ALS.TO - Altius Minerals

[Sunrider]

Yes and if memory serves everyone thought it was worth far north of 14 at the time ...

Sunrider,

 

They raised $65m @ $14/share to partially fund PMRL in May 2014.

 

http://altiusminerals.com/press-releases/view/287

 

I suspect their coal exposure is causing problems. No one is sure what happens after PPA expiration in 2020 since we've not been here before. Throw in the dispute at Voiseys Bay, and a decent chunk of Altius revenue is at some risk. If you are an institutional investor, lender, friendly takeover target, or would-be suitor, determining your price/terms is tough right now.

 

In the Chapada presentation, Altius noted that with this transaction base metals are now the largest contributor to revenue, which I read as the company saying "NOT COAL." 

 

I look at the access to capital Franco and Osisko have and wonder when Altius gets to that point.

[netnet]

Guys... commodity prices have fallen, hence Altius is not worth as much.

 

Yes,  it the the market they (we) are in and we are in the down part of the cycle. You have to play the hand your are dealt.  In Dalton's defense, you have to survive the short run to play the long run, or to paraphrase Munger, "We started at zero, we are not going to risk going back to zero."  So none are perfect and Dalton is being prudent, some would say unnecessarily, so...but I'm still irritated...unless he has another deal coming. (which he probably does...wherein we see the fickleness of the public markets encapsulated in the mind of one investor!) 

[nostradamus]

I've got so much of my net worth invested in this stock that I'm quite glad that Dalton is being prudent. For many of you it seems that the share issue has made you question your Altius investment. For me, the deal announcement and associated debt was what gave me second thoughts. The share placement gives me a lot of comfort.

[Williams406]

MikeK: Welcome to the board. I enjoyed reading your post. If there is consolidation of the non-PM royalty industry involving Altius, I speculate that road goes through LIORC somehow. Between Rio, Osisko, LIORC, Mitsubishi and Altius you have some common interests in getting something done but who knows if that is the road taken?

 

I still don't know if this latest equity raise is Dalton being prudent (or concerned?) or debt negotiations falling through or Altius having another deal in its sights. They released some financing guidance in the Chapada release, then did something different. That's their prerogative. My opinion of this equity raise depends on which of those reasons factored in to the decision and I hope to hear more information in the near future. 

 

 

[nsa122]

So...all in all I have to say I was impressed with Chad Wells' response to my questions.  I put pretty blunt, maybe inflammatory, questions to him that probably most IR departments would have taken offense at or ignored, but he answered them very satisfactorily in my opinion, in a lot of detail, and very promptly. I've had nearly all of my family's investable assets in Altius for the past 2 years and I am satisfied to hold on. He asked me not to share email correspondence, so I won't, but I would encourage everyone to email him with any questions y'all might have.  I am considering trying to make the trek to the annual meeting, has anyone else attended? 

[wachtwoord]

So...all in all I have to say I was impressed with Chad Wells' response to my questions.  I put pretty blunt, maybe inflammatory, questions to him that probably most IR departments would have taken offense at or ignored, but he answered them very satisfactorily in my opinion, in a lot of detail, and very promptly. I've had nearly all of my family's investable assets in Altius for the past 2 years and I am satisfied to hold on. He asked me not to share email correspondence, so I won't, but I would encourage everyone to email him with any questions y'all might have.  I am considering trying to make the trek to the annual meeting, has anyone else attended?

 

Thanks for sharing this. I have contacted IR as well.

[TwoCitiesCapital]

So...all in all I have to say I was impressed with Chad Wells' response to my questions.  I put pretty blunt, maybe inflammatory, questions to him that probably most IR departments would have taken offense at or ignored, but he answered them very satisfactorily in my opinion, in a lot of detail, and very promptly. I've had nearly all of my family's investable assets in Altius for the past 2 years and I am satisfied to hold on. He asked me not to share email correspondence, so I won't, but I would encourage everyone to email him with any questions y'all might have.  I am considering trying to make the trek to the annual meeting, has anyone else attended?

 

Nice to see that someone is getting responses. I've reached out to them twice in the past. Once for clarity on the taxable rate for each of their royalty streams and once again about clarity on the Chapada deal and never received a response either time :/

[wachtwoord]

So...all in all I have to say I was impressed with Chad Wells' response to my questions.  I put pretty blunt, maybe inflammatory, questions to him that probably most IR departments would have taken offense at or ignored, but he answered them very satisfactorily in my opinion, in a lot of detail, and very promptly. I've had nearly all of my family's investable assets in Altius for the past 2 years and I am satisfied to hold on. He asked me not to share email correspondence, so I won't, but I would encourage everyone to email him with any questions y'all might have.  I am considering trying to make the trek to the annual meeting, has anyone else attended?

