ALS.TO - Altius Minerals

[linealdin]

20/20 hindsight says Alderon should have outbid Tacora ($3 million would have done the trick), acquired the significant Wabush assets of a processing plant and rail assets. Then raise a modest $200 million to refurbish the processing plant Michael O’Keeffe style. Then feed Wabush or Kami ore into the plant, whichever works better.  Reap billions in revenue for shareholders.

 

The opportunity was there and it was fumbled. Too much aggressive, idiotic blather by Morabito. Too little thinking.

[linealdin]

By the way, there’s a pellet plant for sale for peanuts in Sept-Iles. A smart management team might be thinking of how high pellet premiums have risen and how that plant could be incorporated in a mine plan.

[linealdin]

Alderon wanted to use an architect to design and build their dream house. Champion and Tacora decided to buy ugly, foreclosed houses for pennies on the dollar and spend some money to remodel.

 

Champion and Tacora are congratulating themselves for making their moves now that the market has turned up. Alderon is still homeless and dreaming.

[linealdin]

https://www.bloomberg.com/news/articles/2018-05-21/buy-low-sell-high-dealmaker-says-iron-play-about-to-turn-profit

 

Michael O’Keeffe talking about Champion to Bloomberg:

 

1) Talking with steel mills to form a strategic partnership to build phase 2 of Bloom Lake, an expansion from 7.4 million tonnes to 16 million tonnes. The expansion will cost a modest $300 million. (Modest compared to the $1 billion it would cost Alderon to bring 7.8 million tonnes online.)

 

Expansion can be brought online “pretty quickly.” Feasibility study being completed now and they will ask for board approval in a few months.

 

2) Bloom Lake receiving a US$18 per tonne premium to the 62% Fe benchmark. US$85 per tonne average realized price so far.  O’Keeffe never expected the high grade iron ore market to be this strong.

 

3) O’Keeffe claims the high grade end of the iron ore market totals 150 million tonnes. The IOC strike and the Minas-Rio suspension (pipeline accident) takes 40 million tonnes out of that market. Easy market gap for Bloom Lake to fill.

 

4) For 2019 Champion plans to ship 3.5 million tonnes to China, 3.0 million tonnes to Japan/South Korea and 1 million tonnes to Europe.

 

5) Focus on internal growth, no approaches by potential buyers.

[linealdin]

Cliffs spent a few billion in capex on its aborted phase 2 expansion of Bloom Lake. Lots of equipment already paid for and ready to use. That’s partially why capex is only $300 million.

 

No interest in spending a billion to develop Fire Lake North from scratch. Smart.

 

Altius should hold its debenture. Looks like a big winner if phase 2 expansion is approved. Project construction begins in Q4 2018 for commisioning in mid-year 2019?

 

Also there’s a royalty deal to be done. Champion already has a lot of debt to pay back. How about C$50 million from Altius in exchange for a 1.5% royalty on phase 2 production? That keeps Champion’s debt profile in check while minimizing the equity that has to be given to a steelmaker partner.

[linealdin]

http://www.kitco.com/news/video/show/IMIC-2018/1972/2018-05-17/The-True-Precious-Metal-Is-Copper#_48_INSTANCE_puYLh9Vd66QY_=http%3A%2F%2Fwww.kitco.com%2Fnews%2Fvideo%2Flatest%3Fshow%3DIMIC-2018

 

More of the copper and electricity argument. Currently electricity accounts for 20% of total power consumption, and 80% is fossil fuels.

 

According to Royal Dutch Shell the future is going to be almost totally electric. The “electrification of everything.” Not just cars. Trains, buses, planes, farms, mines, everything. The current 20% electricity share took 120 years to build. Shell expects electrification to accelerate very quickly. Maybe 50% electricity by mid-century, then beyond that.

 

That electrification growth will require unfathomable amounts of copper. The CAGR growth rate for copper demand will be 4.5% to 5%. But we are entering a 3 year period where no new big copper mines are coming online. “Copper is the true precious metal.”

 

 

[linealdin]

https://www.google.com/amp/s/www.cbc.ca/amp/1.4674070

 

New contract offer coming from IOC to try to end the strike.

[linealdin]

Total global iron ore production is about 2.1 billion tonnes. O'Keeffe estimates the high grade end of the market to to be 150 million tonnes. Only about 7% of the market.

 

Where are we in 5 to 10 years? With China's government mandated changes to the steel plants high grade ore could rise up to 10% to 15% of the market. The door is wide open for Canada to capture a piece of that growth opportunity.

[linealdin]

http://www.adventuszinc.com/news/122503

 

Adventus adds a new project, Santiago, to the Ecuador exploration alliance. Some very high grade chip sampling (2 meters of 28 g/t gold and 231 g/t silver). Former Newmont property.

[linealdin]

The coal royalties are a very steady revenue stream, not subject to the ups and downs of the commodity markets. The best case is that they bring in C$16 million a year for the next 12 years.

 

The goal is to transform that C$16 million for 12 years coal revenue stream, by a kind of financial alchemy, into a stream of longer-lasting renewable energy royalties: let's say C$10 million to C$12 million in annual royalty revenues for the next 40 or 50 years (by which time some of those turbines or solar cells will start wearing out or become technologically obsolete).

 

The renewable royalties will also not be subject directly to the ups and downs of commodity prices. Altius obviously likes the steady, predictable royalty revenues from the power generation business. They are just switching energy sources, just like the rest of the industry.

