ALS.TO - Altius Minerals

[linealdin]

https://caesarsreport.com/freereports/CaesarsReport_2018-07-23.pdf

 

Excelsior is guiding 60 additional days of permitting time to deal with the appeal. Taking us from August 1st to October 1st for an effective federal permit. This thing is dragging on. Production is targeted for summer 2019?

 

Altius owns a 1% royalty on Gunnison and a significant equity position in Excelsior.

[linealdin]

https://www.fscwire.com/newsrelease/sokoman-assays-confirm-high-grade-gold-intersections-moosehead-project-newfoundland

 

Another discovery! Drill season’s been good for Altius.

 

Sokoman Iron hits a high grade hole at Moosehead: 11.9 meters of 44.96 g/t gold and a separate section of the same drill hole of 8.95 meters at 4.2 g/t gold.

 

Best drill hole I’ve seen in a while.

 

Other two drill results from the Western Trend are also decent: 6.42 meters of 8.18 g/t gold.

 

Assays released for the first 3 holes of the 15 hole, 1970 meter drill program recently completed. I expect more good news flow in the coming weeks.

 

Altius owns a 2% royalty on Moosehead and 20% of Sokoman equity. SIC has gotten a nice bump from the drill results.

[linealdin]

Sokoman’s stock doubled on the drill assays but the market cap is still only C$5.3 million. Cheap with a lot of room to run.

 

Moosehead Gold was the subject of Brian Dalton’s undergrad thesis. He’s been chasing this white whale for 20 years. A little bit of validation of the thesis, though there’s plenty of work left to do.

 

The discovery hole is the only one drilled in the new trend in Phase 1. Now they will do a downhole televiewer survey and plan the Phase 2 drill program, which should begin in September. Another 2000 meters or so to try to flesh out the new discovery.

[linealdin]

Decent chance of Altius exiting 2018 with 3 real discoveries in the PG portfolio: an expanded copper/gold resource at Zackly, a high sulphidation epithermal gold deposit at Cuale, and a high grade gold discovery at Moosehead.

 

A lot of gold for a company focused on non-precious metals.

[linealdin]

The 11.9 meters of 44.96 g/t gold at Moosehead, considering the shallow depth, may be the best gold drill hole in the Western Hemisphere in 2018. No hyperbole, it is that good.

 

http://www.mining.com/2017-gold-deposits-boasting-highest-grade-drill-intersects/

 

This is a list of the 10 best gold drill holes of 2017 worldwide. Moosehead at 11.9 meters x 44.96 grams = 535 gram-meters. It would be somewhere near the bottom of the top 10.

 

The Moosehead mineralization is also shallower than 6 of the 10 drill holes on that list.

[linealdin]

PolarX in a trading halt, pending a capital raise of A$3.88 million at A$11 cents per share. Taking advantage of the recent runup in the stock price after the release of the good-looking visuals of the copper sulphides.

 

PolarX had A$1 million cash at the end of March, and just raised A$2.52 million in May.

 

Alaska’s an expensive place to explore with a short field season. PolarX is now cashed up to be very aggressive in drilling out extensions to Zackly and possibly a few of the deeper porphyry targets by the end of October.

 

I want to see 7500 meters drilled on Altius’s royalty land on this project in 2018. Only 2054 meters were drilled in 2017 in a short drill campaign that began on August 27th. This year’s program began on June 18th, a little over 2 months earlier.

[linealdin]

 

John Kaiser discusses Renaissance Gold, one of his top 3 exploration picks at the Sprott conference panel, at the 10:15 mark. Altius owns 3 royalty properties with Renaissance and has an equity stake in the company.

 

Anglogold has received assay results for the Silicon drill program (Altius 1.5% royalty) but has not authorized Renaissance to release them. Anglogold is not sitting on “blockbuster” intersections but information from the drill program has ratcheted up their interest in the area (which includes early stage discoveries by Corvus Gold and Northern Empire). Kaiser speculates that Anglogold has interest in consolidating the area play.

 

Larger theme of the Sprott conference: all the low-hanging fruit has been picked. At surface deposits have been discovered. New discoveries will require geological expertise, innovative ideas for “seeing” below the surface, use of big data etc. The “lifestyle” exploration companies are at a disadvantage. The explorers with great technical skill, like Renaissance, are favored.

 

Rick Rule also believes this is the golden age for best of breed prospect generators. Majors just don’t have enough promising projects in the pipeline because of chronic underinvestment. The best prospect generators, like Altius, Evrim, Avrupa and Renaissance, are doing remarkable numbers of farm-out deals right now.

