ALS.TO - Altius Minerals

[linealdin]

http://altiusminerals.com/uploads/2018-02-21-BMO-Conference-corporate-presentation-FINAL-2.pdf

 

Killer new presentation.

 

1) Altius has the longest underlying resource life in the royalties sector (reserves plus measured and indicated resources).  Altius’s 49 years of remaining life dwarfs its competitors, who are all under 20 years. Kind of shocking to see FNV at only 17 years.

 

“Optionality: Resource size predicts expansions and extensions.”

 

Short resource life means you have to constantly do deals to replace depleting assets, even if the valuations aren’t good.

 

2) 50,000 plus meters of partner-funded drilling in 2018.

 

[i believe this 50K meters is only on projects generated by Altius.  Chapada, a purchased stream, will by itself have 50K meters drilled in 2018. So the number is a lowball.]

 

3) “Sector leading investment returns and margins.”

[linealdin]

The presentation refers to the LIF equity position as a “new producing royalty added.”

 

LIF pass-through income if it is treated as a royalty really helps Altius’s average remaining mine life. IOC has reserves and resources to last another 75 years. LIF is also favorable in terms of Altius’s royalty/stream ratio, margin curve position and commodity diversification.

 

Altius is treating LIF like its other royalties: a permanent hold.

[linealdin]

http://www.allegiancecoal.com.au/irm/PDF/1314_0/FeasibilityStudyCommencesonTelkwaMetCoalProject

 

Allegiance begins a bankable feasibility study, to be delivered in Q4, for a small mine operation of 240,000 tonnes per annum from the Tenas Pit, which contains 21 million tonnes of reserves.

 

A small mine operation would bring Altius a little over C$1 million a year in royalties at current prices. Expansion to a larger operation is the ultimate plan, of course, and $5 million to $6 million in annual royalties.

[linealdin]

https://docs.wixstatic.com/ugd/8d6671_9138df0dd60040f18779642e7ed138b2.pdf

 

All the recent drill holes at Vidalita failed to reach target depth. Wrong type of drill, rock harder than expected, or perhaps just contractor incompetence. Emu is blaming the contractor. A big mess.

 

Emu really should just give Altius the exploration management contract. Altius would hire the right people.

[linealdin]

http://www.afr.com/business/mining/iron-ore-grade-war-boosts-vale-as-hambro-exits-fmg-20180228-h0wseg

 

Two interesting pieces of iron ore news:

 

1) Evy Hambro of BlackRock Mining Trust has sold out of Fortescue because he believes the iron ore quality premiums are mostly structural rather than cyclical. Hambro is a large and influential investor.

 

2) Vale says its EBITDA per tonne of iron ore now matches BHP and Rio Tinto, despite freight costs from Brazil to China being higher than freight costs from Australia to China. Vale produces higher quality ore (64% Fe) than BHP (61% Fe) and Rio Tinto (62% Fe).

 

*

 

Grade is king! IOC produces 65.7% Fe concentrate, as well as super high quality pellets. Champion is producing 66% Fe concentrate. Both companies will do extraordinarily well if Hambro is correct about the premiums being structural.

 

My understanding is the freight costs from Sept-Iles to China are roughly equivalent to Brazil to China freight costs. Just as with Vale the Canadian producers will rely on grade premiums to compete with the Aussie freight discount.

 

I believe the Trough is set to become a major global iron ore basin. And Kami doesn’t need to be developed for Altius to make a killing. If the premiums hold IOC will re-examine the expansion plans it scoped a few years ago for 30 MTA (up to 50 MTA). Bloom Lake phase 2 would push production to 16 MTA. Altius has the right positions at the right time. I believe both of these mines are making more EBITDA per tonne than Fortescue, the world’s 4th largest producer. That is a big deal.

[linealdin]

Bloom Lake’s total CFR cash cost (including shipping to Asia) is US$53.63. The price per tonne for Bloom Lake’s 66% Fe depends on what discounts the offtakers, Sojitz and Glencore, negotiated, but is somewhere between US$95 and US$100.

 

That margin should beat the Big 4. The chart in the article linked above shows Vale, BHP, and Rio Tinto are making EBITDA of US$40 per tonne and Fortescue around US$23 per tonne.

 

Champion just needs to execute its feasibility study and it re-rates as $1 billion to $2 billion market cap producer.

 

 

[linealdin]

Some color on the Buchans deals from the Canstar Resources board on Stockhouse:

 

"Spoke with Christian Kargl-Simard, CEO, Adventus Zinc

Highlights from the conversation:

 

1) Airborne geophysical surveys show anomalies cross into Mary March and Nancy April property and that’s why the need for a deal.

