Liberty Posted October 14, 2017 Share Posted October 14, 2017 I have done my due diligence on Genesee. I know how much Capital Power is investing in capex at those coal plants. Efficiency improvements, wood biomass experiments. Those millions aren't being spent for no reason. You have a very general idea: Coal bad. The general idea is correct, but the details and exceptions matter. You don't know enough. It's not about what Capital Power believes. Did they expect the 2030 change before it came? They might not see the next one coming either. Large secular trends matter. Coal has too many downsides (high carbon emissions, smog, mercury pollution, coal ash storage, coal mining impact, etc), while competing power sources are getting better/cheaper at a good clip. If the externalized downsides of coal ever get priced in, coal will lose any remaining competitiveness it thought it had... And it'll always be #1 on regulator's list because it's the low hanging fruit if you want to reduce pollution. Seems like biomass use and/or efficiency improvements won't help the Altius coal royalty if they reduce tonnage... Link to comment Share on other sites More sharing options...
linealdin Posted October 14, 2017 Share Posted October 14, 2017 ADV only has a $34 million market cap. An equity issue to pay off a $23 million plus debt would be a disaster. Altius isn't paying that debt. Maybe Heibei or Glencore offer a bridge loan. Wouldnt it make more sense to buy the whole company? Link to comment Share on other sites More sharing options...
linealdin Posted October 14, 2017 Share Posted October 14, 2017 I have done my due diligence on Genesee. I know how much Capital Power is investing in capex at those coal plants. Efficiency improvements, wood biomass experiments. Those millions aren't being spent for no reason. You have a very general idea: Coal bad. The general idea is correct, but the details and exceptions matter. You don't know enough. It's not about what Capital Power believes. Did they expect the 2030 change before it came? They might not see the next one coming either. Large secular trends matter. Coal has too many downsides (high carbon emissions, smog, mercury pollution, coal ash storage, coal mining impact, etc), while competing power sources are getting better/cheaper at a good clip. If the externalized downsides of coal ever get priced in, coal will lose any remaining competitiveness it thought it had... And it'll always be #1 on regulator's list because it's the low hanging fruit if you want to reduce pollution. Seems like biomass use and/or efficiency improvements won't help the Altius coal royalty if they reduce tonnage... Nothing to do with what Capital believes. Everything to do with where they are putting their cash. The efficiency improvements and very minimal biomass use provides social cover for the big goal: recovering their investment in their still very new coal plants. ATCO on the other hand has very old plants and they arent spending on sustaining capex or mitigations. We see where this is going. Paintearth royalty disappearing soon. Thankfully Genesee offers much more annual revenue than Paintearth. Everyone wants to get rid of coal but no one wants to spend the billions for combined cycle natural gas, nuclear or other forms of baseline power. Wind sucks and doesn't blow 75% of the time. Wind blows in the middle of the night when the power isnt needed. I see the realtime usage stats at AESO all the time: Coal is still king in Alberta, providing the majority of the power. Link to comment Share on other sites More sharing options...
linealdin Posted October 14, 2017 Share Posted October 14, 2017 All the political hoopla makes casual observers believe coal use has already disappeared in Alberta. The truth: Not one coal plant closure in Altius's portfolio. Not one coal plant conversion to gas. Altius receiving the same coal money every quarter they were getting in 2014 when they bought Prairie Royalties. Highvale starting to operate on Altius royalty lands and the met coal market greatly improving for Cardinal River has helped make up for Paintearth revenue declining. Politicians run their mouths; Altius runs to the bank. Link to comment Share on other sites More sharing options...
bizaro86 Posted October 14, 2017 Share Posted October 14, 2017 If anyone gets an exemption on anything coal related in AB, it will be capital power. They have the most political capital of the power producers, because they were the former utility owned by the city of Edmonton (Alberta's capital). The city still owns a big stake, as do lots of local retail investors. Retail politics matters here, and capital power is perceived in Edmonton as a local champion, in a city that has a head office inferiority complex. Edmonton will likely be a key area in the next election, as it is the power base of the current ruling party. If the UCP can make inroads there, they will win for sure. From an ALS perspective, I think the Gen. Plant running past 2030 is likely. I am also very confident that ALS will get zero compensation from the AB govt, even if the conservatives win. They have no legal basis for it, and no political capital to get money they aren't strictly owed. There was no taking from ALS. They still own the coal, and they didn't put up the cape x to mine it. If they want to they can, they just can't burn it locally. Link to comment Share on other sites More sharing options...
