ALS.TO - Altius Minerals

[linealdin]

Just caught the end of the Yamana Q4 investor conference call. The CEO ended the call by talking about the potential Chapada expansion. Gold ounces would remain the same but copper production would increase “very significantly.”

 

I like the sound of that.

[SharperDingaan]

Re Kami; everybody wants a mine there asap - we get that.

Give the shop away to get 'er done now - we get that.

 

But the reality is that IRON is too small a player to get 'er done, and it is highly likely that they would net a higher value for the deposit if they simply sold it to a major (vs discounting future uncertain profit streams at a very high rate). It would be much simpler and easier, to restart with a major and a clean slate (grandfathered take-off agreements optional). But done today, a major would mothball Kami until the next cycle, and sell into this cycle from existng reserves elsewhere. Hence, a sale of Kami is to kill today's dream.

 

Just a different take, but it's pretty hard to see how something like this doesn't eventualy prevail.

Kami will be developed by a major, not IRON; we just don't yet know how or when.

 

SD

 

 

 

 

 

[linealdin]

http://s22.q4cdn.com/899716706/files/doc_presentations/2018/Q4-2017-Final3.pdf

 

This is the presentation for the Yamana Q4 investor call (audio has also been posted on Yamana’s website).

 

1) Copper reserves and resources have increased significantly at Chapada.

 

2016 year end: 3.25 billion pounds reserves, 660 million pounds measured & indicated resources.

 

2017 year end: 3.6 billion pounds reserves, 1.3 billion pounds measured & indicated resources.

 

That is a 25.3% increase in all categories (excluding inferred resources, which declined). Some of the late 2017 drilling results, including Suruca SW, are not included in these calculations.

 

2) This shows why Yamana is studying how to “very significantly” increase copper production at Chapada. At current production rates it would take nearly 40 years to deplete Chapada’s copper, and they are still discovering ore bodies.

 

3) I hope Yamana management are copper bulls. I believe they could get copper production in the 200 million pound per annum range. The reserves and the economics support the expansion. Chapada is, by far, Yamana’s lowest cost mine.

 

4) The Yamana CEO mentions that they plan to deliver the expansion scoping studies by the Yamana investor meetings in early May. Questions to be answered: How to expand the Chapada pit walls to take in the higher grade mineralization at Sucupira/Baru? How to expand the processing plant? How to exploit the Suruca sulphides beneath the Suruca oxides?

[linealdin]

Re Kami; everybody wants a mine there asap - we get that.

Give the shop away to get 'er done now - we get that.

 

But the reality is that IRON is too small a player to get 'er done, and it is highly likely that they would net a higher value for the deposit if they simply sold it to a major (vs discounting future uncertain profit streams at a very high rate). It would be much simpler and easier, to restart with a major and a clean slate (grandfathered take-off agreements optional). But done today, a major would mothball Kami until the next cycle, and sell into this cycle from existng reserves elsewhere. Hence, a sale of Kami is to kill today's dream.

 

Just a different take, but it's pretty hard to see how something like this doesn't eventualy prevail.

Kami will be developed by a major, not IRON; we just don't yet know how or when.

 

SD

 

I believe there’s little to no interest from majors in purchasing Kami. Mostly because of geography. Rio Tinto likes IOC but they don’t even keep it in its iron ore business division. IOC is stashed away in their Energy and Minerals division. It is an asset they won’t be spending much money on to expand (Kami would be a perfect pit to expand the mine life of IOC).

 

Vale has its hands full in Brazil. BHP and Fortescue have plenty of expansion projects in Australia. Canadian iron ore offers no synergy to those groups.

 

Hebei as a large Alderon shareholder would object to a sale to the Big 4 for political reasons.

 

So that leaves Champion, and maybe ArcelorMittal, as potential buyers. Champion would build the mine this cycle. They like Bloom Lake but the economics at Kami are even better (significantly lower opex).

[Cigarbutt]

Over time, Altius is likely to do well in the commodity space. How it will get there is the cyclical question.

An interesting (and optimistic) take on the present situation:

https://www.financialsense.com/richard-mills/5-reasons-why-commodities-are-place-be-2018

 

 

[linealdin]

Champion Iron up 18% to $1.51 on the ASX. Let’s see if CIA’s stock price on the TSX responds when the market opens on Tuesday.

