ALS.TO - Altius Minerals

[linealdin]

http://www.labradorironore.com/News-Releases/Press-Release-Details/2017/Labrador-Iron-Ore-Royalty-Corporation---Cash-Dividends-for-the-Fourth-Quarter-of-2017---055-Per-Common-Share-Comprised-of-a-Regular-Dividend-of-025-and-a-Special-Dividend-of-030/default.aspx

 

LIF pays a Q4 dividend of 55 cents a share. Reports that IOC will pay out its quarterly dividend of C$19.3 to LIF for its 15% equity stake.

 

The IOC dividend is good news. Shows the mine is quite profitable at current iron ore prices and sustaining capex ($79 million is going towards developing the Wabush 3 pit).

 

LIF dividend seems a touch light. Perhaps rebuilding the cash position after the impressive $1 dividend last quarter.

[linealdin]

Short term weakness in copper market is over. Copper bounced from $2.95 on December 5th to $3.10 today.

 

Should be a perfect environment to introduce a copper spinout.

 

The best characteristic of Altius's copper projects in Chile? Their close proximity to some of the largest copper mines in the world. The Arcas, Quilto, Lia, and Timon claims are located a little south of Collahuasi, the world's third largest copper mine, with 5 billion tonnes of copper reserves. Collahuasi has the capacity to produce 500,000 tonnes of copper per year over a mine life of 50 years.

 

Imagine a 2.5% royalty on a mine that big. Royalty revenues would be well over C$100 million a year at current copper prices. For copper exploration this is the exact right place to be, and the prize for making a discovery is outsized compared to the prize for a gold discovery.

[linealdin]

http://www.labradorironore.com/News-Releases/Press-Release-Details/2017/Appointment-of-John-Tuer-as-a-Director/default.aspx

 

LIF appoints a new director, John Tuer, who was formerly head of mergers & acquisitions for Bank of Nova Scotia. Lots of experience on big mining mergers. Interesting. LIF is always a takeout target for Rio Tinto, and Osisko Gold Royalties held a 10% stake last year and was investigating a takeover (provided LIF's investment rules changed, which they didn't).

 

I'm sure Altius has its designs also. Merger with LIF would create a juggernaut with C$250 million plus in annual revenue. Gaining weight is key.

[TwoCitiesCapital]

Shareholders are finally being rewarded for their long-suffering!

 

22% YTD and 50% off its lows in June. Roughly a double off its 2016 lows (all in USD). Hopefully we will see a significant narrowing in price between this and its precious metal peers for another significant gain over the 2018/2019 period.

 

FX makes a pretty big difference. In CAD, it's 12% YTD.

 

Sure, but they're recovering from a trough that wasn't near as deep. And any investor could say that about any foreign denominated investment. "yea...but it wasn't good for that other guy who's currency appreciated!"

 

In both CAD and USD, Altius has surpassed levels that have previously posed multi-year resistance. The positive momentum is good and is a sign that investors are beginning to recognize the fundamental shift that Altius has undergone in the past 2-years.

 

18-19M a quarter is the new norm or as long as this cycle lasts. That's an incredible yield and the junior mining portfolio offers additional upside. In a status quo scenario, it's not hard to envision Altius pulling in $200-250M over the next two years provided commodities continue to cooperate.

 

If they don't, Altius has the financial wherewithal to continue to roll-up opportunities as they come and bide it's time until the next cycle. At some point in my life, I'm fairly confident that the market will "make it rain" on Altius when we hit a multi-year up-cycle and I tend to think the environment is supportive of that happening sooner as opposed to later. Even if this is just a cyclical upturn amidst a secular down-trend for commodities, there's potential for Altius to make a boatload of money  before it resumes it's downward trend.

 

Obviously some scenarios work out better than others. I'm willing to accept the uncertainty of them knowing that Altius has the opportunity to knock it out of the park with their strategy.

 

 

[linealdin]

https://www.juniorminingnetwork.com/junior-miner-news/press-releases/551-tsx-venture/wlf/39707-wolfden-resources-commences-diamond-drilling-on-the-pickett-mountain-base-metal-property-in-penobscot-county-maine-usa.html

 

Wolfden begins diamond drilling at Mount Pickett. Planned 6000 meter program to confirm historic deposit and test for deposit extensions on trend and at depth. Airborne electromagnetic and downhole electromagnetic surveys performed concurrently.