[linealdin]

http://www.championiron.com/champion-iron/quebec-iron-ore-ships-one-millionth-tonne-of-high-quality-canadian-iron-ore-from-its-bloom-lake-iron-ore-mine/

 

Champion has shipped more than 1 million tonnes. With two more ships scheduled to load on May 25th and May 30th (Sunrise and Pan Advance) the total shipped will be 1.442 million tonnes, 19.5% of the annual target of 7.4 million tonnes.

[linealdin]

Adia Resources, the private company which will advance Altius's Lynx diamond project, has been formed in the British Virgin Islands. Makes me think a multi-national company will be one of the "industry leaders" involved as a strategic investor. BHP, perhaps, because it has had a long-standing interest in finding diamonds in Manitoba.

 

It might be the right time for a new diamond company. The diamond market is turning up:

 

http://www.miningweekly.com/article/optimistic-diamond-price-outlook-could-underpin-a-return-to-profit-dividends-zimnisky-2018-05-24

[linealdin]

A generation of risk-taking mining CEOs have largely been replaced by risk-averse CEO’s. The majors are not buying or building anything new.

 

In this risk-averse environment Altius is being aggressive and taking risks. They maxed out their debt making acquisitions. They took the full $100 million drawdown from Fairfax. They are investing in a dizzying number of spinouts. They are inventing the new sector of renewable energy royalties.

 

They should be shocking us a bit. This is good. In 8 years when Rio Tinto is making record-breaking acquisitions again Altius should be quiet as can be.

 

 

[bizaro86]

Does anyone know why the preferred securities created a big tax liability on the ALS balance sheet? There is a $30 MM number there that I'd like to understand.

[mugwump]

copper consumption will continue to climb

while supply will be stable

price will go higher

chapada deal looks better for altius

[linealdin]

Does anyone know why the preferred securities created a big tax liability on the ALS balance sheet? There is a $30 MM number there that I'd like to understand.

 

This was discussed on the conference call for the Oct 31st quarter at the 19:50 minute mark. Ben Lewis answers an analyst question about it. Very esoteric but the Fairfax instrument is considered a hybrid, part preferred shares and part deferred tax liability. I have no idea what that really means. Check with Ben.

[linealdin]

copper consumption will continue to climb

while supply will be stable

price will go higher

chapada deal looks better for altius

 

Gianni is Mr. Copper. So many interesting tidbits from his feed. Here’s two:

 

1) The top 10 currently producing copper mines were discovered (on average) in 1928.

 

2) The current average time from discovery to production from a copper mine is 30 years.

 

When the world changes and discovers it needs more copper desperately the mining industry will not be able to flip a switch and deliver the pounds. The copper price will need to be elevated to a long time.

[linealdin]

https://www.juniorminingnetwork.com/junior-miner-news/press-releases/2558-tsx-venture/sic/47347-sokoman-iron-receives-revised-moosehead-modeling-multiple-targets-proposed.html

 

Sokoman receives new mineralization model for Moosehead Gold. 2000 meter, 20 hole drill program planned to start in late May. Drill holes will have new orientation to optimally test the mineralization.

 

Drilling will start with confirmation of historic results, then deeper drilling (beyond 150 meters), then a few pure exploration holes.

[mikek]

Regarding IOC

 

http://www.cbc.ca/news/canada/newfoundland-labrador/strike-usw-ioc-deal-1.4678907

[linealdin]

Regarding IOC

 

http://www.cbc.ca/news/canada/newfoundland-labrador/strike-usw-ioc-deal-1.4678907

 

Very good. If the contract is agreed to on Monday and then they restart production in a week or two Altius will have lost a little less than a quarter of LIF royalties: let’s say 56 cents a share or C$1.88 million. Not too bad.

 

The mood on the union’s facebook page is notably less strident than before the last vote. I think they’ve felt the pain of losing those $100K plus salaries.

[linealdin]

http://www.theaurora.ca/news/local/steelworkers-in-labrador-west-hear-details-of-new-tentative-agreement-with-ioc-213381/

 

The new IOC contract offer is much improved from the previous offers which were rejected. The workers are pleased. I expect the contract to be ratified on Monday.

 

The strike delayed the beginning of production from the Wabush 3 pit. Hopefully it comes online this summer.

 

 

[mugwump]

ross beatty talks about renewable energy and mining

[mugwump]

wow!! linealdin

thanks for the information about the IOC strike

after reading a number of your postings,

I actually bought some labrador iron ore royalty stock

it's been depressed but I guess it will have a good week coming up

thanks again for your brilliant postings

[linealdin]

wow!! linealdin

thanks for the information about the IOC strike

after reading a number of your postings,

I actually bought some labrador iron ore royalty stock

it's been depressed but I guess it will have a good week coming up

thanks again for your brilliant postings

 

I was thinking about buying LIF shares last couple of weeks. But then I thought: Altius got their LIF shares in the $13.50 to $16.50 range. And they aren’t buying more shares in the low $20s. So I just bought more Altius on weakness.

 

Anyway, you should make a packet on the speculation. Clear path for LIF to go to $30 plus in 2018.

[linealdin]

http://www.adventuszinc.com/news/122503

 

Adventus adds a new project, Santiago, to the Ecuador exploration alliance. Some very high grade chip sampling (2 meters of 28 g/t gold and 231 g/t silver). Former Newmont property.

 

Edit:

 

The Santiago property Adventus optioned has significant drill results from Newmont: from surface 323 meters of 0.37 g/t gold and 0.23% of copper, for example. Lots of long intercepts of low grade copper and gold. See this Salazar presentation from a few years ago:

 

http://salazarresources.com/docs/SRL_PPT_Aug16_2013.pdf

 

They are low grades, but similar to large, low grade deposits like Chapada, which has reserves grading at 0.20 g/t gold and 0.25% copper. So the low Santiago property drill grades could be economic in the right circumstances.