 

2) Canstar drilled from the wrong place. Should have drilled on the lake. This is where local expertise counts.

 

3) Aggressively marketing Canstar. Determined to make Canstar a success.

 

4) Expects stock price to rise once trading resumes.

 

5) Mineralization depth is 200-300 meters. Concentration of surface mineralization is unique to this area. A strong positive indicator.

 

6) Faulting adds some complexity. Would not be surprised to find relatively intact large lens type deposit.

 

7) Mill available and is currently under care and maintenance."

[linealdin]

The discovery hole at Mary March from 2000 was really good: 10.33% Zn, 118.1 g/t Ag, 1.62% Pb, 4.1 g/t Au, 0.66% Cu over 9.23 meters. The market would notice if a junior announced a hole like that today.

 

Canstar drilled 8 follow-up holes in 2013 but didn't find similar mineralization. I like that Kargl-Simard has a simple hypothesis for why the follow-up drilling didn't work. Maybe there's a simple correction.

[Liberty]

http://business.financialpost.com/commodities/mining/ceo-interviews/wrapup-3-trump-says-u-s-to-impose-tariffs-on-steel-aluminum-imports

[linealdin]

http://business.financialpost.com/commodities/mining/ceo-interviews/wrapup-3-trump-says-u-s-to-impose-tariffs-on-steel-aluminum-imports

 

Labrador Trough will supply high quality iron ore for the infrastructure buildout in Asia, not America. China policy is much more important than anything Trump does. Watching to see if China is still restricting its low grade steel and scrap copper mills after the lunar holidays.

[linealdin]

http://ici.radio-canada.ca/nouvelle/1086627/minerai-mine-fer-pointe-noire

 

Beautiful pics of Bloom Lake ore being loaded on the train and then unloaded in a stockpile at Pointe Noire. First boat shipment will be late March or early April. Workers, some of whom where there for the closing of Bloom a few years ago, are very proud. A little more work still to be done on the multi-user port infrastructure. Article in French.

[Liberty]

http://business.financialpost.com/commodities/mining/ceo-interviews/wrapup-3-trump-says-u-s-to-impose-tariffs-on-steel-aluminum-imports

 

Labrador Trough will supply high quality iron ore for the infrastructure buildout in Asia, not America. China policy is much more important than anything Trump does. Watching to see if China is still restricting its low grade steel and scrap copper mills after the lunar holidays.

 

Doesn't matter where it goes. Globally traded commodities get priced by markets. It's all connected. I'm just saying if a trade war begins, it won't be good for anyone, including canada's commodity producers.

[linealdin]

http://business.financialpost.com/commodities/mining/ceo-interviews/wrapup-3-trump-says-u-s-to-impose-tariffs-on-steel-aluminum-imports

 

Labrador Trough will supply high quality iron ore for the infrastructure buildout in Asia, not America. China policy is much more important than anything Trump does. Watching to see if China is still restricting its low grade steel and scrap copper mills after the lunar holidays.

 

Doesn't matter where it goes. Globally traded commodities get priced by markets. It's all connected. I'm just saying if a trade war begins, it won't be good for anyone, including canada's commodity producers.

 

Don’t be so US-centric. Globally US steel import policy is about as relevant as India’s steel import policy.

 

The tariffs seem poised to hurt US domestic automakers, increasing their cost of steel but perhaps decreasing the cost of steel for their Asian competitors. Though it sounds like the automakers will be able to apply for exemptions from the tariff.

 

Any kind of global financial crisis, including a trade war, will hurt Altius and every other company. That’s about the only thread I can draw between a proposed US steel tariff and a Canadian royalty company/prospect generator.

[Liberty]

If steel becomes more expensive in the US, all else equal, demand for it will go down. If demand for steel in the US goes down, worldwide prices for steel will go down (less demand from US creates slack in worldwide demand since US is such a big player). China will be able to buy some of that lower-priced iron/steel from source that might otherwise have sold it in the US otherwise. This directly impacts iron producers, such as the ALS investees. That's as clear as I can make it.

 

Now Trump might meet with a different lobbyist between now and next week and change his mind, but the news was definitely not off-topic for Altius.

[linealdin]

“Since the US is such a big player” in steel.

 

Pop quiz. What was the ratio of US steel consumption versus Chinese steel consumption in 2016?

 

No Google!

[Liberty]

“Since the US is such a big player” in steel.

 

Pop quiz. What was the ratio of US steel consumption versus Chinese steel consumption in 2016?

 

No Google!