 

Nice to see that someone is getting responses. I've reached out to them twice in the past. Once for clarity on the taxable rate for each of their royalty streams and once again about clarity on the Chapada deal and never received a response either time :/

 

I have immediately received a reply as well. He also offered to talk to me on the phone (and actually said he'd prefer that).

 

The reason we are asked not to share mail correspondence is that some people in the past have started quoting parts of emails out of context.

[Williams406]

Link to speech given by David Harquail, Franco Nevada CEO earlier this year. Includes details on company history and thoughts on mining finance going forward.

 

http://www.globalminingobserver.com/david-harquail-franco-nevada-mmc-160/

[Williams406]

Close of Chapada deal and debt financing announced.

 

http://altiusminerals.com/uploads/PR1607-Chapada-Credit.pdf

[nostradamus]

It's a shame that they don't state the cost of the new debt.

[wachtwoord]

Did ATUSF just trade at 11.81 USD this morning? I have a limit order below that so I guess it's an anomaly.

[Crip1]

Looks like Yahoo had some issue as they are showing that the US ADRs closed last week at US$11.83 and opened today at US$12.01 before moving south to US$8 or so. Google does not show this so it would look to be a glitch on Yahoo's site.

 

 

-Crip

[Williams406]

I don't see Yahoo's pricing anywhere else, either, and day's high/low numbers on yahoo don't reflect that USD $12ish number at all.

 

Letter to shareholders out:

 

http://altiusminerals.com/uploads/May-2016-Letter-to-Shareholders-FINAL.pdf

[Crip1]

Here is a snip from earlier today.

[wachtwoord]

Looks like Yahoo had some issue as they are showing that the US ADRs closed last week at US$11.83 and opened today at US$12.01 before moving south to US$8 or so. Google does not show this so it would look to be a glitch on Yahoo's site.

 

 

-Crip

 

Morningstar had the same glitch. Do they use the same source?

[wachtwoord]

it's been going on everyday now.

 

 

Not that it matters, just the data is not reliable.

[Williams406]

I have both the Canadian-listed and OTC tickers on a watch list. The OTC stock prices for many companies like Reservoir Minerals, Osisko, LIORC, Altius, are all over the place. 

[mikek]

The annual report recently came out.  Nothing really unexpected in the report, just continue to chug along.  Looks like the upcoming year will be in the 42-44 million range on cash flow from the royalties coming in.  Looks like current debt is about 103 million Canadian.  I would guess we currently have about 20 million in cash and 34 million in securities available for sale.  47 million available on the undrawn line of credit.

 

From the MD&A-

"The Term Facility is repayable over a four year period with quarterly principal repayments of $2,000,000 commencing July 31, 2016 until July 31, 2017 and increasing to $3,250,000 thereafter, bearing interest at variable rates based on the Corporation’s total debt ratio. The Revolving Facility is payable in full in 3 years and includes a cash sweep mechanism commencing 12 months after a qualifying royalty or streaming acquisition. Additional draw-downs on the Revolving Facility are permitted for future qualifying royalty and streaming acquisitions."

 

From the Other Materials contract document June 23rd, 2016 on Sedar it has a box about the interest rates.  I think we are currently at the 2% base rate+3.5% prime rate with a .75% on the undrawn line of credit part.  I could be reading that wrong but that would put us at the 5-6% interest rate depending on prime rate and the libor rate.  It looks like we would have a 3% base rate if we were to draw on the line of credit.  Please correct me if I am reading that wrong but that is how I am reading that.  I could be incorrect though.

 

From the MD&A-

"Voisey’s Bay Nickel-Copper-Cobalt Royalty

 

During the fourth quarter, Vale began deducting capital costs associated with construction of its Long Harbour processing facility against the net smelter return royalty calculation, which have reduced the royalty to $nil. Altius disagrees that the royalty agreement allows for the deduction of capital related costs against royalty payments and is, through the Labrador Nickel Royalty Limited Partnership (“LNRLP”), pursuing all legal remedies available to defend its position and its NSR royalty entitlements.

Altius is also, through LNRLP, pursuing a legal claim against Vale which includes assertions that all previous royalty payments made to it have been inadequate on the basis that the sales of material from the mine to other operating subsidiaries of Vale were completed at lower than fair market prices. Altius is a 10% unit holder in LNRLP while Royal Gold is the General Partner holding the remaining 90%."

 

Not good but it only produced 1.4 million last year and we got paid back on that investment in 2010.  I think we will get that figured out anyways, regarding the suit Royal gold who owns 90% of that royalty commented on the 3Q2016 conference call regarding the Voisey Bay Royalty.

