ALS.TO - Altius Minerals

[netnet]

Most of the PG portfolio is not a result of straight equity investments (the kind of thing Paul van Eeden was doing with the $25 million Altius assigned to Cranberry Capital):

 

1) Most of the portfolio is shares obtained in property vendout deals: Adventus (partially), Alderon, Allegiance, Antler, Canex, Champion (formerly Mamba Minerals), Century etc.

 

2) Another big chunk was picked from the Callinan merger: Alianza (formerly Tarsis), Excelsior, Renaissance Gold (takeover of Kinetic Gold), Sokoman Iron (formerly Golden Dory), Evrim, Avrupa etc. That share package was pretty cheap because we were deep in the junior resources bear market in 2015 when the deal happened.

 

3) There are a few equity positions Altius picked up in larger royalty or property acquisition deals: Bitterroot and Wolfden.

 

4) Generally Altius is not going to buy shares of a junior resource company unless there is a larger related deal structure (royalty purchase, property purchase, debenture etc) or a very attractive underlying royalty (Virginia).

 

5) Very hard to compare receiving 33 million shares of a junior in exchange for moose pasture to the performance of the TSX Mining Index.

 

I understand that most of its portfolio is as a result of prospect generation, but that was not the question. The question was how has the portfolio of public companies performed, adjusted for the price available for the public (not the "moose pasture" price). 

 

Hence, my question was not whether prospect generation (PG) derived portfolio has added value, well yeah that's why I looked at the company to begin with, rather how has the public portion performed had it been bought outright.  (Obviously the up and down and slight recovery of Alderon would be a major factor in overall performance.)

 

It may be that them owning the stock of a public company is a really clear and loud signal or it may be that them owning stock in a miner, as consequence of a deal has very little meaning.

[linealdin]

Osisko and Sandstorm management have talked about their ownership of a junior’s stock having an “accelerator” effect for the junior. Nolan Watson of Sandstorm says that tiny juniors come to him asking for equity/royalty deals because they want the eyeballs of Sandstorm’s 41,000 shareholders focused on their project. Sandstorm is building a marketing department to hype up some of these juniors in their portfolio.

 

I suppose Altius is sort of doing the same thing by regularly releasing a list of their PG holdings. They want more eyeballs on those companies, most of which are tiny.

 

 

[linealdin]

https://docs.wixstatic.com/ugd/8d6671_59f9ad14ed7f4f2cbd5c85f3a612a537.pdf

 

EMU with a hilarious press release about their drilling troubles. The drill contractor didn’t have an air compressor; EMU rents a compressor but the vehicle that’s supposed to tow the compressor doesn’t have a tow hitch; the drill rig is in bad shape from the last job, was shipped improperly, and breaks down constantly.

[Williams406]

https://docs.wixstatic.com/ugd/8d6671_59f9ad14ed7f4f2cbd5c85f3a612a537.pdf

 

EMU with a hilarious press release about their drilling troubles. The drill contractor didn’t have an air compressor; EMU rents a compressor but the vehicle that’s supposed to tow the compressor doesn’t have a tow hitch; the drill rig is in bad shape from the last job, was shipped improperly, and breaks down constantly.

 

It's like those holes didn't want to get drilled.

 

We'll get that stuff fixed right away--I'll put my best people on it.

--Bungle Drilling, LLC CEO Mel Adroit

[linealdin]

http://www.evrimresources.com/s/news-releases.asp?ReportID=813972

 

Evrim reports excellent trenching results at its recently acquired Cuale project in Mexico:

 

0.53 g/t gold over 25.4 meters

7.4 g/t gold over 9.4 meters

0.61 g/t gold over 20 meters

 

Altius holds a 1.5% precious metals royalty on Cuale (from the Callinan merger). Evrim’s doing some great project generation work. Cuale should attract a joint venture partner soon.

[linealdin]

http://s1.q4cdn.com/305438552/files/doc_presentations/2018/Hudbay_InvestorPresentation_Jan17_FINAL.pdf

 

New Hudbay presentation. See slide 37 for Hudbay’s 2018 exploration focus:

 

“Large airborne survey underway on a prospective block south of Flin Flon infrastructure.”

 

Altius has 31 square kilometers directly south of the existing Flin Flon infrastructure of 3% royalty land. Best place to find a new mine is near an existing mine.

