ALS.TO - Altius Minerals

[linealdin]

On August 31st Altius bought back 21,000 shares at $10.965, total value of $230K. Subsequently cancelled the shares. Buybacks seem predicated on the stock dipping below C$11.

[linealdin]

Only 120 historic drill holes at the Mt. Chase deposit. That is very few for resource delineation. Plenty of room to drill deeper and more widely than Getty Exploration did in the 70's. If they can get the deposit in the 5 to 10 million tonne range then Wolfden would have something exciting. The grades are very, very good.  Comparable or better than the 777 mine, actually:

 

Mt. Chase: 11.25% zinc and 1.45% copper

 

vs.

 

777 mine: 4.68% zinc and 2.53% copper.

 

Will be very interesting to see Wolfden deliver a 43-101 compliant resource in 2018.

[TwoCitiesCapital]

On August 31st Altius bought back 21,000 shares at $10.965, total value of $230K. Subsequently cancelled the shares. Buybacks seem predicated on the stock dipping below C$11.

 

I'm confused how they filled at C$ 10.965 when the stock was trading at C$12.20ish that day? Doesn't make sense relative the U.S. shareprice of $9.75 that day either. How did they get a fill of 200k more than 10% below market levels?

[linealdin]

On August 31st Altius bought back 21,000 shares at $10.965, total value of $230K. Subsequently cancelled the shares. Buybacks seem predicated on the stock dipping below C$11.

 

I'm confused how they filled at C$ 10.965 when the stock was trading at C$12.20ish that day? Doesn't make sense relative the U.S. shareprice of $9.75 that day either. How did they get a fill of 200k more than 10% below market levels?

 

Is a private transaction possible? Shareholder who wants out (in one fell swoop) sells to Altius's buyback program?

[linealdin]

Altius spending C$10.83 million on a deposit located in Maine of all places is about as weird as Osisko spending C$8.5 million on a tin deposit in Cornwall, UK.

 

The elevated prices of the bull market have sent royalty investors to strange places looking for value.

[TwoCitiesCapital]

Altius spending C$10.83 million on a deposit located in Maine of all places is about as weird as Osisko spending C$8.5 million on a tin deposit in Cornwall, UK.

 

The elevated prices of the bull market have sent royalty investors to strange places looking for value.

 

https://www.benzinga.com/pressreleases/17/09/n10031360/wolfden-enters-into-agreement-to-purchase-base-metal-project-in-penobs

 

Link

[linealdin]

http://www.pressherald.com/2017/09/08/mining-company-plans-to-buy-northern-maine-mountain/

 

Community opposition to the idea of a mine in Maine kicks in right away. Of course it's the owner of a tourist lodge and an activist from the National Resources Council who are quoted.

 

http://www.pressherald.com/2017/08/20/one-year-later-national-monument-stands-its-ground/

 

This article shows the other Maine. The one that vigorously opposed the proposed national monument (5 miles from the Mount Pickett deposit) because it would affect their ATV trails. The one that doesn't want more tourism. The people living in $30K homes and struggling for work after the paper mills closed, or who work cutting down trees. Common folk. Those people are going to support a venture that brings in a significant number of jobs.

 

Those homemade "National Park NO" signs could turn into "Build the Damn Mine" signs. The appetite for jobs is there.

 

Looking at Mount Pickett on Google Earth: No communities or homes close by. Plenty of logging being done on one face of the mountain. An underground mine causes less disturbance than the logging.

[linealdin]

Wolfden with only a $15 million market cap. If they prove up an economic deposit that market cap could easily rise to $100 million to $150 million. Which could turn Altius's $3.55 million equity investment into $20 million or more. The 7.1 million warrants would amplify gains, even with expected dilution.

 

The equity alone could pay back the whole investment. The royalty is the cream on top.

 

The Wolfden team has done it before. Ewan Downie sold the original iteration of Wolfden for C$363 million after making several zinc discoveries. Donald Hoy sold Freewest to Cliffs for C$240 million after discovering the Ring of Fire chromite deposits.

 

VMS deposits tend to cluster. The zinc/lead/copper soil anomalies distal to the main ore body are key.

 

Gameplan is clear. Prove up an economic deposit quickly then sell it to a senior producer for a couple of hundred million. Let the senior producer worry about permitting and construction.

[linealdin]

http://www.allegiancecoal.com.au/irm/PDF/1254_0/TelkwaMetallurgicalCoalProjectStage1PFSResults

 

Telkwa Stage 1 PFS delivered. Capex costs brought down to a remarkable US$35 million. This is going to become a mine if the permitting allows. Cost is negligible for a bulk commodity mine.

