Excelsior Mining Corp.
Terms: Altius owns an underlying 1.625% gross sales royalty covering the project.
The Gunnison project was recently ramping up to commercial production in Q1/2020, however due to the unfolding global COVID-19 pandemic the Company announced a temporary suspension of operations to ensure employee health and safety until the global crisis abates. As of July 2020, no new guidance has been provided for expected restart of operations. Excelsior and its Gunnison project is an example of Altius’ hybrid Equity/Royalty investment strategy to invest in attractive projects at a relatively early stage with a long term view of generating future royalty cashflows at a potential nil to negative cost.
The Gunnison copper mine is located 105 km southeast of Tucson within the Arizona copper belt. Excelsior is currently focusing efforts on the North Star deposit, which is interpreted as an oxidized skarn-type deposit. The project utilizes in-situ methods to leach copper from the buried copper oxide deposit and extract the copper by conventional Solvent Extraction-Electrowinning (SX-EW) technology. Based on the 2016 Feasibility Study, the project is expected to initially produce 25 million pounds of copper per annum for three years ramping up to 75 million lbs and finally expanding to 125 million pounds of copper per annum in year 7. Over a 24-year mine life, AISC are estimated at US$1.23/lb.
The 1% of the Gunnison project royalty was originally acquired by Callinan Royalties Corp. in 2013 as part of a royalty and equity financing of the Company and was later increased to 1.625% by Altius with the exercise of the Calinan Royalties Corp. agreement to acquire an additional 0.625% royalty for CAD$5 million.
Anticipated royalty revenues from the Gunnison copper mine will represent the first production royalty to result from Altius PG business organic royalty growth platform. After accounting for realized and unrealized gains related to the original equity investment in Excelsior, this royalty was created at an effective negative cost. Details of the project economics and the ramp up progress is available here.