ALS.TO - Altius Minerals

[nostradamus]

Thanks Linedin, that's really helpful.

 

Is there any possibility that Nutrien could start mining an area that is not covered by Altius royalties?

 

Or is it the case that the original Prairie/CDP Royalties package basically covers anything that will ever be mined?

[linealdin]

Thanks Linedin, that's really helpful.

 

Is there any possibility that Nutrien could start mining an area that is not covered by Altius royalties?

 

Or is it the case that the original Prairie/CDP Royalties package basically covers anything that will ever be mined?

 

Not possible because these are big unitized royalty areas. Altius will always have a share based upon its percentage of landholdings. Altius is currently trying to make sure its share will be higher rather than lower for Unit 2.

 

CDP holds some land with inferred Rocanville potash resources which is currently outside of Units 1 or 2. Eventually Nutrien will make on deal with Altius and other miscellaneous landholders for a lease which will become royalty Unit 3.

 

Once these 3 units are mined out Rocanville will shut down. Mosaic owns the potash resources to the north of Rocanville (Esterhazy mine) and the area to the south is being used for oil and gas extraction. The province hasn’t allowed potash exploration in the area.

[linealdin]

Unit 1 royalty holders have been getting checks for decades and the checks have gotten bigger in recent years with increasing production and potash prices. They would be understandably unwilling to sell their royalties to Altius.

 

Unit 2 royalty holders have only been getting modest checks for a couple of years (Unit 2 only formed in 2011 and started paying in 2016). Altius is offering a good price and many small holders are grabbing the cash.

[nostradamus]

Thanks again linealdin, very informative as always.

[mugwump]

adventus/salazar drill results

https://ceo.ca/@newswire/adventus-and-salazar-announces-successful-follow-up

[linealdin]

adventus/salazar drill results

https://ceo.ca/@newswire/adventus-and-salazar-announces-successful-follow-up

 

Good hit on the downdip hole, very near the Sesmo discovery holes. Whiffs on the very widely spaced step out holes (see drill plan map on Adventus website). Sounds like they’re going back in to drill closely around the discovery area.

 

Sesmo is likely small but the grades are fine. We now have three closely spaced drill holes with 12 to 20 meters of around 4.5 g/t gold and significant silver. Could be a nice satellite deposit to the main El Domo deposit.

[mugwump]

newfound gold takeover

https://ceo.ca/@newswire/damara-gold-corp-announces-proposed-reverse-takeover

 

okay- it's kinda confusing,but actually damara is gonna get taken out by newfound gold

but some financings are gonna occur which will hopefully allow drilling of newfound properties

[nostradamus]

newfound gold takeover

https://ceo.ca/@newswire/damara-gold-corp-announces-proposed-reverse-takeover

 

okay- it's kinda confusing,but actually damara is gonna get taken out by newfound gold

but some financings are gonna occur which will hopefully allow drilling of newfound properties

Thanks mugwump. Anyone got any clue as to how this all share purchase by a shell company benefits new found gold?

[linealdin]

newfound gold takeover

https://ceo.ca/@newswire/damara-gold-corp-announces-proposed-reverse-takeover

 

okay- it's kinda confusing,but actually damara is gonna get taken out by newfound gold

but some financings are gonna occur which will hopefully allow drilling of newfound properties

 

It’s just a lower cost way for New Found Gold to obtain a public listing on the TSX. IPO’s are expensive. Damara has C$366K in cash, no properties, and is trading already. It’s basically a shell.

 

Damara shareholders get 5.3% of the public New Found Gold in exchange for their cash and their public listing. Seems fair.

 

New Found Gold is going to be cashed up: C$1 million in cash from NFG, C$437K in investments from NFG, C$366K in cash from Damara, and they will raise between C$7.5 million and C$13.5 million in a financing.

 

Altius should receive C$8.2 million in New Found Gold shares and a 2% royalty. It’s a nice score from selling Sail Pond.

[nostradamus]

Thanks!

 

(Obvious really, it was a dim question, even by my standards)

[linealdin]

http://www.allegiancecoal.com.au/irm/PDF/1440_0/2018AnnualReport

 

Allegiance Coal annual report. The plan is to file the Project Description for environmental permitting in September 2018. I believe this triggers a C$300K payment to Altius (payable in cash or shares at Altius’s election).