 

Renaissance has 7 projects being drilled by partners in 2018.

[linealdin]

The Moosehead drill hole is so good it’s caused a quick land grab by juniors of property contiguous with the Moosehead claims.

 

https://www.juniorminingnetwork.com/junior-miner-news/press-releases/2012-tsx-venture/tac/50043-tasca-resources-acquires-land-package-contiguous-to-the-moosehead-gold-project-s-new-gold-discovery-located-in-newfoundland-canada.html

 

https://www.google.com/amp/s/www.marketwatch.com/amp/story/guid/dc1ee009-fd52-4d4d-97d2-1f88c71cab79

 

Tasca Resources and New Point Resources both announce option deals on property surrounding Moosehead. Altius have any gold projects left near Moosehead? It’s in demand.

 

[linealdin]

Immediately after the Moosehead drill result was announced yesterday all the surrounding land was claimed by a number of parties including convicted stock promoter Marino Specogna. Specogna seems to have immediately flipped his claims contiguous to the NW border of Moosehead to the juniors for a total of C$37.5k cash and a couple million shares. A nice day’s work. More deals coming for the surrounding property, I’m sure.

 

If Sokoman were less cash constrained (only C$600k in the bank) they could have staked the land themselves before announcing the game-changing drill results.

 

Quick survey of Newfoundland claimstaking: The two elephants in the room are famous prospector Shawn Ryan and New Found Gold (which Altius did the Sail Pond deal with). Both have staked huge belts of land. Altius has done deals already (Sail Pond, Antler Gold, Moosehead) for most of its Newfie properties.

[linealdin]

Appeal of Excelsior’s EPA permit by the local yokel has been rescinded for some reason. I assume this is some kind of gamesmanship by the environmental groups. I expect a serious 50 page appeal will be filed at the last possible moment by a real environmental group, in order to inflict the maximum process delay. If an appeal isn’t filed then Excelsior will have an effective permit on August 1st.

[mugwump]

35 million shares of sokomon traded today- wow!!

https://ceo.ca/sic

[linealdin]

Global Payback for the Altius Royalties business.

 

Total cash cost of all producing royalties purchased by Altius: C$561.9 million

 

(Prairie Royalties C$240.9 million, CDP C$40 million, Voisey’s Bay C$13 million, 777 royalty C$67 million, Chapada C$78 million, McChip C$8 million, Liberty Potash C$65 million, LIF royalty ~C$50 million. Not including some minor warrant issues.)

 

Total royalty revenue to the end of June 2018: C$214.34 million

 

(Not including interest or project generation revenue.)

 

38% payback. Full payback will be achieved with another 5 years averaging C$70 million in annual revenue. The profit tail will be some extraordinarily long-lived royalties in Chapada, potash, LIF and Voisey’s Bay.

 

On a consolidated basis no other royalty company made better purchases during the same time period/cycle. Quickest payback, longest mine lives, etc. Altius is the best in the game.

[linealdin]

https://yosemite.epa.gov/oa/EAB_Web_Docket.nsf/f22b4b245fab46c6852570e6004df1bd/b024ed3ae140117a852582d60040b9a2!OpenDocument

 

A substantial, lawyered up petition appeal was indeed filed at the last minute by the environmental groups against Excelsior’s EPA permit. 35 page petition plus hundreds of pages of exhibits. Excelsior is guiding an extra 60 days for the appeal taking us to October 1st for an effective permit, which would then jumpstart the construction financing process.

 

I don’t see commercial production (and royalties to Altius) until Q4 2019.

 

 

[linealdin]

The Moosehead drill hole is so good it’s caused a quick land grab by juniors of property contiguous with the Moosehead claims.

 

https://www.juniorminingnetwork.com/junior-miner-news/press-releases/2012-tsx-venture/tac/50043-tasca-resources-acquires-land-package-contiguous-to-the-moosehead-gold-project-s-new-gold-discovery-located-in-newfoundland-canada.html

 

https://www.google.com/amp/s/www.marketwatch.com/amp/story/guid/dc1ee009-fd52-4d4d-97d2-1f88c71cab79

 

Tasca Resources and New Point Resources both announce option deals on property surrounding Moosehead. Altius have any gold projects left near Moosehead? It’s in demand.

