linealdin Posted January 2, 2018 Share Posted January 2, 2018 Potash Corp, to satisfy conditions for the merger with Agrium that just closed, filed a technical report for Rocanville on February 24th, 2017 on their SEDAR profile. It answers many of my questions regarding the McChip royalty purchase: 1) Page 19 shows the Rocanville Unit #1 (where Altius and its partners own longstanding royalties), and the recently developed Unit #2 (where McChip held royalties over a net 4,267 acres and sold to Altius) to the west. 2) Unit #2 at 111,066 acres is significantly larger than Unit #1, comprised of 87,065 acres. 3) Page 55 shows the mine workings at the end of 2016, which extends to maybe 1% of the area of Unit #2. Potash Corp was still drilling holes in Unit #2 in 2016 to establish probable reserves. Conclusion: the minimal royalties McChip had been receiving from its royalties is irrelevant. The vast majority of Unit #2 is undeveloped and untapped. Altius is making a long-term bet that Unit #2 production will increase significantly based upon Rocanville's ramped up capacity (from 2.5 MTA to 6.5 MTA), its new production shaft at Scissors Creek in the heart of Unit #2, and how Unit #1 will inevitably be depleted. Page 55 indicates in black the vast amount of unsecured land to the west of Unit #2 (and in the southern portion of Unit #1). Altius through CDP owns significant freehold mineral rights in those areas. As the Rocanville mine plan keeps expanding west they will make a deal with Altius and other landowners to create new unitized royalty areas (Unit #3 perhaps). It may take 10 or 20 years but the newly formed Nutrien will need to secure that land eventually. Link to comment Share on other sites More sharing options...
Williams406 Posted January 2, 2018 Share Posted January 2, 2018 I suspect Altius has around 15 million potential Champion shares (10 million convertible from debenture and 5 million actual). If the project is executed as expected we should see the Champion stock price hit at least C$2. Also no doubt O’Keeffe is canvassing potential buyers for the mine. A takeover at a C$2 billion market cap should satisfy most shareholders. The Champion position is first in line to be monetized for debt repayment (because it pays no royalty revenue, unlike the LIF position). I doubt Altius still owns Champion shares at the end of 2018. Linealdin, How do you come up with the 5 million shares not related to conversion of debenture? Has Altius put their Champion equity position in any reports within the past couple of years? Link to comment Share on other sites More sharing options...
linealdin Posted January 2, 2018 Share Posted January 2, 2018 I suspect Altius has around 15 million potential Champion shares (10 million convertible from debenture and 5 million actual). If the project is executed as expected we should see the Champion stock price hit at least C$2. Also no doubt O’Keeffe is canvassing potential buyers for the mine. A takeover at a C$2 billion market cap should satisfy most shareholders. The Champion position is first in line to be monetized for debt repayment (because it pays no royalty revenue, unlike the LIF position). I doubt Altius still owns Champion shares at the end of 2018. Linealdin, How do you come up with the 5 million shares not related to conversion of debenture? Has Altius put their Champion equity position in any reports within the past couple of years? In the last conference call Ben Lewis mentions that Champion Iron is one of the top 3 equity positions in the project generation portfolio at the end of October: Adventus, Alderon and then Champion. I found that notable because the Champion position all of a sudden was larger than the Excelsior position (which had been 5.8 million shares worth C$7.13 million at the end of October). The debenture hadn't been converted as of the end of October. The Champion investor presentation from August indicated that Altius owned nil shares of Champion at that time. Conclusion: I believe they bought a significant number of Champion shares in the 90 cent equity raise that closed in October, and sold a portion of their Excelsior position. How much exactly? Altius spent around $5 million purchasing non-LIF investments in the quarter (see Q2 conference call presentation). I believe a good amount of that went into the CIA equity raise. Link to comment Share on other sites More sharing options...
