mikek Posted June 22, 2017 Share Posted June 22, 2017 A bit surprised that they are expecting 55 million for the upcoming year at today's commodity prices. I would be surprised if they got over 52 million. I would put them at around 48-52 at today's prices. They are typically pretty conservative so that number surprises me a bit. Link to comment Share on other sites More sharing options...
linealdin Posted June 22, 2017 Share Posted June 22, 2017 Copper right now is at $2.59, and zinc is at $1.22. In Altius's 4th quarter Chapada sold copper at an average price of $2.54, I assume similar realizations for 777 mine. So plenty more money to be made at current prices. I would be thrilled if today's copper and zinc prices hold for the next fiscal year. Also don't underestimate the LIF contribution to revenue. Altius receives a cool million in the first quarter from LIF dividends. Altius also has late calendar year effects. Yamana expects Chapada to ramp up in H2, and Alberta electricity demand is highest in winter. Altius's Q3 of November, December and January captures those seasonal effects. That is partly why Altius hit quarterly revenue record in Q3. Rocanville hasn't had its production allocation increased by Canpotex. That allocation is also expected to take effect on July 1st. Link to comment Share on other sites More sharing options...
linealdin Posted June 23, 2017 Share Posted June 23, 2017 Altius sold 870,000 pounds of Chapada copper from February through April. In a calendar year Chapada guidance is 120 million pounds. Altius's cut is 3.7% of that, or 4.44 million pounds. So the next 3 quarters Altius should sell around 1.19 million pounds of Chapada copper each quarter to reach the expected 4.44 million pounds of annual royalty. So Chapada revenue should average $4 million per quarter in Q1 through Q3, if copper prices are $2.54 per pound. (Copper currently $2.61 and rising, inshallah.) Link to comment Share on other sites More sharing options...
linealdin Posted June 23, 2017 Share Posted June 23, 2017 777 mine production in recent quarters: Altius fiscal year 2017 Q4: 7.6 million pounds of copper, 23 million pounds of zinc, $3.341 million revenue Q3: 10.8 million pounds of copper, 24 million pounds of zinc, $2.213 million revenue Q2: 9 million pounds of copper, 26.5 million pounds of zinc, $2.441 million revenue Q1: 10.5 million pounds of copper, 15.1 million pounds of zinc, $2.606 million revenue While revenue for the 777 mine was spectacular in Q4 at $3.341 million, the production was rather mediocre: lowest copper producing quarter and third lowest zinc producing quarter. So why did the revenue improve so much from Q3's $2.213 million, when 777 produced much more copper and zinc? I suspect the lag effects Altius management has noted for some of its royalties. I think only in Q4 did the royalty start seeing benefits from copper at or above $2.50 and zinc at or above $1.15. We shall see if 777 sticks around $3.3 million in revenue in this year's Q1. My belief is that at current copper/zinc prices and at recent production rates the 777 royalty brings in $13 million to $14 million in annual revenue. Link to comment Share on other sites More sharing options...
mikek Posted June 23, 2017 Share Posted June 23, 2017 "So Chapada revenue should average $4 million per quarter in Q1 through Q3, if copper prices are $2.54 per pound." I don't think we will see 12 million in the next 3 quarters for the Chapada royalty for Altius but I do see how we can get to the 55 million for the upcoming year for Altius now. I think the potash royalties will probably go from 5 million to about 7 million this year and I think you could be right on the 777 numbers. If commodity prices stay near where they are today I guess they could get to 55 million for the upcoming year. I would say the Chapada royalty could go from 10 million on the current year to about 12 million for the upcoming year. Thermal coal should be flat, met coal probably down a little and the LIF royalty should be up on a year over year basis. Link to comment Share on other sites More sharing options...
linealdin Posted June 23, 2017 Share Posted June 23, 2017 http://www.reveloresources.com/content/658/RVL_NR06_LoroHochschild_2017-06-06_Final.pdf Revelo options Loro property to Hochschild Mining (British precious metals miner). Altius Chilean subsidiary owns 2% royalty on precious metals, and owns Revelo shares. Four properties were optioned from Altius Chile to Revelo in 2015. Hochschild has minimum $2 million cost and 5000 meter drilling commitment for initial stage. Link to comment Share on other sites More sharing options...