 

Word leaking out about progress from the Bloom Lake mine site: Water is connected and crushing/processing began on February 16th. 4500 tonnes of concentrate produced on day 1; 4000 tonnes on day 2. This is still the testing and commissioning phase. First train will be loaded up tomorrow.

 

*Tuesday Morning Update*

 

CIA closes at A$1.57 on the ASX. That translates to C$1.56. May be a significant move up for CIA on the TSX this morning. The Canada listing tends to lag the Australian because Canadian resource investors aren’t true believers yet.

[linealdin]

First 3 Wolfden holes announced:

 

West lens:

8.7 meters at 28.3% zinc equivalent

6.7 meters at 15.2% zinc equivalent

 

East lens:

8.6 meters at 15.2% zinc equivalent

 

Excellent grades over good widths, as expected.

 

https://www.juniorminingnetwork.com/junior-miner-news/press-releases/551-tsx-venture/wlf/42536-wolfden-resources-announces-initial-drill-results-from-pickett-mtn-maine.html

 

https://www.newswire.ca/news-releases/wolfden-announces-initial-drill-results-from-pickett-mtn-maine-674684633.html

[nostradamus]

Canstar Resources, Adventus Zinc and Altius Minerals Announce the Consolidation of Newfoundland Zinc Exploration Projects, Focused on the Buchans Camp

 

https://globenewswire.com/news-release/2018/02/21/1372707/0/en/Canstar-Resources-Adventus-Zinc-and-Altius-Minerals-Announce-the-Consolidation-of-Newfoundland-Zinc-Exploration-Projects-Focused-on-the-Buchans-Camp.html

 

[linealdin]

http://www.canstarresources.com/i/pdf/presentation.pdf

 

Canstar presentation for the land consolidation deal.

[linealdin]

Thoughts on the Canstar deal:

 

1) All upside for Adventus. They get half the shares of the recapitalized Canstar in exchange for some early-stage, non-core properties. No more cash outlays required from them. They focus their money on Curipamba exploration.

 

2) Altius has 2% royalties on Buchans, La Poile, Katie and Daniel’s Harbor (probably). They have a new right of first refusal to do a royalty financing for Mary March. Canstar in 2018 plans drill programs or TDEM surveys at these properties. Altius enjoys upside from any discovery.

 

The $500K investment is the downside but it helps creates a 9% position in Canstar while the equity is pretty beaten down. Getting in cheap, just like the Wolfden deal.

 

3) I also like that Altius has a contract to run the exploration program for the first 12 months. Altius can, in turn, give jobs to their favored prospectors and contractors. Reward their team players.

 

4) The flow through shares reduce Altius’s tax bill.

[linealdin]

http://www.adventuszinc.com/storage/presentations/adzn---corporate-presentation---feb-2018---final-with-canstar-1519247982.pdf

 

Updated Adventus Zinc presentation. Claims 5X gains with sale of Newfoundland properties to Canstar. Adventus originally paid Altius for the Newfoundland properties by issuing Altius 3.57 million shares at a very low deemed price.

 

Canstar is backed by management from Probe Mines, which was sold to Goldcorp for C$526 million in 2015. Credible players.

 

There’s a possibility of one or more partnership deals for the Irish properties. 10K to 15K meters of drilling is possible for the Irish properties in 2018. Seismic survey results for Rathkeale will be released shortly.

[linealdin]

https://globenewswire.com/news-release/2018/02/22/1379680/0/en/Quebec-Iron-Ore-Restarts-the-Bloom-Lake-Mine-With-First-Rail-Shipment-From-Fermont.html

 

Champion Iron announces that the first trainload of ore leaves the Bloom Lake mine site today. It will carry 16,500 tonnes of 66% Fe concentrate. Benchmark price of 62% iron ore is currently $78 per tonne while Champion’s feasibility study assumed a benchmark price of $56 per tonne. Market price is approximately 39% higher than expected. Bloom Lake is in a sweet spot to immediately be profitable.

 

Mining operations began on February 16th, ahead of schedule, and within budget.