Williams406 Posted January 2, 2018 Share Posted January 2, 2018 Got it--Thanks. Given Dalton's expressed enthusiasm ("super bullish") for iron ore in the recent Junior Stock Review interview, you could well be right on the Champion equity purchase. I'd love to see some ownership re-configuration and major deal-making in the Trough in 2018. Thanks also for the Potash/McChip digging. Link to comment Share on other sites More sharing options...
linealdin Posted January 2, 2018 Share Posted January 2, 2018 Got it--Thanks. Given Dalton's expressed enthusiasm ("super bullish") for iron ore in the recent Junior Stock Review interview, you could well be right on the Champion equity purchase. I'd love to see some ownership re-configuration and major deal-making in the Trough in 2018. Thanks also for the Potash/McChip digging. After Bloom Lake reaches production Champion will have some options. Selling the company to a major for a premium is most preferred, of course. But acquiring Alderon also makes a lot of sense. Kami is permitted and shovel ready; Fire Lake North is not. (Are there other major iron ore mines in the world that are fully permitted and shovel ready? Kami may be a unicorn.) Kami is located close to Bloom Lake and to existing common carrier railways; Fire Lake North is much farther away from both. Kami and Bloom Lake have synergies. Theoretically you could have one processing plant for the two mine sites, they are that close to each other. As a producer Champion would likely have a $1 billion plus market cap. That makes raising the capex for Kami (US$750 million, Hebei responsible for the remaining 25%) within the realm of possibility. Alderon, as a junior with C$30 million market cap, raising US$750 million seems beyond the realm of possibility. Makes all the sense in the world for Champion. But they don't want to pay a lot. O'Keeffe is a bargain-hunting vulture. Would Alderon's stakeholders accept a takeover offer of C$55 million in Champion shares? Probably not. Link to comment Share on other sites More sharing options...
linealdin Posted January 2, 2018 Share Posted January 2, 2018 Alberta's carbon tax of $30 per tonne kicked in at the beginning of 2018. No effect on coal plant usage from what I can tell. Genesee and Sheerness running at max capacity. The Keephills complex at max capacity. The Battle River complex is running weakly as usual. Sundance has retired or mothballed 2 units at the beginning of the year but the rest are running fine. Altius electrical coal revenue should be just as strong in 2018 as it was in 2017. Alberta electrical demand picture looks great. Cold winter in Alberta, lots and lots of coal being transformed into cash. Link to comment Share on other sites More sharing options...
netnet Posted January 2, 2018 Share Posted January 2, 2018 netnet, Clarification. Very few people consistently make money in mining/commodities. The question about skill and luck underlines the strong possibility that Mr O'Keefe at Champion now is one of those exceptions. I recognize also that frequent contributors on this Board (including you) may also be the exception. I have some selected positive results in my record in this space but clearly not enough data points for a significant trend. The spirit of the post was to underline the potential strength in others. I just read writser's post (performance for 2017) and I enjoyed it (impressed, wow) the same way I enjoy watching Federer and Nadal. But we don't have to swing at all the pitches. And I prefer cycling. The wish: "Good luck to those riding the wave and hope that 2018 will be good." was sincere. This what I most like about the board: Gracious and thoughtful comments, particularly in response to a... ahem, somewhat prickly comment. Here is wishing you, Cigarbutt, (and everyone) a Happy, Healthy, and Prosperous New Year! Link to comment Share on other sites More sharing options...
linealdin Posted January 3, 2018 Share Posted January 3, 2018 The November/December "mini-quarter" is complete. Preliminary results should be announced around the 20th of this month. I expect around C$11 million in revenue. This mini-quarter will contain no LIF royalty revenue (the 55 cent dividend will be paid on January 25th), so that will keep the numbers down. The mini-quarter MD&A should also reveal news about whether First Quantum took its option to enter into a joint venture agreement for West Cork copper project. Deadline was December 2017. I'm assuming FQM didn't take the option. The Moosehead Gold deal hasn't closed with Sokoman Iron because the exchange has decided a 43-101 report on the Moosehead property is required before Sokoman can issue Altius nearly 20% of its shares. There will be a few weeks delay while the report is prepared. Formal takeover of Moosehead, and issuance of the shares, should happen by the end of January. Link to comment Share on other sites More sharing options...
