On March 15, 2018, CLHbid.com will be auctioning off one of the largest privately owned high-grade aggregate deposits in Western Canada.
All permits have been acquired and the pit has been operational for over a year. Permits along with the existing reclamation deposit held by SRD will be assigned to the high bidder. To the highest bidder, the pit is virtually turnkey ready. Hundreds of thousands of dollars in both ‘on site’ and ‘off site’ expenses have been spent to get the pit where it is today. This includes things such as stripping, permitting, building of access roads and hiring consultants to prepare requisite reports for SRD. The prior operator of the test pit has entered into an agreement with the Landowner to discontinue operations immediately and then remove existing stockpiles by April 30, 2018.
The land is only thirteen miles south of Crooked Creek off Highway 43 and has pavement to within 6 miles. There is currently a high-grade road right to the property, with an Industrial Road Use with the MD of Greenview having been obtained by the past operator of the test pit. There are no hills to climb when taking crushed product from the land.
Transportation economics alone ensure the Ridgevalley Aggregates’ deposit is one that will be immensely profitable from day one. The deposit is further enhanced by the fact that it has no competing deposits in close proximity. The market area east to Valleyview and Fox Creek and north to High Prairie has very limited supplies of high grade aggregate.
The functionality of the deposit was proven with the test pit operated on the North-West quarter section. The pit shows a high-grade quality of the deposit of significant depth with overburden that is commercially economical to deal with. The rock size and hardness, along with the silt as opposed to clay based fines, make for a product that is easily brought to spec. Water was easily managed in the test pit with water seemingly localized as opposed to spring fed. A further noteworthy advantage of the deposit is the lack of coal.
Overburden varies throughout with rock right to surface near test hole 5 and the very deepest overburden being around 17 feet. The vast majority of the deposit tested, however, indicates very manageable depths of overburden. Once the overburden is removed, the vertical quality of the deposit is one of its outstanding features with consistency not often seen – right from the surface down to the floor of the pit.
Perhaps the most significant attribute of the deposit is that it is on private land. The high bidder will avoid paying royalties to the Crown – currently close to $1.50 a tonne. With the trend of ongoing increases in government taxes and royalties, no doubt this economic advantage will only widen with time. Even at today’s numbers it already amounts to hundreds of thousands of dollars a year. Unlike SMLs on Crown land, with aggregate excavation on private land the future costs are known and are not subject to momentous financial uncertainty. Recent government changes in policy relating to Crown land SMLs such as no compensation for pipelines or highways across a SML merely reinforce the uncertainly that comes with gravel plays on Crown land. In business certainty is paramount especially when investing in a deposit that is likely to have a life span of several decades.
The final Purchase Price will include a fixed lump sum payment of TWO MILLION FIVE HUNDRED THOUSAND ($2,500,000.00) due June 1st, 2018 upon closing with the balance paid in annual installments as a Vendor Take Back (‘VTB’). The high bidder will obtain title to the land on closing with a mortgage back to the Vendor to secure the VTB. The entire half section of land will be sold excepting thereout a 9.89-acre subdivision in the SE corner where a recreational cabin is located. The high bidder will receive a) title to 310 acres of fee simple land in an area where farmland is selling for record prices b) the benefit of significant improvements to the half section associated with opening up a new pit (access roads, stripping etc.) c) avoid the high cost associated with the first phase in a pit where product is often moved at least twice d) obtain the benefit of the existing deposit at SRD and e) obtain the benefit of all permits and approvals in place to allow the pit to produce revenue almost immediately upon closing. The Vendor will be entitled to lease and crop that portion of the land not being used for industrial activity until such time as it required to be used by the high bidder.
The amount of the VTB over and above the up-front payment of $2,500,000.00 will be the subject of the timed auction. The Starting Bid of ONE MILLION ($1,000,000.00) will be payable in two equal payments of FIVE HUNDRED THOUSAND ($500,000.00) on June 1, 2019 and June 1, 2020. The amount to which the Closing Bid exceeds the Starting Bid shall be allocated to each subsequent year of the VTB and payable on the anniversary date of Closing with maximum payments of FIVE HUNDRED THOUSAND ($500,000.00) payable in any subsequent year commencing on June 1, 2021. The up-front payment of $2,500,000.00 plus the Starting Bid of $1,000,000.00 is based on a minimum payment of 40 cents/metric tonne [8,900,000 metric tonnes x .40 cents).
Interested parties may obtain a copy of the professional aggregate report in relation to the land by contacting email@example.com.