ALS.TO - Altius Minerals

[linealdin]

http://www.newswire.ca/fr/news-releases/entente-de-principe-chez-minerai-de-fer-quebec-653670123.html

 

Quebec Iron Ore (Champion Iron) reaches deal with Bloom Lake workers union. There will be 300 workers. Still on target for Feb. 2018 restart.

[bizaro86]

Altius only owns the mineral rights, not the surface rights. They are divisible under the Torrens title system used here.

 

I can prove it to. 1.7mm acres would be worth close to a billion dollars anywhere in Western Canada. ALS management is promotional enough they would have mentioned it in their presentations. Also, you would see millions per year in income and expenses from rent and property taxes.

 

Also, Sherritt got most of these minerals from buying Fording coals thermal assets. Fording of course was a spin from CP rail, which got the land for building a railway.

 

They sold the land and kept the minerals, trying to get western Canada settled to provide markets for their railway.

 

My ancestors bought quite a bit of land from CP 100 or so years ago. If they got the minerals my life would likely be quite different (Pan Canadian discovered oil under their land...)

 

Thank you so much for the clarification. My apologies, I thought "fee simple" meant the same thing in Canada as it does in the U.S.

 

Does the fee simple right to the subsurface minerals include the oil and gas?

 

No problem. I always enjoy digging through the history of these assets - big chunks of mineral rights always come from somewhere, and they're always worth more than people think they are.

 

The answer to your question is that it depends. The different types of minerals are also divisible.

 

There is quite a bit more information on the matter here, including history of the Carbon Development Partnership.

 

https://www.fhoa.ca/fhoa-research/the-cbm-ownership-dispute.html

[linealdin]

Still no news from Wolfden Resources on Maine mountain purchase, but Wolfden stock is on a weird runup to 35 cents. Stock was halted at 17 cents when the Altius deal was announced in September. Must be a leak that the deal is about to close. Plenty of broker-dealers involved in the private placement and word gets out.

 

Altius's deal is to purchase 14.2 million shares at 25 cents a share, with half warrants that can be exercised at 35 cents. So that part of the deal looks good. I want a runup in the equity portion of the deal to pay for the royalty portion, which won't be paying out for another 10 years, if ever.

 

Wolfden is buying 6,871 acres of timberland, including all subsurface rights, for US$8.5 million. That works out to US$1,237 per acre. Not including the acreage of the great ponds, which probably lowers the price per acre. A little over priced for timberland. If no economic mine is ever found they should be able to resell the property as timberland for about 1/3 to 1/2 of what they paid. 

[bizaro86]

Perhaps more useful to the ALS discussion than "it depends" is the fact that I don't believe CDP has oil and gas right's,  just coal rights.

 

CP split their rights up with, the oil and gas rights going to Pan Canadian --》EnCana --》Cenovus --》Ontario Teachers Pension Plan. Now that Teachers has a long life annuity royalty asset, I expect they'll keep it.

 

The CDP lands went CP, then were spun out to Fording Coal. Sherritt and Ontario Teachers Pension Plan got them by trading met coal mines for them, and then ALS bought out Sherritt.

 

In the very long run, I think Ontario Teachers would be a logical buyer for a mature ALS.

[linealdin]

But CDP collects coal bed methane revenue currently. That is a gas asset. I expect there is more CBM development potential.

[bizaro86]

I don't think they will get any new CBM development.

 

From the link I posted a couple above:

 

These meetings and the CBM Ownership Petition fostered by FHOA and signed by thousands of freehold owners and concerned citizens finally bore fruit in the fall of 2010 when the Alberta Government passed Bill 26, the Mines and Minerals (Coalbed Methane) Amendment Act, 2010. This act clarified that CBM mineral ownership is and has always been natural gas, for both Crown and freehold minerals, providing certainty in split title situations. In 2011, a Court of Queen’s Bench judge, in reliance on Bill 26, issued summary judgment dismissing the legal actions brought by EnCana in situations where it claimed CBM had not been leased when it leased natural gas. In 2012, the Alberta Court of Appeal upheld the trial judge’s ruling.

 

Bill 26 gives all new CBM development to the owner of the natural gas rights. However, it carved out existing leases as being still valid, so CDP can collect CBM revenue on existing leases, but new revenues will flow to the owner of the natural gas rights, which generally isn't them.

