Friday, February 24, 2017

Fairfax Financial to invest $100 million in to Altius Minerals

Altius Minerals website:

Altius Minerals Corporation ("Altius") (TSX: ALS) is pleased to announce that it has entered into a letter agreement pursuant to which Fairfax Financial Holdings Limited, through certain of its subsidiaries (collectively, "Fairfax"), will make an up to $100 million investment in Altius (ATUSF) in exchange for the issuance by Altius of preferred securities and warrants.

Fairfax has agreed to subscribe, on a private placement basis, for 5% preferred securities in an aggregate amount of $100 million, issuable in tranches of not less than $25 million. Altius intends to close an initial subscription of $25 million, and has sole discretion with respect to additional subscriptions by Fairfax for the remaining $75 million in minimum tranche sizes of $25 million by no later than December 31, 2017. The preferred securities will be subordinate secured and have no fixed maturity date but may be redeemed by Altius at any time after 5 years from closing, or after 3 years if its common shares are trading at a price of at least $24 per share.

Altius has also agreed to issue 6,670,000 common share purchase warrants, exercisable at $15 per share. Warrants will vest proportionately based on the aggregate amount of preferred securities drawn by Altius under the private placement. Each vested warrant will be exercisable within 5 years, but may be extended to 7 years if the closing price of the Altius common shares is less than $24 on the fifth anniversary of the initial closing. Altius can also elect to require early exercise of the warrants if the closing price of its common shares reaches $24 at any time after the third anniversary of the initial closing.

The proceeds raised from the Fairfax financing will be used by Altius for investing in opportunities it identifies within the mining and minerals sector and for general corporate purposes.

This is great news as I am a big fan of the Altius Mineral management team. They have consistently demonstrated that they understand the cyclical nature of the resource markets. The Altius team have made money for shareholders in the last two bear and bull market cycles.

Prem Watsa and Fairfax Financial really need no introduction. Watsa is a billionaire Canadian investor who is known as the Warren Buffet of Canada.

I look forward with eager anticipation as to how Altius will put this capital to work in an emerging commodity bull market.

Altius is a hold for me.

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