ALS.TO - Altius Minerals

[mugwump]

adventus drill results- wow!!

5% copper, 10g/t gold

https://ceo.ca/@newswire/adventus-and-salazar-announce-additional-2018-drill

[linealdin]

john kaiser discusses altius Lynx project

at 26 minutes

 

Kaiser’s got his ears to the ground. Most interesting news: Lynx has attracted the investment participation of “at least one diamond major.” How many diamond majors are active in Canada? DeBeers, BHP, Rio Tinto? A diamond major is needed to put this one into production. Huge validation of the project. Tremendous profit potential for Altius once diamonds come out of their bear market.

 

Pros: huge tonnage potential. If the macrodiamonds are there this is going to be a large diamond mine. Diamonds are a bulk commodity. Bulk commodity royalties pay out way more than gold royalties. C$25 million a year in Altius royalties is possible.

 

Cons: must prove this isn’t another Wawa microdiamond scam (no diamonds of saleable size).

[linealdin]

adventus drill results- wow!!

5% copper, 10g/t gold

https://ceo.ca/@newswire/adventus-and-salazar-announce-additional-2018-drill

 

Curipamba is underrated as a gold project. Imagine if a junior gold explorer announced 27.47 meters of 6.26 g/t gold from near surface.

[linealdin]

https://www.morningstar.com/articles/882902/potash-producers-rally-thanks-to-china.html

 

Analyst expects US$300 potash in 2019, up from an average of US$270 potash in 2018, underpinned by slow ramp-up of new supply from K+S and Eurochem and lower production from K+S and SQM.

 

Belarus Potash Corp agrees to US$290 potash with China and India through June 2019. Canpotex should follow suit.

 

Altius potash royalties averaged C$321, or US$247, in H1 2018. Chance for a 21% bump if these price forecasts become reality.

[linealdin]

https://ceo.ca/@newsfile/sokoman-iron-announces-start-of-field-preparations

 

Sokoman 10,000 meter drill program begins October 1st. Two drill rigs operating 24 hours a day over two months. Possible Phase 3 drill program to begin in early 2019 in frozen ground.

 

This 10,000 meters and the 17,000 meters planned by Anglogold for Phase 2 at Silicon blows out the 40K meters Altius had expected in partner-funded drilling in 2018.

[linealdin]

Nutrien CEO Chuck Magro’s remarks about the potash market from the Credit Suisse conference on September 12th:

 

“In potash, we continue to see strong demand in most major markets. We had record potash demand in 2017 with solid consumption in all markets including India, China and Brazil. We've also seen a slow ramp up in new projects which is typical for potash projects around the world and some reduction in capacity of mines as they reach end of life. In fact, we're seeing about 4 million tons of capacity reductions by 2020. All these factors have led to strengthening potash pricing.

 

“Over the past five years, we've seen 4% annual consumption growth. This is well above the long-term historical average of 2.8% and we expect record demand again this year in 2018. And we just raised our guidance again at the end of the second quarter and now we expect 65 million to 67 million tons this year.

 

“Now, I fully recognize there are some concerns about the new capacity coming online in the medium term, when it comes to the potash business. I would say demand growth is key. The new capacity is coming, it's built and it's coming online as we speak. But it can be absorbed by the market, if demand grows at the historical growth rate. And as you can see from this chart by 2020 to somewhere between 2020 and 2022 utilization rates will improve and the market will tighten and I think that's important.”

[linealdin]

LIF breakout to C$27.50. Altius position worth C$86.63 million at that level.

 

Iron ore 62% Fe benchmark trading at a 6 month high near US$70 per tonne. 65% Fe trading at US$96.50.

[linealdin]

https://www.alderonironore.com/images/Presentation/20180911_Alderon_Corporate_Presentation12.pdf

 

Latest Alderon presentation with an updated timeline:

 

→ Updated bankable feasibility set to conclude in Q3-2018

→ Financing plan under review; to be launched in Q4-2018

 

*

 

Only a week or two left in Q3. We should see an updated feasibility for Kami in a few weeks. It is the right time to release an iron ore feasibility study if the numbers are strong.

 

A good feasibility (post-tax NPV higher than capex) should bring in more strategic investors: private equity groups who can make add-on bets during the construction finance phase. Maybe even a stream financing.

