ALS.TO - Altius Minerals

[linealdin]

anglo pacific buys 4% of labrador iron ore royalty

https://ceo.ca/@fscwire/purchase-of-a-425-shareholding-in-labrador-iron-ore

 

Anglo-Pacific now owns 2.72 million shares of LIF at a cost basis of C$24 per share. (Altius bought its first LIF tranche at C$13.50 a share; total cost basis is around C$16 per share.)

 

Why is Julian Treger of Anglo-Pacific piling into LIF at this point? He sees what we see. The LIF Q2 dividend was abnormally low because of the strike. LIF Q3 and Q4 dividends will be spectacular. Catch-up dividends from IOC to LIF, selling of some stockpiled production from Q2, and record quality and pellet premiums.

 

An easy C$1.50 or more in LIF dividends in H2 2018.

 

*

 

https://www.google.com/amp/www.proactiveinvestors.co.uk/companies/amp/media_files/10147

 

Treger interview on LIF purchase. Believes potential IOC expansion could double mine size (to 44 MTA).

[petec]

http://www.reveloresources.com/content/771/RVLNRAugust152018Final.pdf

 

Revelo hits long intercepts of low grade silver at Loro. 338 meters of 7.7 g/t silver.

 

Silver halo is an encouraging start. Target is El Penon-type precious metals vein system.

 

Polite reminder: Please include a brief explanation of why each of these data points is relevant!

 

Altius and its Chilean partners own a 2% royalty on precious metals on the Loro property. They also own equity in Revelo Resources (which doesn’t show up in the junior equity portfolio because they are held in a joint venture vehicle, same as the Aethon shares).

 

Hochschild Mining funded the 2972 meter drill program, which ended up on the high end of the estimated 1500 to 3000 meters. I think Hochschild continues funding another round of drilling. Low grade silver halos are typical of the targeted precious metals vein system. Revelo is hunting in the right place.

 

Many thanks.

[linealdin]

https://www.nasdaq.com/press-release/midland-starts-a-first-trenching-program-on-its-base-metals-projects-with-altius-and-amended-the-20180816-00438

 

Midland starts trenching and soil sampling programs at Shire and Moria base metals projects. Altius funding half the expenses and holds a 1% royalty.

 

Midland and Altius amend the exploration MOU. Altius gets C$500K worth of Midland shares, and also participates in a small Midland private placement to fund its portion of 2018 exploration alliance expenses.

 

Midland now owns 100% of the 7 Altius alliance projects and can more easily market them to potential joint venture partners.

 

 

[linealdin]

https://palisade-research.com/sokoman-iron-new-golden-hope/

 

Palisade Research (also partnered with Altius in New Found Gold) with a great promo piece on Sokoman Iron.

 

Moosehead Gold on the same structure as Dalradian Resources’ Curraghinalt deposit in Ireland – “which’s a high-grade gold system. Curraghinalt currently has 6 million ounces and was just recently acquired for C$537 million.”

 

Tim Froude, CEO of Sokoman, previously worked for Altius for 20 years.

[linealdin]

https://www.nasdaq.com/press-release/midland-starts-a-first-trenching-program-on-its-base-metals-projects-with-altius-and-amended-the-20180816-00438

 

Midland starts trenching and soil sampling programs at Shire and Moria base metals projects. Altius funding half the expenses and holds a 1% royalty.

 

Midland and Altius amend the exploration MOU. Altius gets C$500K worth of Midland shares, and also participates in a small Midland private placement to fund its portion of 2018 exploration alliance expenses.

 

Midland now owns 100% of the 7 Altius alliance projects and can more easily market them to potential joint venture partners.

 

Once the two newest projects, Lothlorien and Fangorn, are designated Altius will have 1% royalties on 9 projects in the Midland Alliance. The cost of generating those royalties: C$500K in Midland shares.

 

If they can eventually sell those shares for a profit the effective cost of generating those royalties will be zero or negative cost.

[linealdin]

LIF trading today at C$25. Altius’s cost basis is around $16 a share. So Altius is sitting on unrealized capital gains of 56%.

 

The realized gains are the LIF dividends: C$10.9 million since the first tranche of LIF was acquired in Spring 2015.

 

The dividends alone have paid back 21.8% of the original investment.

 

Altius is a shrewder and more patient allocator of capital than Julian Treger at Anglo-Pacific (who bought LIF at a much higher price) and Sean Roosen at Osisko Gold Royalties (who sold their 10% LIF position right before the run of special dividends in 2017).