linealdin Posted October 14, 2017 Share Posted October 14, 2017 No compensation to Altius required if Genesee allowed to operate past 2030. Would be a major win. Let's see if the UCP can win the election and fulfill their campaign promises. Link to comment Share on other sites More sharing options...
linealdin Posted October 14, 2017 Share Posted October 14, 2017 As to Alderon renting out its port facilities? My understanding is that it is a multi-user facility owned by the government of Quebec. Same facilities Champion will use. Not sure how it will charge rent if not the owner. I believe the inevitable outcome with the Liberty loan is Liberty consenting to take shares instead of cash payback, thus becoming the majority shareholder of Alderon (around 66%). More dilution for the other shareholders obviously. Link to comment Share on other sites More sharing options...
SharperDingaan Posted October 14, 2017 Share Posted October 14, 2017 Quebec doesn't own the port handling facility - ADV does. Champion will be paying ADV a fee, every time they use the facility to load a boat .... and from day 1 http://www.alderonironore.com/index.php/news/2017/410- Alderon is a leading iron ore development company in Canada. The Kami Project, owned 75% by Alderon and 25% by HBIS Group Co. Ltd. (formerly Hebei Iron & Steel Group Co. Ltd.) ("HBIS") through The Kami Mine Limited Partnership, is located within Canada's premier iron ore district and is surrounded by two producing iron ore mines. Its port handling facilities are located in Sept-Îles, the leading iron ore port in North America. HBIS is Alderon's strategic partner in the development of the Kami Project and China's second largest steel producer. ADV is also getting refunded its $11.5M electricity deposit; more than enough cash to tide them over until Champion starts producing, and put up a partial repayment on the Liberty debt in return for a debt roll-over. The odds on any significant dilution are pretty low. ALS, as ADV's owner, is very good at what they do; & this is just an operational example. All good long term mechanics. SD Link to comment Share on other sites More sharing options...
doc75 Posted October 14, 2017 Share Posted October 14, 2017 Quebec doesn't own the port handling facility - ADV does. Champion will be paying ADV a fee, every time they use the facility to load a boat .... and from day 1 http://www.alderonironore.com/index.php/news/2017/410- Alderon is a leading iron ore development company in Canada. The Kami Project, owned 75% by Alderon and 25% by HBIS Group Co. Ltd. (formerly Hebei Iron & Steel Group Co. Ltd.) ("HBIS") through The Kami Mine Limited Partnership, is located within Canada's premier iron ore district and is surrounded by two producing iron ore mines. Its port handling facilities are located in Sept-Îles, the leading iron ore port in North America. HBIS is Alderon's strategic partner in the development of the Kami Project and China's second largest steel producer. ADV is also getting refunded its $11.5M electricity deposit; more than enough cash to tide them over until Champion starts producing, and put up a partial repayment on the Liberty debt in return for a debt roll-over. The odds on any significant dilution are pretty low. ALS, as ADV's owner, is very good at what they do; & this is just an operational example. All good long term mechanics. SD I don't follow this closely but I thought they upgraded from an 8M tonne facility to the big multi-user one, which is a joint project with other players and the QC gov't. Quick search turned up the following, but obviously not an official source: http://www.canadiansailings.ca/port-of-sept-les-multi-user-dock-though-fully-operational-now-will-be-officially-inaugurated-in-2017/ Link to comment Share on other sites More sharing options...
linealdin Posted October 15, 2017 Share Posted October 15, 2017 http://www.canadiansailings.ca/port-of-sept-les-completes-multi-user-wharf//url] Yes, Alderon funded $22 million of total $220 million capex cost for new multi-user port. That funding guarantees them access to use the port. They do not own the port. The Port of Sept-Iles Authority owns and operates the facility. Link to comment Share on other sites More sharing options...