 

 

 

[mikek]

Regarding Alderon: that thing is unfortunately not getting built. I wish it were but no one is putting down that type of money on the capex. The product is good and having all the permits are good but that Mark guy made two huge mistakes. Allowing Glencore that 40 percent offtake and not winning the cheap auction were the nails in the coffin. Only way this thing ever gets built is way lower starting production/capex or bought out and gets combined with a current project. Just no way this gets built as a standalone project. Even if capex was 25 percent lower I would still say the same thing. Seems like a waste of time if they are just doing another feasibility study if they are attempting to start this at 7 to 8 million tonnes per year. Look, I don't even know if the economics are possible to start it out at a much lower production/ capex but anyone that thinks this project is getting built with 750 million to 1 billion in capex is in pure hope land. Getting Alderon built is the biggest value creation activity Altius could have for shareholders but the probability of that seems extremely unlikely. I will be the first to admit if I'm wrong and hopefully I am but I just don't see this thing getting built as a standalone project.

[linealdin]

Regarding Alderon: that thing is unfortunately not getting built. I wish it were but no one is putting down that type of money on the capex. The product is good and having all the permits are good but that Mark guy made two huge mistakes. Allowing Glencore that 40 percent offtake and not winning the cheap auction were the nails in the coffin. Only way this thing ever gets built is way lower starting production/capex or bought out and gets combined with a current project. Just no way this gets built as a standalone project. Even if capex was 25 percent lower I would still say the same thing. Seems like a waste of time if they are just doing another feasibility study if they are attempting to start this at 7 to 8 million tonnes per year. Look, I don't even know if the economics are possible to start it out at a much lower production/ capex but anyone that thinks this project is getting built with 750 million to 1 billion in capex is in pure hope land. Getting Alderon built is the biggest value creation activity Altius could have for shareholders but the probability of that seems extremely unlikely. I will be the first to admit if I'm wrong and hopefully I am but I just don't see this thing getting built as a standalone project.

 

I understand the skepticism. The market is pricing Alderon as an impossible project. But I do see catalysts in the near term. The feasibility update should be excellent. And I’m certain Alderon will close a couple of strategic investments in the next 12 months. Too much private equity money out there for that not to happen.

 

The additional cash infusions will allow Alderon to pay back the US$14 million loan to Sprott/Altius. And the stock price should rise with these developments.

 

Remember Altius’s cost basis in Alderon is very low (maybe 10 cents a share). They got most of their shares in exchange for property and 18.8 million shares at 27 cents each. Alderon is trading for 30 cents a share today. If Altius is aggressive they should be able to squeeze out C$10 million to C$20 million in profit from their investment, even if Kami is never built.

 

Get the US$2 million loan paid back with interest, and sell down the 52.5 million shares opportunistically during positive liquidity events. Not rocket science.

 

 

[linealdin]

Lynx Diamond update:

 

1) Altius recently had a site visit for analysts and investors. Perhaps that’s why Kaiser was discussing the project on his Discovery Watch show.

 

2) IPO is going to happen by early 2019. It should be akin to Alderon: Altius takes home a big chunk of Adia equity (up to 40%) and a royalty on the flagship project.

 

3) It will turn out to be a profitable deal, whether the mine is built or not, because Altius has only spent modest amounts exploring the property. Altius will leave the IPO with shares worth 5x to 10x what they’ve spent on the property. So it’s either a small win (cash out the equity for C$5 million at some point) or a home run (production). No possibility of losing money, that’s the beauty of the prospect generator model.

 

4) Purely my wild speculation: Lynx has a chance to be the largest diamond mine on the planet. From the size of the diamond-bearing rock units (much larger than most diamond mines) this could be 400 million tonnes of material.

 

Stockwatch Daily wrote that microdiamond frequency analysis indicated the deposit could grade 0.54 carats per tonne. At 400 million tonnes that would be over 200 million carats:

 

https://www.pressreader.com/canada/stockwatch-daily/20180815/281685435682740

 

5) At a couple hundred U.S. dollars per carat the revenue that a 2% royalty would bring in is unbelievable. That’s the blue sky.

