ALS.TO - Altius Minerals

[linealdin]

The non-mainland Chinese have made much smarter investments in the Labrador Trough than the Chinese have.

 

Mitsubishi (Japan) owns 26.18% of IOC. Posco (South Korea) and China Steel (Taiwan) own 15% of Arcelormittal’s Mont Wright. And Sojitz (Japanese trading house) owns a piece of Bloom Lake. All of these players enjoying profits and production.

 

The Chinese have gotten zero returns so far on their iron ore investments in the Trough.

 

Kami needs smarter money on board.

[linealdin]

http://www.championiron.com/wp-content/uploads/2018/10/2018-10-QIO-Corporate-Presentation-Citi.pdf

 

New Champion Iron presentation. I hear Champion’s out marketing and advertising the stock a bit more in advance of the release of what should be excellent results for Q3 2019. Champion trading at A$1.38 in Australia, big divergence from the Canada stock.

 

C$262 million in debt, C$72 million in cash. Net debt of only C$190 million. I believe annual operating cash flow at Bloom Lake should be significantly more than C$190 million at full production. Once the debt is paid off Bloom Lake becomes a cash flowing, dividend paying machine.

 

Once Bloom Lake is proven to be profitable then the EV/annual production should rise to US$100 to US$200 per tonne.

 

C$962 million to C$1.94 billion market cap at 7.4 MTA.

 

Double those market cap numbers for the Phase 2 expansion to 15 MTA.

 

2X to 8X the current market cap.

[linealdin]

http://www.evrimresources.com/s/news-releases.asp?ReportID=837723

 

Evrim receives permit after a long delay and starts drilling Cuale. 10 to 15 holes, 3000 meters total. Most of the drill collars at the La Gloria discovery trenches. One drill collar each at North Dome and the Wifi section. I suspect most of the tonnage at this deposit will actually come from the North Dome. The discovery trenches are just the erosional window to the much larger deposit.

 

Evrim hits a day high of C$1.61. Altius total position, including exercised warrants, worth C$21.7 million at that level.

 

Cuale’s going to be the first domino to fall from Altius’s PG portfolio. A round of good drill holes then a Newmont takeout netting Altius C$50 million in cash. Setting up nicely.

[mugwump]

wolfden drill results

https://ceo.ca/@newswire/wolfden-adds-to-multiple-zones-in-deep-drilling-at

[mugwump]

altius project generation update

https://ceo.ca/@businesswire/altius-provides-3rd-quarter-2018-project-generation-update

[linealdin]

wolfden drill results

https://ceo.ca/@newswire/wolfden-adds-to-multiple-zones-in-deep-drilling-at

 

 

In relation to the excellent Wolfden results (most importantly the discovery of a new high grade lens) here's Ron Little of Wolfden presenting at the most recent MIF conference. Key takeaways:

 

1) The historical 3 million tonne resource is based on drilling to 400 meters deep. Wolfden believes they can add 2 million tonnes from deeper drilling in the West and East lenses. The assay results released today are part of that effort.

 

2) Little claims the ore at Mt. Pickett is so high grade (highest grade undeveloped base metals deposit in North America?) that the ore can be trucked or railed to other locations for processing. But Little believes that if 5 million tonnes can be established then it might make economic sense for Wolfden to build its own concentrator.

 

3) Rule of thumb for an economic zinc deposit is 10 million tonnes at 10% zinc equivalent. Little suggest that the resource for Mt. Pickett might be 5 million tonnes at 20% zinc equivalent (new 43-101 resource by the end of Q4), which is the equivalent amount of metal.

 

4) Wolfden is currently selling some lumber from the property bringing in net revenue of US$250K annually. (These sales don't affect the US$5 million total timber value.) Doesn't Altius get a piece of those lumber sales?

 

5) Wolfden is down to C$2.5 million. The monthly burn rate with one drill had been C$300K, with the second drill recently added it will be a total monthly burn of C$430K. So a cash raise should be expected after the current 15K meter drill program is completed in Q4 2018.