 

The relatively temperate Maine climate (compared to the James Bay area of northern Quebec for instance) allows for year-round exploration. Can conduct exploration at a pace 2X or 3X as fast as in the remote parts of Canada. It is an advantage, there will be news flow year round.

 

New Altius director Andre Gaumond is a big fan of Wolfden's chairman Ewan Downie. He is impressed by how Downie has serially made discoveries and created significant value for shareholders. Premier Gold (C$715 million market cap) was a free spinout to shareholders in 2006 from the original Wolfden, which was then itself acquired for C$360 million in 2007. Investors made a mint.

[linealdin]

LIF up another $1 this morning, breaks through to C$26.20. Altius's publicly revealed LIF position at the end of October is worth C$82.53 million at that level. I believe the big block purchases in mid-November, which I think were made by Altius, were at the C$21.65 level.

 

Iron ore prices rose 6% in overnight futures trading.

[linealdin]

http://altiusminerals.com/uploads/December-2017-corporate-presentation-FINAL.pdf

 

Updated presentation. Copper spinout will be called Aethon Minerals, launched as qualifying transaction of Watusi Capital (TSX-V: WAS). Will hold 12 Chilean copper-gold projects. Will raise C$7.7 million.

 

Here is the Watusi news release. Sprott (Rick Rule is godfather of Altius) involved with raising money.

 

http://www.stockhouse.com/news/press-releases/2017/12/13/watusi-announces-proposed-qualifying-transaction-and-$7-7-million-private

 

Altius and its 51% Chilean partners will receive 11.2 million shares in exchange for properties. The C$7.7 million equity raise will price the shares at 51 cents per share.

 

Watusi required to spend C$750K exploration costs in first 18 months to complete option.

[linealdin]

Watusi’s existing 4 million shares will be consolidated 3 for 1, leaving 1.33 million shares. Watusi had C$483K in cash at the end of August, no debt. The financing, if they raise the max of C$7.7 million, will create 15.1 million shares.

 

Altius and partners receive 11.2 million shares, or 40.5% of post-transaction company Aethon Minerals.

 

This is a Rick Rule special. Michael Atkinson, CEO of Watusi, used to run Sprott Resource Lending. Access to capital won’t be an issue.

 

Only Chilean properties are going into vehicle, not Michigan Copper range or other Altius copper properties.

[linealdin]

https://www.pressreader.com/canada/stockwatch-daily/20171214/282364040026426

 

Excellent summary of the Aethon deal including more details on Robert Davies's resume (Barrick, Kinross, Inmet, GE Capital) and on the history of the Watusi capital pool.

[linealdin]

Aethon deal structure is a supercharged version of the Antler deal: use of the Capital pool but a higher equity position (41% vs. 20%) and choice of most of the board members and CEO.

 

Adventus is unique because of the participation of the two private equity groups with deep pockets and willing to make add-on bets. Use of expensive IPO process also makes sure there are no legacy shareholders (capital pool opportunists).

[linealdin]

New Altius presentation linked above indicates that the traditional debt facilities have been reduced from C$70.258 million to C$66 million. Almost certainly cutting the revolver debt. A C$3.2 million principal payment is due on the term facility at the end of January.

 

Cash and public equity holdings of C$142 million as of the end of October.

 

I like that they are getting serious about debt reduction. Sounds like the adults at the board meeting made it a priority. Revolver should be down to C$9.3 million.

 

 

[linealdin]

http://www.juniorstockreview.com/2017/12/14/a-conversation-with-brian-dalton-ceo-of-altius-minerals/

 

New Brian Dalton interview published last week. Interesting points for me:

 

1) Believes this bull cycle could last as long as 15 more years. Last cycle went from the bottom in 2000 to the apex in 2011. Believes it is taking longer for the mining industry to move from depression to optimism to euphoria.

 

2) Mega bull on copper because of geologically driven supply problems. Copper grades falling at mines. Super bullish on iron ore. Very bullish on nickel. Bullish on zinc “for now.” Pessimistic on uranium, agnostic on gold.

 

3) Talking up the innovative geological model that found silver in Sail Pond. Conventional wisdom said there’s no silver in Newfoundland, but there it is.

 

Sail Pond could be the next big play.

 

4) Measures country risk by simple question: Can I visit there with my kids? That explains why Altius doesn’t invest in places like Burkina Faso (where Sandstorm Gold just made a US$45 million royalty purchase). Though political issues in a seemingly safe place like Alberta have created Congo-like expropriation risks.

