TwoCitiesCapital Posted February 24, 2017 Share Posted February 24, 2017 FAIRFAX TO MAKE STRATEGIC INVESTMENT IN ALTIUS http://altius.cmail19.com/t/ViewEmail/d/01CA5BE82B0C423E/2F9415254B7704C2C68C6A341B5D209E Cheers, Gio Nice! I know that many speculated that Altius would make a unique investment for Fairfax, but I never actually expected to see it happen. It's good that they now have access to cheaper financing for their next big deal without having to go through the investment banks. Link to comment Share on other sites More sharing options...
Gamecock-YT Posted February 24, 2017 Share Posted February 24, 2017 I'm not sure what to think about this, do they really need the money? I thought the cycle had turned and now was the time to reap what they had sown rather than essentially take on new debt and dilute shareholders. N. Yep. Market seems to like it. But color me surprised. Unless they already have a plan to go after something...? Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted February 24, 2017 Share Posted February 24, 2017 I'm not sure what to think about this, do they really need the money? I thought the cycle had turned and now was the time to reap what they had sown rather than essentially take on new debt and dilute shareholders. N. Yep. Market seems to like it. But color me surprised. Unless they already have a plan to go after something...? Taking $25M upfront at 5% isn't too bad and gives them the ability to pay off higher yielding debt if necessary. The remaining $75M will be drawn when they have something to spend it on. Link to comment Share on other sites More sharing options...
SharperDingaan Posted February 24, 2017 Share Posted February 24, 2017 Sh#@# !!!! ... FFH is following us around :D It's a good deal. It also suggests that Kami has passed its feasibility study, & that the initial tranche will be to fund the ALS contribution. The remaining tranches are if the mine actually goes into development. Assuming 25% ownership, they expect the financing to require around a maximum 300M (75M/.25) of new equity. All good. SD Link to comment Share on other sites More sharing options...
cwericb Posted February 24, 2017 Share Posted February 24, 2017 Wondered why this didn't happen long ago. Not only does this look like a good partnership but it will focus more attention on Altius. My only reservation is my reluctance to investing alongside of FFH. I seem to remember a certain pulp company in Quebec... But I think Mr. Dalton is smarter than those guys were. Link to comment Share on other sites More sharing options...
Williams406 Posted February 24, 2017 Share Posted February 24, 2017 Sh#@# !!!! ... FFH is following us around :D It's a good deal. It also suggests that Kami has passed its feasibility study, & that the initial tranche will be to fund the ALS contribution. The remaining tranches are if the mine actually goes into development. Assuming 25% ownership, they expect the financing to require around a maximum 300M (75M/.25) of new equity. All good. SD SD, What exactly is that initial tranche being used for, hypothetically? Scully? What pre-development costs are there at this point? Link to comment Share on other sites More sharing options...
SharperDingaan Posted February 24, 2017 Share Posted February 24, 2017 We assume the partners expect to spend up to 100M between them (25M first tranche/25% ALS stake) on buying in old mines/rail, repairing facilities, engineering, power agreements, etc., to lower the development cost of the potential mine. The platform investment we speak of. While we expect that the actual costs will very likely be a lot lower than this, it's prudent to keep some buffer room. It's possible that despite this, it still results in no mine; if so ALS still has access to the remaining 75M pledged, and still retains 25% of Kami - for another try at some other time. Hence it's a pretty good deal. We're not thrilled FFH is co-investing, but we recognize its a small pond - and a public place. It just means that'll have to walk the talk; it isn't going to be an automatic given. All good. SD Link to comment Share on other sites More sharing options...
mikek Posted February 24, 2017 Share Posted February 24, 2017 I would hope that Altius doesn't contribute more capital to Alderon. I could careless about the equity stake in the project. Don't get me wrong, it would be huge to get that mine built due to the 3 percent gross royalty but the risk to the company goes up if they contribute more capital to it. I would guess that this transaction was to lower the debt rate a little but mainly for the name recognition of Prem investing in the company and a future source of capital. It does get more eyeballs looking at the company. I wouldn't bet on these funds being used for the Kami project. Altius can dilute their alderon stake for all we care, the real value is in the royalty and not keeping a 25 percent equity position in Alderon. They can give the Alderon equity away for free for all I care, the only thing they should care about is the royalty. The thing about Altius is that they aren't in the business of building mines, their risk capital in that project was about 2.5 million. Hopefully they keep to the strategy of finding mines, keeping a royalty and letting the partners take on the equity/ capital risk of getting the mines built. Link to comment Share on other sites More sharing options...