 

Altius sold 100% of the Telkwa project to Allegiance for 40.6 million shares. But Allegiance is still required to pay C$9.8 million in milestone payments. This obligation is secured by a charge against the Telkwa project (subordinate to any project debt finance they are able to obtain).

 

Allegiance isn’t doing the small mine option anymore (less than 250K tonnes of annual production), they are moving directly to permitting and building a major mine. The remaining milestone obligations:

 

C$300K with filing for small mine permits

C$500K upon receipt of small mine permits

C$2 million upon sale of 100K tonnes from small mine

C$2 million upon grant of large mine permits

C$3 million upon sale of 500K tonnes from major mine

 

(I assume some of the small mine milestone payments will be combined with the other milestone payments, for example, C$2.5 million will be paid to Altius when major mine permits are received, and C$2 million will be paid when 100K tonnes are produced from a major mine.)

[linealdin]

Big slew of buybacks by Altius. Check SEDI filings. Altius has been buying a couple of thousand shares per day since mid-August.

 

Looks like their broker has an instruction to buy at C$12.75 or below, subject to the NCIB daily volume restrictions.

 

(The broker instruction for the last year’s NCIB was likely to purchase at C$12 or below.)

[linealdin]

I count 115.5K shares bought back by Altius from 8/13 through 8/31. Average price around C$12.35 or so? I’m not going to do the exact calculation.

 

115,500 shares x C$12.35 = C$1.426 million spent on buybacks in August.

 

I’m sure buybacks are continuing in September with continued share price weakness.

 

Altius total share count will likely dip below 43 million soon (43,215,026 shares out on August 10th, 2018).

[linealdin]

The new NCIB allows buybacks of 814,972 shares, or 1.89% of Altius total shares, over the next year. At this rate Altius will buy back its maximum allotment.

 

 

[linealdin]

Allegiance Coal had C$2.9 million cash at the end of June. So they can pay the C$300K milestone payment (due when permit applications are filed) in cash to Altius. But I expect Altius to play nice and take the payment in shares instead.

 

The Telkwa project comes from the CDP portfolio which Altius likely overpaid for at C$42 million. The royalties from CDP are less than C$2 million annually.

 

But farmland sales from CDP have netted over C$4 million. And if Telkwa reaches production Altius will receive a total of C$10 million in milestone payments (separate from Telkwa royalty payments). So further farmland sales and Telkwa reaching production can go a long ways towards salvaging the deal.

 

Telkwa royalties, over the life of the mine, could easily total double or triple the C$42 million CDP purchase price.

[linealdin]

The project Allegiance is permitting is for 750,000 tonnes of annual production from the Tenas pit for a 22 year mine life.

 

But Tenas is one deposit out of three on the Telkwa property. There’s also Goathorn and Tekwa North, both of which hold significant reserves and resource.

 

Once the Tenas mine is successfully permitted and built Allegiance will inevitably start the process to increase the production rate and the mine life. A 22 year mine will turn into a 50 year mine. This initial project is small to keep capex low and not scare the locals, but growth is likely. Lots of hidden option value for Altius’s royalty.

[mikek]

"The new NCIB allows buybacks of 814,972 shares, or 1.89% of Altius total shares, over the next year. At this rate Altius will buy back its maximum allotment."

 

Pretty irrelevant, buying 1.89% of shares in a year isn't going to do anything.  Why were they allowed to buy 2 million last year and only 800,000 this year?

 

[linealdin]

"The new NCIB allows buybacks of 814,972 shares, or 1.89% of Altius total shares, over the next year. At this rate Altius will buy back its maximum allotment."

 

Pretty irrelevant, buying 1.89% of shares in a year isn't going to do anything.  Why were they allowed to buy 2 million last year and only 800,000 this year?

 

Cash constraints and other uses for cash. The debt position was C$73 million last August. This August it was C$125 million. Must maintain prudent reserves to deal with the debt.

 

Buybacks are just one tool in the toolbox. I like the buybacks but I also want regular dividend increases, new royalty purchases and aggressive debt reduction. I’m not willing to sacrifice the latter three goals to focus solely on buybacks.