[linealdin]

The skeptical take on the Lynx project: a 75% chance this is yet another Canadian microdiamond fakeout. A bulk sample could show hundreds of thousands of microdiamonds but no engagement ring diamonds. It’s going to cost Adia C$5 million to C$10 million to find that out.

[linealdin]

In the likely scenario Kami isn’t built as a standalone Alderon should still be able to sell the project to one of its producer neighbors for a considerable amount:

 

1) The 8 million tonnes of port capacity alone should be worth C$6 million (based upon NML’s sale of part of its port capacity for cash and a royalty).

 

2) Kami is fully permitted. It would probably cost C$30 million to permit a similar project today. (Fire Lake North isn’t permitted. The peripheral IOC deposits are also not permitted.)

 

3) The ore body is perfect for feeding into Bloom Lake Phase 2 or into feeding an IOC expansion to 30 MTA. Or even into a re-started Wabush Mines.

 

*

 

In the current iron ore price environment would Alderon  be able to sell Kami for at least Alderon’s current market cap of C$41.5 million? I think so.

 

Altius would take home C$15.75 million in that transaction. Fine with me. The royalty pays no matter who puts the deposit into production.

[linealdin]

The buyback window (C$12.75 or below?) is closing up for a bit. I hope Altius is now below 43 million shares out. They had plenty of buying opportunities in early September. The SEDI filings for September will appear before October 10th.

 

 

[linealdin]

Alderon raised C$265 million over the course of its existence. Now it has C$5.7 million in cash left, and US$14 million in debt.

 

Kind of shocking all that money is gone. But the things they actually accomplished with that money (helping finance a multi-user port, a deposit with a bankable feasibility study, full permits) are real accomplishments and assets.

 

Altius owns 38% of those assets and they will figure out how to monetize them.

 

 

[nostradamus]

Giving Glencore that 40 percent offtake was a massive mistake, for which MM must take full discredit, but I would not see it as a nail in the coffin.

 

The offtake is worth nothing for Glencore if Kami doesn't get built. Glencore want Kami to get built, and so they could end up being part of the solution (eg helping with the financing?) rather than the problem. Also, if the offtake was the only thing holding the project up, I'm sure Glencore would be willing to come to some kind of arrangement. Better to be paid off than to retain an offtake on a project that never gets built.

 

 

[reader]

Adventus Zinc begins trading today on OTCQX under the symbol "ADVZF."  U.S. investors can find current financial disclosure and Real-Time Level 2 quotes for the company on www.otcmarkets.com.

 

 

 

https://www.otcmarkets.com/stock/OTCM/news?id=204476

 

 

[linealdin]

https://www.icis.com/resources/news/2018/09/21/10261259/clear-price-direction-for-global-potash-as-china-contract-settles/

 

Clear price direction for global potash.

 

The current state of the potash market: tight supply in all markets, increasing offers, firm price pressure unlikely to let up, and desperate buyers.

 

Altius well positioned for a 25% or more price increase for its royalties. I see Altius receiving C$20 million in total potash royalties in 2019. Just the beginning of a great bull run for that commodity.

[mugwump]

altius transfer interest in lynx project to adia

https://ceo.ca/@businesswire/altius-transfers-lynx-diamond-project-to-adia-resources

[linealdin]

altius transfer interest in lynx project to adia

https://ceo.ca/@businesswire/altius-transfers-lynx-diamond-project-to-adia-resources

 

This is the seed financing for the private company. Helps the discoverers and seed financiers get positioned with cheap/free shares before a subsequent IPO at a higher price per share. Altius will recruit a CEO, management team and board of directors for Adia before the IPO happens.

 

Altius receives 5 million shares (in exchange for property).

 

“Diamond exploration sector leaders” buy 4 million shares at 50 cents each.

 

DeBeers provides C$1.5 million in services for 750,000 shares.

 

Total shares pre-IPO: 9.75 million shares.

 

The IPO will issue additional shares, hopefully at at least 75 cents, diluting Altius’s position to 20% to 40% of Adia, but valuing its position post-IPO at C$3.75 million.

 

*

 

Notable that DeBeers isn’t the only major diamond player involved. BHP also? Those two were the big players in the last Manitoba diamond staking rush. DeBeers spent many, many millions looking for diamonds in Manitoba. They held parts of the Knee Lake claims at one point and will have significant data and expertise to help advance the Lynx project.