 

Obviously it's much smaller than china, but it's big enough to have an impact at the margin, especially since there's supposedly a "huge" infrastructure plan coming. Commodity prices are set at the margin. It didn't take massive supply-demand imbalances to make the price of oil fluctuate significantly in the past 5-10 years.

[Cigarbutt]

The China steel numbers are indeed sooo large.

The assumption which is reasonable is that domestic demand will remain robust but China has also relied on exports.

There have been forced closures (temporary?) due to environmental concerns (?) but some suggest that China exports at least some of its excess capacity.

 

Earlier in 2017, it was reported that China ports stockpiles had enough iron ore to build 13 000 Eiffel towers and more recently it has been said that they had enough stockpiles to "produce steel for 107 million cars — more than three times the country’s annual auto sales, or enough to reach the moon if lined up nose to tail" and that's very large even in terms of the giant.

 

It will be interesting to see the evolution of the price differential according to grade.

[linealdin]

Steel tariff is big piece of red meat for steel towns in Pennsylvania. Protect American jobs, stop the devious Chinese from “dumping” cheap steel. That was a mayor campaign promise. America First!

 

But China only provides a measly 1% to 2% of the US imported steel. The biggest supplier is Canada.

 

The US also exports steel. Its biggest customer? Canada.

 

Likelyhood this leads to a US-Canada trade war: low.

 

Legislation is meant to feel anti-Chinese but it’s actually irrelevant to them. China machine rolls on. Urbanization of Asia continues.

 

 

 

 

[linealdin]

http://www.myheraldreview.com/news/a-community-at-odds/article_230055be-1d08-11e8-b52a-fb24bfb173a9.html

 

EPA says at public meeting that its final decision on the Gunnison project will be delivered this summer. Quite a blow for Excelsior. Original company timelines had the EPA permit received by September 2017. Permitting is really dragging.

 

Trump EPA is only pro-mining in theory. In practice it is very, very slow to issue permits, at least with all the mining projects I’ve been following. Incompetence? Lack of funding? Pruitt’s been cutting staff, that can’t help morale.

 

New timeline for production? Q3 2019 at the earliest. After the EPA permit is issued it takes another 30 days for the permit to become “effective.” Debt financing is probably contingent on all permits being in place.

 

 

[linealdin]

http://www.thetelegram.com/news/local/another-bump-in-the-road-for-ioc-contract-negotiations-in-labrador-city-190590/

 

IOC labor negotiations break off again. Contract expired at the end of February. Workers continue to work under terms of old contract, for now.

 

Both sides seem to want to find a solution, not saying anything too inflammatory in the press.

[linealdin]

New pages for the Finland gold, Finland nickel-copper, Mt. Isa zinc, and Midland exploration alliance posted on the Altius website. Trying to sell some new properties at PDAC.

 

Finland nickel-copper project is most advanced, with an airborne TDEM survey completed.

[linealdin]

https://www.google.com/amp/s/www.cbc.ca/amp/1.4563329

 

Union workers at IOC are angry and are currently voting to go on strike. Points of disagreement: pensions and sick leave.

 

I expect a 6 week strike then a labor contract will be agreed to for the next 5 years. It will get resolved. IOC isn’t going to fire everybody and train 1400 new workers. And the union members won’t find a better paying job elsewhere.

[linealdin]

Watusi has closed the maximum C$7.7 million financing. Great job by Rick Rule of Sprott getting the capital organized. The next step is a special meeting on April 2nd to approve the name change to Aethon Minerals and other corporate matters.

 

Aethon will begin life with over C$8 million in the treasury.

 

That C$8 million will be spent exploring land that Altius has an effective 1.5% royalty on. Altius will own 20% of Aethon Minerals equity (assuming they didn’t pick up additional shares by participating in the C$7.7 million financing).

[linealdin]

https://www.google.com/amp/www.northernminer.com/news/adventus-zinc-salazar-resources-boost-resource-curipamba-ecuador/1003794521/amp/

 

Northern Miner article on Curipamba drilling. Nice picture of the core shack. Looks like good drilling progress.

 

Kargl-Simard says goal is to double or triple Curipamba’s current 11.4 million tonnes resource, thus creating hundreds of millions of value.

 

I always forget that Fredy Salazar discovered the Fruta del Norte deposit (Lundin Gold). He’s a legend.

[linealdin]

LIF will pay a 35 cent dividend for Q1. Smaller than recent quarters because IOC withheld its usual quarterly dividend in anticipation of labor contract issues. Should be a big chunk of change coming once a new contract is hashed out.

 

LIF expects a bump in revenue from IOC hauling ore for Bloom Lake starting in March 2018.