 

Hudbay is really ramping up its Manitoba exploration. In 2017 they guided only C$4 million in Manitoba exploration expenses. For 2018 they are guiding C$15 million in Manitoba exploration expenses. Getting serious about finding new deposits near Flin Flon to replace production from 777 and Reed. See the press release below:

 

http://www.hudbayminerals.com/English/Media-Centre/News-Releases/News-Release-Details/2018/Hudbay-Announces-2018-Production-and-Cost-Guidance-and-New-Collective-Bargaining-Agreements-in-Peru-and-Manitoba/default.aspx

[linealdin]

http://altiusminerals.com/uploads/2018-1-19-FINAL-Altius-Reports-2-and-8-Month-Royalty-Revenue-and-Guidance-.pdf

 

Altius hits roughly $11 million in royalty revenue for the two month mini-quarter, right around where I expected.

 

Altius has NOT increased its 3.15 million LIF share position since the last quarter. Those block purchases of LIF in early November were not by Altius.

 

The Fairfax C$50 million cash drawn down in early November is still intact and ready to be deployed (C$62 million total cash). C$66 million in debt.

 

Potash performance looked outstanding over the 2 month period at C$1.254 million. That would be C$7.524 million on an annualized basis. Unit 2 production from the McChip royalty at Rocanville starting to contribute.

 

*

 

Guidance for 2018 is only C$60 million to C$65 million. A little lower than I expected:

 

1) Altius being conservative, usual. They prefer to outperform their guidance.

 

2) 777 mine will produce less this year. Hudbay guiding lower zinc and copper production at 777 in 2018. Maybe 15% lower production? The mine is aging and production will just get harder and harder.

 

3) Tremendous uncertainty predicting iron ore price environment for LIF.

[linealdin]

http://www.stockhouse.com/news/press-releases/2018/01/18/sokoman-iron-corp-provides-exploration-outlook

 

Sokoman Iron update on the Moosehead Gold project. A 43-101 report is being generated on the Moosehead property, as required by the Exchange. Pending approval by the Exchange, and compilation of data and modelling, a Phase 1 drill program will begin in late Spring 2018. I like to hear about drilling.

 

Best historical drill hole at Moosehead: 14.07 g/t gold over 16.84 meters.

 

The delay by the Exchange in approving the Moosehead JV deal probably hasn't affected the exploration timeline. It is the dead of winter and not much drilling is happening.

[linealdin]

http://adventuszinc.com/storage/news/adzn-press-release-18-02-final-jan-22-1516629527.pdf

 

Adventus and Salazar begin their drill program at Curipamba, testing a southern extension of the El Domo deposit. A minimum of 18,000 meters of drilling is planned for 2018. Two drill rigs, run by a subsidiary of Salazar, have been contracted. Adventus has budgeted US$7 million for the exploration program, which will include an airborne electromagnetic and geophysical survey.

[linealdin]

https://globenewswire.com/news-release/2018/01/22/1298499/0/en/Excelsior-Mining-Announces-Closing-of-Second-Tranche-of-Private-Placement.html

 

Excelsior closes the second tranche of its equity raise, 16.4672 million shares issued to Greenstone. Total money raised is US$30 million, which is about 64% of stage 1 capex of US$46.9 million. They are in a good position to start construction as soon as the final EPA permit is received (any day now).

 

Excelsior has around 206 million shares now--a lot of dilution recently--so the share price may be capped until production actually begins in 10 months or so. Altius was right to sell down some of its equity position.

 

*

 

Couple more notes on Excelsior. The Gunnison project will be the world's first large scale commercial in situ copper mining project. It will also be the first in situ copper mining project of a virgin ore body that hasn't been pre-fractured with explosives. It works in the lab, it may not work in the real world. An enormous amount of technical risk.

 

The more sensible path would have been first running a small scale pilot test facility, as Taseko is doing with its Florence in-situ copper project. See what the recovery rates are in the field, and adjust the plan from there.

[linealdin]

Scuttlebutt on the Lynx Diamond project: Budget for getting back in the field and drilling and bulk sampling the diamondiferous unit would be C$5 million. Considering a spin-off of the project. The 43-101 report currently being prepared for the project will obviously be essential to spinning off the project, either to a junior or as a new diamond-focused vehicle.