linealdin Posted January 3, 2018 Share Posted January 3, 2018 Gold vs. Coal In November 2014 Osisko Gold Royalties paid C$461 million to acquire Virginia Gold. Virginia held lots of development assets but its crown jewel, and the reason for the aggressive takeover offer, was a royalty on Goldcorp's Eleonore Mine. Gold is the best thing on earth, and the Eleonore royalty is a flagship gold royalty. In May 2014 Altius closed a deal to pay C$240.9 for a disreputable bunch of coal and potash royalties (Prairie Royalties, excluding CDP). Coal is literally the worst thing on earth, and no one knows what the hell potash is. Since purchasing the Eleonore royalty Osisko, to the end of 2017, has received roughly 14,000 gold ounces. Multiply that by an average gold price of US$1265 over the last couple of years, and an exchange rate of USD/CAD 1.26. Osisko has received roughly C$22.67 million from its flagship gold royalty. Altius, at the end of 2017, has received roughly C$62.5 million just from the coal portion of its Prairie Royalties package. Let's not even mention the potash royalties because no one knows what the hell potash is. How long will the Eleonore mine last? Maybe until the end of 2030, if we include measured/indicated resources (though there have been some tricky geological issues that could affect mine life). How long will the coal royalties last? Maybe until the end of 2030 for Genesee and late 2020's for Sheerness (though there have been some tricky political issues that could affect plant life). What is likely, given the relative pace of payout, is that the coal portion alone of the Prairie deal will end up paying out more money than the Eleonore royalty will. Unbelievable but true. Is the royalties business a popularity contest? If so, then Altius is losing, and Osisko is winning. Osisko receives heavenly multiples because of its precious metals weighting, and Altius gets crap multiples for being involved with coal. If the royalties business is about acquiring big stacks of cash then Altius is winning, and Osisko is losing. Just look at what they paid for their royalties, and look at what those royalties are paying out. Link to comment Share on other sites More sharing options...
linealdin Posted January 4, 2018 Share Posted January 4, 2018 Donald Warr, longtime Altius director, sold 2900 shares at C$15 per share. Taking advantage of recent run up. Not confident in further gains in near term. Lame. * Iron ore benchmark 62% Fe at $75 per tonne. 65% Fe at $91 per tonne. This is the bull market we’ve all been waiting for. If Morabito can’t close construction financing in this bull market then he must be removed as CEO. My belief is that he is a Vancouver stock hustler, not a mine builder. Let him concentrate on what he does best, promoting his latest shady ventures: an artificial intelligence startup, a Facebook knockoff for young investors, and a discount airline. Link to comment Share on other sites More sharing options...
linealdin Posted January 4, 2018 Share Posted January 4, 2018 http://www.rengold.com/i/pdf/RENNR2018-01.pdf Ramelius Resources completes 7 hole drill program at Jupiter gold prospect in Nevada. Drill core sent for assays at the end of December. Altius holds a 1% royalty. Link to comment Share on other sites More sharing options...
linealdin Posted January 5, 2018 Share Posted January 5, 2018 Wolfden Resources insider Ewan Downie sells 600,000 shares at 52 cents on 12/29/17 in a private transaction. Total value of C$312K. Nice Christmas bonus. In November, in another private transaction, he sold 400,000 shares at 36 cents for proceeds of C$144K. The Mount Pickett property acquisition, funded by Altius, has become an avenue for a major cashout by the company founder. No mercy in the junior resources game. Link to comment Share on other sites More sharing options...
linealdin Posted January 6, 2018 Share Posted January 6, 2018 http://www.cbc.ca/beta/news/canada/calgary/grande-cache-coal-mine-1.4469836 Met coal cycle is visibly turning up. Grande Cache met coal mine in Alberta was sold for $1 billion in 2011 to Chinese groups. The met coal price then fell sharply and these groups weren’t able to service $500 million in debt related to the mine. The mine went into bankruptcy on Christmas 2015. Now one of the lenders is buying the asset from the bankruptcy receiver and putting the mine back into operation ASAP because of the rising met coal price. Altius’s Tower met coal project is down the road from Grande Cache. I’m interested in seeing the value for Tower and Allegiance Coal at the top of this met coal cycle. The valuation change from the bottom to the top can be astonishing. Smart money (Chris Cline and Michael O’Keeffe) secured Alberta met coal projects in the downturn. Dumb money (the Chinese) buy at the top of the cycle. “When the Chinese come in, then you get out.” That maxim certainly applied to the Labrador Trough. Hebei’s investment in Alderon pretty much was a sign the iron ore market had topped during the last cycle. First sign of danger for this iron ore bull will be a major investment by a Chinese concern. Watch for it. (I exclude the Japanese, Korean, and Taiwanese steelmakers and commodity houses from this rule of thumb. They are much more sophisticated and experienced players.) Link to comment Share on other sites More sharing options...
