ALS.TO - Altius Minerals

[linealdin]

https://www.platts.com/latest-news/metals/london/swedens-kaunis-targets-low-alumina-silica-in-26970884

 

“Platts published Thursday the alumina differential as seen for iron ore fines in the 60%-63.5% Fe band -- at $6/dry mt per 1% of alumina in the band 1%-2.5% and $6/dmt for the 2.5%-4.5% band. This was up from $2.50/dmt for both ranges, a month earlier.

 

“Canadian concentrates usually have the added advantage of very low phosphorous. Higher phosphorous can limit the steel grades a producer can offer and place limitations in steelmaking and recycling in the works. Penalties and premiums for phosphorous have been stable while those for silica have fallen as more attention shifted to differentiating on alumina.”

 

*

 

So alumina premiums/penalties have moved from US$2.50 per 1% to US$6 per 1% in just a month. Labrador Trough’s alumina advantage over certain leading Aussie ores has moved from US$5 per tonne to over US$12 per tonne.

 

If this is a structural change in the market it is significant. Iron ore benchmark is only US$64.69. This one contaminant premium nets Alderon a 19% higher price.

 

Add to that steady premiums for low phosphorous and falling penalties for silica (Trough ores have average amounts of silica).

 

Everything is moving in the right direction. The updated feasibility for Kami should include these market changes. I want to see an NPV above US$2 billion.

 

 

[linealdin]

http://www.cbc.ca/news/canada/newfoundland-labrador/voiseys-bay-mining-announcement-planned-1.4697699

 

Voisey’s Bay underground mine development to be re-started. Announcement on Monday with the provincial government.

 

Another 18 years of revenue once the royalty dispute is settled in September.

[linealdin]

I’m certain Vale will lose the Voisey’s Bay lawsuit. If they are staying in the province for the next 20 years it makes it more likely Royal Gold and Altius will be able to collect the judgment. Declaring bankruptcy for Voisey’s Bay and Long Harbour not an option anymore.

[linealdin]

https://www.google.com/amp/s/www.bloomberg.com/amp/news/articles/2018-06-08/vale-is-said-to-reach-700-million-deal-to-sell-cobalt-output

 

Vale reaches deal to sell $700 million of cobalt from future production at Voisey’s Bay. This is how they will finance the underground mine. Quite a coup for Vale to lock the deal down while cobalt prices are sky high. Whoever is giving Vale the $700 million is a sucker.

[linealdin]

http://www.ganderbeacon.ca/news/local/construction-to-start-this-summer-on-voiseys-bay-underground-mine-217387/

 

Vale proceeding with underground mine at Voisey’s Bay. Construction to begin this summer, $2 billion in capex, first ore by April 2021. Will add “at least” 15 years of production taking mine life to 2036.

[linealdin]

http://www.royalgold.com/property-portfolio/producing/voisey-s-bay/default.aspx

 

Royal Gold states Voisey’s Bay reserves at December 31st, 2017:

 

688 million pounds of copper

1.521 billion pounds of nickel

92.86 million pounds of cobalt

 

At current metal prices and exchange rates Altius’s 0.3% royalty on all that metal yields a total of C$63.5 million.

 

Once the underground ramps to Reid Brook and the Eastern Deeps are built it should be easier for Vale to continue exploration drilling for more underground deposits. Voisey’s Bay will grow.

[linealdin]

http://www.rengold.com/s/NewsReleases.asp?ReportID=828148&_Type=News-Releases&_Title=Renaissance-Gold-receives-US200000-payment-from-AngloGold-Ashanti-to-mainta...

 

Anglogold Ashanti makes an option payment to Renaissance Gold to keep earning into the Silicon gold property. Anglogold recently completed a 6 hole drill program. Assay results are pending.

 

A further drill program is planned for later in 2018.

 

Altius holds a 1.5% royalty on Silicon. Anglogold Ashanti was the world’s 3rd largest gold producer in 2017 (3.76 million ounces). Surprising but true. It means something that Anglogold is committing resources to drilling this property.