SharperDingaan Posted February 24, 2017 Share Posted February 24, 2017 I would hope that Altius doesn't contribute more capital to Alderon. I could careless about the equity stake in the project. Don't get me wrong, it would be huge to get that mine built due to the 3 percent gross royalty but the risk to the company goes up if they contribute more capital to it. I would guess that this transaction was to lower the debt rate a little but mainly for the name recognition of Prem investing in the company and a future source of capital. It does get more eyeballs looking at the company. I wouldn't bet on these funds being used for the Kami project. Altius can dilute their alderon stake for all we care, the real value is in the royalty and not keeping a 25 percent equity position in Alderon. They can give the Alderon equity away for free for all I care, the only thing they should care about is the royalty. The thing about Altius is that they aren't in the business of building mines, their risk capital in that project was about 2.5 million. Hopefully they keep to the strategy of finding mines, keeping a royalty and letting the partners take on the equity/ capital risk of getting the mines built. Quite agree, but a few caveats here... There is no royalty if there is no mine. ALS also owns the nearby Julian Lake deposit which does not have a royalty agreement. It is very much in the ALS interest to see both Kami & Julian Lake (with a royalty agreement) combined, and in the partnership interest to incorporate Wabush & the rail facilities to reduce costs. No incorporation, no mine, no royalties on BOTH Kami and Julian Lake. It's highly likely that ADV equity related to mine development, will be in the form of convertible prefs. A material consideration as until Kami/Julian Lake start producing, that (Wabush) production isn't paying ALS a royalty. Once Kami production kicks in ALS would sell the ADV prefs; but it means a cash flow out of Kami from day 1 of production. Exactly the ALS model. Agreed this probably isn't what ALS would have preferred, but if successful - it will clearly be a company maker. Not a bad place to be. SD Link to comment Share on other sites More sharing options...
nostradamus Posted February 27, 2017 Share Posted February 27, 2017 I agree with mikek, I wouldn't want to see them inject any money into Alderon. It's not their business model to fund the development of mines. ALS have just announced record royalty revenue for the quarter: http://altiusminerals.com/uploads/PR1704-Q3call.pdf Also, their latest presentation shows that their cash and marketable securities now exceeds their debt (see last slide): http://altiusminerals.com/uploads/2017-Altius-Feb-(website-bd).pdf Wouldn't be at all surprised if they start to increase their dividend some time soon... N Link to comment Share on other sites More sharing options...
Gamecock-YT Posted February 27, 2017 Share Posted February 27, 2017 I agree with mikek, I wouldn't want to see them inject any money into Alderon. It's not their business model to fund the development of mines. ALS have just announced record royalty revenue for the quarter: http://altiusminerals.com/uploads/PR1704-Q3call.pdf Also, their latest presentation shows that their cash and marketable securities now exceeds their debt (see last slide): http://altiusminerals.com/uploads/2017-Altius-Feb-(website-bd).pdf Wouldn't be at all surprised if they start to increase their dividend some time soon... N That was a weird news release they put out today. Don't think they've ever pre-announced revenue. Kind of overly promotional. Wonder if they're trying to get the stock up to use as currency on a deal? Or could just be have some options about to expire. Link to comment Share on other sites More sharing options...
Williams406 Posted February 27, 2017 Share Posted February 27, 2017 Gamecock-YT: I thought the same about the release. Had to check past releases to make sure. Regarding uses of first tranche of Fairfax capital: debt repayment and Alderon have been mentioned. Adventus may have an advanced target requiring another capital round. Excelsior has milestone targets at which Altius can choose to kick in up to an additional $18 million total (I think)--some of those milestones aren't likely imminent so who knows? New target entirely? I'm guessing we won't have to wait too long to find out. Link to comment Share on other sites More sharing options...
Gamecock-YT Posted February 28, 2017 Share Posted February 28, 2017 Alderon announces re-boot of Kami Project. Link to comment Share on other sites More sharing options...
mikek Posted February 28, 2017 Share Posted February 28, 2017 About how the Altius and Fairfax Financial deal came about http://www.bnn.ca/video/altius-minerals-to-get-deeper-pockets-with-fairfax-investment~1067278 Link to comment Share on other sites More sharing options...
