Altius posts $52-million impairment charge

Altius Minerals‘ (ALS-T) annual net income was drastically cut by its investment in a multi-billion-dollar oil refinery project after engineering contractor, SNC-Lavalin (SNC-T), sought to have the refinery operator declared bankrupt in June.

Altius’ annual net income for the year ended April 30, 2008 was $12.1 million, or 40 per share, compared to $52.8 million a year earlier, or $1.80 per share.

The company, which has a varied portfolio of metals, mining, and energy-related projects, is a 36.9% owner of the Newfoundland and Labrador Refinery Corporation (NLRC), which plans to build a 300,000-barrell-per-day refinery.

Altius included an impairment charge in its fourth quarter results totaling $52.2 million for the company’s $22.1-million equity investment and $30.1-million loan to NLRC.

Altius management say they are unable to estimate the value of its investment in NLRC.

NLRC negotiated delayed work timelines with contractors after it had difficulty getting the necessary financing in time.

According to a June 23 Haywood Securities report by analyst, David Beasley, it appears that SNC Lavalin continued to bill at the full project rate, which NLRC disputed.

Beasley writes that Altius, which had $167 million in cash, likely didn’t bail out NLRC’s payments to SNC because it wouldn’t guarantee that SNC would stop billing at the full rate and also that it could motivate other contractors to go back to full contract billing, which could amount to hundreds of millions of dollars.

NLRC was granted a stay of proceedings by the Newfoundland Supreme Court on June 24, allowing it a chance to decide how best to restructure the company and to continue to secure financing or partners for the project.

During the reported fiscal year, Altius has entered into seven mineral exploration agreements plus another three since the end of April. The company didn’t say whether the impairment charge for NLRC would affect its other projects. The Haywood report downgraded its target price for Altius to $8.50 per share.

Today, Altius shares fell 12, or nearly 2%, to $6.77 apiece on a trading volume of 99,000 shares. On June 20, the share price was nearly halved in one day when NLRC announced it was seeking bankruptcy production. Shares fell to $7.25 from $12.37 apiece. Altius has a 52-week high of $30.40 and a low of $6.31.