ALS.TO - Altius Minerals

[nostradamus]

ST. JOHN'S, NEWFOUNDLAND AND LABRADOR--(Marketwired - July 15, 2015) - Altius Minerals Corporation ("Altius") (TSX:ALS) is pleased to announce that it has completed an agreement to transfer certain of its CDP mineral lands in central Alberta to Westmoreland Coal Company ("Westmoreland") in exchange for future production royalties. CDP is a wholly owned subsidiary of Altius Prairie Royalties Corp. and was acquired in May 2014 as part of the acquisition of a portfolio of coal and potash royalties from Sherritt International.

 

Westmoreland operates the Paintearth and Sheerness mines in central Alberta, Canada which provide thermal coal to the Battle River and Sheerness electrical generating stations, respectively. The subject lands are located in close proximity to current mine permit areas and are known to contain near surface coal resources. The royalty rate remains confidential but is consistent with the inflation adjusted tonnage based rates of existing agreements in Alberta.

 

Altius CEO Brian Dalton commented, "This agreement represents an important milestone for Altius in that it brings solid potential for the creation of a new production royalty from our extensive portfolio of undeveloped mineral lands and validates the project generation and royalty creation component of our overall growth strategy. Altius maintains other extensive mineral land holdings in western Canada that include coal reserves and resources, several of which have been the subject of advanced project level studies and evaluations and that represent additional future development options."

 

[TwoCitiesCapital]

ST. JOHN'S, NEWFOUNDLAND AND LABRADOR--(Marketwired - July 15, 2015) - Altius Minerals Corporation ("Altius") (TSX:ALS) is pleased to announce that it has completed an agreement to transfer certain of its CDP mineral lands in central Alberta to Westmoreland Coal Company ("Westmoreland") in exchange for future production royalties. CDP is a wholly owned subsidiary of Altius Prairie Royalties Corp. and was acquired in May 2014 as part of the acquisition of a portfolio of coal and potash royalties from Sherritt International.

 

Westmoreland operates the Paintearth and Sheerness mines in central Alberta, Canada which provide thermal coal to the Battle River and Sheerness electrical generating stations, respectively. The subject lands are located in close proximity to current mine permit areas and are known to contain near surface coal resources. The royalty rate remains confidential but is consistent with the inflation adjusted tonnage based rates of existing agreements in Alberta.

 

Altius CEO Brian Dalton commented, "This agreement represents an important milestone for Altius in that it brings solid potential for the creation of a new production royalty from our extensive portfolio of undeveloped mineral lands and validates the project generation and royalty creation component of our overall growth strategy. Altius maintains other extensive mineral land holdings in western Canada that include coal reserves and resources, several of which have been the subject of advanced project level studies and evaluations and that represent additional future development options."

 

I wish there was more detail on the extent of the land that was transferred. It was my understanding that CDP was known to have a lot of coal deposits on it. If we know that the coal deposits are there, and there are coal mines surrounding this area, what's the estimate for when we'll actually have a mine up and running to see this flow into our net income?

 

[nostradamus]

 

I wish there was more detail on the extent of the land that was transferred. It was my understanding that CDP was known to have a lot of coal deposits on it. If we know that the coal deposits are there, and there are coal mines surrounding this area, what's the estimate for when we'll actually have a mine up and running to see this flow into our net income?

 

 

The operating mines currently service power stations. Assuming that the amount of coal dug up currently is everything the power stations need, I would speculate that the main effect of the additional lands is to extend the expected life of the existing paintearth and sheerness royalties, rather than expand the size of the royalty. Ie when the current mines are emptied, they move on to the new lands that Altius has just donated to continue servicing the power stations. But this life extension would be a big deal as these two mines are very big components of Altius' revenue.

 

http://altiusminerals.com/prairie-royalties/paintearth

http://altiusminerals.com/prairie-royalties/sheerness

 

Any other views?

 

N.

 

[TwoCitiesCapital]

 

I wish there was more detail on the extent of the land that was transferred. It was my understanding that CDP was known to have a lot of coal deposits on it. If we know that the coal deposits are there, and there are coal mines surrounding this area, what's the estimate for when we'll actually have a mine up and running to see this flow into our net income?

 

 

The operating mines currently service power stations. Assuming that the amount of coal dug up currently is everything the power stations need, I would speculate that the main effect of the additional lands is to extend the expected life of the existing paintearth and sheerness royalties, rather than expand the size of the royalty. Ie when the current mines are emptied, they move on to the new lands that Altius has just donated to continue servicing the power stations. But this life extension would be a big deal as these two mines are very big components of Altius' revenue.