linealdin Posted June 23, 2017 Share Posted June 23, 2017 "So Chapada revenue should average $4 million per quarter in Q1 through Q3, if copper prices are $2.54 per pound." I don't think we will see 12 million in the next 3 quarters for the Chapada royalty for Altius but I do see how we can get to the 55 million for the upcoming year for Altius now. I think the potash royalties will probably go from 5 million to about 7 million this year and I think you could be right on the 777 numbers. If commodity prices stay near where they are today I guess they could get to 55 million for the upcoming year. I would say the Chapada royalty could go from 10 million on the current year to about 12 million for the upcoming year. Thermal coal should be flat, met coal probably down a little and the LIF royalty should be up on a year over year basis. You're right. I was confusing pounds actually sold with pounds produced. A little under $12 million probably better estimate. Altius only gets paid for pounds sold. Chapada guidance of 120 million pounds is for pounds produced. In 2016 Chapada didnt hit the original target, and it took a huge Q4 to make it respectable: Q1: 25.9 million pounds produced; 22.7 million pounds sold Q2: 23.2 million pounds produced; 26 million pounds sold Q3: 29.6 million pounds produced; 22.1 million pounds sold Q4: 36.9 million pounds produced; 34.2 million pounds sold In 2017 it looks like a similar slow start: Q1: 26.5 million pounds produced; 25.2 million pounds sold Link to comment Share on other sites More sharing options...
linealdin Posted June 23, 2017 Share Posted June 23, 2017 One thing about Chapada: $10.557 million in fiscal 2017 did NOT represent a full year of royalties. Remember Altius's royalty only kicked in halfway through Q1. Altius sold 334,000 pounds and received a paltry 887,000 in revenue in Q1. So 3.5 quarters of Chapada (with missed production target) at $2.43 average price per pound = $10.557 million in revenue A full 4 quarters of Chapada (hitting production target) at a $2.60 average price per pound = ???? Link to comment Share on other sites More sharing options...
linealdin Posted June 23, 2017 Share Posted June 23, 2017 What the heck happens to the copper pounds produced but not sold? Link to comment Share on other sites More sharing options...
linealdin Posted June 23, 2017 Share Posted June 23, 2017 http://www.excelsiormining.com/images/Presentations/2017/June_21_2017.pdf New presentation on Excelsior website with detailed renderings of what exactly the $49 million capex buys: wellfields, pipelines, power lines, solution ponds etc. It also shows a picture of the ugly open pit at the former Johnson copper mine. No one living nearby to complain about the open pit, even less likely anyone protests the innocuous looking wellfield and pipelines. This is remote mining country. Link to comment Share on other sites More sharing options...
linealdin Posted June 26, 2017 Share Posted June 26, 2017 If conservatives take over again, they might allow the supercritical plants to produce power longer, but they are even less likely than the NDP to pay Altius anything. If the conservatives allow the supercritical plants to operate past 2030 then Altius won't need any form of compensation. The only impairment it has recorded is 72 million on the shortened life of Genessee. None of its other coal royalties are particularly impacted by the NDP policy change. This whole coal thing is overblown. Altius will have payback on its purchase by mid- 2025. Everything else beyond that date is gravy. Link to comment Share on other sites More sharing options...
linealdin Posted June 27, 2017 Share Posted June 27, 2017 Interesting iron ore royalty dispute in Australia between mogul Clive Palmer and CITIC, one of China's biggest conglomerates. CITIC decided it wasnt going to pay Palmer royalties on its massive iron ore mine because the iron ore market moved from annual benchmark to spot pricing in 2010, therefore it became be too "difficult" to determine a market price royalty payments. They want to pay nothing. This rationale sounds about as stupid as Vale's decision to deduct its plant capex costs from its Voiseys Bay royalty payouts. The expectation in Australia is that Clive Palmer is about to receive a hefty judgment at trial (asking for $150 million plus). I think Palmer holds a 10% royalty. That is crazy. I doubt the iron ore mine can be economic with that heavy a royalty drag. I suspect Vale thinks its case is probably unwinnable, especially because the trial is taking place in St. Johns Newfoundland not Brazil. But even if they lose the payout at trial will be equivalent to paying back an interest free loan. The money they withhold from Royal Gold/Altius is much needed cash flow as the iron ore market tanks. Link to comment Share on other sites More sharing options...