SharperDingaan Posted March 1, 2017 Share Posted March 1, 2017 About how the Altius and Fairfax Financial deal came about http://www.bnn.ca/video/altius-minerals-to-get-deeper-pockets-with-fairfax-investment~1067278 Nice to see, SD Link to comment Share on other sites More sharing options...
petec Posted March 1, 2017 Share Posted March 1, 2017 Very useful video, thanks. Link to comment Share on other sites More sharing options...
nostradamus Posted March 1, 2017 Share Posted March 1, 2017 Great video, thanks for posting. I love the way that he is so honest and plain speaking about the company and willing to acknowledge the things that are not going well as the things that are. He was also clear that he is not going to use the Fairfax money for buying existing paying royalty streams, which gives me some comfort. He mentioned that he is speaking at the PADC next week. I guess this was the reason for bringing forward the announcement of the record revenue of the group – it is hard to speak at these public events with significant undisclosed information. N. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted March 1, 2017 Share Posted March 1, 2017 Great video, thanks for posting. I love the way that he is so honest and plain speaking about the company and willing to acknowledge the things that are not going well as the things that are. He was also clear that he is not going to use the Fairfax money for buying existing paying royalty streams, which gives me some comfort. He mentioned that he is speaking at the PADC next week. I guess this was the reason for bringing forward the announcement of the record revenue of the group – it is hard to speak at these public events with significant undisclosed information. N. Yes. He mentioned using the money to contribute to project financing in return for royalty interests for projects that "didn't quite make it to the project financing stage before the cycle turned [down]". I know SD suggested that the financing was for Kami. This sounds like it confirms that. Link to comment Share on other sites More sharing options...
nostradamus Posted March 2, 2017 Share Posted March 2, 2017 Great video, thanks for posting. I love the way that he is so honest and plain speaking about the company and willing to acknowledge the things that are not going well as the things that are. He was also clear that he is not going to use the Fairfax money for buying existing paying royalty streams, which gives me some comfort. He mentioned that he is speaking at the PADC next week. I guess this was the reason for bringing forward the announcement of the record revenue of the group – it is hard to speak at these public events with significant undisclosed information. N. Yes. He mentioned using the money to contribute to project financing in return for royalty interests for projects that "didn't quite make it to the project financing stage before the cycle turned [down]". I know SD suggested that the financing was for Kami. This sounds like it confirms that. Maybe. Or he is referring to more funding for Adventus Zinc. Or maybe even Julienne Lake. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted March 2, 2017 Share Posted March 2, 2017 Great video, thanks for posting. I love the way that he is so honest and plain speaking about the company and willing to acknowledge the things that are not going well as the things that are. He was also clear that he is not going to use the Fairfax money for buying existing paying royalty streams, which gives me some comfort. He mentioned that he is speaking at the PADC next week. I guess this was the reason for bringing forward the announcement of the record revenue of the group – it is hard to speak at these public events with significant undisclosed information. N. Yes. He mentioned using the money to contribute to project financing in return for royalty interests for projects that "didn't quite make it to the project financing stage before the cycle turned [down]". I know SD suggested that the financing was for Kami. This sounds like it confirms that. Maybe. Or he is referring to more funding for Adventus Zinc. Or maybe even Julienne Lake. I'm not as familiar with where Adventus Zinc and it's pre-cursors were in 2011/2012, but this exactly describes the position Kami was in..and Kami just restarted. JL is a possibility as well, but it wasn't "quite to the project financing stage" as he put it. It had much further than to go than Kami did in terms of getting into production and raising money from outside stakeholders. Link to comment Share on other sites More sharing options...
