ALS.TO - Altius Minerals

[linealdin]

The majority of Altius’s revenue is from Canadian mining operations. They invest in Canada because there is strong rule of law protecting royalties. The Voisey’s Bay trial in September will be an important test of that rule of law.

 

How much money could Altius win? I estimate C$8 million for about 3 years of total non-payment based upon the scurrilous deductions of Long Harbour construction capex. And another C$8 million for systematic underpayment through inter-company transfers since production began. Having Vale pay for Labrador Nickel’s attorney costs would be the cherry on top. Royal Gold is, of course, lined up for a much bigger payday.

 

The meteoric rise in cobalt prices gives Vale incentive to develop the underground portion of Voisey’s Bay.

 

(I have some sympathy for Vale. All they wanted to do was mine a big nickel deposit. Politics forced them to build a multi-billion dollar processing facility inside the province, and not ship concentrate out of province. I see the non-payment of the Labrador Nickel royalty and the threat to not mine underground as expressions of deep dissatisfaction. They took the risk to build the mine but aren’t making the profits they expected.)

[linealdin]

Interesting detail from the Global Mining Observer that Wheaton Precious Metals financed its largest deals with 1.67% interest debt.

 

Altius is currently paying an effective interest rate of 5.2%. The interest on its next debt facility should be lower given Altius’s recent growth and royalty diversification. 3.5%? 4%?

 

Size has advantages.

[linealdin]

http://www.adventuszinc.com/storage/presentations/adzn---corporate-presentation---april-2018-final-1523027776.pdf

 

New Adventus presentation. New slides on the Sesmo and Sesmo Sur targets at Curipamba (remarkable historical trenching results). Adventus will spend US$9 million at Curipamba in 2018.

 

And a new slide of the Pijili project (pictures of artisanal gold miner excavations). US$600K exploration program planned for Pijili in 2018, with drilling planned for 2019.

 

5000 meter drill program planned for Buchans/Mary March once the Canstar deal closes. Adventus’s 40% equity stake in the pro-forma Canstar will be worth C$6 million.

 

A 10,000 to 15,000 meter drill program seems to be promised for Rathkeale in 2018. Strategic alternatives being reviewed.

 

Altius owns 2% royalties on Buchans and Rathkeale. Exciting for them.

[linealdin]

If you study the history of Franco-Nevada a large part of their value was created by a royalty on a discovery at Goldstrike.

 

Buying producing royalties can be profitable if you buy at the right part of the cycle. Rising commodity prices are great, too. But only the drill bit is going to create spectacular wealth.

 

Michelin uranium was a real drill bit discovery, as was Kami. Aurora had a peak market cap of C$1.2 billion, and Alderon reached C$400 million market cap, and that’s with neither company even sniffing production. We need similar discoveries in this cycle.

[linealdin]

http://www.portsi.com/wp-content/uploads/2018/04/2018-04-Courrant.pdf

 

Four more bulk carriers scheduled to ship Bloom Lake iron ore. A little under 1 million tonnes total including the inaugural ship Magnus Oldendorff (headed to China). 5 boatloads in about 7 weeks (March 24th to May 15th) Champion is well on its way to hitting its goal of shipping 7.4 million tonnes annually. Shipping picks up in warmer weather.

 

IOC strike issues do not affect Bloom Lake. The QNS&L rail workers are not in any kind of strike posture and Champion signed a port deal with the SFPPN port workers, who are separate from the IOC port workers union local 9344.

 

Bloom Lake ore is currently the only iron ore being shipped from Sept-Iles. The strike has stifled all of IOC’s activity.

[linealdin]

https://www.newswire.ca/news-releases/the-societe-ferroviaire-et-portuaire-de-pointe-noire-announces-a-call-for-projects-to-relaunch-the-pointe-noire-pellet-plant-in-sept-iles-614282873.html

 

SFPPN owns the old Wabush Mines pellet plant at Port Noire. They are calling for proposals to re-start the plant. Pellet premiums have gone through the roof in recent years.

 

Would be a cheap way for Alderon or Champion to get into the premium pellets business.

[linealdin]

http://aethonminerals.com

 

The Aethon Minerals website is now functional. Arcas copper projects look to be the most advanced and will have a 2 phase exploration program in 2018. Phase 1 will be reconnaissance sampling, mapping and geophysics. Phase 2 will be reverse circulation drilling.

 

David O’Connor as Chile country manager and chief geologist is key. He helped discover the giant Olympic Dam mine in Australia, as well as several deposits in Chile.

[Cigarbutt]

Quote from above:

 

"If you study the history of Franco-Nevada a large part of their value was created by a royalty on a discovery at Goldstrike.

 

Buying producing royalties can be profitable if you buy at the right part of the cycle. Rising commodity prices are great, too. But only the drill bit is going to create spectacular wealth."

