ALS.TO - Altius Minerals

[linealdin]

By this December 31st the Voisey’s Bay royalty will have been non-paying for a little under 3 years. With interest I calculate about C$10 million is owed on that basis.

 

In the lawsuit for chronic underpayment due to inter-company transfers, filed in 2009, the Labrador Nickel Royalty partnership was asking for US$29 million. That underpayment number has probably doubled since then. So let’s say US$58 million.

 

Altius would get 10% of the chronic underpayment award: US$5.8 million, or C$7.63 million.

 

A total of C$20 million with interest? That’s about the most I would expect.

 

More important is that the royalty keep paying in the future. Voisey’s Bay certainly has more rich underground bodies which will extend mine life for 50 years or more. Once the underground mine is built they will drill extensively and deeply.

[linealdin]

http://www.kereport.com/wp-content/uploads/2018_08_28-Christian-Kargl-Simard-Adventus-Zinc.mp3

 

Christian Kargl-Simard of Adventus doing some great promotion in this interview with Korelin Report:

 

1) Curipamba infill drilling results are the highest grade base metal intercepts in the world over the last 3 or 4 years. Exceptionally high grades.

 

2) If you isolate the commodities at Curipamba you still likely have mineable deposits. 10 million tonnes of 2.34 g/t gold is a mine (open pit). 10 million tonnes of 1.62% copper is a mine (open pit). Same for 10 million tonnes of 2.42% zinc (open pit). But all three commodities, at those grades, in the same deposit? Now you have something exceptional.

 

3) What is Curipamba worth as a producing mine? Kargl-Simard says the best comparison is the Degrussa VMS deposit mined by Sandfire Resources. Degrussa started production at 10 million tonnes with grades similar to Curipamba. Sandfire is basically a one asset company but it is trading at a market cap of A$1.03 billion (market cap was over A$1.5 billion in early June 2018). Sandfire is a cash flowing machine because of the excellent margins at Degrussa.

 

That’s the kind of market cap Adventus is chasing as it studies its production options (1 year fast track permitting for 1000 tonne per day vs. two year permitting for 3000 tonne per day operation).

 

[mugwump]

evrim- more trench results

https://ceo.ca/@nasdaq/evrim-expands-outcropping-gold-mineralization-at-cuale

[linealdin]

http://www.evrimresources.com/s/news-releases.asp?ReportID=835632

 

A better copy of the Evrim new trenching press release. The new trenches are fine.

 

What gets me excited is Figure 2, showing the gold in soils results. There’s a lot of gold in the soil at the North Dome. The La Gloria trenches, which also have high gold in soil, are in a small area compared to the North Dome.

 

La Gloria, by an accident of nature, just happens to be eroded enough to allow trenching. And the trenching results there have moved Evrim’s stock up. But the North Dome, hidden under a cover of block and ash tuff, is the more exciting drill target. It is large and enticing.

 

The 1700 x 300 meter central corrider defined by the gold in soil survey (including the North Dome) is about 10X larger than the La Gloria trench area. Evrim is targeting a huge gold deposit.

[linealdin]

Word from Royal Gold is that the Voisey’s Bay trial will take 1 to 2 months. Courtroom reserved until December 14th.

[linealdin]

Teck will be actively exploring in the fall and winter of 2018 at Cheviot, in support of the proposed 9 year mine life extension. (Mine life extension = an estimated C$26 million additional met coal royalty revenue to Altius.)

 

“Cardinal River Operations will be conducting exploration work in the MacKenzie and Redcap areas of the Cheviot mine Fall and Winter 2018. There will be a need to temporarily close access on designated access trails when equipment is working. Closures are expected to be one to two weeks in duration. The designated access trails that will be impacted are the MacKenzie Creek, Powerhouse Creek and the unnamed trail that intersects the Powerhouse Creek trail in the Redcap. Additionally, while there is active exploration, access may be restricted in parts of the MacKenzie and Redcap areas or a short period of time, approximately, one week.”

[linealdin]

http://www.allegiancecoal.com.au/irm/PDF/1446_0/PlacementCleansingStatement

 

Allegiance Coal signs a term sheet for a joint venture deal with an unnamed major Japanese trading house:

 

“Following a recent site visit by a major Japanese trading house (JTH), the JTH has offered investment and joint venture terms to Telkwa Coal Limited, the Company’s wholly owned Canadian subsidiary that owns a 100 percent interest in the Telkwa Project.

 

“Subsequently, the JTH and the Company have entered into a terms sheet (Terms Sheet) allowing time for approvals to be obtained, and for the negotiation of binding and definitive agreements, in relation to that potential investment and joint venture.