 

http://altiusminerals.com/prairie-royalties/paintearth

http://altiusminerals.com/prairie-royalties/sheerness

 

Any other views?

 

N.

 

That's an interesting thought. I hadn't considered that before, but it certainly makes sense relative the secular decline that we find the coal industry in. I guess only time will tell.

[bizaro86]

 

I wish there was more detail on the extent of the land that was transferred. It was my understanding that CDP was known to have a lot of coal deposits on it. If we know that the coal deposits are there, and there are coal mines surrounding this area, what's the estimate for when we'll actually have a mine up and running to see this flow into our net income?

 

 

The operating mines currently service power stations. Assuming that the amount of coal dug up currently is everything the power stations need, I would speculate that the main effect of the additional lands is to extend the expected life of the existing paintearth and sheerness royalties, rather than expand the size of the royalty. Ie when the current mines are emptied, they move on to the new lands that Altius has just donated to continue servicing the power stations. But this life extension would be a big deal as these two mines are very big components of Altius' revenue.

 

http://altiusminerals.com/prairie-royalties/paintearth

http://altiusminerals.com/prairie-royalties/sheerness

 

Any other views?

 

N.

 

Nope, you've nailed it. I would expect royalties to be down slightly, as power prices in AB have been low, so power station owners are taking market based downtime. Also, the extra land is unlikely to extend the timeframe of the royalties past when the adjacent coal plants close. Currently paintearth closes in 2019/2025/2031 for regulatory reasons. (One giant boiler each of those years)

[TwoCitiesCapital]

 

I wish there was more detail on the extent of the land that was transferred. It was my understanding that CDP was known to have a lot of coal deposits on it. If we know that the coal deposits are there, and there are coal mines surrounding this area, what's the estimate for when we'll actually have a mine up and running to see this flow into our net income?

 

 

The operating mines currently service power stations. Assuming that the amount of coal dug up currently is everything the power stations need, I would speculate that the main effect of the additional lands is to extend the expected life of the existing paintearth and sheerness royalties, rather than expand the size of the royalty. Ie when the current mines are emptied, they move on to the new lands that Altius has just donated to continue servicing the power stations. But this life extension would be a big deal as these two mines are very big components of Altius' revenue.

 

http://altiusminerals.com/prairie-royalties/paintearth

http://altiusminerals.com/prairie-royalties/sheerness

 

Any other views?

 

N.

 

Nope, you've nailed it. I would expect royalties to be down slightly, as power prices in AB have been low, so power station owners are taking market based downtime. Also, the extra land is unlikely to extend the timeframe of the royalties past when the adjacent coal plants close. Currently paintearth closes in 2019/2025/2031 for regulatory reasons. (One giant boiler each of those years)

 

I thought they were expecting the Sheerness mine to have a life of nearly 25 years. That would put it several years past the closure of the coal plants if that's the case. What are the economics of exporting the coal from these mines?

[bizaro86]

 

I wish there was more detail on the extent of the land that was transferred. It was my understanding that CDP was known to have a lot of coal deposits on it. If we know that the coal deposits are there, and there are coal mines surrounding this area, what's the estimate for when we'll actually have a mine up and running to see this flow into our net income?

 

 

The operating mines currently service power stations. Assuming that the amount of coal dug up currently is everything the power stations need, I would speculate that the main effect of the additional lands is to extend the expected life of the existing paintearth and sheerness royalties, rather than expand the size of the royalty. Ie when the current mines are emptied, they move on to the new lands that Altius has just donated to continue servicing the power stations. But this life extension would be a big deal as these two mines are very big components of Altius' revenue.

 

http://altiusminerals.com/prairie-royalties/paintearth

http://altiusminerals.com/prairie-royalties/sheerness

 

Any other views?

 

N.

 

Nope, you've nailed it. I would expect royalties to be down slightly, as power prices in AB have been low, so power station owners are taking market based downtime. Also, the extra land is unlikely to extend the timeframe of the royalties past when the adjacent coal plants close. Currently paintearth closes in 2019/2025/2031 for regulatory reasons. (One giant boiler each of those years)

 

I thought they were expecting the Sheerness mine to have a life of nearly 25 years. That would put it several years past the closure of the coal plants if that's the case. What are the economics of exporting the coal from these mines?

 

Sheerness is newer, its not expected to close its boilers until 2036/2040. The closure date is based on Federal environmental rules.