 

From my notes on Franco-Nevada:

 

Mr. Lassonde and Mr. Schulich are both extraordinary business people but the circumstances of the initial strike had more to do than just buying in the right part of the cycle (in fact, FN has always done well whatever happened to gold price). In the early 1980's both liked to ski in Nevada and decided to start a joint venture there (combine mining and royalty). Through an ad in a local newspaper (!) they bought a small gold royalty for 2 million (1985). The royalty covered a small superficial operation producing 44,000 ounces per annum with limited proven reserves. One year later, Barrick Gold purchased the property. Further exploration revealed 50 million oz. gold, and Franco-Nevada maintained a royalty on every ounce that came out of Goldstrike for the life of the mine and has collected so far over $1 billion. No need for a financial calculator here to validate if the return was satisfactory.

 

Mr. Lassonde thought the initial deal was only worth $1m, but the seller refused to budge. "It was the entire amount of money we had in our treasury, so I was rolling the dice for the entire company on this one deal."

 

Fortune favors the bold and both investors were shrewd contrarians but it is hard to say that luck was not a factor.

 

[linealdin]

Yes, of course we are hoping for luck to strike a world class deposit. But the odds get better with every meter of drilling.

 

When Altius had zero meters of partner funded drilling during the depths of the bear market their odds of finding a world class deposit were nil. Now the odds are slightly better.

 

Most of the 50K meters of partner funded drilling in 2018 is pure, early stage exploration drilling, not resource delineation. Any drill hole can be a game changer.

 

I’d be surprised if we left 2018 without at least one promising new drillbit discovery on Altius royalty land. Will it be world class? Who knows.

[Dazel]

https://republicofmining.com/2018/03/29/a-tribute-to-peter-munk-pierre-lassondes-memories-of-goldstrike-and-beyond-business-network-news-march-29-2018/

 

“If I have seen a little further it was because I was standing on the shoulders of giants”.

 

Peter Munk was a giant. RIP

 

Dazel

[Dazel]

 

In the future I believe they will talk about Dalton this way.

 

I will share a quick Peter Munk story from one of his books....

 

He was sitting in his office and one of his employees came in to have a meeting with him. Peter says what I can I do for you? Are you looking for a raise? The employee responds...no Peter quite the opposite I have decided to leave Barrick I am going to retire and spend time with my family.

 

Peter says are you sick are you okay? How are you going to get by in retirement? The employee responds...thanks to Barrick shares I am worth $7m.

 

This was the first time that Peter Munk realized he was making all of the people around him rich.

 

Cheers to Dalton having this problem!

 

Good luck all!

 

Dazel

[mugwump]

https://ceo.ca/@nasdaq/evrim-samples-1935-metres-grading-209-gt-gold-at

 

evrim trench results

[linealdin]

http://www.evrimresources.com/s/news-releases.asp?ReportID=820655

 

In January Evrim announced some good trenching results at the Cuale gold prospect. They continued to extend those trenches and today they announced some spectacular trenching results: Trench 1 has an interval of 193.5 meters of 2.09 g/t gold. Trench 1 in total grades 351.8 meters at 1.28 g/t gold.

 

Assays for Trench 4 will be announced soon but a 96.6 meter interval has the same strong alteration as Trench 1.

 

IP survey indicates the target is 300 meters x 100 meters.

 

*

 

We know the gold is at surface (open pit). We know the target is very large. Other high sulphidation deposits in the area are low cost and profitable to mine. Evrim has a strong incentive to keep the project wholly owned and drill it out in 2018.

 

This could be the next drillbit discovery on Altius royalty land.

 

Market likes the results. Edit: Evrim up 52.6% to 74 cents in early trading. Altius’s equity position in Evrim is worth C$8.5 million at that level. Plus 2 million warrants at 50 cents now in the money.

 

 

[linealdin]

If Cuale turns out to be a high suphidation oxidized deposit it would be comparable in Mexico to Goldcorp’s El Sauzal (2 million ounces gold), Alamos Gold’s Mulatos (5 million ounces) and Agnico-Eagle’s La India (3 million ounces).

 

Agnico acquired La India from Grayd Resources in 2011 for C$275 million. These are very valuable types of gold deposits. Evrim’s market cap is still only C$45 million after today’s run up.

 

There’s an interesting detail in Evrim’s press release: “The low chargeability across the entire survey suggests any gold mineralization within the first 400 metres from surface may be oxidized.”

 

300 meters x 100 meters x 400 meters is a lot of oxidized material.

[linealdin]

The word from Sept-Iles is a new trainload is arriving from Bloom Lake every single day. Big stockpile at the dock ready for loading onto the next boats (Suigo arrived yesterday).

 

Champion is making significantly more money per tonne than their feasibility study predicted. Their rail & port unions are happily contracted, zero risk from IOC strike. In fact less traffic on the QNS&L should make operations easier.

 

Undervalued stock. Stock should move once Q2 revenue and EBITDA, reflecting a full quarter of production, are posted.