 

Unlike many of you I don’t want the Altius potash royalties paid as dividends directly to shareholders (or similar screwball passive investment scheme). I want continued patient and shrewd capital allocation.

[mikek]

Who cares, these guys should never ever mention again that they feel their shares are too cheap if they aren't going to buy back shares.  All I see from this stock is continued underperformance.  Even with copper and zinc going down the annual revenue isn't going to move that much yet I would guess these guys aren't even buying back shares.  It shows they really don't believe what they have been saying.  Management has been a huge disappointment to me unfortunately.  Not sure how shareholders are ever going to get any value out of this.  Fact is, opportunity costs matter and this stock unfortunately has been a disaster for quite awhile.  You can't eat 1 percent dividends.  Even if "actual performance" has been fine the fact is we all don't have infinite timeframes and the fact is we could have thrown darts randomly and done a lot better than this.

 

 

[petec]

Actually, not buying back shares and reinvesting internally is a sign they *do* believe in what they do. They can believe the shares are undervalued and still believe the best use of capital is internal reinvestment - the two are not mutually exclusive if the reinvestment has a high enough roic.

 

And the fact the shares haven’t risen might have more to do with the commodity cycle than management.

 

Still, good luck with those darts.

[mikek]

Petec, you are new to the company so to be honest your viewpoint is going to be a lot different compared to mine.  I have been in this stock for a bit, haven't really lost much but it has been dead money for quite awhile.  I know the company well, management, and the assets pretty well.  There is definitely going to be a totally different viewpoint between someone that has been around a long time compared to someone that just bought.  I'm not saying you aren't going to do well with the stock, I'm saying I have been around long enough to know this company, management and the assets well enough to comment on the company.  The fact is there is definitely going to be some resentment built up from current shareholders compared to people that are brand new to the company.  That is just the way it works.  When you have heard the company say for years that they believe X and actions haven't lined up I'm going to say something.  They were recently saying they felt shares at $16 Canadian would be low, if you truly believe all your recent deals over the last 2-3 years have been good you should be buying back shares.  I would also guess that most shareholders that have been in this company at least 3-5 years would agree with that statement.  They have 60 million cash with 16-18 million coming in each quarter, you have funds to be buying back more of your royalties that you felt were good deals. 

[Gregmal]

Who cares, these guys should never ever mention again that they feel their shares are too cheap if they aren't going to buy back shares.  All I see from this stock is continued underperformance.  Even with copper and zinc going down the annual revenue isn't going to move that much yet I would guess these guys aren't even buying back shares.  It shows they really don't believe what they have been saying.  Management has been a huge disappointment to me unfortunately.  Not sure how shareholders are ever going to get any value out of this.  Fact is, opportunity costs matter and this stock unfortunately has been a disaster for quite awhile.  You can't eat 1 percent dividends.  Even if "actual performance" has been fine the fact is we all don't have infinite timeframes and the fact is we could have thrown darts randomly and done a lot better than this.

 

This is true for a lot of companies. Unfortunately management interests carry massive dividends in the form of salary and if there are time vested stock options/grants, they get paid to drag things out and lower your ROI. I have spent the past several years watching one of my best "on paper" investments underperform greatly because management rather invest in retail and office properties at 5-6% cap rates than repurchase stock at 30-50% below the conservative estimates of NAV. When they do buyback stock it's negligible amounts never exceeding maybe 2-2.5% of shares outstanding(on an annualized basis!) and then they trumpet how aggressive the buyback program is. Bottom line, with most management teams, they get paid to tell stories and make you wait.

[hohi]

I would also guess that most shareholders that have been in this company at least 3-5 years would agree with that statement.

 

I oftentimes feel the frustration too, mikek. Out of my resources bets, ALS has been the worst performing by a wide margin (examples being Ivanhoe where I cashed out over 400% in profits or Norislk where they paid me 50% of the investment back in dividends in some short years; still both great (and undervalued) companies btw!). But yet I disagree with the conclusions you draw. ALS has been making steady progress and good deals. Then they had bad luck with the coal royalties. But the value creation here will come (seemingly) over night in an absolutely asymmetrical form I believe. It is the cyclicity of resource markets and it is the inability to define (or even see) the optionality value inherent in ALS.