 

Another one:

 

https://www.juniorminingnetwork.com/junior-miner-news/press-releases/2626-cse/pivt/50120-pivit-acquires-land-package-contiguous-to-sokomans-moosehead-gold-project-newfoundland-canada.html

 

Pivit Exploration paid C$7500 cash and C$310,000 in shares for property contiguous with the southern end of Moosehead.

 

Sokoman only had C$600k in the bank at the end of March. They could have staked this ground themselves and later auctioned it off to juniors. Missed opportunity.

 

 

 

[linealdin]

https://www.teck.com/media/Q2-18-News-Release.pdf

 

Wonderful news for Altius’s Cheviot met coal royalty in Teck’s Q2 news release:

 

“We plan to invest approximately $12 million to complete and evaluate the MacKenzie Redcap detailed design study. MacKenzie Redcap development is expected to supply approximately 1.4 million tonnes of steelmaking coal production per year and has the potential to extend Cardinal River Operations for approximately nine years beyond the planned closure in 2020.”

 

*

 

Teck was drilling the Redcap area last spring. Now they are ponying up the big bucks for a feasibility/design study. The tone is certainly positive: “Redcap development is expected to supply approximately 1.4 million tonnes.”

 

Cheviot brings in around C$3 million a year at current met coal prices. 9 extra years of revenue is a big deal for Altius. I expect an up or down decision by mid-2019, in order to bring the new production area online in 2020.

 

It all depends on met coal prices of course. If prices stay what they are today (US$193 per tonne) Teck makes money hand over fist from its steelmaking coal unit and the Redcap extension will certainly be built. At US$100 met coal Redcap won’t be economic.

[linealdin]

Chapada Q2 results are in. 31.1 million pounds of copper produced in Q2, 61.5 million pounds for H1. With seasonal effects at Chapada I expect guidance of 120 million pounds will be smashed. On pace for 133.7 million pounds annual production. Yamana guides 46/54 split for H1/H2 production.

 

 

[linealdin]

https://s22.q4cdn.com/899716706/files/doc_news/2018/18-YAMANA-GOLD-PROVIDES-MID-YEAR-2018-EXPLORATION-UPDATE.pdf

 

Chapada exploration update. 14,788 meters of drilling in H1. With 20 years of reserves already the focus is on drilling out new inferred resources. Looks like a successful program. I expect in 2018 Yamana will add more resources through exploration than they will deplete by mining.

 

37 years of mine life remaining at Chapada (including all resources). I think 50 years is possible.

[linealdin]

https://hotcopper.com.au/documentdownload?id=uOMxKKzFkiWRTLKhOROKAxjvSDYL4we%2Fyhn1v%2FRw%2FrFiGug%3D

 

Champion quarterly activities report. They look to be profitable but full ramp-up wasn’t achieved until end of June. I expect costs of mining will decline in coming quarters.

 

During the quarter they sold 1.798 million tonnes for proceeds of US$114.864 million (FOB Sept-Iles price). US$63.88 per tonne net price. (Add the price of shipping and the discounts for the offtakers and you reach the “market price” for 66% ore CFR Asia in the low US$90’s).

 

Champion had positive cash flow from operating activities of C$38.6 million in the quarter. This is very good.

[linealdin]

https://wcsecure.weblink.com.au/pdf/PXX/02002983.pdf

 

PolarX raises A$3.9 million to finance a more aggressive drill program. The deeper porphyry targets will be drilled this season. The money will also pay for a helicopter magnetic survey on Stellar.

 

Assays due by early August for the visually promising holes.

 

*

 

http://www.resourcesrisingstars.com.au/news-article/breaking-news-creasy-confirms-major-base-metals-discovery-wa

 

Great article on PolarX.

[linealdin]

http://www.allegiancecoal.com.au/irm/PDF/1420_0/June2018QuarterlyActivitiesReport

 

Allegiance quarterly activities report. Joint Venture partner discussions:

 

“Over the last six months, the Company has hosted site visits from two potential joint venture partners who are evaluating investing and participating in the Telkwa Project. A site visit from a third potential joint venture partner is scheduled for August.

 

“Receipt of the Company’s coal quality and washability test results, along with the feedback from the target steel mills following their own coal quality analysis, has proved valuable in this process.

 

“Joint venture discussions have generally revolved around direct investment into Telkwa Coal Ltd by way of a share subscription for a minority interest to meet part or all of the equity financing component, along with balance sheet support for the debt financing component, of mine construction, and the granting of the coal marketing rights to that party. Although discussions with all parties remain on-going, shareholders are cautioned that the timing of any potential joint venture investment is uncertain.”