 

CIA closed at A$1.59 on the ASX, 22% higher than the Canadian stock price. O’Keeffe will need to do some promotion to get the Canadian stock to catch up. Another illustration of how we are still very early in the cycle for resource stocks in Canada. Investors still feeling the pain of the recent bear market, taking profits at every opportunity.

 

O’Keeffe has floated the idea of CIA paying a dividend “sweetener” in 2018 if the restart of Bloom Lake goes well and the iron ore market holds up. That would wake people up.

[netnet]

 

 

CIA closed at A$1.59 on the ASX, 22% higher than the Canadian stock price. O’Keeffe will need to do some promotion to get the Canadian stock to catch up. Another illustration of how we are still very early in the cycle for resource stocks in Canada. Investors still feeling the pain of the recent bear market, taking profits at every opportunity.

 

Well finance theory tells us that this is impossible. Why hasn't this been arbitraged away?  What is there no borrow on the Australian stock exchange?

[bizaro86]

IB has no borrow for CIA on Australia, I've been checking regularly.

[linealdin]

http://altiusminerals.com/uploads/BunibonibeePressRelease.pdf

 

Altius signs an agreement with the Cree Nation to explore the Lynx diamond project near Oxford House, Manitoba.

 

A lot of ground work being done with this project: a 43-101 report will be delivered soon and formalizing a relationship with a First Nation is always a good idea.

 

The ingredients are there to spin out a new diamond exploration company.

[nostradamus]

http://altiusminerals.com/uploads/BunibonibeePressRelease.pdf

 

Altius signs an agreement with the Cree Nation to explore the Lynx diamond project near Oxford House, Manitoba.

 

A lot of ground work being done with this project: a 43-101 report will be delivered soon and formalizing a relationship with a First Nation is always a good idea.

 

The ingredients are there to spin out a new diamond exploration company.

 

Wow, they have certainly done a good job keeping the locals happy: "“we are pleased that Altius was willing to work with us to craft an agreement that is respectful of our rights. Because of their respect and understanding, we can feel comfortable supporting their project. I encourage the Government of Manitoba and other mining and mineral exploration companies to look to this Agreement as an example of best practice going forward, as the mining industry in our territory continues to grow.”

 

New Florence Lake project page on the Altius website:

http://altiusminerals.com/projects/florence-lake

 

[bizaro86]

Looks like someone found some borrow (or finally got CAD shares converted over) in Champion, as the AUD shares were down 13%, closing that spread materially.

[linealdin]

The Canstar/Adventus/Altius master agreement is filed on Canstar’s SEDAR profile. A new 2% royalty has been created on the Daniel’s Harbour zinc property that Altius sold to Canstar.

 

The $2 million financing that will follow the initial $750K financing will be subscribed by the Probe Mines guys (rich from selling a mine for half a billion three years ago).

 

The Daniel’s Harbour property was only staked in May 2017. Minimal exploration expenditures so far. Quick flip for 12.1 million shares of a junior and a 2% royalty. That works.

 

Altius will earn a 10% management fee for being the interim exploration operator while Canstar’s internal team is being built. Altius is tasked with designing an exploration program for 2018 and 2019, initially focused on the Buchans Camp, with a budget of $2 million.

 

 

[linealdin]

https://www.google.com/amp/www.northernminer.com/news/prospect-generator-evrim-resources-boasts-partners-deep-pockets/1003794266/amp/

 

Great article about Evrim in the Northern Miner.

 

Important detail about Cuale (Altius 1.5% royalty): It is a high sulphidation deposit in the Sierra Madres, which tend to be rare. When you find them they typically turn into successful and producing mines.

 

Evrim seems to be leaning towards drilling Cuale. “At some point in every prospect generator’s life they decide to drill something themselves.”

[linealdin]

Roland Butler made a flurry of small royalty deals for Callinan in 2012 and 2013. When Altius bought Callinan in 2015 those royalties weren’t assigned much value. Now that the bull market is beginning we are seeing a significant amount of progress developing those royalties. The companies joint-venturing, drilling and exploring those properties have validated the royalty purchases Butler made. The depth of Callinan’s royalty portfolio outside of the 777 royalty was under appreciated.