[linealdin]

http://aethonminerals.com/news/122495

 

Aethon Minerals misses on its 8 hole, 1417 meter drill program at Llanos. Best result 4 meters of 1.33% copper. Sounds like Aethon might attempt some deeper holes after petrographic studies to search for a copper/gold porphyry.

 

Altius has no royalty on Llanos but owns 20% of Aethon equity.

[linealdin]

Miscellaneous news from Altius's project generation portfolio:

 

http://www.avrupaminerals.com/news/index.php?content_id=290

 

Oz Minerals drops the farm-in option on Avrupa's Alvito project (Altius 1.5% royalty) on bad drill results.

 

*

 

https://www.canstarresources.com/site/assets/files/5420/canstar_presentation_october_2018_final.pdf

 

See Slide 15. Canstar has started field exploration programs and plans to drill Buchans in Winter 2018 (Altius 2% royalty) and Daniel's Harbour zinc project in mid-2019 (Altius 2% royalty).

 

*

 

 

Renaissance Gold presentation at recent MIF. The Anglogold 17,000 meter Phase 2 follow-up drill program at Silicon will cost around C$3 million. Major spend. (Altius 1.5% royalty on Silicon.)

 

*

 

https://www.canexmetals.ca/site/assets/files/4985/nr-18-6_canex_commences_gibson_drilling.pdf

 

Canex starts 1000 meter drill program at Gibson. Altius has a 1.5% royalty on Gibson and significant equity in Canex.

[linealdin]

https://discoverestevan.com/local/canadian-westmoreland-coal-not-affected-by-bankruptcy-announcement-2

 

Westmoreland Coal files for bankruptcy in the U.S. Westmoreland's Canadian subsidiaries are NOT part of the petition. The subsidiaries seem to be cash flow positive and will be unaffected by the restructuring process in Chapter 11.

 

Westmoreland's Canadian subsidiaries operate the Genesee, Paintearth, and Sheerness coal mines for the power plants operated by ATCO, Transalta, and Capital Power.

 

Things seem to be orderly so far, no layoffs, no mine closures. No disruption to Altius electrical coal revenue.

 

*

 

In 2014 Sherritt sold its coal mines and coal/potash royalties for a total of C$946 million. Westmoreland paid C$465 million for 7 coal mines in Alberta and Saskatchewan. Altius, Liberty Metals and minority partners paid C$481 million for 11 coal and potash royalties.

 

The royalties ended up being a safer play than the operating mines.

[linealdin]

https://www.denvergoldforum.org/webcast/

 

Minute 11:40 of the Royal Gold presentation at the Denver Gold Forum (Monday, September 24th at 11 am). Tony Jensen sums up the Voisey’s Bay settlement:

 

1) RG/Altius now receiving 50% of the gross metal value (at current commodity prices) from Long Harbour is a reduction from the 60% of gross metal value RG/Altius had been receiving when the Voisey’s Bay concentrate was sent out of the province for processing.

 

2) The reduction from 60% to 50% of gross metals value basically compensates Vale for being forced by the province to spend $6 billion to build Long Harbour. Blaming it on politics.

 

3) Altius tells me that their percentage of the gross metals value is now levered to commodity prices. I believe in a bull market for nickel they will be taking home a higher percentage of the GSR than under the previous regime. Altius is betting that the current nickel price is a trough price.

 

4) Voisey’s Bay produces a nickel concentrate (which also contains copper and cobalt) which is processed at Long Harbour, and also a copper concentrate which is shipped to third party processors. Royal Gold’s slide presentation indicates the new calculation of 50% gross metals value only applies to the nickel concentrate processed at Long Harbour. The copper concentrate is calculated as before, around 60% of the gross metals value from the third party smelter.

 

5) Royal Gold also believes there is ample opportunity for Voisey’s Bay to extend mine life beyond 2034.