 

 

 

[linealdin]

Tim Froude, CEO of Sokoman Iron, says that they do have enough money in the treasury (recent warrant exercises?) to fund the Phase 2 drill program which will target the discovery hole area. Sokoman may do a private placement at these elevated stock levels. Phase 2 drill program will be around 2000 meters and begin around September.

 

More assays from Phase 1 at the Western Trend will be released soon. Good mineralization on visual inspection. Possibility of establishing some inferred gold resources in the Western Trend once the assays for all 12 holes are in.

 

So Sokoman will end up drilling around 4000 meters on Altius royalty land in 2018. Better than expected.

[linealdin]

https://s22.q4cdn.com/899716706/files/doc_presentations/2018/07/Q2-2018-FINAL-Webcast.pdf

 

Yamana Gold Q2 results presentation. The market approves: Yamana is up over 10% in early trading. Cerro Morro seems to be coming online as expected. The bankruptcy risk has declined from modest to nil.

 

86.2% recovery for copper at Chapada in Q2. Best quarterly recovery rate in 6 years. Cost of production also lower than guidance at $1.65 per pound (AISC). The copper price would have to drop well below $2 for Yamana to consider idling production. Chapada is a low-cost and robust operation which will thrive through the highs and lows of the copper price cycle.

 

Slide 22 shows the plan to enlarge and deepen the Chapada open pit to encompass Sucupira and Baru. As they define more economic resources they gradually deepen and widen the open pit plan. Good results so far finding more of Baru.

[petec]

Linealdin how do you think about valuing this? I'm not asking for the specifics (although that would be great if you're willing to share) but more the structure. For example, I could look at it as:

 

(EV-listed holdings)/(2018 estimated royalty revenue - admin costs - interest - tax)

 

I'd probably adjust for royalties expiring soon and also stress test to the downside by looking at what revenue each royalty produced in 2016.

 

If that multiple seems reasonable, then it's probably a buy based on option value and smart capital allocation.

 

Does that sound sensible to you or do you have another framework?

 

[linealdin]

https://s22.q4cdn.com/899716706/files/doc_news/2018/18-YAMANA-GOLD-PROVIDES-MID-YEAR-2018-EXPLORATION-UPDATE.pdf

 

Chapada exploration update. 14,788 meters of drilling in H1. With 20 years of reserves already the focus is on drilling out new inferred resources. Looks like a successful program. I expect in 2018 Yamana will add more resources through exploration than they will deplete by mining.

 

37 years of mine life remaining at Chapada (including all resources). I think 50 years is possible.

 

The Santa Cruz drill exploration results are important. Santa Cruz is 1 km west of Corpo Sul, which is one of Chapada’s 3 open pits. The Santa Cruz copper results are at a relatively shallow depth and the copper grades are slightly richer than Chapada: 39 meters of 0.39% copper, 45.5 meters of 0.38% copper. This can be another open pit to feed into the existing infrastructure to extend mine life another 5 years.

 

I’m obviously less interested in the gold oxide discoveries and the Sucupira/Baru mineralization is mostly incorporated in the latest resources already. Santa Cruz will be new inferred resources to extend mine life.

[linealdin]

Linealdin how do you think about valuing this? I'm not asking for the specifics (although that would be great if you're willing to share) but more the structure. For example, I could look at it as:

 

(EV-listed holdings)/(2018 estimated royalty revenue - admin costs - interest - tax)

 

I'd probably adjust for royalties expiring soon and also stress test to the downside by looking at what revenue each royalty produced in 2016.

 

If that multiple seems reasonable, then it's probably a buy based on option value and smart capital allocation.

 

Does that sound sensible to you or do you have another framework?

 

I like think about whether it would be a good deal to buy the whole company for its current market cap of C$546 million. What do I get for that purchase?

 

I think about the potash royalties paying out C$1.6 billion over the next 100 years.

 

I think about Chapada paying out C$1 billion over the next 75 years (yes, I think it will go that long). In the larger land package that Altius holds a stream on there are multiple deposits that could be the next Chapada. Yamana won’t seriously drill out those deposits until the current Chapada complex is depleted, which will be a long time.

 

LIF paying out C$800 million over the next 100 years.

 

Squeezing out another C$150 million from electrical and met coal over the next 10 years.

 

Another C$42 million from 777 in the next 4 years.

 

In the short term I believe C$500 million will be cashed out from the PG portfolio in what will be a thrilling bull market over the next 7 to 10 years. Quick payback of my purchase price.