 

You can see more on it here: https://www.lexology.com/library/detail.aspx?g=0fabda69-c42e-48a4-920a-3e960ed83b7f

 

 

[linealdin]

777 mine started 2017 with 4.46 million tonnes proven and probable reserves. 3.65 million tonnes left after Q3. Only 235K tonnes mined in Q3. At this slower production pace P&P reserves last through Q2 2021.

 

Should we assume no resources (indicated and inferred) will be mined?

 

There is also the large stockpile that has to be processed.

[linealdin]

Coal power generating 5250 MW of the 10,335 MW total generation in Alberta this morning. A little over 50%. When the wind isn't blowing hard (vast majority of the time) coal is still king in Alberta. It will remain so for a very long time.

 

Don't believe the hype. Believe the realtime usage reports.

[linealdin]

Good comeback for the 62% iron ore benchmark price in recent days. Now trading at US$62.74. The commodity low was US$37 in January 2016. Some false starts since then but the price is still up 70% since that decade low.

 

LIF should unveil in Q3 results after the close of markets today. Interesting to see if the revenue is as strong as Q2 (C$34.2 million) and Q1 (C$43.4 million). There's been some benchmark price weakness in Q3 but IOC has been increasing its volumes, especially for the high premium pellets.

 

Does increasing volume and pellet premiums make up for slightly lower benchmark prices? My guess: C$40 million in Q3 revenue.

 

Next LIF dividend announcement in early December.

 

*

 

Champion Iron up to A$1.14 in the Australian market.

[linealdin]

Downside for VMS deposits is that they are generally on the small side. The majors tend to leave them to the junior explorers. But Adventus Zinc's El Domo VMS deposit is bucking that trend.

 

It already has 6.08 MT at 16.7% zinc equivalent in the indicated category. And 3.88 MT at 11.5% zinc equivalent in the inferred category. So just under 10 million tonnes in total resources at excellent grades.

 

This resource estimate doesn't include the just completed 10,400 meters of step-out drilling on El Domo in 2017. The results of the step-out drilling look terrific. Could the deposit already be at 15 MT in total resources once that drilling program is accounted for?

 

If El Domo is further extended to 20 MT at 13% zinc equivalent or better in the planned 2018 drill program it basically becomes another 777 mine (19.4 million tonnes at 12.8% zinc equivalent), which we know has been a cornerstone mine for Hudbay. El Domo is much closer to the surface than 777, so its open pit economics are better. Less capex, better IRR.

 

Dr. James Franklin, a leading expert on VMS deposits, predicted in 2009 that the Curipamba district hosted at least 20 MT in resources and possibly up to 50 MT. If they can find the economic satellite deposits in a typical VMS cluster pattern then the Curipamba district becomes a VMS camp like Flin Flon (Flin Flon main deposit, Callinan deposit, 777 deposit). What is 75% of a Flin Flon-size mining district worth?

 

This deposit is a company maker.

 

 

 

 

[linealdin]

Came across an interesting news item today. IC Potash, which has an interest in the Ochoa sulfate of potash project in New Mexico, is now getting into cannabis development AND blockchains. You can tell when a market segment, in this case potash, is at a market bottom: the juniors who still have cash left go into either cannabis or blockchain technology. Or both in this case. Yes, this is the exact right time for Altius to be buying the McChip potash royalty.

[linealdin]

Only about 2 weeks until Altius makes an early announcement of its Q2 revenues. I'm ready for the selloff when ~C$20 million in revenue is announced. Limit orders are in.

[mikek]

I would guess 16-17 Canadian for the upcoming quarter.  I would be pretty surprised if we saw 20 million this quarter.

[linealdin]

I would guess 16-17 Canadian for the upcoming quarter.  I would be pretty surprised if we saw 20 million this quarter.

 

Q1 revenue was C$15.4 million. How to get to ~C$20 million? Easily.

 

1) Extra C$3 million in revenue combined from Chapada and 777 (the big copper/zinc price increases only started kicking in August, after Q1 finished). Chapada production volume increased significantly.

 

2) Extra C$500K from potash assets (Rocanville rampup).

 

3) Extra C$1 million from LIF royalty (at least 2.5 million shares x $1 dividend). And they may own 3 million shares of LIF by now.

 

(Some of these projections may be a touch enthusiastic. 777 mine revenue seems to lag the commodity price bumps sometimes. But Q2 revenue won't come in a penny under C$18.5 million.)

[linealdin]

Good comeback for the 62% iron ore benchmark price in recent days. Now trading at US$62.74. The commodity low was US$37 in January 2016. Some false starts since then but the price is still up 70% since that decade low.