[mugwump]

wheaton acquires cobalt stream from voisey bay

https://ceo.ca/@newswire/wheaton-precious-metals-acquires-cobalt-stream-from

[mugwump]

cobalt 27 acquires streaming deal from vale at voisey bay

https://ceo.ca/@nasdaq/cobalt-27-acquires-us300-million-cobalt-stream-on

[linealdin]

So Wheaton and Cobalt 27 are the “suckers” who bought the Voisey’s Bay cobalt stream. Very rough run through of the numbers:

 

US$690 total advance payment.

 

92.86 million pounds of cobalt reserves left. By January 2021 (when the stream kicks in) there may be only 80 million pounds left. Wheaton and Cobalt entitled to 75% of that 80 million pounds = 60 million pounds.

 

60 million pounds x current cobalt price of US$37.88 = US$2.27 billion.

 

So the deal works fine if cobalt prices hold or if Vale discovers more cobalt at Voisey’s Bay.

 

The problem is cobalt prices have nearly quadrupled very recently. Wheaton and Cobalt 27 have very little protection if the cycle moves against them. They are buying at the high.

 

My understanding is that there are literally thousands of Phd’s employed by these EV companies trying to figure out batteries which will use much less or no cobalt. Dangerous.

 

[linealdin]

From the Cobalt 27 press release linked above:

 

“As estimated by Vale, during the initial ramp-up period of 4 years, first full ramp-up year commencing in 2021, the underground mine is expected to produce an average of approximately 1.8kt (4.0mmlb) per year of refined cobalt. When complete, the underground mine is expected to produce an average of 2.6kt (5.8mmlb) per year of refined cobalt. Nickel production from Voisey’s Bay mine will be maintained at 38kt per year from 2018 to 2020, ramping up to 45-50kt per year of nickel contained in concentrate from 2024 onwards.“

 

*

 

The underground mine at Voisey’s Bay is a very positive development for Royal Gold and Altius. Cobalt production is expected to increase from 4 million pounds to 5.8 million pounds per annum, a 45% increase. Nickel production could increase up to 32%. (I assume copper production will also increase.)

 

Those are big production increases that cost Royal Gold and Altius nothing. Other people are paying for it.

 

Instead of the Voisey royalty yielding Altius C$3 million a year it could be yielding C$5 million or C$6 million in the future. Commodity price increases and production rate increases.

[linealdin]

When Altius agreed to buy the VB royalty in June 2003 the nickel price was $4. By the time the mine opened in 2005 the price was $8. Then in the next 3 years the nickel price went parabolic, spiking to over $22. Payback was quickly achieved. Pure contrarian play.

 

Wheaton and Cobalt 27 are spending US$690 million buying a stream after the parabolic spike already took pace. Cobalt was $10 in late 2015, now it is $38. Many companies are flooding into the cobalt space. It is a very hot commodity. Classic bull market mania.

 

These guys are going to get slaughtered. This isn’t hindsight.

[linealdin]

EMU is in a trading halt. I assume they are about to release results from their recent 5400 meter drill program at Vidalita. Earlier they claimed to have discovered a “substantial” high sulphidation epithermal gold/silver system based on visual inspection of the drill core. Now the assay results have to back up that claim.

[mikek]

I think VB today would be paying Altius 4-5 million. All those metals have jumped quite a bit. The back payment and going forward will be pretty nice I feel if Altius wins. I am of the opinion that they will get backpay but also I think Altius has a very good case that Vale has been underpaying for quite a bit. Vale has always bragged that they produce a premium product that gets a premium price. Why should Altius have barely been getting spot price all those years if everything Vale has said over the years is that they get above spot for their product due to the quality. Should be an interesting trial. The big selling point that Vale made before they bought VB is that they will get premium pricing for their product. This is all captured in the book about VB. They also continue to brag that they get a premium price. Why should we now believe that they can barely get spot for their product when every AR says they get premium pricing for their product. It doesn't line up.

[linealdin]

http://www.allegiancecoal.com.au/irm/PDF/1397_0/TenasGeologicalModelIndicatesDecreaseinStripRatio

 

Allegiance decreasing strip ratio and potentially improving project economics. A new resource and pit optimization model will be released in a few days.

[linealdin]

https://hotcopper.com.au/documentdownload?id=uOMxKKzFkiWRTLKhOROKAxjvTDYC6wm%2FzxCZpfpske92GA%3D%3D

 

EMU announces assay results from one diamond drill hole at Vidalita. Some minor gold, silver and copper mineralization was intercepted. 26 meters of 0.33 g/t gold is best intercept. Their hope is that these intercepts represent the stockwork or stringer zones of a larger HSE system.