linealdin Posted January 6, 2018 Share Posted January 6, 2018 Hebei completed its C$182 million investment in Alderon in March 2013. Two months later POSCO (Korea) and China Steel (Taiwan) each invested US$540 million for minority stakes in ArcelorMittal’s Mont Wright mine and related Canadian iron ore assets. Five years later Hebei has received nothing from its investment. POSCO and China Steel have secured ultra-high quality iron ore offtake to support their steel making operations, as well as fat dividends from ArcelorMittal’s profitable operation. Of course Hebei is mad. They look like rank amateurs compared to the experienced operators. Link to comment Share on other sites More sharing options...
Dazel Posted January 7, 2018 Share Posted January 7, 2018 Happy New year all! You have all done a tremendous job on this thread! Keep up the good work. Cheers to Altius $20 in 2018! Dazel Link to comment Share on other sites More sharing options...
linealdin Posted January 7, 2018 Share Posted January 7, 2018 http://www.weeklyanchor.com/images/FLIP%20PAPERS/March%2016%202015/mobile/index.html#p=23 2015 article on the extension of mining past 2020 at Teck's Cardinal River / Cheviot mine. Teck representatives state: "At $106 coal expansion would be indeterminate but should the markets reach $180 we could expand the life past 2020." The coking coal price Teck needs for mine life extension at Cardinal River past 2019 seems to be US$180. Current price of benchmark coking coal is US$262. I am very optimistic the peripheral deposits at Cardinal River will be mined in the 2020 to 2027 period. Mining permits for those peripheral deposits need to applied for soon. Link to comment Share on other sites More sharing options...
linealdin Posted January 8, 2018 Share Posted January 8, 2018 https://www.reuters.com/article/us-china-copper-scrap/as-china-restricts-scrap-metal-companies-look-to-process-copper-abroad-idUSKBN1EX0OA China makes it much, much harder to import Western metal garbage and glean it for copper. Too dirty (and undignified) a process. 90% less copper scrap = more required imports of high quality copper concentrate. China's environmental cleanup again favors Altius's "megabull" copper position (as it does Altius's "superbullish" position in iron ore). Link to comment Share on other sites More sharing options...
Cigarbutt Posted January 8, 2018 Share Posted January 8, 2018 Yes, China seems to apply a "pragmatic" approach to balance economic growth and the environment. But I wonder if there is a component of central government management of over-capacity. https://www.ft.com/content/cd2fe8f0-cf70-11e7-b781-794ce08b24dc Question: Why is the anti-corruption agency involved? I understand that Premier Li has said that all "zombie" companies will be eliminated within two years starting in 2016. Maybe a ruthless elimination is a clean and efficient form of restructuring? Link to comment Share on other sites More sharing options...
linealdin Posted January 8, 2018 Share Posted January 8, 2018 Yes, China seems to apply a "pragmatic" approach to balance economic growth and the environment. But I wonder if there is a component of central government management of over-capacity. https://www.ft.com/content/cd2fe8f0-cf70-11e7-b781-794ce08b24dc Question: Why is the anti-corruption agency involved? I understand that Premier Li has said that all "zombie" companies will be eliminated within two years starting in 2016. Maybe a ruthless elimination is a clean and efficient form of restructuring? Overcapacity, sure. But of what exactly? Does a small-scale Chinese iron ore mine digging into a 15% Fe ore body need to exist? Does China really want to import garbage from Europe to glean copper scrap? The Chinese authorities say no and no. Link to comment Share on other sites More sharing options...
