ALS.TO - Altius Minerals

[linealdin]

With the C$10 million Champion debenture the ideal for Altius is that Champion NOT offer early repayment of the loan. If Champion rides the loan out to maturity in June, then Altius collects the C$800K in interest and some small change in fees.

 

More importantly Altius can see how commissioning of commercial production goes early next year, and see how the stock price reacts to the restart, before deciding to convert the debenture to shares.

 

If Champion were to offer to repay the loan today Altius would face a much tougher conversion decision. Lots of uncertainty when mines come online, and also uncertainty with the Champion stock structure (potential dilution with the millions of warrants/options).

[linealdin]

http://canexmetals.ca/docs/NR-17-6%20CANEX%20Gibson%20trenches%201%20to%203%20results%20Final%20with%20map.pdf

 

Canex Metals with trenching results at Gibson. 4 g/t gold equivalent over 12 meters the best result. Some very high silver values.

[nostradamus]

It seems that someone called Glenda Ferris is not so happy about the environmental impact of the Telkwa coal project:

 

http://www.interior-news.com/opinion/telkwa-coal-project-has-high-hazard-risk-with-no-trade-off-compensation/

[FFHWatcher]

****I POSTED THIS ON APRIL 13/2010....

 

Altius Minerals-als on the tsx

 

I find it very hard to play in the resource sector. I have spent a great deal of time trying to understand the pricing of mines, resources etc. To me it is has cost me dearly in a few names I could not pull the trigger on (looked at Teck resources at $6, Hudbay at $3, Quadra at $4!!!!) so I do not pretend to be an expert in the field. I still have an extreme liking for cash and liquidity and I hate capex. Obviously to a fault!

 

However, Altius Minerals is run by a 35 year old (Brian Dalton) who to me has created a mining company the way I would. They do not mine. They purchased the land rights of numerous mines back in the late 90's and early 2000's. For those that love "Leucadia" on this board they have done the same thing on a smaller scale. They were also a lot earlier than Leucadia. If lyou ook at what Leucadia did with Inmet in Spain you will see what Altius Minerals has done in eastern Canada. They purchased the mining rights for pennies on the dollar and have brought miners in to develop the properties and have taken a piece of the company and royalty payments. They also own a Royalty on the Voisey Bay Nickel mine. This Royalty alone paid out $5 million all in cash in 2008 and 2007...it is on the books at $11 million and it has a 25 year life...

 

They have compounded growth at 37% a year clip over the last 10 years.

*see their presentation on their website dated Feb 2010.

*Rick Rule (he is a value investor in the resource sector and has partnered with Eric Sprott...he is a big holder and bigger supporter of the company)...he has several bnn interviews where he discusses the company.

Altius is loaded in cash on a per share basis with no debt (margin of safety)....but it is their properties and      royalties that offer the upside. They purchased over 10 percent of their shares back during the downturn where the other miners were issuing shares.

 

mkt cap

$305 million

$205 million-cash equivalents after making $30 million in gains in IRC in 6 months (it was sold to Royal Gold with Altius securing the deal with the tender of their 10 percent position)...the market has not seen   

this gain in their financial results but it has been disclosed.

$100m for the company after backing out the cash

 

$100m-The Voisey bay royalty is worth at least this over 25 years..$4m a year is low...Nickel is hitting new    highs for the year...Voisey bay is on strike right now so the market is forgetting it. This is an all cash payment made by Vale.

 

When you back out the cash and the Royalty Altius is free or less than free as we think the Royalty could be worth much more.

 

What's left for free?

Look at the website they do a great job of describing their projects...I suggest you look at the Aurora uranium project and how they did it...2006

13 projects are ongoing

 

Alderon is the one with the greatest near term potential. Their value in the market on conversion (not guaranteed) is in the $80m range. $2.50-they would own 34m shares on conversion if drilling supports what Alderon thinks. Alderon is made up of the former managment of Thompson Consolidated (iron ore) which is located very close to the Alderon sites. I wish we had owned Thompson it has gone from about 20 cents to over $10 bucks! They are producing iron ore this year.