[linealdin]

https://yosemite.epa.gov/OA/EAB_WEB_Docket.nsf/Dockets/UIC+18-04

 

More permit delays for Excelsior. EPA now has until October 12th to decide on the appeal, while the petitioners will have until November 5th to respond to the EPA’s decision. (Something about new staff coming into EPA region 9 office and existing staff taking summer vacations.) Excelsior has lawyers involved.

 

This EPA office is spectacular at delay. Excelsior had been expecting an effective EPA by Q4 2017 (see timeline in old Excelsior presentations).

 

Now I don’t expect an effective EPA permit until February 1st, 2019. Then financing, then construction, then commercial commisioning.

 

No royalty income for Altius until early 2020, I think.

[linealdin]

https://www.thereminder.ca/news/local-news/search-is-on-for-northern-manitoba-s-next-mine-1.23387174

 

Assabgui also provided updates for operations near Flin Flon, stating that efforts to extend the lifespan of 777 mine were underway.

 

“Today, our business plan has the mine closing in 2021, but we’re looking to extend that life with the possibility of adding reserves with remnants. We’re working on that today,” said Assabgui.

 

Assabgui also confirmed Hudbay is conducting drilling operations near Flin Flon and Snow Lake, including ongoing operations near Centoba Park and at the Pen deposit near Lalor mine.

 

*

 

“Adding reserves with remnants.” I like the sound of that. I want to see 777 mine open through 2024.

[linealdin]

http://www.globalminingobserver.com/franco-nevada-oil-royalties-201

 

Global Mining Observor with an overview of the non-precious metals royalties industry. Altius mentioned:

 

Whilst gold mines tend to have short lives and high returns, says Altius chief executive Brian Dalton, mines in base metals and bulk commodities have larger resources and greater scope for expansion. The mining industry is at least seven times bigger than the gold market, so at this early stage, he says, the runway for growth in royalties outside of precious metals looks more like “gravel surfaced.”

 

*

 

Also mention of LIF asking its shareholders for permission to move into copper.

 

*

 

BHP will be mining its iron ore orebodies in Australia well into “the next century”, say analysts at Investec, making its price-earnings multiple of thirteen “seem silly.”

 

*

 

Companies can play an arbitrage between different commodities, says Canada's Scotiabank, which has structured many of the sector's largest transactions. Whilst gold royalty groups trade on multiples as high as 25 times cash flow, non-gold assets can be snapped-up for seven to eight times, opening-up a large new source of deal flow.

[linealdin]

http://altiusminerals.com/uploads/2018-08-08-Investor-Presentation-.pdf

 

New Altius presentation for August.

 

On Chapada: “Exploration beyond the immediate mine area continues to identify significant mineralization that could result in the further expansion or extension of current operations or lead to additional mining and processing centers within the extensive project area.”

 

I firmly believe there are multiple Chapadas in this mining district. Yamana will be proving that over the next few years with its focus on adding inferred resources outside of the current mining area. Altius has a stream on all of it. This district will be mined into the next century.

 

On potash: Altius estimates a 15% to 25% increase in potash prices year over year, depending on the region, as a result of tight global supply.

 

Also highlights some extremely good drill results from Constantine Metals: “Drill intercepts include step out assays results of 4.8 meters grading 436 g/t Ag, 1.3 g/t Au, 3.6% Zn, 1.6% Pb; Second drill hole intercepted an interval of 28.8 meters grading 141 g/t Ag, 0.5 g/t Au, 9.0% Zn, 3.5% Pb.”

 

Palmer’s going to be a mine.

 

 

[linealdin]

Market ignores that BHP can mine its own ore bodies well into the next century just as it ignores that Altius’s potash and iron ore royalties could also last into the next century.

 

It’s a mistake, and it will be proven to be a mistake over time.

[linealdin]

https://www.google.com/amp/s/www.bloomberg.com/amp/news/articles/2018-07-02/lithium-s-top-challenge-is-finding-funds-not-the-battery-metal

 

Banks have gone AWOL when it comes to financing new lithium mines. That’s likely one reason that Lithium Royalty Corp was formed and Altius took a founding equity stake. Should be a target rich environment for lithium royalty deals.

[linealdin]

Earlier this spring Altius had C$65 million in liquidity.

 

Some investors would have preferred Altius spend that C$65 million buying back 5 million Altius shares. I wouldn’t have minded that but I really, really loved what they actually did with the C$65 million: they bought the Liberty potash portfolio.