 

How was capex reduced from $51 million to $35 million? Tweaking the mine plan to do less pre-stripping, choosing the cheaper washplant, and cheaper water management.

 

Altius has a big chunk of this one: 4.5% royalty at current met coal prices. Nasty.

 

 

[nostradamus]

http://www.allegiancecoal.com.au/irm/PDF/1254_0/TelkwaMetallurgicalCoalProjectStage1PFSResults

 

Telkwa Stage 1 PFS delivered. Capex costs brought down to a remarkable US$35 million. This is going to become a mine if the permitting allows. Cost is negligible for a bulk commodity mine.

 

How was capex reduced from $51 million to $35 million? Tweaking the mine plan to do less pre-stripping, choosing the cheaper washplant, and cheaper water management.

 

Altius has a big chunk of this one: 4.5% royalty at current met coal prices. Nasty.

 

 

 

The royalty is: Altius will receive a 3% gross sales royalty on coal sold where the benchmark coal price is less than US$100 per tonne; 3.5% where the benchmark coal price is US$100-US$109.99 per tonne; 4% where the benchmark coal price is US$110-US$119.99 per tonne; and 4.5% where the benchmark coal price is greater than US$120 per tonne.

 

The PFS details a plan for 250k tonnes per annum initially, potentially doubling in a second phase (its disappointing that this plan for 500k capacity is significantly below their prior PFS that envisaged ramping up to 1.75M tonnes pa).

 

So, if met coal stays above $120, this gives an annual royalty of above 250k * $120 * 4.5% = $1.35m initially, or $2.7m for stage 2. Not bad!

 

Plus, there is the 6.45% equity interest in Allegiance which is currently worth around $0.6m. The market cap of Allegiance is currently around $9m, and this will certainly be multiples higher if they actually do what they claim they can do in the PFS.

 

Plus, Altius has a 10% retained project interest in Telkwa. This could easily be worth another $5m if the PFS works out.

 

(Aside: ALS posted an updated corporate presentation on the website: http://altiusminerals.com/uploads/Corporate-Presentation-August-2017-vFinal-Full.pdf and Q1 results due on Thursday)

 

N.

[linealdin]

I believe the plan is still to go to 1.75 million tonnes in Phase 2. Allegiance is just indicating that the Stage 1 plant is scalable to 500,000 tonnes without additional capex. Just hiring workers for 7 days instead of the planned 4 day workweek does the trick.

 

Using your numbers at 1.75 million tonnes the annual Altius royalty revenue would be US$9.45 million or C$11.43 million.

 

Bulk commodity royalties can be astonishing profit generators.

[linealdin]

http://altiusminerals.com/uploads/Corporate-Presentation-August-2017-vFinal-Full.pdf

 

Question about the latest Altius presentation. What mining commodity is composed of the D element? See page 12.

 

[linealdin]

Altius due another C$9.8 million in cash payments as Allegiance hits various benchmarks as it moves to "major mine" production (anything more than 250K tonnes per annum).

 

I'm sure Altius will take much of that C$9.8 million in shares instead of cash to give Allegiance some breathing space. Altius likely becomes a 30% to 50% shareholder of Allegiance if all goes well.

 

$10 million in total benchmark payments, a maximum 4.5% royalty, AND a 10% retained project equity: Altius drove a very hard bargain with the Telkwa project.

[Williams406]

Deuterium, a hydrogen isotope. Produced from water. Altius innovation may be to use ice as starting point. Even if it wasn't renewable, Canada has quite a few years of the stuff on hand, I'm told. 1.5% royalty on deuterium produced from just 1% of Canada's ice annually could be a tidy sum. 1)Vend-out, 2) PEA due at 1) plus 6 months, with off-take agreements to follow?

[linealdin]

Implied Q1 revenue from the presentation:

 

Chapada: $3.53 million

777: $3.505 million

Genesee: $1.672 million

Sheerness: $1.576 million

Paintearth: $67K

Highvale: $399K

Cheviot: $694K

Rocanville, Cory, Allen and Patience Lake: $1.595 million

Esterhazy: $610K

Vanscoy: $41K

 

Adds up to $13.68 million

 

Add in IOC revenue and CDP revenue and you get to $14.8 million for the quarter?

 

[linealdin]

Presentation also implies that Altius has increased its LIF equity position from 1.7076 million shares to around 2.23 million shares. Working backward from C$2.8 million in LIF dividends LTM as of July 31st.