 

“The Company cautions investors that the provisions of the Terms Sheet in relation to the potential investment and joint venture are and remain non-binding and that an investment decision should not be made on the basis of this information. There can be no certainty that any binding agreement or agreements will be reached, or that any concluding transaction will eventuate.

 

“The Company will make a further announcement in the event that the negotiations complete and binding agreements are executed.”

[linealdin]

http://aethonminerals.com/storage/presentations/aethon-minerals-sep-2018-1536772717.pdf

 

New Aethon Minerals presentation. 8 hole drilling program completed at the Llanos project, over 1000 meters. Assays expected by the end of September. Also evaluating several "accretive acquisition opportunities with exploration upside."

[linealdin]

Regarding Allegiance Coal's potential Japanese joint venture partner: the Japanese end-users are notoriously picky about coal quality (unlike the Chinese). They demand the best quality with the lowest deleterious elements. A good sign for Telkwa's viability if the JV deal closes.

 

The capex for developing the Tenas pit is only US$61.8 million. A good JV deal (some cash upfront and a construction financing commitment) could take care of 1/3 to 1/2 of that capex.

 

If permitting is obtained Tenas will certainly become a mine. Low capex and incredibly low operating costs per tonne make financing the mine easy.

 

750,000 tonnes of annual production from Tenas = C$5 million+ in annual royalties to Altius, with ample opportunities for mine life extension and production increases.

[linealdin]

http://www.rengold.com/i/pdf/REN_Presentation.pdf

 

Renaissance Gold presentation.

 

Anglogold hit something serious in its first round of drilling at Silicon. The follow-up program is enormous: 5000 meters of diamond drilling and 14,500 meters of RC drilling. What?

 

Renaissance hints that Anglogold is holding back from releasing results to facilitate consolidation in the district. Anglogold owns 20% of Corvus Gold, neighbor to Silicon. And Coeur just took over Northern Empire, the neighbor to the south. See slide in presentation of the Silicon district.

 

Altius owns a 1.5% royalty on Silicon and an equity position in Renaissance.

[linealdin]

Anglogold as the 3rd largest gold producer on the planet isn’t going to explore a project that doesn’t have a chance to move the needle for them. Therefore the target deposit at Silicon must be very large.

 

Also it just isn’t normal to commit nearly 20K meters of to an early stage exploration project. Therefore my interpretation is Anglogold has hit a discovery hole at Silicon, indicating a large gold deposit, and is now following up aggressively on that discovery hole.

[mugwump]

altius settlement with vale

https://ceo.ca/@businesswire/altius-reports-settlement-with-vale-on-voiseys-bay

[nostradamus]

http://altiusminerals.com/uploads/2018-09-14-Altius-Reports-Voiseys-Bay-Dispute-Settlement-FINAL.pdf

 

"The new calculation methodology maintains the estimated future value of the royalty within a range that is consistent with estimates and assumptions we would have made before the dispute issues emerged"

 

So does this mean:

(a) that from this point on, the royalty revenue will be roughly the same as what it would have been, but essentially ALS has lost all the amounts that were due since Vale stopped paying; or

(b) the future revenue stream has been adjusted in a way that effectively makes up for the amounts ALS has missed out on since Vale stopped paying?

 

If (a), its a bad outcome, unless there is some kind of  undisclosed compensation payment.

[mugwump]

nostradamus

it looks like the past royalties were expunged and vale will only be responsible for payments beginning in april 2018

[nostradamus]

Royal Gold's news release:

 

https://www.royalgold.com/investors/news/news-details/2018/Royal-Gold-Resolves-Voiseys-Bay-Royalty-Dispute/default.aspx

 

Weird slight difference in the language used:

 

Royal Gold:

 

Royal Gold expects the 3% royalty rate will apply to approximately 50% of the gross metal value in the concentrates at existing nickel, copper and cobalt prices.

 

Altius:

 

Altius expects the 3% royalty rate will apply to approximately 50% of the gross metal value in the concentrates at existing nickel, copper and cobalt prices, after accounting for acceptable processing and marketing related charges and metal recoveries.

 

 

[nostradamus]

nostradamus

it looks like the past royalties were expunged and vale will only be responsible for payments beginning in april 2018

 

so the approximately $10m in back payments is lost...

[linealdin]

https://www.marketwatch.com/press-release/royal-gold-resolves-voiseys-bay-royalty-dispute-2018-09-14

 

The Royal Gold version of the press release. The payment to the Nickel Royalty Partnership for Q2 of US$2.2 million, or C$2.86 million, will be paid in October. Subsequent quarterly payments will be paid 45 days after quarter end.

 

Altius’s 10% share of the Q2 payment will be C$286K.