 

 

"Stephen Walker

 

Thank you, operator, good morning. Just briefly on the legal dispute with Voisey's Bay, can you give us an update on that Tony if you would?

 

Tony Jensen

 

So, Stephen, the concentrate from Long Harbour is now in part going to – sorry, concentrate from Voisey's Bay is now going to Long Harbour, and there are some deductions that are being incurred against our royalty that we disagree with regard to Long Harbour. So we have added those to our litigation claim that has been outstanding and we are in the discovery process. We are very active in that whole process. And we are very much looking forward to getting our day in court to be able to argue our position. We think that our position is very traditional with regard to how smelter return royalty should be calculated. So we were in a bit of that type of pattern I would say until maybe 18 months or so before the matter is heard before the court."

 

 

MD&A

"Increased dividend income related to 1,150,000 shares of Labrador Iron Ore Royalty Corporation (“LIF”) that are held by the Corporation"

Pretty much what I figured they had purchased.

 

Definitely recommend the annual letter that was posted by Brian Dalton.

 

 

[Gamecock-YT]

Also noticed they wrote off the value on the War Baby claim.

[nostradamus]

I know the normal course issuer bid that ALS announced today is just a routine thing that they do every year to give themselves the option of buybacks, but I would be surprised if they did not start to do some more buybacks at these levels...

 

N.

[TwoCitiesCapital]

I know the normal course issuer bid that ALS announced today is just a routine thing that they do every year to give themselves the option of buybacks, but I would be surprised if they did not start to do some more buybacks at these levels...

 

N.

 

If they can continue acquiring more royalty streams and optionality on future assets, I'd prefer they do that though. It doesn't take much to move their bottom line yet and I'd prefer organic growth and an extension on current royalty payments than fewer shares outstanding. Maybe when they get to the point of generating $100+M in recurring revenues, they can use internally generated cash to purchase new assets AND repurchase shares in the next downturn.

[nostradamus]

I wouldn't really want them to take on anymore debt to purchase streams at this point, and would be very annoyed if they issued shares at this price to make a purchase. So, a few buybacks here and there to give me a bigger share of the eventual upside seems like a good use of money to me. But maybe I'm just getting impatient for some gains.

[nsa122]

Not that anyone cares too much but I sold my Altius stake last month.  I originally was very excited that Altius could be a decades-long compounder, but I grew disappointed by repeated dilution and assumption of debt for mixed quality assets at non-bargain prices. I can see the attraction of the long-lived potash royalties, but I can see no margin of safety in the coal and 777 royalty acquisitions, which seem like they'll be breakeven at best. Management seems fine with expanding the market cap/empire without necessarily maximizing per share value.  I suppose I'm the dumb money who funded their expansion by buying high and selling low, and maybe I'll be proven wrong and other shareholders will reap the benefit.  Buying here at $7 is a different proposition than when I did at $12, and maybe the current price is in line with value, but I have lost confidence in management's motivations. Would be interested to hear any other opinions.

[mikek]

“Not that anyone cares too much but I sold my Altius stake last month.  I originally was very excited that Altius could be a decades-long compounder, but I grew disappointed by repeated dilution and assumption of debt for mixed quality assets at non-bargain prices. I can see the attraction of the long-lived potash royalties, but I can see no margin of safety in the coal and 777 royalty acquisitions, which seem like they'll be breakeven at best. Management seems fine with expanding the market cap/empire without necessarily maximizing per share value.  I suppose I'm the dumb money who funded their expansion by buying high and selling low, and maybe I'll be proven wrong and other shareholders will reap the benefit.  Buying here at $7 is a different proposition than when I did at $12, and maybe the current price is in line with value, but I have lost confidence in management's motivations. Would be interested to hear any other opinions.”

 

What changed your opinion on management’s motivations from your April post?  I think management is actually concerned with per share value compared to empire building.  I do think you’re definitely correct in your assessment on the 777 royalty acquisition.  The coal/potash deal still hasn’t played out but I still feel okay with that deal.  Brian Dalton still owns 1.3 million shares so I feel management is still aligned with the shareholders.  You have to figure that the guy has the majority of his net worth tied up in the company.  The annual pay/incentives still seem to be reasonable and wouldn’t lead me to believe that he is in the company to milk the shareholders.

 

I would love to hear your opinion on the management’s motivation comment.  I can see why people would sell out of the company though.  There is a lot of fear in the Alberta power market and it probably isn’t unwarranted with the NDP leading things.

 

I would actually prefer them to sell out of some of their publicly owned stocks and use the funds to purchase another royalty.  I don't think the market tends to value those holdings very well.  They would have about 40-60 million in cash with 100 million in debt.