linealdin Posted January 8, 2018 Share Posted January 8, 2018 Some of the larger public equity positions are bubbling. As of yesterday's close: LIF equity: C$33 million Excelsior equity: C$7.424 million Adventus equity: C$8.84 million Antler Gold equity: C$3.44 million Total: C$52.7 million Just in August we were discussing LIF’s C$33 million market value, and the wisdom of using the Fairfax money to make a “leveraged bet” on LIF. With LIF hitting C$28 I believe Altius’s LIF position is worth at least C$100 million (Altius share position around 3.6 to 3.75 million). The magnitude of this one position has just grown and grown. Link to comment Share on other sites More sharing options...
linealdin Posted January 8, 2018 Share Posted January 8, 2018 https://www.businessinsider.com.au/iron-ore-breakeven-rates-major-miners-macquarie-bank-2018-1 A useful chart of estimated breakeven rates for major iron ore miners. The Canadian iron ore sector, as a high-grade marginal producer, has improved competitiveness because of the exploding quality premiums. According to this article Canada (IOC and ArcelorMittal’s Mont Wright) has bottom quartile costs despite its distance from Asia. Actually lower costs than Vale! That’s incredible. How does Kami or Bloom Lake or Julienne Lake fit into the global picture? By replacing marginal Western Australian low-grade producers like Atlas Iron (US$66 breakeven), Cliffs (US$65) and Iron Valley (US$66). Those producers aren’t making much money right now. Canadian iron ore isn’t fighting big boys like BHP or Rio Tinto. It is fighting an eminently winnable market share battle against very weak marginal producers. Link to comment Share on other sites More sharing options...
linealdin Posted January 11, 2018 Share Posted January 11, 2018 https://docs.wixstatic.com/ugd/8d6671_a4a98c503a73442cb3f737c0c1f6db2b.pdf EMU has begun its big 36 hole aircore drill program at Vidalita. Soil and rock chip sampling has identified a new area of interest at Jotahues. And new concessions north of Vidalita have been applied for. There were dry years during the bottom of the cycle when zero meters were drilled on Altius royalty land so I savor every meter being drilled now. Link to comment Share on other sites More sharing options...
linealdin Posted January 11, 2018 Share Posted January 11, 2018 http://www.globenewswire.com/news-release/2018/01/11/1287448/0/en/Adventus-Zinc-and-Salazar-Resources-Begin-Testing-Regional-Targets-at-Curipamba-Project.html Wonderfully detailed press release by Adventus on the commencement of their 2018 exploration program at Curipamba. Dalton noted in a conference call in September that the exploration possibilities at Curipamba (beyond El Domo) were “ridiculously exciting.” I see what he meant. The sampling at some of the targets is astonishingly rich: 186.5g/t Au and 1,055 g/t Ag over two meters at Sesmo, for instance. First exploration priority is Sesmo, where drilling will begin in February. There are a dozen other targets after that. At the same time a new mineral resource estimate will be prepared for El Domo (10 million tonnes resources currently at excellent grades) incorporating the very successful 9,765 meters of drilling Salazar Resources completed in 2017. Mineral resource update will be delivered in Q1 2018. El Domo is already a company maker but it will get bigger with the resource update, and much, much bigger if exploration finds satellite deposits. Jim Franklin, a global VMS deposit expert, examined El Domo and claimed it was a type of VMS cluster system that typically has 6 economic deposits, one of them being a central “giant” deposit of at least 30 million tonnes. He believed the Curipamba camp contained at least 20 million tonnes and up to 50 million tonnes. That is an extraordinary target. Link to comment Share on other sites More sharing options...
petec Posted January 11, 2018 Share Posted January 11, 2018 Did these guys take all $100m of prefs on offer from Fairfax? I seem to remember they came in tranches and the warrants vested with the tranches. Link to comment Share on other sites More sharing options...
linealdin Posted January 11, 2018 Share Posted January 11, 2018 Did these guys take all $100m of prefs on offer from Fairfax? I seem to remember they came in tranches and the warrants vested with the tranches. Yes indeed. Old news. They took the last C$50 million tranche on November 10th. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now