SharperDingaan Posted October 15, 2017 Share Posted October 15, 2017 ADV owns 10%, same as the other 4 iron ore producers. The underlying assumption is that loading volumes from current mining will be enough to run the wharf at a profit; 10% of it will come back to ADV most likely as a dividend that services debt; & all seven parties adjust their debt repayment schedules to match anticipated dividends. Newfoundland is a small place, the wharf is a long lived asset, & 50% of the ownership is infrastructure money that has a long term view. Seems reasonable. Of course - we would prefer that everyone is 'positive' that ADV is a next to bankrupt piece of dung, with maggots crawling all over it. More dung please ;) SD Link to comment Share on other sites More sharing options...
linealdin Posted October 15, 2017 Share Posted October 15, 2017 The failed cashout of the $100 million in ADV shares was a sin of aggression. Altius was hoping to monetize more like $250 million once Alderon reached commercial production. A big producing iron mine is worth at least $1 billion in market cap. It was a risk and it failed. We will see how it plays over the longer time. It is certainly a nice property, and the permits are a big achievement. A cleanout of the debt, recapitalization, and new management would serve Altius's interests best. On a smaller scale I think Altius will wait until commercial production next year to monetize its 5.8 million Excelsior shares. Could be a $2 to $3 stock when Excelsior is rerated as a producer. Same strategy, let's hope it works this time. Link to comment Share on other sites More sharing options...
linealdin Posted October 15, 2017 Share Posted October 15, 2017 https://albertaviews.ca/profile-hanna/ Hanna mayor, on July 2017, on the Sheerness power plant: "Atco has promised to burn coal as long as possible, but 13 years isn't a lot of time." I very much like the sound of 13 more years of revenue from Sheerness. Sounds like crisp new bank notes. ATCO is making lots of contradicting promises. In public they act like they are already off coal. In private conversations with stakeholders they promise to burn coal at Sheerness until 2030. The reality is that the current economics doesnt support coal to gas conversions of newer plants like Sheerness. Market doesn't need more simple cycle gas, which is what the coal plants convert to. Plenty of simple cycle gas plants in Alberta already sitting idle. Check the usage reports at AESO. Let's not pretend that gas is in favor with the environmentalists. Link to comment Share on other sites More sharing options...
linealdin Posted October 16, 2017 Share Posted October 16, 2017 http://www.yamana.com/English/investors/news/news-details/2017/Yamana-Gold-Announces-Preliminary-Third-Quarter-2017-Operational-Results-and-Provides-Update-on-Brazilian-Tax-Matters/default.aspx Chapada Q3 results: 37.1 million pounds of copper. Q2: 29.6 million pounds Q1: 26.5 million pounds With the big bump in production and the white hot copper price the results should be excellent: at least C$5 million in Chapada revenue in Altius Q2. Another quarterly record. Link to comment Share on other sites More sharing options...
linealdin Posted October 16, 2017 Share Posted October 16, 2017 Spectacular breakout in copper: $3.23 Wow. Strange time to be discussing extended bear markets in commodities. Link to comment Share on other sites More sharing options...
linealdin Posted October 16, 2017 Share Posted October 16, 2017 Aussie listing of Champion Iron shot up to A$1.17. The Australian investors want in. The Canadians catching up at C$1.04. Altius debenture right to convert at $1 looks like it may pay off. Link to comment Share on other sites More sharing options...
linealdin Posted October 16, 2017 Share Posted October 16, 2017 Champion has completed all conditions and raised C$300 million for construction. The money is in hand. Amazing accomplishment. Let's see if they offer to pay the Altius debenture back immediately. Link to comment Share on other sites More sharing options...
linealdin Posted October 16, 2017 Share Posted October 16, 2017 http://www.riotinto.com/media/media-releases-237_23353.aspx IOC production up 18% in Q3 over Q2. Biggest increase in high premium pellets (up 24%). Volume increases make up for any slackness in the iron ore price. IOC still enjoying premiums for its high quality products. Should be another excellent quarter for LIF. IOC only produced 18.2 million tonnes of saleable ore in 2016. Guidance for 2017 is 19.4 to 21.1 million tonnes. Coming in the middle of that range would be significant for LIF revenue. Plenty of room to grow organically. Link to comment Share on other sites More sharing options...
linealdin Posted October 17, 2017 Share Posted October 17, 2017 Champion Iron now trading at A$1.36 in the Australian market. Huge move. Link to comment Share on other sites More sharing options...
