Altius Minerals Corp. has reported that it has entered into an agreement with Liberty Metals & Mining Holdings LLC to acquire its 44.9% interest in certain royalty based limited partnerships, of which Altius acts as general partner. Upon closing, Altius’s partnership interests will increase from 52.4% to 97.3%.
These limited partnerships hold tonnage-based, cash-flowing royalties relating to coal operations that are predominantly integrated with several electrical generation plants based in Alberta, Canada. The underlying electrical generation plants are subject to regulations and/or compensation agreements that require the cessation of coal fuelling by 2030 as part of federal and provincial government policy initiatives. While revenues from the acquired royalty units are expected to decline progressively as the phase out of coal-based power generation within Canada continues toward an ultimate deadline of 2030, Altius expects to receive a strongly accretive return on its capital and an enhancement of free cash flow that it intends to allocate towards investment in our long-term renewable energy royalty growth strategy.
Under the agreement structure, Altius will acquire a company that holds LMM’s units in the partnerships for CAN$11.25 million before positive working capital adjustments, which it will fund using existing cash-based liquidity.
Brian Dalton, CEO of Altius, commented: “This acquisition may seem at first glance to be contradictory to our strategic objective of providing royalty focused alignment with major sustainability-based growth trends, including the fossil fuel to renewable energy transition. 3 years ago, however, rather than choosing to divest our coal royalty interests, we took the decision to proactively allocate remaining revenue from these interests to direct investment in the growth of the renewable energy sector.
“Divesting would have changed nothing other than the name of the royalty revenue recipient, while reinvestment of proceeds into renewable energy developers allowed Altius to become a leader in supporting the sustainability transition - and we have met this goal with actions. At that time, we expected around CAN$100 million in coal-based royalty revenue before scheduled phase outs were complete. We have since committed this full amount into the innovative funding of wind, solar and hydro based renewable energy projects through our emerging renewable energy royalty subsidiary. With this partnership consolidation we can now even further accelerate the growth and impact role of Altius Renewable Royalties.”
Paul Mitrokostas, EVP of Liberty Mutual Investments, added: “Liberty Mutual’s global policy on coal underwriting and investing outlines our commitment to a decarbonised future. This agreement with Altius accelerates our objective to phase out thermal coal-focused investments. We are pleased that the agreement also furthers the momentum for Altius to invest in renewable energy projects that will directly contribute to the global transition toward cleaner power generation.”
Read the article online at: https://www.globalminingreview.com/finance-business/28072020/altius-to-acquire-additional-royalty-interests-from-liberty-metals-mining-holdings/