 

 

[linealdin]

http://www.gsmmaine.org/wp-content/uploads/2010/02/A-History-of-non-ferrous-metal-mining-and-exploration-6.pdf

 

The historical estimate for Wolfden’s Mt. Pickett deposit, on slide 39, is spectacular: 3.2 million tonnes of 11.25% zinc, 4.83% lead, and 1.45% copper.

 

Plug that into the calculator and you have 3.2 million tonnes of 18% zinc equivalent or 8% copper equivalent. That looks like a mine to me: small but incredibly high grade.

 

The Wolfden CEO is claiming the deep drilling will increase the total resource to 5 million tonnes at even higher zinc and copper equivalent grades (recent deep drill grades have been very rich).

 

The keys for Wolfden moving forward:

 

1) The initial 43-101 resource, due in Q4, coming in at at least 5 million tonnes and 20% zinc equivalent. Those resource numbers would wake the market up.

 

2) Discovery of one additional lens of VMS mineralization (besides the deep drilling). Entice a major with the potential of this being a VMS district, not just one small, high grade deposit.

[linealdin]

At 5 million tonnes of 20% zinc equivalent Altius’s 1.35% royalty on Mt. Pickett brings in C$46 million over the life of the mine. Every million tonnes Wolfden adds to the resource is very valuable for Altius.

 

Altius paid US$6 million for the royalty. They expect to receive at least US$1 million in the near term from the sale of timber rights from Mt. Pickett, with a minimum of US$2 million in timber tights proceeds in escrow. The escrowed amount goes to Altius is Mt. Pickett doesn’t reach production. (Altius entitled to 20% of timber rights sale, which must be minimum US$5 million.)

[linealdin]

At current prices and current production rates I expect Altius to receive C$1.5 million annual revenue from Voisey’s Bay. Production rates have purposefully been ramped down by Vale.

 

Full production adds 33% to the royalty: C$2 million annually.

 

For the full cycle I expect increased nickel prices (EV battery adoption) multiplied by a corresponding increase in the formula percentage of gross metals revenue. Let’s say $8.50 nickel and 55% GSR. Another ~50% increase: C$3 million on an annual basis through the cycle.

 

Will there be bumper years of $20 nickel during this bull cycle? Electric vehicles create a nice setup.

[linealdin]

Canex Metals has an obligation to spend C$500K in exploration expenses at Gibson property by November 12th, 2018. They’ve only spent C$79K as of June 30th, 2018.

 

That’s why a drill was mobilized last week to drill 1000 meters at Gibson. Not sure Canex has the cash yet to complete the $500K requirement. Their private placement has only partially closed for proceeds of C$86.2K.

 

Before drilling starts Canex pays Altius another 1.18 million shares. After the $500K spend is completed Canex pays Altius another 1.24 million shares to earn 100% of the Gibson project.

 

Bonus payment of 1.275 million shares to Altius if Canex defines 1 million gold equivalent ounces.

 

 

[linealdin]

I expect Altius Q3 royalty revenue to beat Q2’s mark of C$16.5 million.

 

Copper and zinc prices will be down for the quarter but not as much as you would expect. Altius has lag effects in its royalty pricing. The market price dump won’t kick in completely and immediately. Potash prices up.

 

Positives will be the special dividend from LIF, a double catch-up payment from Voisey’s Bay, and possibly lithium royalty payments from the Lithium Royalty Corp co-investments ($100K from the Cattlin royalty, perhaps).

 

C$18 million for Q3?

[linealdin]

https://www.denvergoldforum.org/webcast/

 

The Yamana Gold presentation at Denver Gold Forum is also excellent. See minute 5:45 of the video on Day 1 of the Forum:

 

1) Yamana had targeted a 4% improvement in recoveries from the improved recovery circuits they installed last year at Chapada. They are actually achieving a 6% to 8% improvement in recoveries. Hence the outsize copper production every quarter.

 

2) 8 to 10 million tonnes of quality ore being added to the Chapada stockpile every year. That’s why they need to increase the plant capacity from 23 MTA to 32 MTA.

 

3) Drilling results at Sucupira and Baru are better than the current Chapada pit. No brainer that those ore bodies must be mined, even if they have to push the pit walls back and relocate some surface infrastructure.