 

They have a $29m claim in court against Vale for underpayment on their royalty in Voisey Bay

 

The biggest call option is NLRC...which they have written off to 0 on the balance sheet. It is the first refinery project that has been fully permitted in North america in a generation which also has some heavy hitters on board (Harry Dobson a billionaire from Scotland). They have a great deal invested in this project. With the financial crisis and suppliers troubles having put the project is in doubt (it has been through court proceedings) I am confident in the ability of the ceo Brian Dalton to salvage some value from it...If he can pull it off it as homerun. I like to speculate when it is free!

 

For what it is worth we own the shares...we have purchased as low as $5.70 and we are the high for the year I believe  at $10.75.

 

429 pages. read 1,000,000 or more times (??).  It is coming up on 7 years of this board following Altius.  It looks like it was about $12-13 back then and 7 years later it is in about the same place but with a dividend, at least now. 

I have followed Altius for many years, owned it off and on.  I find it an interesting story in a field that seems to have factors that are so far outside of ones control, that I find it mostly a gamble (less so for Altius, more so for other names).  There is more coverage and fascination with Altius on this board than almost any other name, especially if it is prorated for market value.  Also interesting recently that Fairfax got involved.

My question is, if this has been stagnant money for almost 7 years how long does one wait and why is this story and opportunity so fascinating for some that you get multiple posts in a single day when the stock price is the same as it was 2500 days ago.

[Gamecock-YT]

Maybe instead of just rehashing the same points, just read through the liberty/linealdin debates

[linealdin]

Let me translate the argument of Fairfax Watcher: Fairfax traded near 600 in 1998, and is only 648 today. I guess it's been stagnant money for the last 20 years. Why is this stupid message board named after them? Grump, grump, grump.

[nostradamus]

There are very regular posts on Altius because some of us have huge amounts of money invested it and as a result want to follow every relevant development.

[linealdin]

Back to regular programming.

 

https://plannord.gouv.qc.ca/wp-content/uploads/2017/09/Etude_faisabilite_lien_ferroviaire_entre_Fire_Lake_Nord_Pointe-Noire.pdf

 

This is the C$15.2 Canarail study on a 3rd rail option for the Labrador Trough, paid for by Plan Nord. It certainly favors the Fire Lake assets of Champion, which would be de-stranded as assets. All options for routes pass through Fire Lake North. Only some options serve Kami. Report in French only, released in September.

 

Report Conclusion: New railway needed if 40 million tonnes of new production hit the market. Otherwise existing railways have enough capacity.

 

Quebec and Labrador have stated they will be working on cooperation opportunities in the Trough. Splitting the cost of a new multi-user, dual province railway would be nice. C$2.5 billion each? That would free Fire Lake, Kami, Julienne Lake and a few other deposits in the Fermont area. Running the line up to Labmag/Kemag or Lac Otelnuk deposits in the far north would be a much bigger price tag.

 

The infrastructure issues will be worked out. Both provinces want the jobs and tax royalties.

[linealdin]

Adventus Zinc trading at C$1.15. Up another 10 cents. Just buyers squeezing into a tightly held stock or news of another deal leaking out? Kargl-Simard promised multiple acquisitions in the near term.

 

Altius equity position worth C$13,931,114.

[linealdin]

http://www.afr.com/business/mining/how-rio-tintos-mozambique-mess-unfolded-20171018-gz3ana

 

Michael O'Keeffe of Champion's last big score was selling Riversdale to Rio Tinto for US$3.7 billion. Rio Tinto then had to write the project down to basically zero. Now the SEC is bringing charges against Rio and the former CEO and CFO for fraud in covering up the losses related to the Riversdale acquisition.

 

O'Keeffe has ungodly timing and/or luck. Who is the sucker who buys Bloom Lake for a couple billion?

[linealdin]

The unrelenting revenue growth will win over even a skeptical market. Altius LTM revenue (ending in July) is C$52.98 million. What is the Altius market cap? C$521.9 million.

 

So the market cap is roughly 10x LTM revenue. Not very generous compared to Altius's royalty company peers, but whatever.

 

At current commodity prices Altius should hit C$70 million revenue LTM at the end of June 2018. (The quarter ending this month will hit at least C$18 million in revenue.) The market cap will follow to the C$700 million level, again by midyear 2018.

 

How to get to a C$1 billion market cap in 2018? This be the path:

 

1) Copper and zinc, instead of staying stable, continue to move up in a bull market. Altius annual revenue moves to $80 million. Market cap follows.