 

Increase of 522,000 shares. Let's see if my math is correct on Thursday.

 

If correct LIF equity position would be worth nearly C$45 million at current market price.

 

If next quarterly LIF dividend is 80 cents then Altius's payout at the end of October is C$1.78 million.

 

If, if, if.

[linealdin]

I'm going to be unhappy if a dividend increase isn't announced on Thursday. It is time. Annual meeting on Friday. Looking forward to Andre Gaumond joining the board. He's made some very good discoveries, including base metals deposits, and seems to have strong beliefs about low cost exploration and partnering.

[TwoCitiesCapital]

I purchased an additional 20% going into the announcement - definitely hoping for a sizeable dividend increase and/or significant buybacks in the next quarter or two.

 

For whatever reason, $10 USD/share has been a signficant support/resistance for the last 5+ years (coincidence?). I don't know why the USD price would matter with the majority of the volume in CAD, but it seems to have held true through multiple years/exchange rates/etc. I think if we get an event that pushes us over the top of that range, we'll see a sustained rally based on the phenomenal development we've seen in their assets/investments/royalties.

 

Maybe or dividend hike or repurchases will get us there.

[linealdin]

Sandstorm Gold with double the market cap of Altius. Yet Altius has slightly higher quarterly cash flow. And pays a dividend.

 

Altius Q4: $13.378 million revenue, but only $879K cost of sales (only one stream Chapada)

 

Sandstorm Q2: $16.1 million revenue, but $3.7 million cost of sales (all those streams take a big chunk)

 

Altius is going to start pulling away in the quarterly revenue race, starting with Q1.

[linealdin]

https://www.reuters.com/article/us-china-ironore/chinas-dalian-exchange-adjusts-high-grade-iron-ore-delivery-standard-idUSKCN1BO0ZV

 

More structural changes to market for premium iron ore. Now the exchange itself is lowering the acceptable impurity limits and charging small premiums and discounts for quality.

 

There is a stockpile of low quality ore in China that needs to be worked through (sold at extreme discounts). That will encourage the majors to shut down high impurity ore mine capacity and shift to better quality. Vale did this during the second quarter and Rio Tinto announced similar intentions recently.

[linealdin]

http://prensa-latina.cu/index.php?o=rn&id=102421&SEO=empresa-canadiense-expresa-interes-de-invertir-en-mineria-boliviana

 

http://www.cambio.bo/?q=node/29204

 

Rough translation from Spanish:

 

Adventus Zinc looking at a mining project in Santa Isobel Potosi, Bolivia. David O'Conner, consultant for Adventus, speaks to Cesar Navarro, minister of metals and mines, about looking to invest in a very large mine in the Santa Isobel area.

 

The two parties plan to meet again in August with proposals and counterprosals about developing the project. Adventus seems to have sent a team of crusty technical advisors to check out the Bolivian project.

 

(Bolivia has large historic reserves of zinc. Foreign investors have returned since the business environmment has improved. Sumitomo Corp of Japan operates a large zinc/silver mine in Potosi.)

 

http://www.mining-journal.com/world/centralsouth-america/bolivia-looks-outside-for-mining-growth/

 

Article from 2016 about the reopening of Bolivian mining to foreign investors. The Santa Isobel deposit is estimated to be 40 million tonnes of silver/lead/zinc and requires US$350 million capex. Foreign investors can only own up to 49% of a project, the majority owner will be COMIBOL the state mining company. So the project has to be a big enough prize to make a even a minority stake appealing. Pan American Silver also sniffing around the Santa Isobel project.

 

I read about drill holes of up to 13% zinc at Santa Isobel in another article:

 

http://www.prophecydev.com/new-drilling-at-apogees-santa-isabel-property-returns-15m-of-253gt-silver-13-zinc-230gt-indium/

 

History: Apogee Minerals (later Apogee Silver), a Canadian company, signed an earn-in agreement to explore the Santa Isabel project in 2004, in a deal brokered by the famous Forbes & Manhattan (Stan Bharti). They had some very good drill results but an ownership issue came up. The original owner owed US$1.25 million to the State Mining Department and the debt was disputed. Apogee then stopped making earn-in payments and wrote off the property a few years later.

 

Some sloppy amateur nonsense.

 

 

 

 

[linealdin]

Altius vs Sandstorm, warrant/option situation

 

Altius:

 

400,000 warrants at $14

1.67 million warrants at $15 (25% vested of total Fairfax warrants)

274,993 share purchase options

 

Sandstorm:

 

24.88 million warrants at various exercise prices. All of the warrants are significantly in the money already.