linealdin Posted June 27, 2017 Share Posted June 27, 2017 http://www.excelsiormining.com/index.php/news/news-2017/522-excelsior-mining-s-johnson-camp-mine-receives-amended-state-permit Excelsior receives another necessary permit, this one an amended aquifer protection permit for its Johnson Camp (where the processing plant is located). Stock up 6% to 91 cents, nearing its 52 week high. Link to comment Share on other sites More sharing options...
linealdin Posted June 27, 2017 Share Posted June 27, 2017 Potash royalties affected by one-off issues at Allan and Ezterhazy in Q4. Allan shut down for 12 weeks beginning in February, which took out the whole quarter of production. At Ezterhazy a serious accident shut down production for a while. Both should be back to normal in Q1. The other potash royalties improved. Beginning of production expansions. Link to comment Share on other sites More sharing options...
linealdin Posted June 28, 2017 Share Posted June 28, 2017 Champion debenture agreement is now on Champion's SEDAR profile: June 21st, under "other securityholders documents." Of interest to Altius shareholders: 1) Altius has matching rights for the next 24 months on any streaming or royalty financing offers Champion receives. 2) The initial interest payment, representing 6 months interest, is paid in advance on the issue date. So Altius received $400,000 on June 1st, representing interest for June 1st through Dec. 1st. Next payment will be on December 31st, $266,666 (interest for Dec. 2nd through Dec. 31st, and Jan 1st through March 31st). Interest paid in advance. March 31st, 2018: $200,000 And so on every quarter. 3) Altius holds an overriding right to convert the debenture to shares. Even if Champion closes the master financing and elects to prepay the debenture before its 1 year maturity date, Altius still has the right to receive shares instead. * Altius drives a hard bargain. I love the $400,000 interest prepayment, and all the interest payments being advance payments. That $400,000 should show up as "interest and investment" revenue in Q1. Also seems clear Altius is very interested in buying a royalty as part of the mine's development finance. I think they probably get a deal done. It will be fairly expensive. 2% royalty for $60 million? Link to comment Share on other sites More sharing options...
linealdin Posted June 28, 2017 Share Posted June 28, 2017 Excelsior Mines Construction Funding GRR option: The smaller size of the final design for the plant adjusts the royalty option for Altius. For a plant smaller than 40 million pounds per annum the fully vested Construction GRR would cost $5 million for 1.25% royalty, instead of $10 million for a 1% royalty for a plant with 80 million pounds or higher capacity. Since Altius's Construction option is 50% vested it will have the option of buying a 0.625% royalty for $2.5 million if Excelsior sticks to its plan to build a 25 million pound pilot plant. See Share Purchase and Royalty Option Agreement between Callinan and Excelsior dated July 19th, 2013. Now that looks like a lot better value. If the permitting and financing proceed well I think Altius makes this construction royalty purchase. A 1.625% royalty has a nice ring to it. Link to comment Share on other sites More sharing options...
linealdin Posted June 28, 2017 Share Posted June 28, 2017 Altius "interest and investment" revenue is a minimum of $1.425 million for Q1. Up from $860K in Q4 and $307K in Q3. Link to comment Share on other sites More sharing options...
linealdin Posted June 28, 2017 Share Posted June 28, 2017 Magic number for Altius quarterly revenue is $13.75 million, which hits the annual $55 million revenue target. My estimates for Q1: 777: $3 million (lower than Q4, considering lower commodity prices) Chapada: $3 million (slightly higher than Q4, with ramp up in production) Cheviot: $487K (coking coal realizations decline from $206 to $155 per tonne) Thermal coal: $3.9 million (slightly higher than Q4, higher summer electricity demand) Potash: $1.8 million (slightly higher than Q4, Rocanville rampup, Allan and Esterhazy back to normal) CDP coal bed methane: $229K (even with Q4) Interest and investments: $1.45 million (LIF special royalty, Champion debenture interest) Total: $13.866 million. Link to comment Share on other sites More sharing options...
linealdin Posted June 28, 2017 Share Posted June 28, 2017 How will that estimated $13.866 million be spent in Q1? Cash costs excluding accounting devices like amortization and depletion: ~1.3 million interest on longterm debt (declines as debt declines) $2 million quarterly payment on term debt facility (increases to $3.25 million in Q2) $3.418 million voluntary payment on revolver $1.3 million shareholder dividends ~$1.5 million on administrative costs ~860K income tax ~$900K cost of copper stream ~$250K for Genex and mineral leases ~$312.5K for Fairfax interest -------------- Total quarterly cash costs: $11.840 million That leaves just $2.026 million for investments, building cash hoard, buybacks etc. That's why sales from the junior equity portfolio are crucial to giving Altius some financial leeway ($12.726 million in equity sales in fiscal 2017). Link to comment Share on other sites More sharing options...