 

 

[linealdin]

What's going to end this commodity bull cycle is industry euphoria, not investor euphoria. When the mining industry (especially the majors) is euphoric it will be investing multi-billions in marginal projects, pumping out low margin supply to chase the skyrocketing commodity prices. Exactly what was happening in 2011 and 2012.

 

Is that happening in the mining industry now? I don't see any signs. All I see is the majors professing caution and concern with costs and margin growth. No chasing after meaningless production records. They've learned hard, painful lessons very recently.

 

It will take a long time for those lessons to be forgotten. Maybe by the time the electric vehicles have won significant market share euphoria will again set in for base metals producers.

 

I'm going to be watching the behavior of the big producers, not the commodity price action.

 

 

[linealdin]

From the Dalton interview linked above:

 

"We tend to use the downturns as an opportunity to get into the best places. As it turns out, the best places are the places where money returns to first. We’ve never felt the need to chase a lot of political risk to find value because we find value just by buying in the right part of the cycle."

 

Sandstorm runs towards the worst places (Turkey and Burkina Faso) hoping to find value. Altius just waits and waits and waits until the best places go on sale.

[linealdin]

http://www.alderonironore.com/index.php/news/2017/421-

 

Kami LP negotiates solution to its take or pay obligations at the multi-user port. Basically their obligations will be satisfied by their previously paid $20 million deposit. Once the deposit is used up then their 8 MTA allocation is reduced. I think that’s what the press release means.

 

No, Alderon isn’t receiving any sort of rent from other users of the port. The port agreement is a liability if Kami isn’t in production.

 

65% iron ore is trading at US$90. High enough. What is Morabito doing to actually advance the project, as opposed to just stopping the bleeding? Build the mine or sell the deposit to someone who can.

[linealdin]

http://www.excelsiormining.com/index.php/news/news-2017/535-excelsior-mining-corp-announces-oversubscription-of-private-placement

 

Excelsior’s equity raise goes from C$26 million to C$38.6 million (US$30 million) after oversubscriptions. Greenstone participates to maintain its 50% equity.

 

US$30 million of the US$46.9 million Stage 1 capex is now secured. The remaining debt component should be easy.

[linealdin]

LIF closes at C$26.35. Altius’s 3.15 million disclosed shares worth C$83 million.

 

Beautiful close for ALS at C$15.06. Three or four year high?

 

More to come. Bull markets are the best for constant news flow. Adventus and Wolfden with high probability drill programs, Aethon will make some noise, a couple new PG agreements, a couple of early stage royalty purchases.

 

I want to see $25 in 2018.

 

 

[bizaro86]

65% iron ore may be trading at that price, but didn't Alderson sign away most of the high Fe premium in its off take agreements?

 

Maybe if Hebei thinks they'll make enough money on their share they'll put in some extra cash...

[linealdin]

65% iron ore may be trading at that price, but didn't Alderson sign away most of the high Fe premium in its off take agreements?

 

Maybe if Hebei thinks they'll make enough money on their share they'll put in some extra cash...

 

Oh no. The offtake still tracks the market price premiums. Hebei just gets a 5% discount and Glencore gets a 2% discount to the market price after all the quality and impurity premiums/penalties are accounted for. Basically.

 

Hebei is responsible for 25% of project capex. That is a big deal.

[nostradamus]

http://www.excelsiormining.com/index.php/news/news-2017/535-excelsior-mining-corp-announces-oversubscription-of-private-placement

 

Excelsiors equity raise goes from C$26 million to C$38.6 million (US$30 million) after oversubscriptions. Greenstone participates to maintain its 50% equity.

 

US$30 million of the US$46.9 million Stage 1 capex is now secured. The remaining debt component should be easy.

 

With over 50% of the construction financing complete,  Altius now needs to decide whether it exercises its option to purchase a 0.5% royalty for $5m. If they do, the remaining debt component will be even easier. I think Dalton has said that he is interested in pre-production royalities and given his "Mega bullish" outlook on copper, maybe they do pay for the additional royality...

 

C$15.06 close. Fairfax warrants are now in the money.

[linealdin]

http://www.excelsiormining.com/index.php/news/news-2017/535-excelsior-mining-corp-announces-oversubscription-of-private-placement

 

Excelsior’s equity raise goes from C$26 million to C$38.6 million (US$30 million) after oversubscriptions. Greenstone participates to maintain its 50% equity.