nostradamus Posted March 2, 2017 Share Posted March 2, 2017 Great video, thanks for posting. I love the way that he is so honest and plain speaking about the company and willing to acknowledge the things that are not going well as the things that are. He was also clear that he is not going to use the Fairfax money for buying existing paying royalty streams, which gives me some comfort. He mentioned that he is speaking at the PADC next week. I guess this was the reason for bringing forward the announcement of the record revenue of the group – it is hard to speak at these public events with significant undisclosed information. N. Yes. He mentioned using the money to contribute to project financing in return for royalty interests for projects that "didn't quite make it to the project financing stage before the cycle turned [down]". I know SD suggested that the financing was for Kami. This sounds like it confirms that. Maybe. Or he is referring to more funding for Adventus Zinc. Or maybe even Julienne Lake. The doubt I have about Altius giving more money to Alderon is that Altius has already got their royalty on Kami, so they don't need to contribute/risk more money. But I could easily be wrong. As other have said, we probably don't need to wait too long to find out. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted March 2, 2017 Share Posted March 2, 2017 Great video, thanks for posting. I love the way that he is so honest and plain speaking about the company and willing to acknowledge the things that are not going well as the things that are. He was also clear that he is not going to use the Fairfax money for buying existing paying royalty streams, which gives me some comfort. He mentioned that he is speaking at the PADC next week. I guess this was the reason for bringing forward the announcement of the record revenue of the group – it is hard to speak at these public events with significant undisclosed information. N. Yes. He mentioned using the money to contribute to project financing in return for royalty interests for projects that "didn't quite make it to the project financing stage before the cycle turned [down]". I know SD suggested that the financing was for Kami. This sounds like it confirms that. Maybe. Or he is referring to more funding for Adventus Zinc. Or maybe even Julienne Lake. The doubt I have about Altius giving more money to Alderon is that Altius has already got their royalty on Kami, so they don't need to contribute/risk more money. But I could easily be wrong. As other have said, we probably don't need to wait too long to find out. That royalty is largely worthless if Kami doesn't get built and it loses value every year it's delayed in terms of PV. If you can throw $25-50M at a project for a fair return and it dramatically increases the probability of you receiving $20-24M/annually on your current investment, you're going to do it. Prior investments are a sunk cost. The question is what can they do now to maximize the value of Kami. If that's to throw $25-50M at it to ensure it gets up and running, that's what they'll do. Link to comment Share on other sites More sharing options...
Williams406 Posted March 2, 2017 Share Posted March 2, 2017 Great video, thanks for posting. I love the way that he is so honest and plain speaking about the company and willing to acknowledge the things that are not going well as the things that are. He was also clear that he is not going to use the Fairfax money for buying existing paying royalty streams, which gives me some comfort. He mentioned that he is speaking at the PADC next week. I guess this was the reason for bringing forward the announcement of the record revenue of the group – it is hard to speak at these public events with significant undisclosed information. N. Yes. He mentioned using the money to contribute to project financing in return for royalty interests for projects that "didn't quite make it to the project financing stage before the cycle turned [down]". I know SD suggested that the financing was for Kami. This sounds like it confirms that. Maybe. Or he is referring to more funding for Adventus Zinc. Or maybe even Julienne Lake. The doubt I have about Altius giving more money to Alderon is that Altius has already got their royalty on Kami, so they don't need to contribute/risk more money. But I could easily be wrong. As other have said, we probably don't need to wait too long to find out. Creating royalties is the name of the game, but you need them to be producing royalties. Altius tends to take both a royalty and minority equity stake in spin-offs. I suspect the latter interest is primarily for steering and influence rather than a big potential pay-day though I've never once objected to a large pay day for myself. Own just a royalty on a property, cross your fingers and hope the owner develops. Own a decent minority stake and you've got some say. I think SD is right that this isn't how Altius would have mapped things out 3-4 years ago for Kami (i.e. perhaps contemplating adding equity), but may feel they have a unique window right now. If the Kami partnership has been looking at the "platform" infrastructure investments, how does that not spark discussions with the Julienne Lake Alliance partners?: "JL looks even better with those assets. Come to the table." Greater scale, faster first production, lower development and operating costs, etc. Even for Kami standalone, iron ore prices warrant at least looking very seriously at how to capitalize. With a Kami/JL combo, everyone wins, especially Altius (and SD's nephews). I have to remind myself that while Altius doesn't want to be in the mine building business, the royalty creation side of the business hasn't yet resulted in a producing royalty. Kami would be a most impressive start. But adding capital, should they do it, definitely carries risk. I'm not wild about that. Link to comment Share on other sites More sharing options...
Williams406 Posted March 3, 2017 Share Posted March 3, 2017 Global Mining Observer article mentioning possible IOC sale. I think Rio has tried at various points to sell IOC so who knows? http://www.globalminingobserver.com/rio-tinto-uranium-bold-baatar-179 Link to comment Share on other sites More sharing options...
SharperDingaan Posted March 3, 2017 Share Posted March 3, 2017 You may want to read up on the early days of the Hemlo gold fields north of Lake Superior. There were essentially a number of smaller operations that were combined into 2-3 giant mines to extract economies of scale. The Labrador Trench has more than a few similarities. It would also seem that the prospects are picking up for our nephews. One day they may even get to visit the mine that bought them their digs, .... & bow down before it! SD Link to comment Share on other sites More sharing options...
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