nostradamus Posted October 17, 2017 Share Posted October 17, 2017 Allegiance Coal update: http://www.allegiancecoal.com.au/irm/PDF/1258_0/TelkwaMetallurgicalCoalProjectPermittingUpdate They are aiming for an initial production of just under 250,000 tonnes per annum, as a way of avoiding federal and provincial environmental assessment requirements that kick-in at 250,000 tpa at the provincial level and 1mtpa at the federal level. They think this means that they could start production in a couple of years. I guess that the game here is to get production started and then subsequently complete the assessments needed to increase production (potentially up to the 1.75Mtpa level they looked at in their first PFS). Seems smart. Environmental objections to the expansion of an existing mine are going to be lower than for a brand new mine. Link to comment Share on other sites More sharing options...
linealdin Posted October 17, 2017 Share Posted October 17, 2017 No problems with the Allegiance plan, except that it could be more expedited. They have had Telkwa since September 2016. Should have been taking pictures of birds and checking groundwater levels on an ongoing basis since that point. Submitting permit applications in 2019 is taking their sweet time. Stalling for an increase in the met coal price? Link to comment Share on other sites More sharing options...
linealdin Posted October 17, 2017 Share Posted October 17, 2017 http://www.adventuszinc.com/storage/news/pr1706-cfo-1508190914.pdf Adventus hires someone to serve fulltime as CFO and corporate secretary, replacing Ben Lewis and Chad Wells who had filled in on a temporary basis. As of the end of July Altius had charged Adventus C$297K for the services of Lewis and Wells and other admin. Will reap another ~C$65K through the end of November, when the administrative agreement ends. A sneaky way of getting part of their original C$2.3 million investment paid back. By the way, Adventus is still run out of Kargl-Simard's apartment in Toronto. The corporate address, Suite 707, 438 King Street West is a very nice condo building, not an office building. That is how to run on a shoestring when just starting out. Save on office costs, splurge on consulting fees for grizzled vets who know the geology of the projects being evaluated. Also don't need much of an office when you are supposed to be flying around the world closing deals. Link to comment Share on other sites More sharing options...
linealdin Posted October 17, 2017 Share Posted October 17, 2017 Altius has had the good luck (and foresight) to be involved with some stocks that have made significant gains over the last calendar year: Excelsior, Champion and Adventus are some of the bigger gainers on the TSX during that period. But the ventures market as a whole hasn't really been strong. The TSX-V index peaked at 2400 in early 2011, dropped to 500 in January 2016, and trades at 788 today. Some recovery, but not much. See how Mountain Lake failed to raise a measly C$1 million to close its option deal for Moosehead Gold. It is still tough out there for juniors. I wouldn't worry about overvaluation on the Venture Exchange until the TSX-V is much higher. If there is going to be a bull market in junior equities there is still plenty of room to run. Of course this may just be the beginning of a bear market that lasts 50 years. Who knows? Link to comment Share on other sites More sharing options...
linealdin Posted October 17, 2017 Share Posted October 17, 2017 Adventus trades up to $1.05 this morning. Hard stock to get into, not many sellers, buyers must pay a premium. Altius position worth C$12.72 million at that level. Link to comment Share on other sites More sharing options...
linealdin Posted October 18, 2017 Share Posted October 18, 2017 The big zinc acquisition that Adventus is stalking, a deposit currently held by a major that can support 100,000 tonnes per annum of zinc production for at least 10 years, is going to cost them a pretty penny. Could be C$100 million or more price tag. My understanding is that Altius plans to offer royalty financing as a big piece of that acquisition price. Let's say C$33 million for a 3% royalty. Greenstone and Resource Capital provide the rest. 100,000 tonnes = 220.5 million pounds of zinc. 220.5 million pounds x 3% royalty x $1.40 per pound of zinc = US$9.26 million or C$11.58 million in annual royalty revenue. If it is a 20 year mine life it could be a big prize. If a royalty deal is going to get done with an Adventus acquisition it should be agreed to before December 31st so using the remaining Fairfax money is an option. Any Altius equity raise is out of the question, and new traditional debt facilities would offer worse terms than the Fairfax money. Link to comment Share on other sites More sharing options...
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