 

Pre-production:

 

Gunnison (Excelsior) 1% royalty

 

Recently drilled:

 

Kingscourt (Teck) 2% royalty

Jupiter (Ramelius) 1% royalty

Silicon (Anglogold) 1.5% royalty

Pine Bay (Callinex) 1% royalty option

 

Planned or possible drill programs in 2018:

 

Alvito (Oz Minerals) 1.5% royalty

Rathkeale (Adventus) 2% royalty

Cuale (Evrim) 1.5% royalty

 

Active exploration projects:

 

Lismore (Adventus) 2% royalty

West Cork (First Quantum) 2% royalty

 

[Sunrider]

Linealdin et al

 

Firstly, L, thanks for the continued news flow. I’ve held for more than five years and I think my cost basis is around $13.3. I didn’t add when I took the major turn down a while ago.

 

What’s been in mind for a while is the question as to what will actually get the market to recognise the -alleged- value creation that’s been going on under the hood? (Which would also be a guide to the potential returns from here on out.)

 

People on this board have argued for years that value has been going up every year based on the underlying deals. The only ones that have been able to extract money out of this increase in value has been management. I say ‘alleged’ because is it really value if it can never be sold at the indicated ‘value’ level?

 

Cheers - C.

[linealdin]

The market only recognizes the car zooming down the track, not under the hood developments. Which is fine.

 

In a bull market, which we are the beginning stages of, the under the hood stuff turns into cash. It’s just a matter of time.

 

Do you think Altius is going to be in debt forever? Look at the pace of payback. Altius will be free of traditional debt in 2.5 years at the latest. And it could be tomorrow if they decide to cash in a few investments. The investment portfolio dwarfs the traditional debt.

 

What happens when the debt is gone? The $30 million plus a year they’ve been spending on repayment of principal and interest goes straight into the cash hoard and into increased dividends. Altius becomes an ATM.

 

Everything else is contingent— there’s no certainty any of the hundreds of thousands of meters being drilled on Altius royalty land hits paydirt—there’s no certainty Altius will be able to find accretive investments for its Fairfax cash—but the debt payoff to cash machine process is inevitable.

 

After the Chapada deal debt spiked to $103 million on April 30th, 2016. Debt was $79.42 million on January 31st, 2017. Debt was $66 million at the end of 2017. The required term payment on January 31st was $3.25 million. So the debt position was at most C$62.75 million at the end of January.

 

C$40.25 million of debt paid off in only 7 financial quarters. And the Altius board was still unhappy with the pace.. They’ve officially charged Dalton with the task of obliterating the debt.

[linealdin]

https://www.google.com/amp/www.northernminer.com/news/canstar-resources-adventus-zinc-altius-minerals-consolidate-buchans-camp/1003794285/amp/

 

Kargl-Simard compares the Canstar deal to how Osisko Metals consolidated the Bathurst mining camp and immediately reached a market cap of $130 million on the district consolidation. The model is multiple zinc-focused deposits that can feed a central concentrator. No brainer deal for all 3 parties because of synergies.

 

Mentions that Canstar as a consolidation vehicle could eventually buy Teck’s Duck Pond mill, which is on care and maintenance.

[linealdin]

http://www.allegiancecoal.com.au/irm/PDF/1311_0/FarEastCapitalCoverageNoteFebruary2018

 

Analyst coverage of Allegiance Coal. Two Japanese steel groups have been doing due diligence for 6 months and visited the Telkwa site in February.

 

*

 

https://www.interior-news.com/opinion/telkwa-coal-deserves-a-full-environmental-assessment/

 

Permitting won’t be easy. Environmental group in BC is organizing to oppose the fast track permitting process for the small mine plan.

 

[linealdin]

https://hotcopper.com.au/documentdownload?id=uOMxKKzFkiWRTLKhOROKAxjvTDYC5A24zhWZsPN3ke92GA%3D%3D

 

Investor presentation for restructured Paladin Energy. Michelin uranium project (Altius 2% royalty) is still in Paladin’s development plans. They note:

 

336,130 meters of historical drilling

$75 million total spent on exploration of the deposit

One of the largest uranium deposits in North America

Potential development in the 2022 to 2025 timeframe.

 

In the near term there will be increased exploration spending at Michelin to satisfy previously deferred exploration commitments.

 

Deep bear markets create the conditions for great bull markets. Uranium is coming back next.