[linealdin]

https://www.google.com/amp/s/www.cbc.ca/amp/1.4612034

 

http://www.theaurora.ca/news/local/labrador-west-striking-steelworkers-and-ioc-possibly-going-back-to-the-table-200475/

 

Sounds like IOC called the union on Monday afternoon asking to get back to the negotiating table. Positive tone from the union president Ron Thomas about getting back to work.

 

Strike allowed the workers to let off some steam about management. Workers proved their point that they are united and resolute. Now they want their paychecks back.

 

I think a deal is reached and operations resume by May 1st. LIF loses 5 or 6 weeks of revenue. No big deal.

 

 

 

[linealdin]

Evrim now trading at 86 cents. All based off a long trench result. This is a crazy run.

 

Altius’s equity position worth ~C$10 million at that level, not including warrants.

 

Evrim on their website now lists Cuale as an “Evrim Project” and not under “Seeking Partners.” It seems the decision has been made to keep Cuale 100% ownership and drill it themselves.

 

I expect an equity issue at some point to take advantage of the high stock price and raise a few million for a drill program.

[nostradamus]

Do you think Altius will keep the Cuale royalty or sell it?

 

It seems like the market would give it a higher value on the balance sheet of a gold focused royalty company.

 

[linealdin]

Do you think Altius will keep the Cuale royalty or sell it?

 

It seems like the market would give it a higher value on the balance sheet of a gold focused royalty company.

 

I don’t think they will ever sell a royalty of any kind. Altius won’t buy any producing gold royalties but organic precious metals royalties (if Cuale, Sail Pond, or Vidalita reach production) are welcome. Adds additional diversification to the revenue mix.

 

More immediate focus: How to cash out C$15 million to C$30 million from the Evrim equity position if drill results confirm a real discovery. Extra cash for debt repayment is a priority.

[linealdin]

Allan Laboucan, resource newsletter writer, speculates that Paddy Nicol at Evrim has found his prospect generator’s Eleonore like Andre Gaumond did at Virginia Mines. Crazy talk at this stage but I love the excitement (and wealth) real discoveries create.

[linealdin]

It will be very amusing if the Evrim equity/royalty ends up paying back the whole cost of the Callinan deal. Callinan’s exploration royalties were disregarded at the time of the merger.

 

Roland Butler made some very shrewd royalty purchases while he was CEO of Callinan and now Altius is reaping the benefits (Excelsior equity/royalty is the other big hit from the Callinan royalty portfolio).

[bizaro86]

I'm not a mining expert by any stretch, but those results (by Evrim) sound pretty close to me to being enough information to know that you can build a profitable mine there, does that sound right? Open pit would also be cheaper and faster, one would think. It would be nice to see ALS collecting actual money from a de novo royalty.

 

I wouldn't necessarily want them to sell a gold royalty, but I wonder if you could trade it for something. For instance, someone like Royal Gold might be willing to trade $1 of gold royalty revenue for $1 of base metal royalty revenue, even if the base metal mine has a way longer reserve life. I'd generally be in favour of them making a deal like that.

[nostradamus]

I wouldn't necessarily want them to sell a gold royalty, but I wonder if you could trade it for something. For instance, someone like Royal Gold might be willing to trade $1 of gold royalty revenue for $1 of base metal royalty revenue, even if the base metal mine has a way longer reserve life. I'd generally be in favour of them making a deal like that.

Along similar lines, Altius clearly sees more value in the non-precious metals royalty space, so if they could sell a gold royalty at a premium and acquire a base-metals royalty at a discount, I don't see why they wouldn't do this...

[linealdin]

Evrim continues climbing to 95 cents in early trading. Altius position worth C$10.88 million at that level.

 

*

 

 

In other exploration news John Kaiser, mining newsletter writer, discusses Avrupa Minerals starting at minute 20:50 of this video. Discussion of the drilling at Alvito with joint venture partner Oz Minerals (Altius holds a 1.5% royalty). The IOCG target is large but still conceptual. Drilling will confirm if Avrupa/Oz are on the right track.  Avrupa has also signed a letter of intent to joint venture 3 Iberian Pyrite Belt properties with a major international mining company. Deal should close in late May. Altius holds a significant equity position in Avrupa and will benefit from these developments.

[linealdin]

http://www.mining.com/copper-supply-crunch-earlier-predicted-experts/

 

Copper supply crunch is coming sooner than predicted. 200 copper mines set to close operations before 2035. Not enough copper projects in the pipeline to replace that potential 15 million tonne annual shortfall.

 

Investors in copper producers aren’t currently supporting new supply build outs; they want dividends and other forms of capital return instead.

 

Only much higher copper prices will incentivize new supply build out. This is the mega bull case for copper.

 

*

http://www.mining.com/juniors-struggle-compete-majors-exploration-chiles-mining-society/

 

Also of interest, an article on how junior copper explorers find it hard to compete in Chile because majors own the best exploration land and they can hold it cheaply without spending very much.

 

Altius had to be very patient to acquire the Aethon Minerals land packages. Only a deep bear market shook those properties loose for staking or optioning.

 

Chile’s got all the copper but it’s not easy to get a foot in the door.