 

I should also note that I'm taking these dates from Altius, I know originally all coal plants that didn't get Carbon Capture emissions levels were going to be required to close by 2030.

 

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/ottawa-unveils-new-coal-fired-plant-emissions-rules/article4522237/

 

There is also risk that the upcoming greenhouse gas emission rules in Alberta (due to the new NDP gov't) will make some of the existing coal plants uneconomic earlier than their Federally mandated closure dates.

[EliG]

There is also risk that the upcoming greenhouse gas emission rules in Alberta (due to the new NDP gov't) will make some of the existing coal plants uneconomic earlier than their Federally mandated closure dates.

 

There is also talk that NDP may impose 40-year cap on the lifespans of the coal plants. This is 10 year shorter than the current federal cap.

 

http://business.financialpost.com/news/energy/coal-fired-power-plants-feel-the-heat-of-albertas-new-carbon-tax-rules

[Studesy]

Does anyone have any input on the recent decline? Down roughly 15% over the past month.  Does the market not like the recent coal related announcements or is this just market related volatility? TIA

[hohi]

Does anyone have any input on the recent decline? Down roughly 15% over the past month.  Does the market not like the recent coal related announcements or is this just market related volatility? TIA

 

Have you watched the general resource markets recently? The 15% decline in Altius is nothing compared to some of the other names, especially in the gold business ;)

[Studesy]

Does anyone have any input on the recent decline? Down roughly 15% over the past month.  Does the market not like the recent coal related announcements or is this just market related volatility? TIA

 

Have you watched the general resource markets recently? The 15% decline in Altius is nothing compared to some of the other names, especially in the gold business ;)

 

To be honest, no I haven't watched general resource markets lately.  I just noticed the decline in Altius in my portfolio, didn't see negative internal developments...  Altius is the only resource based stock I own; I especially have no understanding or interest in gold.  Glad to hear it is just a resource market decline and nothing internal. Would like to see a $9.99 special so I can add more :)

[TwoCitiesCapital]

Does anyone have any input on the recent decline? Down roughly 15% over the past month.  Does the market not like the recent coal related announcements or is this just market related volatility? TIA

 

Have you watched the general resource markets recently? The 15% decline in Altius is nothing compared to some of the other names, especially in the gold business ;)

 

To be honest, no I haven't watched general resource markets lately.  I just noticed the decline in Altius in my portfolio, didn't see negative internal developments...  Altius is the only resource based stock I own; I especially have no understanding or interest in gold.  Glad to hear it is just a resource market decline and nothing internal. Would like to see a $9.99 special so I can add more :)

 

Altius seems to fluctuate between $9 and $12 on no news whatsoever. I've been selling about 10-15% of my position when it hits $12 or higher and picking them back up when they're under $10. This recent decline is great though because Altius might actually act on that share repurchase authorization.

[Studesy]

Does anyone have any input on the recent decline? Down roughly 15% over the past month.  Does the market not like the recent coal related announcements or is this just market related volatility? TIA

 

Have you watched the general resource markets recently? The 15% decline in Altius is nothing compared to some of the other names, especially in the gold business ;)

 

To be honest, no I haven't watched general resource markets lately.  I just noticed the decline in Altius in my portfolio, didn't see negative internal developments...  Altius is the only resource based stock I own; I especially have no understanding or interest in gold.  Glad to hear it is just a resource market decline and nothing internal. Would like to see a $9.99 special so I can add more :)

 

Altius seems to fluctuate between $9 and $12 on no news whatsoever. I've been selling about 10-15% of my position when it hits $12 or higher and picking them back up when they're under $10. This recent decline is great though because Altius might actually act on that share repurchase authorization.

 

Yes that strategy has worked quite well here so far.  I have made multiple purchases in and around $10 and held on.  Hasn't worked as well as the strategy you have mentioned...not under water yet though. If that happens I will add to my position.

[Liberty]

Does anyone have any input on the recent decline? Down roughly 15% over the past month.  Does the market not like the recent coal related announcements or is this just market related volatility? TIA

 

Have you watched the general resource markets recently? The 15% decline in Altius is nothing compared to some of the other names, especially in the gold business ;)

 

To be honest, no I haven't watched general resource markets lately.  I just noticed the decline in Altius in my portfolio, didn't see negative internal developments...  Altius is the only resource based stock I own; I especially have no understanding or interest in gold.  Glad to hear it is just a resource market decline and nothing internal. Would like to see a $9.99 special so I can add more :)

 

Altius seems to fluctuate between $9 and $12 on no news whatsoever. I've been selling about 10-15% of my position when it hits $12 or higher and picking them back up when they're under $10. This recent decline is great though because Altius might actually act on that share repurchase authorization.