 

There’s a limited pool of money and Altius has to make hard choices. I prefer the potash over the buybacks.

 

Altius had unlimited discretion with the C$100 million Fairfax gave them. They could have used it to buy back 8 million Altius shares. I prefer what they actually did with the money (LIF, Champion debenture, McChip potash, Evrim equity, part of Liberty potash etc.).

[linealdin]

Altius current dividend yield is 1.34%. I would prefer increased dividends over buybacks. Both methods return capital to shareholders but increasing dividends draw in new classes of long-term investors. Certain institutions and investors hunt for potential dividend aristocrats (increasing dividend payouts for 25 consecutive years).

[linealdin]

Voisey’s Bay royalty dispute is scheduled for trial on September 10th in the St. John’s Supreme Court Trial Division docket.

 

I wonder if they settle right before trial. I don’t think Vale’s lawyers are looking forward to making a ridiculous argument about royalties in a Newfoundland courtroom. The province’s budget depends on enforceable oil and mining royalties, interpreted conservatively. Everyone in the province knows about the history of Voisey’s Bay and the 3% royalty granted to the co-discoverers, Al Chislett and Chris Verbiski.

 

Vale will definitely lose at trial, just as CITIC lost in an Aussie court when they made ridiculous arguments trying to avoid paying Clive Palmer iron ore royalties. The question is whether they will appeal and how long that process will drag out.

 

This ain’t Brazil.

[bizaro86]

I agree that raising the dividend each year (even if only by 5%) is a good idea. It wouldn't hurt my feelings for ALS to end up very richly valued, and a long record of dividend growth is a great way to achieve that.

[linealdin]

https://thevault.exchange/?get_group_doc=143/1534738396-Interim2018Explorationupdate.pdf

 

Anglogold Ashanti gives a half-year exploration update for Silicon (Altius 1.5% royalty):

 

“At the Silicon project in Nevada a total of 2,346m of DD and RC drilling was completed. Some significant results were returned. AGA elected to maintain the 100% earn‐in option on the Silicon property for the second year with Renaissance Gold.”

 

*

 

As the world’s 3rd largest gold producer Anglogold is understandably matter of fact about their exploration results. Either the assays are “disappointing, with no significant results” and the project is dropped or the drill results are “significant” and more money is spent on the project. No pumping of good results, no obfuscation of bad results.

 

My interpretation is that Anglogold has found significant economic intercepts of gold in some of the drill holes at Silicon.

 

I’m encouraged that Anglogold is actively exploring fewer than 10 greenfield projects on a global basis and that Silicon is one of those projects.

[linealdin]

John Kaiser has suggested some consolidation will take place in the Bare Mountain mining district, where Silicon is located. Anglogold has been doing a lot of insider buying at Corvus Gold, they now own 20% of the shares. The Corvus executive team is all ex-Anglogold employees. Corvus holds the claims for the Bullfrog and Motherlode projects contiguous and on the same geological trend with the Silicon claims.

 

Either Corvus buys Silicon or Anglogold takes over Corvus.

 

Northern Empire, which held the claims south of Silicon, was recently taken over by Coeur Mining (also a significant shareholder in Corvus).

 

A lot of smoke and activity. Is there a discovery there?

[linealdin]

I believe Lithium Royalty Corp won’t be a private company for long. Once they sign enough royalty deals and gain enough weight they will have an IPO on the TSX.

 

Pure play royalty companies are popular with TSX investors. Everyone looking for the next Franco-Nevada. Cobalt 27 is a pure play royalty/streamer on cobalt with a very successful IPO. Uranium Royalty Corp is preparing an IPO for investors who believe uranium has bottomed.

 

Altius could gain multiples of its C$7 million seed investment with a successful IPO. Timeline: within the next 2 years.

[linealdin]

https://www.newswire.ca/news-releases/adventus-and-salazar-announce-additional-2018-drill-results-at-the-curipamba-project-including-371-metres-of-300-copper-3655-gt-gold-3217-zinc-4113-gt-silver-and-680-lead-691248611.html

 

More Adventus infill drilling results from Curipamba. 7310 of planned 7500 meter infill program completed.

 

The grades of the latest set are spectacular:

 

4.58 meters of 36% copper equivalent

8.16 meters of 28% copper equivalent

15.57 meters of 4.5% copper equivalent

6.27 meters of 14% copper equivalent

18.55 meters of 6% copper equivalent