[linealdin]

Debeers, the world's leading diamond company, in 2000 staked 1.94 million hectares of diamond exploration land in Manitoba. It cost them around C$1 million just to stake those claims. They spent significantly more in exploration costs but didn't find any diamonds. (BHP and other large interests also explored for diamonds in the province.)

 

Now Altius and its consortium partners have found diamonds in Manitoba. The particular diamond-bearing rock unit has the potential to be very large.

 

Canada is one of the few significant diamond producing countries with rule of law and efficient capital markets (versus Africa and Russia).

 

Why wouldn't Debeers be chomping at the bit to to buy into the Lynx project? Their diamond claims started a staking rush. Their thesis, that Manitoba has just as much diamond potential as the Northwest Territories, has been proven correct.

[linealdin]

http://www.avrupaminerals.com/news/index.php?content_id=278

 

Avrupa updates progress at the Alvito IOCG prospect in Portugal. Oz Minerals, a A$2.77 billion market cap copper producer, is funding exploration. A successful surface exploration campaign of geophysics and rock chip sampling has delineated drill targets. A 2000 to 2500 meter drill campaign (upsized from original 1500 meter plan) should begin by late March, the end of the rainy season.

 

Altius holds a 1.5% royalty and an equity position in Avrupa.

[bizaro86]

Debeers, the world's leading diamond company, in 2000 staked 1.94 million hectares of diamond exploration land in Manitoba. It cost them around C$1 million just to stake those claims. They spent significantly more in exploration costs but didn't find any diamonds. (BHP and other large interests also explored for diamonds in the province.)

 

Now Altius and its consortium partners have found diamonds in Manitoba. The particular diamond-bearing rock unit has the potential to be very large.

 

Canada is one of the few significant diamond producing countries with rule of law and efficient capital markets (versus Africa and Russia).

 

Why wouldn't Debeers be chomping at the bit to to buy into the Lynx project? Their diamond claims started a staking rush. Their thesis, that Manitoba has just as much diamond potential as the Northwest Territories, has been proven correct.

 

Would be nice if the property got vended to someone with the capital to just build it versus a de novo junior that needs to fight to raise money to drill first.

 

Of course, if you sell it to De Beers you have to consider the risk they just keep it in inventory. Maybe one of the smaller Canadian companies that is an actual producer that could use a second mine (eg Lucara, Dominion, Mountain Province) would be a better choice. They could all easily fund exploration and raise capital to build a mine as well.

[linealdin]

https://globenewswire.com/news-release/2018/01/23/1299175/0/en/Excelsior-Mining-Provides-Draft-Federal-EPA-Permit-Update.html

 

Excelsior EPA permit update. Public info meeting to be held in Arizona on February 27th.

 

Terrible delay. This final permit could drag on into the summer. Remember Excelsior's original timeline had all permits received by September 2017. Blame the incompetence of Trump EPA administration. They are supposed to be pro-mining Republicans.

 

I don't expect commercial production from Gunnison until early 2019.

[linealdin]

Mining analyst and geologist Brent Cook talking up Evrim Resources at the Vancouver Resource Investment Conference, and specifically mentions how much he likes the rocks he’s examined from Cuale, Evrim’s latest project in Mexico. Evrim recently announced excellent early stage trenching results from Cuale (7.4 g/t gold over 9.4 meters).

 

Altius holds a 1.5% royalty on Cuale, and a little under 20% of Evrim equity.

[linealdin]

Copper dropped to nearly $3.11 yesterday, then had a huge bounce today to $3.22 right now. Zinc strong at $1.57 but iron ore is diving down. Very volatile in the commodities markets. We could see 30% to 50% corrections during this bull cycle.

[linealdin]

https://ceo.ca/@newsfile/watusi-signs-definitive-agreement-for-proposed-qualifying

 

Watusi Capital signs the definitive agreement to acquire Altius’s Chilean properties. Altius and its partners will split 11.2 million shares (priced at 51 cents in the initial financing), a 1.02% royalty and a thousand in cash. The board members of Aethon Minerals will be Robert Davies, Michael Atkinson, Sam Leung and Jens Mayer.

 

Atkinson is from Watusi and is associated with Rick Rule and Sprott, who is organizing the initial financing.

 

Sam Leung is a mining engineer and second in command at Adventus Zinc.