 

Yes that strategy has worked quite well here so far.  I have made multiple purchases in and around $10 and held on.  Hasn't worked as well as the strategy you have mentioned...not under water yet though. If that happens I will add to my position.

 

That's what you call a long-term trading strategy. Altius first hit the current price in 2007.

[TwoCitiesCapital]

Does anyone have any input on the recent decline? Down roughly 15% over the past month.  Does the market not like the recent coal related announcements or is this just market related volatility? TIA

 

Have you watched the general resource markets recently? The 15% decline in Altius is nothing compared to some of the other names, especially in the gold business ;)

 

To be honest, no I haven't watched general resource markets lately.  I just noticed the decline in Altius in my portfolio, didn't see negative internal developments...  Altius is the only resource based stock I own; I especially have no understanding or interest in gold.  Glad to hear it is just a resource market decline and nothing internal. Would like to see a $9.99 special so I can add more :)

 

Altius seems to fluctuate between $9 and $12 on no news whatsoever. I've been selling about 10-15% of my position when it hits $12 or higher and picking them back up when they're under $10. This recent decline is great though because Altius might actually act on that share repurchase authorization.

 

Yes that strategy has worked quite well here so far.  I have made multiple purchases in and around $10 and held on.  Hasn't worked as well as the strategy you have mentioned...not under water yet though. If that happens I will add to my position.

 

That's what you call a long-term trading strategy. Altius first hit the current price in 2007.

 

Fortunately, I didn't find out about Altius until 2012-2013ish. :)

 

This is only something I've done recently given how volatile it appears to be on no news. If I were more adventurous, I'd do it with larger pieces than 10-15%, but I would kick myself if something happened and I missed a big move above $12 due to trading. I'm basically just trying to reduce my opportunity cost of holding a few % at a time.

 

Unfortunately, it's back up 7% today instead down another 7%; otherwise I would have rebuilt the entire position from what I sold a few weeks back.

[TwoCitiesCapital]

This recent decline is great though because Altius might actually act on that share repurchase authorization.

 

or not...

[Williams406]

Part of the update press release from Royal Gold regarding Voisey's Bay:

 

Voisey’s Bay Mine

 

We received the first quarterly royalty payment relating to processing Voisey’s Bay nickel concentrates at Vale’s new Long Harbour hydrometallurgical plant. In response to questions concerning Vale’s determination of the Long Harbour smelter and refining charges deducted from actual proceeds to calculate the net smelter return royalty payable, Vale recently stated that the charges included “the cost of product sold, pre-operating costs, depreciation and cost of capital.” Royal Gold strongly disagrees with Vale’s determination that these charges are permissible deductions pursuant to the royalty agreement and is requesting further clarification of the basis for these charges while aggressively pursuing its legal remedies.

 

No shocking revelations here, but the legal issues with VB and the old 777 royalty serve as a balancing consideration to the generally good economics of royalties  when created/purchased cost-effectively. If you're negotiating a new royalty, go ahead and insist that it be of a "gross sales" variety.

[Gamecock-YT]

Chad and the CFO have been making purchases over the last week.

 

https://canadianinsider.com/company?menu_tickersearch=ALS%20%7C%20Altius%20Minerals

[Williams406]

Global Mining Observer latest issue has a list of 20 royalties scattered around the globe with a brief description of each that makes for interesting reading. I've added a new daydream to my standard one which is a grandfather who lived in Omaha and decided to entrust $500,000 to "that young whipper-snapper" Buffett when he started his partnership and then stuck with Berkshire Hathaway stock, never selling a share. Adding to that, my grandfather on my mom's side took a flyer on a massive claims stake in the Pilbara in early 1960's.

[ap1234]

Williams406,

 

The list of royalties you mentioned from the Global Mining Observer sounds quite interesting. I'd love to read it.

 

Would you be able to post a .pdf of the article or would we be able to find a free version online?

 

Thanks!

 

[Williams406]

For the price of disclosing your e-mail, you can have the weekly issue sent to you:

 

http://www.globalminingobserver.com/subscribe

 

Enjoy!

[nostradamus]

So Altius used to own 90% of Cranberry with the remaining 10% owned, and the funds managed, by Paul Van Eeden. In turn Cranberry owned around 10% of Kobex Capital. Kobex is mainly a cash shell (it has one equity investment) that PvE is chairman of, which is looking to make investment in the resources sector.

