Canadian Mining Journal


COAL: New interest in B.C. coal mine

ST. JOHN’S, NEWFOUNDLAND AND LABRADOR: Altius Minerals Corporation says that the private company optionee of its Telkwa Coal project in British Columbia, Telkwa Coal Limited, has announced a conditional binding agreement to be acquired by an Australian-based public issuer, Allegiance Coal Ltd.

Upon successful regulatory and shareholder approvals of the proposed transaction, Altius expects to be a significant shareholder of Allegiance while retaining a project level royalty over the Telkwa project.

TCL commissioned a Canadian NI 43-101 JORC Compliant Technical Report in February 2015 which confirmed a 16Mt coal resource, including 89Mt in the measured resource category, as defined by the JORC Code. TCL also commissioned a report to assess coal quality and coal market options in July 2015 and concluded that Telkwa coal is a semi-soft coking coal with the potential to compete alongside Queensland and New South Wales semi-soft coking coals.

The project is located immediately adjacent to Canadian National Railway’s mainline that runs direct to the deep-water port of Prince Rupert, a 390km rail haul from the project’s planned siding direct to Ridley Island Coal Terminal.

TCL has the right to earn up to a 90 per cent interest in the Telkwa project in exchange for staged milestone payments. Altius will retain both a sliding scale gross sales royalty that ranges between 3% and 4.5% depending upon benchmark coal prices at the time of any coal sale and a 10% project interest.

Altius has elected to receive pending milestone option payments in the form of shares that will result in Altius receiving shares in Allegiance, representing approximately 5% to 6% of the pro-forma outstanding shares of Allegiance, depending on the level and pricing of capital raising that Allegiance completes as part of the acquisition.