 

Dividends bring in new classes of loyal investors. New royalties provide portfolio and commodity diversification. Debt reduction is necessary to avoid debt covenant violations and bankruptcy in a nightmare scenario of multiple producing royalties failing to pay out.

 

 

[linealdin]

New Found Gold, in a private placement, has to issue a minimum of 12.5 million shares to raise C$7.5 million.

 

Nice parallel with Altius receiving 12 million shares, worth C$7.2 million, as payment for Sail Pond.

 

Altius must participate in the private placement for C$1 million, so they will start with C$8.2 million of NFG shares. In terms of cash value it’s one of the largest initial spinout equity positions they’ve ever done. Any kind of discovery at Sail Pond or the Linear gold project is going to have some torque.

 

What I don’t like about New Found Gold: too many hustlers involved. The Palisade Global guys have pumped and dumped resource juniors. Sheldon Inwentash took home excess compensation while blowing up a billion dollars at Pinetree Capital. Altius has to be careful about not being left holding the bag with these shady characters around.

[mugwump]

will first majestic take out evrim

https://ceo.ca/@nasdaq/first-majestic-and-evrim-resources-agree-to-exercise

well, it's possible

[linealdin]

will first majestic take out evrim

https://ceo.ca/@nasdaq/first-majestic-and-evrim-resources-agree-to-exercise

well, it's possible

 

Evrim has received C$450K in combined cash payments for Ermitano and Cumobabi, and were owed another C$150K and production notices from First Majestic.

 

Now Evrim receives C$1.5 million, 10X what they were owed, and drops the production notice requirements. First Majestic indicating it will bring Ermitano into production in the near term. 2% royalty income from Ermitano would fund most of Evrim’s modest cash burn rate as a prospect generator.

 

Evrim has approximately C$13.5 million in cash after this settlement. Evrim is well-funded for a couple of rounds of drilling at Cuale leading to an auction process.

[linealdin]

https://www.juniorminingnetwork.com/junior-miner-news/press-releases/619-tsx/anx/51869-anaconda-mining-options-new-gold-property-and-reorganizes-exploration-projects-to-unlock-value-for-shareholders.html

 

Anaconda Mining proposes to spin out an Explore Co listing with the Great Northern Project as one of its 2 flagship projects. Great Northern contains the Viking deposit which has 114,000 gold ounces in indicated and inferred resources. Altius owns a 2% royalty on Viking.

 

Anaconda has been steadily putting smaller Newfoundland gold deposits into production. Will be nice to see more drilling at Viking.

[linealdin]

will first majestic take out evrim

https://ceo.ca/@nasdaq/first-majestic-and-evrim-resources-agree-to-exercise

well, it's possible

 

First Majestic is likely too small to take over Evrim. It will cost many hundreds of millions (USD) if Cuale is what I think it is. Newmont, with a market cap of US$16 billion, is better positioned.

 

Amusing that Evrim as a prospect generator currently has only one project available for option: Llano de Nogal, which Altius has a 1.5% royalty on. Everything else is taken by majors (and one junior). Evrim’s been too busy with Cuale exploration and Ermitano litigation to generate new prospects for the market.

[linealdin]

Voisey’s Bay trial begins at 2:30pm today in the Newfoundland Supreme Court St John’s Trial Division. According to the court calendar it is scheduled for 1 week. Should be shorter than most criminal trials: no jury selection required. Chief Justice David Orsborn will run the proceedings and eventually decide the case.

 

I would expect a published decision in early Q4.

 

*

https://www.pressreader.com/canada/the-telegram-st-johns/20110202/282806417777139

 

I found a case in which Justice Orsborn ruled in favor of an individual holding a royalty on a uranium property held by Crosshair Exploration. The CEO of Crosshair: Mark Morabito. Only stupid people try to withhold royalties in Newfoundland.

[StevieV]

Any estimate on a possible recovery for Altius?  Seems to me as though on a go-forward basis, a favorable ruling could be worth about 6 or 7 cents in post-tax EPS.  That would be about a 13% boost to run-rate earnings.  Does anybody have a similar or much different number?