 

Jens Mayer was head of investment banking at Canaccord, and is now a principal at Infor Financial, a leading independent investment bank. (Mark Wellings, another principal at Infor Financial, is on the board of Adventus.)

 

*

 

So Altius’s 5 year Chilean adventure yields 5.5 million shares of Aethon and an effective 0.5% royalty on 12 copper-gold properties. And 500 dollars.

 

Underwhelming. I would much prefer fewer shares and a bigger royalty, in case Aethon hits on something big. It is elephant country for copper deposits.

[linealdin]

On the other hand Aethon will begin life with a very modest C$10 million to C$13 million market cap. Altius will own 20% to 25% of the company, depending on how many shares are issued in the financing.

 

Any kind of discovery could increase Aethon’s market cap by 10X or 20X. Always good to be involved early.

[linealdin]

Evrim Resources presented at the Mineral Investment Forum. Charles Funk from Evrim says the Cuale project (which Altius holds a 1.5% royalty on) is so attractive that they want to keep it for themselves. From a poster on the ceo.ca board:

 

"Another stock that have attracted attention at MIF is $EVM Evrim Resources, the following Monday trading saw the stock jumped 0.055 to close at 40c. At the booth, Charles Funk, VP New Opportunities and Exploration, talks enthusiastically about the exciting emerging plays they have. Some majors have come in twice to JV, which speaks quality of their projects and the trust earned.

 

"The dream of any prospect generator is to find a play that is so attractive that they want to keep it for themselves. They may have found one in the Cuale project, a high sulphidation epithermal Au-Ag play in Jalisco, Mexico. The property is located near Agnico Eagle Mines' Barqueño Au-Ag project and Endeavour Silver’s Ag-Au Terronera project.

 

"A side note is the winos really got their fills as Paddy Nichol, EVM’s President has kindly made available wine from his BC vineyard during the cocktail hours.

 

"(EVM is among the 3 top mining companies for 2018 by Brent Cook & Joe Mazumdar of Exploration Insights.)"

 

*

 

Evrim hit a high of 44 cents today. Altius's equity position in Evrim is worth C$5 million at that level.

[linealdin]

Zinc is at $1.58 and Altius's zinc plays are prospering:

 

Wolfden up to 66 cents. Altius's 14.2 million share are worth C$9.73 million at that level (another 7.1 million warrants exercisable at 35 cents).

 

Adventus up to 96 cents. Altius's 15,182,183 shares worth C$14.575 million at that level.

 

Total value of the two positions: C$24.3 million.

 

Project generation portfolio showing excellent gains this quarter.

[linealdin]

http://www.allegiancecoal.com.au/irm/PDF/1294_0/December2017QuarterlyActivitiesReport

 

Allegiance quarterly activities report. Their plans for 2018:

 

"The work programme for 2018 aims to position the Company where, subject to permitting, it is ready to commence mine construction and production. This includes completing detailed mine and engineering design, settling rail and port contracts, securing coal off-take agreements and mine construction finance. An enormous amount to deliver in the coming year but a

challenge we are confident we will achieve.”

 

A 6 hole drill program will begin in early February for environmental baseline data and to retrieve coal core that the Japanese and South Korean steelmakers can test in their ovens.

 

A joint venture deal with a big Asian steelmaker will certainly get this stock moving.

 

 

 

[linealdin]

 

Paddy Nicol presenting Evrim at MIF. Excited about potential at Cuale project. Recent discovery trenches ended in mineralization, plan in next few weeks is to go back in and trench some more. Considering keeping project and drilling it themselves because the potential is so good. Should be significant news flow this year about Cuale.

[linealdin]

https://thewest.com.au/news/goldfields/goldfields-iron-ore-mine-closure-a-blow-for-workers-at-esperance-port-ng-b88725881z

 

Cliffs will close its 11 MTA iron ore operations in Western Australia this year. Admits defeat; losing money with the discounts for low grade, high impurity ore.

 

Bloom Lake begins operations in the next month or two, selling into a strong market for high grade, low impurity ore.

 

A slight shift in the global iron ore market in favor of the Labrador Trough and at the expense of Western Australia. This trend will continue.

[linealdin]

http://aethonminerals.com

 

Website coming soon. Logo looks like the Altius bird, but it's a bird rising from the flames/ashes. Phoenix, as a rebirth of Altius.

 

*

 

Zinc breaks above $1.63. Quite a bull run.