 

The 2.5% royalty to Altius is better than I expected. The underlying royalties are to the original discovery consortium of prospectors. Probably a 1% royalty that can be bought back by Altius for C$1 million if there’s actually an economic deposit there. Something like that.

 

*

 

The C$2 million cash raise and C$1.5 million in DeBeers services is enough to fund Adia through the winter drill program and possibly mini-bulk sampling. A Phase 3 bulk sampling program will cost C$5 million or more and needs to be funded by the IPO.

[linealdin]

The great advantage of the Lynx project is that the diamond-bearing rock unit is right at surface (maybe 1 or 2 meters of overburden). No need for expensive underground developments to complete bulk sampling as with other diamond deposits. Going underground for bulk sampling gets shockingly expensive (hundreds of millions).

 

Adia will find out what it has for a relatively modest investment (modest for the diamond exploration sector).

 

The Lynx deposit is quite unusual. It’s not a traditional kimberlite pipe. But the validation of DeBeers and the other diamond major involved should put some concerns at ease.

[linealdin]

Debeers, the world's leading diamond company, in 2000 staked 1.94 million hectares of diamond exploration land in Manitoba. It cost them around C$1 million just to stake those claims. They spent significantly more in exploration costs but didn't find any diamonds. (BHP and other large interests also explored for diamonds in the province.)

 

Now Altius and its consortium partners have found diamonds in Manitoba. The particular diamond-bearing rock unit has the potential to be very large.

 

Canada is one of the few significant diamond producing countries with rule of law and efficient capital markets (versus Africa and Russia).

 

Why wouldn't Debeers be chomping at the bit to to buy into the Lynx project? Their diamond claims started a staking rush. Their thesis, that Manitoba has just as much diamond potential as the Northwest Territories, has been proven correct.

 

De Beers was indeed chomping at the bit to buy into the Lynx project.

 

De Beers had 3 diamond mines in Canada. One closed in 2015, another is scheduled to close in 2019, and the last is Gahcho Kue (owned 50/50 with Mountain Province Diamonds). The acquistion of Peregrine Diamonds last week and the Adia deal today are meant to replace the shortfall in Canadian production.

 

Canadian diamond production is strategically important because it allows De Beers to competively negotiate royalty and other terms for its major mines on Botswana. Canada gives it options.

 

I see no history of De Beers keeping diamond deposits on inventory. They seem to be aggressive and experienced mine builders in Canada. Lynx is in a much easier development environment than the other De Beers projects in the far north of the Northwest Territories.

[linealdin]

Strong day for quality projects.

 

Adventus up 12% to C$1.03. Altius equity position worth C$16 million at that level.

 

Evrim up 11% to C$1.43. Altius total potential equity position (if the 2 million warrants are exercised) is worth C$19.255 million.

 

Just 2 stocks in the PG portfolio worth a combined C$35.255 million today.

[bizaro86]

Anyone have any idea what percentage of micro diamond bearing structures contain saleable/economic diamonds.

 

I encountered a kimberlite once planning an oil development in AB. The kimberlite didn't have diamonds, and it sterilized part of the oil play. These things are all over the place, I'm curious how far through the journey from 'igneous rock' to 'diamond mine' we are as a result of finding micro diamonds.

 

 

[linealdin]

Anyone have any idea what percentage of micro diamond bearing structures contain saleable/economic diamonds.

 

I encountered a kimberlite once planning an oil development in AB. The kimberlite didn't have diamonds, and it sterilized part of the oil play. These things are all over the place, I'm curious how far through the journey from 'igneous rock' to 'diamond mine' we are as a result of finding micro diamonds.

 

Finding a few microdiamonds isn’t particularly meaningful. Finding an enormous number, in a relatively small sample, may be meaningful. That’s what Lynx has.

 

It isn’t a guarantee there’s going to be a mine. But it’s an interesting enough result that the most sophisticated players in the diamond business are paying for drilling and a bulk sample. De Beers doesn’t invest in many junior explorers. Their deal with Adia is quite a rare occurrence.

 

The bulk sample, if it is large enough, should decide the whole project. Dig up a lot a lot of rock, process 1 or 2 carats of macrodiamonds per tonne of rock, and you’re in business. Otherwise it’s dead.