 

Cash compensation payments would likely be the confidential part of the settlement, but we will see the payments in the Royal Gold and Altius financials (if they exist).

[StevieV]

By this December 31st the Voisey’s Bay royalty will have been non-paying for a little under 3 years. With interest I calculate about C$10 million is owed on that basis.

 

In the lawsuit for chronic underpayment due to inter-company transfers, filed in 2009, the Labrador Nickel Royalty partnership was asking for US$29 million. That underpayment number has probably doubled since then. So let’s say US$58 million.

 

Altius would get 10% of the chronic underpayment award: US$5.8 million, or C$7.63 million.

 

A total of C$20 million with interest? That’s about the most I would expect.

 

More important is that the royalty keep paying in the future. Voisey’s Bay certainly has more rich underground bodies which will extend mine life for 50 years or more. Once the underground mine is built they will drill extensively and deeply.

 

 

Above is what linealdin said earlier.  I agree that the forward payments are more important.  It is hard to tell whether this is a good settlement or not.  I read Altius's statement that the payments are in line with that they would have expected before the dispute, but the companies are always going to put a positive spin on a settlement.  So, it's hard to know if it is true.

 

It is possible there are back payments in the settlement agreement, though my impression is that there are not.  I guess we will see.  That could be what Royal Gold and Altius gave up to get the settlement.

 

Not getting any market quotes yet to see if there is a reaction in the stock price.

[linealdin]

The settlement ties the royalty to commodity price escalators.

 

At current commodity prices (US$5.67 nickel, US$2.67 copper, US$28.46 cobalt) there’s 50% coverage of total Voisey’s Bay production.

 

At $8 nickel and $4 copper there’s, let’s say, there’s 80% coverage. And a corresponding decline in coverage percentage if commodity prices decline.

 

Royal Gold and Altius are betting that today’s commodity prices are trough prices and expect a multiplier effect for their royalty with higher commodity prices (higher prices X higher proportion of Voisey’s Bay production subject to the royalty).

[nostradamus]

286k * 4 = CA$1.14m annualised. Isn't this a lot lower than they were getting previously?

 

The ALS website says "LTM (as of January 31, 2016) Royalty Revenue $2.2 million".

[linealdin]

It’s a defeat for Royal Gold and Altius. Vale has effectively cut the Voisey’s Bay royalty in half at current commodity prices. RG/Altius will get some of their original royalty back as commodity prices rise.

 

But the original royalty agreement was for a royalty on 100% of the metal value produced by Voisey’s Bay (after customary net smelter deductions).

 

The only justification for taking the deal: worry that Vale could lose at trial and then still drag out multiple appeals for another 10 years. Litigation takes forever, costs millions, and you may not get paid even if you win in the courts.

[bizaro86]

Re: the Silicon project - it looks like renaissance sold the project for cash payments, so the most they can get out of it of all goes well is $3mm total, 300k  received so far. Does that seem right?

 

If so, the vast majority of the upside is in the royalty not the equity, since REN shares won't move much on a $3mm prospective gain.

 

Shows the value of not capping the upside if it works out...

[linealdin]

Re: the Silicon project - it looks like renaissance sold the project for cash payments, so the most they can get out of it of all goes well is $3mm total, 300k  received so far. Does that seem right?

 

If so, the vast majority of the upside is in the royalty not the equity, since REN shares won't move much on a $3mm prospective gain.

 

Shows the value of not capping the upside if it works out...

 

Renaissance was granted a 1% royalty on Silicon (Altius has 1.5%). So both companies benefit if Anglogold discovers a big deposit and puts it into production. Altius had a modest share position in Renaissance: 583,000 shares (Callinan had shares in Kinetic Gold, then Renaissance bought Kinetic for shares).

[mugwump]

re: vale settlement

I agree with linealdin- it's better to get PRESENT CASH flow than to

win pyrrhic victories and get No CASH flows

[linealdin]

http://www.vale.com/EN/investors/information-market/quarterly-results/QuarterlyResultsDocs/PREPORT2T18_i%20-%20vf.pdf

 

“Production from the Voisey’s Bay source reached 9,500 t in 2Q18, in line with 1Q18 and 35.8% lower than in 2Q17. The decrease compared to 2Q17 was mainly due to the strategic decision to decrease production output to extend the mine lifespan in support of the investment schedule.”

 

*

 

Q2 2018 Voisey’s Bay royalty revenue of C$286K is NOT representative of the long-term potential. Vale made a strategic decision to decrease production (35.8% lower than in Q2 2017). Long Harbour is still ramping up and they wanted to extend the open pit mine life so that the underground mine could be financed and built without a work stoppage.

 

We will see higher revenue when Long Harbour is processing at full capacity.