[mugwump]

hi linealdin

great posting as usual

i searched altius homepage but couldn't find a listing for EMU anywhere

where did you find it?

TIA

[linealdin]

hi linealdin

great posting as usual

i searched altius homepage but couldn't find a listing for EMU anywhere

where did you find it?

TIA

 

Not sure why the project was taken off the website. But here's the terms of the agreement:

 

https://docs.wixstatic.com/ugd/8d6671_0dd23e5e74b54f7884ff69b8cd5132e5.pdf

 

Up to 15 million EMU shares go to Altius and its Chilean partners:

 

2.5 million shares received.

Another 2.5 million shares due November 2019 if EMU continues its option on Vidalita.

5 million shares if a 500,000 ounce gold resource is defined.

Another 5 million shares if a 1 million ounce gold resource is defined.

[mugwump]

hi linealdin

thanks for the information

[mugwump]

copper imports to india about to rise fourfold

https://www.bloomberg.com/news/articles/2018-06-12/copper-buying-by-india-to-quadruple-as-vedanta-plant-stays-shut

[linealdin]

http://www.globalminingobserver.com

 

GMO latest issue:

 

1) EV batteries may turn out to be heavy on aluminum (along with graphite). Nickel, cobalt and lithium fall by the wayside. Aluminum is cheap and highly available. No one can be certain where the cutting edge battery technology will lead.

 

The recent boom in lithium and cobalt activity looks like a speculative bubble.

 

2) A mention that Franco Nevada is eyeing hard assets like iron ore (next issue). I want to see who does the first streaming deal for iron ore.

[linealdin]

http://www.kitco.com/news/2018-06-13/BMO-Raises-Long-Term-Forecast-For-Copper.html?sitetype=fullsite

 

BMO raises long term copper price to $3.25. They believe the largest single driver of copper demand growth will be renewable energy, particularly copper-intensive solar and wind power installations. Electric vehicles also important to copper demand but secondary to renewables.

 

Last 3 quarters at Chapada had realized copper prices of $2.69, $3.01 and $3.15. We haven’t seen the full copper revenue potential of either Chapada or 777.

 

I’d be thrilled with an average copper price of $3.25 for the next 15 to 20 years.

[linealdin]

The Excelsior 1% to 1.5% royalty, at full 125 million pound annual production and a $3.25 long-term copper price, would yield C$5.3 million to C$7.9 million in annual royalty revenue.

 

Perfect timing for Excelsior to be going into production. Altius should probably buy the extra 0.5% royalty. Even if they have technical doubts about the project. The copper market looks too good and the rewards are enticing if the in-situ process works.

 

If the in-situ process fails Altius loses the C$5 million. If it works Altius gains an extra C$42 million over the life of the mine (based on the 2 billion pounds of recoverable copper). Limited downside but considerable upside.

[linealdin]

Tacora Resources (re-start of Wabush Mine) has to pay a 7% royalty FOB Pointe Noire net revenues to MFC Bancorp. How the hell is Tacora going to make any money with a 7% royalty? That’s a project killer. Their IPO investors may be suckers, too.

[linealdin]

Tacora filed their IPO marketing presentation to SEDAR. Lots of good intel on the iron ore market.

 

1) Move to flat steel products, such as sheet and plate, reduces the acceptance for phosphorous.

 

2) Increasing demand for lower levels of silica and alumina to control the coke rate. (Less coke = less pollution.)

 

3) Silica levels from South Brazil have doubled since 2010. Alumina levels for Australian ore have been on an uptrend.

 

4) Supply of premium grade ore (65% plus) has decreased by 30 million tonnes since 2011. Supply of low grade and medium grade ore has risen by 368 million tonnes in same time frame. The premium ore will blend and upgrade the lower quality ore.

 

5) Tacora got US$80 million in debt financing (infrastructure financing and term loan) from SAF Metals & Mining Finance (option to take additional US$40 million from SAF). They got US$64 million in equipment financing from Komatsu and Caterpillar (option for additional US$9.5 million). They are trying to raise US$96 million in an IPO.