[linealdin]

 

John Kaiser interviews Bob Felder of Renaissance Gold. Discussion of the Silicon project at minute 6:45. How Silicon was discovered: hidden deposit with no gold at surface but mercury and silica as indicators of the top of an epithermal system. Anglogold has refused to give Renaissance the assay results of their initial 2346 meter drill program yet they are immediately funding a US$3 million, 17,000 meter Phase 2 drill program. Why such secrecy? A lot of smoke.

 

Altius owns a royalty on Silicon and equity in Renaissance.

[linealdin]

http://www.vale.com/EN/investors/information-market/quarterly-results/QuarterlyResultsDocs/PREPORT3T18_i%20vFinal.pdf

 

Very, very low production from Voisey’s Bay in Q3:

 

Nickel, copper and cobalt all lower than in Q2 (which was already significantly lower than the previous year).

 

This is a strategic decision by Vale to decrease production from the open pit, thus extending its mine life, and waiting for the underground operation to come online. Voisey’s Bay royalty will be pitiful for a while.

[linealdin]

http://www.explorationmidland.com/en/Communique.aspx?ResourceId=ba6921a6-d147-4f7d-b265-ae9681bdff01

 

Midland Exploration makes an interesting surface discovery at the former Lothlorien project. 700 meters trend defined by high grade gold and copper grab samples indicating a possible gold/copper/MO porphyry.

 

Under the revised JV agreement Altius received a 1% royalty on Lothlorien and shares in Midland in exchange for their 50% interest in Lothlorien and other JV projects.

[linealdin]

https://www.riotinto.com/documents/181016_Rio_Tinto_releases_third_quarter_production_results.pdf

 

Rio Tinto reports Q3 production numbers for IOC at the bottom of page 28 in the linked document.

 

Only 4.905 million tonnes of production (slight dropoff due to maintenance issues) but a very healthy 5.415 million tonnes in sales. The LIF royalty is based on sales. The Q2 strike quarter seems to have left some product on the wharf, which was then sold in Q3.

[linealdin]

https://www.marketwatch.com/press-release/canex-metals-closes-financing-and-issues-gibson-property-payment-and-altius-files-early-warning-report-for-participation-in-financing-2018-10-16

 

Canex closes a small C$115K financing, Altius taking the lion’s share of C$100K with full warrants. 1.18 million shares were also given to Altius as a property payment for Gibson. Altius would own ~24% of Canex with exercised warrants.

 

Cheap way to get into position as Canex starts a 1000 meter drill program.

[nostradamus]

https://www.excelsiormining.com/news/news-2018/excelsior-mining-successfully-concludes-permitting-process

 

Excelsior now fully permitted. Now they just need to get the money to build the mine. They are aiming for initial production in 2019. That seems...ambitious.

[mugwump]

altius attributable royalties

https://ceo.ca/@businesswire/altius-reports-third-quarter-attributable-royalty-revenue1-of-169m

[linealdin]

altius attributable royalties

https://ceo.ca/@businesswire/altius-reports-third-quarter-attributable-royalty-revenue1-of-169m

 

The Altius LIF position has increased from 3.15 million to approximately 3.5 million shares, additional shares purchased in Q3. Altius now owns ~5.46% of LIF.

[StevieV]

I expect Altius Q3 royalty revenue to beat Q2’s mark of C$16.5 million.

 

Copper and zinc prices will be down for the quarter but not as much as you would expect. Altius has lag effects in its royalty pricing. The market price dump won’t kick in completely and immediately. Potash prices up.

 

Positives will be the special dividend from LIF, a double catch-up payment from Voisey’s Bay, and possibly lithium royalty payments from the Lithium Royalty Corp co-investments ($100K from the Cattlin royalty, perhaps).

 

C$18 million for Q3?

 

"I expect Altius Q3 royalty revenue to beat Q2’s mark of C$16.5 million."

 

Right on that count.

 

"C$18 million for Q3?"

 

Good bit short yet.