 

2) Iron ore is a little stronger than expected. The LIF shares are cashed out for C$75 million. Champion has a successful restart of Bloom Lake in February 2018, and it is rerated as a producer. The Champion debenture is cashed in for C$25 million. The traditional debt is wiped out. The market realizes it likes debt free companies with significant, and longlasting revenue streams. It values Altius at a modest 12.5x its annual revenue of $80 million = C$1 billion market cap.

 

This scenario doesn't require any of the other Altius options to bear fruit. It doesnt require Altius to make any spectacular royalty purchases. Adventus will take a few more years to realize its potential, same for the proposed copper spinout. Alderon and Julienne Lake will take another 5 or 10 years. Every one of the hundreds of drill holes currently being made on Altius royalty land fails in this scenario. Excelsior copper solution mine just doesn't work technically, value of its shares and royalty falls to zero. Allegiance Coal goes nowhere. Antler Gold discovers its land is moose pasture. All Altius project generation efforts fail, no one wants Manitoba diamonds, Finnish gold, or anything else.

 

 

[linealdin]

Chapada produced 92.7 million pounds of copper in the last 9 months. Q4 is usually strongest at Chapada. I expect the year to finish at 130 million to 132 million pounds. Way over guidance of 120 million pounds.

 

With the optimization of a cleaning circuit in Q4 expected to raise copper recovery percentages even more I expect Yamana's 2018 guidance to be revised upwards to 130 million pounds.

 

Organic growth. Volume growth at today's copper price is VERY rewarding:

 

132 million pounds x 0.037% royalty x US$3.16 per pound x 1.25 exchange rate = C$19.3 million revenue

[FFHWatcher]

Let me translate the argument of Fairfax Watcher: Fairfax traded near 600 in 1998, and is only 648 today. I guess it's been stagnant money for the last 20 years. Why is this stupid message board named after them? Grump, grump, grump.

 

Touche!! 

[Cigarbutt]

"Let me translate the argument of Fairfax Watcher: Fairfax traded near 600 in 1998, and is only 648 today. I guess it's been stagnant money for the last 20 years. Why is this stupid message board named after them? Grump, grump, grump."

 

"Touché!!"

 

Maybe, that's a reason to consider timing of buying and selling decisions.

[linealdin]

http://www.tvanouvelles.ca/2017/10/12/pierre-moreau-donne-des-nouvelles-de-son-etat-de-sante

 

See interview above from October 11th. The Quebec minister mentions a "tres belle announce" concerning Plan Nord. "La Chine" has an interest in metals, especially iron ore, and significant investments will be announced in the coming weeks.

 

Apparently some news will be announced soon relating to the Labrador Trough iron ore and the Chinese (probably on the Quebec side of the border). Pierre Arcand, one of the Quebec resources ministers, recently returned from a trade mission promoting Plan Nord to Japan and China. There seems to be renewed Asian interest in Canadian iron ore.

 

Let's hope for Chinese help with building a rail line. That's what they are trying to do with stranded iron ore assets in Western Australia: 

 

https://thewest.com.au/business/mining/chinese-company-lined-up-to-build-6m-balla-balla-project-ng-b88425297z

[linealdin]

How many active Quebec iron ore developers, aside from Champion, still exist? Adriana merged into a Sprott spinout. Cartier Iron looking for gold in Chile. Someone landed a Chinese investment, I wonder who?

 

Maybe Champion found a Chinese investor for Fire Lake North. It is an advanced project.

[linealdin]

https://www.bloomberg.com/news/articles/2017-10-22/quants-take-bullish-iron-ore-bet-as-bnp-says-model-signals-gains

 

BNP quantitative model values iron ore at a spot price of $76 (actual benchmark price around $62). The bank has made a large bet in the futures market.

[linealdin]

Allegiance Coal in a trading halt. A capital raise to be announced. I suspect Altius kicks in a couple hundred thousand to maintain its equity position.

[linealdin]

LIF's 15.1% equity ownership position in IOC is probably undervalued. Rio Tinto only owns 58.7% of IOC equity but during its recent sales process for that stake (which attracted bidders like Wuhan, Minmetals, Teck and Glencore) was demanding US$3.5 billion to US$4 billion. I understand a deal was never finalized but it gives a ballpark valuation of what LIF's equity stake might be worth in a bull market: around C$1.2 billion.