linealdin Posted June 28, 2017 Share Posted June 28, 2017 In fiscal 2017 Altius sent $32.614 million towards debt repayment (interest and principal on term facility and revolver, and one-time old debt facility retirement costs). The debt won't be around forever. I think 2 to 3 years of aggressive payback should take care of it. What happens then? That $32.614 million, or over 75 cents per share, flows towards more positive uses: increased dividends, cash hoard, accretive investments. Link to comment Share on other sites More sharing options...
linealdin Posted June 28, 2017 Share Posted June 28, 2017 http://www.avrupaminerals.com/news/index.php?content_id=262 In April Avrupa optioned the Alvito project in Portugal to Oz Minerals. Oz to fund $4 million in exploration costs over the next 2.5 years. Altius holds a 1.5% royalty on the Alvito property, part of the Callinan acquisition. http://www.rengold.com/s/NewsReleases.asp?ReportID=793410&_Type=News-Releases&_Title=Renaissance-Gold-Signs-Binding-Terms-Sheet-with-Ramelius-Resources-on-Jupit... Renaissance Gold options Jupiter gold property to Ramelius Resources. $3 million in exploration funding over 5 years. Altius owns a 1% royalty on Jupiter, also from the Callinan deal. (Oz Minerals and Ramelius Resources are both Australian companies. Profits from the Aussie mining boom now being deployed worldwide. Same with O'Keeffe/Champion and Telkwa and even Coventry Resources.) The juniors are definitely cashed-up and ready to spend. Link to comment Share on other sites More sharing options...
linealdin Posted June 29, 2017 Share Posted June 29, 2017 Allegiance Coal halted for imminent delivery of the Pre-feasibility Study. Press release should be in Friday morning Aussie time, or this 5pm this evening in Canada. Allegiance plans to go on road show with positive PFS to sign a joint venture partner. Coking coal (and iron ore prices) have had a strong bounce up this week in China. I believe coking coal hit the 8% daily limit on a move up. China steel trade not dead yet. Link to comment Share on other sites More sharing options...
linealdin Posted June 30, 2017 Share Posted June 30, 2017 http://www.rengold.com/i/pdf/2017-06-30_NR-IUghaz.pdf Renaissance Golds sells Silicon property to Anglogold Ashanti, third largest gold producer in world. $3 million in payments over 3 years (heavily backloaded) and a 1% royalty for Rengold. Altius retains a 1.5% royalty, yet another legacy of Callinan acquisition. Another lottery ticket! The pace of indirect farmout projects with Altius retained royalties is extraordinary. Silicon (Anglogold), Jupiter (Ramelius), Stellar (Polaris Minerals), Alvito (Oz Minerals), and Loro (Hochschild) just in the last couple of months. Link to comment Share on other sites More sharing options...
linealdin Posted June 30, 2017 Share Posted June 30, 2017 http://www.rengold.com/i/pdf/2017-05-29-ren.pdf Renaissance acquired Kinetic Gold in an all share deal, 6.833 million Rengold shares for 100% of the privately held Kinetic. Altius (from Callinan) owned 1.35 million of Kinetic's 15.8 million shares. So Altius received ~583,000 shares of Rengold. Rengold currently trading at 28 cents. Deal unlocked stake in private company, now those shares of Rengold are added to the Project Generation portfolio. Link to comment Share on other sites More sharing options...
linealdin Posted June 30, 2017 Share Posted June 30, 2017 http://www.capitalpower.com/InvestorRelations/Events/Documents/2017%20June%20Investor%20Meetings.pdf See slide 8. Notes that Alberta has had seven consecutive months of positive normalized load growth. Basically electricity demand has been growing from November 2016 through May 2017 (June numbers also excellent). We should see very strong quarters of the coal royalties going forward. Slide 13 has updated estimated Alberta power plant closing dates. Takes ATCO management's at their word they will convert Battle River and Sheerness by end of 2020. (ATCO's word is worth nothing.) Capital Power is, of course, rooting for the older plants of their competitors to close early so Capital's younger coal plants operate in an undersupplied electricity market. No changes planned for Genesee 1, 2, 3 or Keephills 3: all will run through 2030. Link to comment Share on other sites More sharing options...
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