4.8 million vested share purchase options, 8.2 million total options.

 

Nolan Watson does not care very much about shareholder dilution obviously.

 

 

 

[linealdin]

http://190.129.70.195/noticias/noticias.php?id=576

 

This Adventus in Bolivia thing is for real. This article has more details. Bolivia presented some projects at PDAC March 2017. Contact was first made then. On May 18th David O'Connor, Bedric Mory, and Guillermo Cordero, consultants for Adventus, met with Jose Pimentel, president of COMIBOL, the state mining company, and a representative of EMV, the state tin producer, to analyze the Santa Isabel deposit and generate a technical report which may lead to investment. Total Adventus investment in Bolivia would amount to $250 million.

 

$350 million is the expected capex of the project.

 

Then the meeting in July with the minister of mines, then another meeting in August to exchange proposals.

 

What I like about this: Christian Kargl-Simard, CEO of Adventus, is swinging for the fences. Home run or nothing. Bolivia is a very dangerous jurisdiction. EMV, the tin producer mentioned above, received a nationalized Glencore tin smelting complex not that many years ago.

 

But the prize is huge. 40 million tonnes is a world class resource for a zinc mine. And the grades from drilling done by Apogee Minerals are also very strong.

[nostradamus]

 

What I like about this: Christian Kargl-Simard, CEO of Adventus, is swinging for the fences. Home run or nothing. Bolivia is a very dangerous jurisdiction. EMV, the tin producer mentioned above, received a nationalized Glencore tin smelting complex not that many years ago.

 

But the prize is huge. 40 million tonnes is a world class resource for a zinc mine. And the grades from drilling done by Apogee Minerals are also very strong.

 

I'm not a fan of the Adventus strategy. They already have some potentially economic zinc deposits in stable jurisdictions (Ireland and Canada). With zinc riding high, I would much prefer it if they focussed all of their efforts on attracting partners to develop these deposits. This is meant to be part of their strategy, but instead it seems like (from the outside) the focus of Christian Kargl-Simard is entirely on the other part of their strategy which is to make an acquisition.

 

Essentially, we have a former investment banker using Altius' money to make a massive bet during the boom years of zinc in a risky jurisdiction. Home run possibly, but probably nothing. Perfectly rational for him, and I'm sure that trying to do a massive deal in Bolivia is more exciting for a banker than developing the exiting properties. But, Altius repeatedly comments on the quality/stability of the jurisdictions to which it has exposures, so is this really the right strategy?

 

N.

 

[linealdin]

 

What I like about this: Christian Kargl-Simard, CEO of Adventus, is swinging for the fences. Home run or nothing. Bolivia is a very dangerous jurisdiction. EMV, the tin producer mentioned above, received a nationalized Glencore tin smelting complex not that many years ago.

 

But the prize is huge. 40 million tonnes is a world class resource for a zinc mine. And the grades from drilling done by Apogee Minerals are also very strong.

 

Essentially, we have a former investment banker using Altius' money to make a massive bet during the boom years of zinc in a risky jurisdiction. Home run possibly, but probably nothing. Perfectly rational for him, and I'm sure that trying to do a massive deal in Bolivia is more exciting for a banker than developing the exiting properties. But, Altius repeatedly comments on the quality/stability of the jurisdictions to which it has exposures, so is this really the right strategy?

 

N.

 

Hopefully not spending too much of Altius's money. Altius got 7,570,014 million Adventus shares in exchange for the Buchans and Ireland properties. The rest of their 12.1 million shares they paid for, about 4 million shares at 25 cents per share, and another 500K shares at 50 cents a share.

 

So their investment so far is roughly C$1.25 million directly into Adventus. And indirectly the cost of their add-on investment in the original Irish Adventus (724K), and the cost of developing the Buchans/Irish properties (975K). They have gotten some small change back by charging Adventus for certain services.

 

So ~C$3 million of Altius money is at risk with Kargl-Simard.

 

My guess is that Greenstone, Resource Capital, and the other deep pocketed investors make the add-on bets when Adventus makes its acquisition. Altius hits the brakes and gets diluted from its 26.6% stake.

 

Kargl-Simard's goal for Adventus is very ambitious: Becoming a mid-tier base metals producer. That implies a market cap of $500 million to $1 billion. After a dilution even a 10% stake in a company of that market cap is significant.

 

Also Adventus is currently spending millions to explore Lismore, Rathkeale and Buchans, properties Altius holds 2% royalties on. Geochemical, seismic, electromagnetic surveys and probably small initial drill programs this fall. All of that counts.