 

Then Altius not long ago unwound the Cranberry deal and took directly the 10% stake in Kobex. Yesterday it looks like Altius sold this stake for C$0.65 per share to Kingsway Financial Services Inc. This seems to mark the end of PvE managing the money of ALS. Is there something going on?

 

Also, ALS Q1 results out today. The main thing I noticed when skimming the MD&A is the following:

 

"The Corporation is currently taking advantage of the market downturn and is accumulating equity positions in certain non-precious metal royalty companies. These particular companies traditionally pay out a large portion of their free cash flow in distributions to shareholders. Thus, the Corporation expects these acquisitions to contribute additional revenue to the Corporation."

 

N.

[TwoCitiesCapital]

So Altius used to own 90% of Cranberry with the remaining 10% owned, and the funds managed, by Paul Van Eeden. In turn Cranberry owned around 10% of Kobex Capital. Kobex is mainly a cash shell (it has one equity investment) that PvE is chairman of, which is looking to make investment in the resources sector.

 

Then Altius not long ago unwound the Cranberry deal and took directly the 10% stake in Kobex. Yesterday it looks like Altius sold this stake for C$0.65 per share to Kingsway Financial Services Inc. This seems to mark the end of PvE managing the money of ALS. Is there something going on?

 

Also, ALS Q1 results out today. The main thing I noticed when skimming the MD&A is the following:

 

"The Corporation is currently taking advantage of the market downturn and is accumulating equity positions in certain non-precious metal royalty companies. These particular companies traditionally pay out a large portion of their free cash flow in distributions to shareholders. Thus, the Corporation expects these acquisitions to contribute additional revenue to the Corporation."

 

N.

 

Funny coincidence - I saw the price of Kobex jump to CAD 0.65 yesterday and managed to sell my stake at 0.61 before it fell back to around 0.58. Looked into it after I saw Altius' transactions and felt it didn't hurt to have stock in a company that was a cash proxy selling at a massive discount. After 25% gains, I was happy to move into actual cash again.

 

I'd be happy if Altius was picking up more resource names in this environment - they certainly know the market far better than I do and I'm happier having them allocate some money there than me trying to do so myself. I'd be even happier if they were to buy more producing royalties, but if equities are providing them better value at the moment then I'll take it.

[Williams406]

I'd guess that in the current environment, Altius feels it can deploy capital directly without need for someone like PvE. I wouldn't read anything more into it than that, but I'm wholly unfamiliar with PvE, Kobex, or the Kobex investment. Altius is a proactive bunch and many potential partners are feeling a lot of pain and are in need of capital. If I were them, I'd look to free up every bit of capital I could.

 

If I'm reading things right, it looks like they invested $25.7 million in acquisitions, $9.4 million of which was the cash consideration to acquire Callinan. That leaves about $15 million spent on other, unspecified acquisitions this quarter. They didn't do much more than the minimum payments on debt or repurchase shares in the quarter, so equity investments in non-precious metals royalty companies is where they see the most bang for the buck at present. More than one, high level of distributions.

[TwoCitiesCapital]

I'd guess that in the current environment, Altius feels it can deploy capital directly without need for someone like PvE. I wouldn't read anything more into it than that, but I'm wholly unfamiliar with PvE, Kobex, or the Kobex investment. Altius is a proactive bunch and many potential partners are feeling a lot of pain and are in need of capital. If I were them, I'd look to free up every bit of capital I could.

 

If I'm reading things right, it looks like they invested $25.7 million in acquisitions, $9.4 million of which was the cash consideration to acquire Callinan. That leaves about $15 million spent on other, unspecified acquisitions this quarter. They didn't do much more than the minimum payments on debt or repurchase shares in the quarter, so equity investments in non-precious metals royalty companies is where they see the most bang for the buck at present. More than one, high level of distributions.

 

I just read it and came to the same conclusion with the $15M. The other thing to note is that interest receipts went jumped to $366k - significantly higher than the prior 4 quarters despite the decreases in the cash balance. Could it be that they're receiving sizable dividends on these investments already? That would equate to somewhere between an 8-10% annual yield if the majority of the change is from  new investments.

 

The other thing to note is that Alderon has been written down to $9M. At worst, it can kill another quarter of earnings, but after that we'll have uninhibited pass through of the royalty revenues. That could be a catalyst for a higher share price if the the reported earnings go from negative to positive. Also, are Canadian companies required to file something similar to 13Fs? I would be interested to see what they spent 15M on.