 

What is LIF's current market cap? C$1.33 billion.

 

I now understand why Altius was aggressively building a position when LIF was trading at C$13. LIF was trading below the value of its 7% royalty AND it was also probably trading below the value of its IOC equity position. When you consider the value of both combined? A screaming value play.

 

LIF still cheap at C$21.

[linealdin]

Allegiance issues around 122 million shares at 3 cents each to raise A$3.67 million. I think Altius participated so as not to be diluted out of existence.

 

Allegiance should be cashed up through submission of small mine permits in early 2019.

[linealdin]

One more note on the equity vs royalty issue previously discussed: the Sherritt deal had two components. Westmoreland Coal bought Sherritt's producing coal mines for C$465 million. Altius bought its portion of the Prairie royalties for C$240.9 million.

 

I'm not an expert on Westmoreland but I will note that their market cap today is much, much smaller than the C$465 million Sherritt purchase price in 2014. I don't think they will ever make back their purchase price. In fact they are actively losing money on the Canadian operations (revenue lower than costs).

 

Altius will achieve 100% payback on their C$240.9 million royalty package purchase in mid-2025. Beyond that I expect 5 more years of production from Genesee (with a non-negligible chance of operating long past that) and hundreds of years of potash royalties.

 

Danger of being a producer vs safety (and profitability) of being a royalty holder.

[linealdin]

Thinking through the Chapada expansion scenarios. Yamana seems to be planning a PEA for a Sucupira/Baru large open pit operation. If the additional open pit comes into being the Chapada operation is likely going to expand.

 

If the expansion increases annual production by at least 33% the royalty stream drops from 3.7% to 2.65% until 75 million pounds are delivered to Altius. The effect on Altius will probably be either a wash or a small reduction in royalty revenue during that 75 million pound period.

 

But the positive effects will be for its tail 1.5% stream rate for all remaining production once 75 million pounds are delivered. Instead of a 1.5% stream on a 120 million pound operation they will have a 1.5% stream on a 160 million pound or 180 million pound operation. The money comes in much quicker, and thus the stream has more present value.

 

Yamana drilled 61,972 meters in 2016 on the Chapada land package, and will surpass that in 2017. Think about what it would mean if a junior drilled that many meters. I think Yamana is spending that money because it is determined to expand both production rate and mine life at Chapada.

[linealdin]

Another case management conference happening at the end of this month in the St. Johns Trial Division for the Voisey's Bay litigation. Also another opportunity for settlement negotiations. No one wins when both sides are paying so much in attorney fees. Trial still set for late 2018.

 

I suspect Vale continues to delay the decision on the Voisey's Bay underground mine until this litigation is settled. The 3% royalty, in a depressed nickel market, seems to matter to the bottom line.

 

 

[linealdin]

LIF back at C$21.47. Market expects another big special dividend announcement. IOC with excellent pellet and concentrate production in Q3.

 

Altius's 2.5 million LIF shares worth C$53.675 million.

 

(Though I suspect their LIF position has grown since the end of July to closer to 3 million shares. Just guessing from the tone of a recent management email.)

[linealdin]

The Chinese crackdown on pollution is leading to increased demand for high quality iron ore products, like the pellets that LIF markets. Those pellets don't require sintering, which is a process that produces all kinds of pollutants. A steelmaking region like Hebei is basically right on top of Beijing. The Beijing residents don't want the bad air quality.

 

So what does China do? They are basically exporting the pollution problem to a remote region in Canada. Nobody cares too much about having a pellet plant in Labrador City. It is a way less crowded place than Beijing, and the air quality is fine.

 

This trend will continue. There's a proposed multi-billion dollar iron ore project in Minnesota that depends on the high premiums for pellets and hot briquetted iron sold to China. Cliffs is also building a hot briquetted iron plant in Toledo, Ohio.

 

http://www.grandrapidsmn.com/free_press/billionaire-tours-iron-range-touting-billion-project/article_60d5e3d2-a903-11e7-8b9e-070149293b7f.html

 

The future for the Labrador Trough may involve more production of these higher value products.