 

LIF should unveil in Q3 results after the close of markets today. Interesting to see if the revenue is as strong as Q2 (C$34.2 million) and Q1 (C$43.4 million). There's been some benchmark price weakness in Q3 but IOC has been increasing its volumes, especially for the high premium pellets.

 

Does increasing volume and pellet premiums make up for slightly lower benchmark prices? My guess: C$40 million in Q3 revenue.

 

Next LIF dividend announcement in early December.

 

*

 

Champion Iron up to A$1.14 in the Australian market.

 

http://www.labradorironore.com/News-Releases/Press-Release-Details/2017/Labrador-Iron-Ore-Royalty-Corporation---Results-for-the-Third-Quarter-Ended-September-30-2017/default.aspx

 

LIF Q3 revenue comes in right around C$40 million, as expected. Healthy.

 

Pellet premiums have been "exceptional."

 

Q4 should be even better with drawdown of the 0.6 MT stockpile.

 

 

[linealdin]

LIF Q4 dividend still in a wide range. At least 50 cents, at most $1. IOC dividend to LIF announced this month will set the range.

[wachtwoord]

Only about 2 weeks until Altius makes an early announcement of its Q2 revenues. I'm ready for the selloff when ~C$20 million in revenue is announced. Limit orders are in.

 

Why do you think there'll be a sell off after the revenue is announced?

[linealdin]

Only about 2 weeks until Altius makes an early announcement of its Q2 revenues. I'm ready for the selloff when ~C$20 million in revenue is announced. Limit orders are in.

 

Why do you think there'll be a sell off after the revenue is announced?

 

Big stock price drop when Q1 revenue was announced. Anything can happen. The Canadian resource investor is a skittish and damaged creature. No longer believes in commodity price cycles, etc.

[nostradamus]

Altius up 6% today on no news...

[linealdin]

http://www.alderonironore.com/index.php/news/2017/417-

 

New Alderon PEA with the Wabush mine elements removed. I love that huge NPV and the US$29 mining cost per tonne. The mine is economic at current and projected iron ore prices simply because of the new structural premiums for high grade ore.

 

Construction financing is still an Everest to climb. It was tricky for Champion to raise $300 million, imagine how hard getting $1 billion capex is going to be.

 

 

[linealdin]

Wolfden up to a high of 41 cents today. Altius's 14.2 million shares and 7.1 million warrants amount to a C$8.73 million position at that high. Maine deal is supposed to close very soon.

 

People as important as property. Ewan Downie, Wolfden chairman, seems to have made investors good money in the past. Speculators are jumping on. They like the 3.2 MT historical resource with very high zinc grades.

[mikek]

Seems like a waste of time and money for Alderon to keep doing PEA's with a billion dollar capex.  They would be better off trying to create a mine plan with a much lower starting production and capex.  It seems extremely unlikely that they will ever be able to raise those type of funds.

[linealdin]

Seems like a waste of time and money for Alderon to keep doing PEA's with a billion dollar capex.  They would be better off trying to create a mine plan with a much lower starting production and capex.  It seems extremely unlikely that they will ever be able to raise those type of funds.

 

I certainly agree with your take if no other alternatives are available. I will note that Alderon seems to have gotten fairly close to securing construction financing in the last cycle. The banks were signing up for the story but the price environment kept deteriorating. So Alderon management may have some residual confidence that they can march into those bank offices again and close the deal this time.

 

A smaller capex project would definitely raise the opex, and lower the IRR and NPV. It might be necessary.

 

My dream scenario is giving Michael O'Keeffe a shot at locking down the $1 billion in capex.

[linealdin]

LIF finishes day at new 52 week high of C$21.59. Altius 2.5 million position worth C$54 million.

 

Market coming to realization that LIF will be able to pay $2 to $3 in annual dividends with iron ore stuck around US$60 per tonne (consensus 2018 forecast for iron ore price).

[linealdin]

Remaining corporate moves for Alderon. The offtake is all committed. Hebei owns 25% of Kami on a project basis. Alderon could sell more of its 75% Kami project equity to Hebei or bring on another minority partner.

 

Each partner on project basis would be responsible for their share of capex. Champion only owns 63.2% of Bloom Lake on project level. Helps reduce their capex burden. Rio Tinto only owns 58.7% of IOC. Huge projects demand multiple partners. The Kami NPV is so high compared to Alderon's market cap the ADV stock will multiply in any production scenario.

 

Most radical move: selling project equity position down to 20% and letting Hebei take the lead in building the mine.

 

Altius doesn't care who builds the mine as long as the royalty pays out with production.