 

US$30 million of the US$46.9 million Stage 1 capex is now secured. The remaining debt component should be easy.

 

With over 50% of the construction financing complete,  Altius now needs to decide whether it exercises its option to purchase a 0.5% royalty for $5m. If they do, the remaining debt component will be even easier. I think Dalton has said that he is interested in pre-production royalities and given his "Mega bullish" outlook on copper, maybe they do pay for the additional royality...

 

C$15.06 close. Fairfax warrants are now in the money.

 

I doubt they take the additional royalty. They've been rather negative about the project, turning down royalty options twice and selling some equity a year before production is set to begin. Too much technical risk?

[nostradamus]

http://www.excelsiormining.com/index.php/news/news-2017/535-excelsior-mining-corp-announces-oversubscription-of-private-placement

 

Excelsiors equity raise goes from C$26 million to C$38.6 million (US$30 million) after oversubscriptions. Greenstone participates to maintain its 50% equity.

 

US$30 million of the US$46.9 million Stage 1 capex is now secured. The remaining debt component should be easy.

 

With over 50% of the construction financing complete,  Altius now needs to decide whether it exercises its option to purchase a 0.5% royalty for $5m. If they do, the remaining debt component will be even easier. I think Dalton has said that he is interested in pre-production royalities and given his "Mega bullish" outlook on copper, maybe they do pay for the additional royality...

 

C$15.06 close. Fairfax warrants are now in the money.

 

I doubt they take the additional royalty. They've been rather negative about the project, turning down royalty options twice and selling some equity a year before production is set to begin. Too much technical risk?

 

Maybe, or maybe they sold some equity to buy the royalty. The previous royalty options had a lot more risk than this one. Not sure when the option expires, but hopefully its after the final permitting decision is made.

 

[linealdin]

http://www.excelsiormining.com/index.php/news/news-2017/535-excelsior-mining-corp-announces-oversubscription-of-private-placement

 

Excelsior’s equity raise goes from C$26 million to C$38.6 million (US$30 million) after oversubscriptions. Greenstone participates to maintain its 50% equity.

 

US$30 million of the US$46.9 million Stage 1 capex is now secured. The remaining debt component should be easy.

 

With over 50% of the construction financing complete,  Altius now needs to decide whether it exercises its option to purchase a 0.5% royalty for $5m. If they do, the remaining debt component will be even easier. I think Dalton has said that he is interested in pre-production royalities and given his "Mega bullish" outlook on copper, maybe they do pay for the additional royality...

 

C$15.06 close. Fairfax warrants are now in the money.

 

I doubt they take the additional royalty. They've been rather negative about the project, turning down royalty options twice and selling some equity a year before production is set to begin. Too much technical risk?

 

Maybe, or maybe they sold some equity to buy the royalty. The previous royalty options had a lot more risk than this one. Not sure when the option expires, but hopefully its after the final permitting decision is made.

 

I agree with you, there are attractive aspects to Gunnison. The project feasibility study certainly is impressive, especially at current copper prices.

[linealdin]

http://altiusminerals.com/uploads/2016-march31-Chapada.pdf

 

Slides 16 to 18 make the geological supply case for being a copper mega-bull.

 

1) Incentive prices for copper are determined by how much it costs to build and operate copper mines, and return a decent profit. Copper head grades are declining, mines have to go deeper; opex and capex/lb are rising. Therefore the incentive price is rising.

 

No signs of any of those trends abating.

 

2) Slide 18 indicates that the incentive price for building copper was below $1.50 in the 2006 to 2008 period, while the copper price was near $4. The industry, of course, had incredible incentive to build supply and they did.

 

3) The copper price has to rise and stay above the incentive price for a significant period for significant new copper supply to be sanctioned. (Unless the world doesn't need any more new copper mines.)

 

*

 

I find the geological supply constraint theory more compelling than the wild fantasies about electrical cars increasing base metals demand to incredible levels. Who knows if we will all be driving Teslas in 2030? Who knows how the designs of those electric cars will change by 2030? Will self-driving cars mean more cars on the road, or fewer?

[linealdin]

Regardless of whether Altius buys an additional royalty from Excelsior selling the shares when they did was the exact right thing to do. When they received the 5.8 million MIN shares from Callinan in May 2015 the shares were trading around 26 cents. They patiently waited more 2 years for the stock to move and sold somewhere around C$1.20 to C$1.30. 

 

The alternative: Hold the position and be diluted with 36 million new shares issued at C$1.