The legal claim is currently in the document production stage.