ALS.TO - Altius Minerals

[linealdin]

http://altiusminerals.com/uploads/ARR-Renewables-Launch-Presentation-2019-Feb-FINAL.pdf

 

The presentation for the renewables is a must read.

 

Management has stated that the royalty runs with the land (and an area of interest on surrounding lands). If a solar project is built on the wind farm property then Altius gets a 3% royalty on the solar revenue. As wind turbine technology improves more turbines can be added to the same piece of land. More turbines = more revenue.

 

Notice the multiple phases of development for previous Tri Global projects Bearkat, Fluvanna and South Plains.

 

As always, the real juice in this royalty deal is capacity expansions and life extensions.

[linealdin]

http://www.adventuszinc.com/news/122519

 

Adventus vends 4 Irish properties—Lismore, Fermoy, Millstreet and Charleville—to BMEx Limited for 2.65 million shares priced at 20 cents a share. A$530K value. Altius holds 2% royalties on Lismore and Fermoy.

 

Altius also recently vended its Australian portfolio in Broken Hill and Mt Isa to BMEx for 3.5 million shares. At 20 cents a share the stake is worth A$700K.

 

BMEx will be publicly listed in Australia in H1 2019.

[wachtwoord]

Thanks for the insights linealdin :)

[linealdin]

How much cash is left after the Q1 spending spree?

 

US$10 million for the 2% Curipamba royalty.

US$7.5 million first tranche payment to Tri Global Energy.

US$5 million to acquire Great Bay Renewables.

 

= US$22.5 million, or C$29.88 million

 

Add to that the purchase of another tranche of LIF in early January. Around 471K share at, let’s say, C$23.5 a share = C$11 million.

 

So a total spend of C$41 million once all the deals close (the renewable deals are still pending final close). Altius only had C$33.8 million at the end of Q3 2018.

 

I expect some asset sales and/or use of part of the revolver to create some liquidity.

[linealdin]

A few thoughts on wind power:

 

1) Capacity factor is rising with each generation of turbines. The turbines installed in 2004 to 2011 average 32% usage. 2012-2016 turbines reached 40% usage. I would expect the Altius royalty turbines installed in 2020 to 2022 to be producing 50% to 60% of the time, especially in ideal locations like West Texas.

 

Altius only receives royalty revenue when the turbines are turning.

 

2) Turbines last for about 25 years with proper maintenance. Repowering is a fancy word for refurbishing or replacing the turbines at the 25 year mark. Repowering is economically efficient for the power producers and the landowners. The site selection, permitting, land acquisition, design, towers, transmission lines and social license are all in place. Replacing the rotors and turbines for a wind farm is a fraction of the total original capex.

 

I would expect multiple sequences of repowering for the Altius royalty wind farms. The farms will deliver royalties to Altius until a cleaner, cheaper form of power makes wind power obsolete.

[wachtwoord]

Does "repowering" extend the royalty?

[linealdin]

Does "repowering" extend the royalty?

 

Royalty runs with the land (for the purposes of renewable energy production) not with the equipment. If they add turbines to the royalty land package then Altius gets a 3% royalty on production from those turbines. If, in 10 years, they decide to co-locate a solar farm beneath the wind turbines (a growing trend) then Altius gets 3% of those solar revenues.

 

(If they discover oil or copper on the same land package Altius has no royalty rights to those minerals.)

[linealdin]

https://www.yamana.com/English/investors/news/news-details/2019/Yamana-Gold-Announces-Fourth-Quarter-and-Full-Year-2018-Results/default.aspx

 

Yamana greatly increases copper reserves and resources at Chapada, after depletion.

 

As of December 31st, 2018, Chapada had:

 

3.707 billion pounds proven & probable reserves

2.025 billion pounds measured & indicated resources

781 million pounds inferred

 

As of December 31st, 2017 Chapada had:

 

3.471 billion pounds proven & probable

1.313 billion pounds measured & indicated

252 million pounds inferred

 

So overall, even after depletion from a year of mining, Chapada added an astonishing 1.477 billion pounds in 2018 across all resource categories.

 

In 2018 there was a decrease of 157 million pounds from depletion. At that depetion rate the additional 1.477 billion pounds of copper would equal 9.4 years of additional mine life.

 

By my calculation Chapada now has resources to last another 41.5 years (starting on January 1st, 2019). If the successful exploration trends continue Chapada easily becomes a mine which will last another 50, 60 or 70 years.

 

 

[linealdin]

Anglogold provides a drilling update for Silicon (Altius 1.5% royalty):

 

“At the Silicon project in Nevada, a 17,000m follow-up RC and DD programme commenced, with eight RC and five DD holes completed for a total of 3,147m and 2,190m, respectively. The programme follows up encouraging observations made during Phase 1 drilling, which was completed in the first quarter of 2018 and will also test other structural targets within the Silicon project area.

 

“A 2.7km pole-dipole Induced Polarization orientation survey line was completed over the Silicon project at 100m station spacing and 100m dipole spacing. Further IP lines are scheduled for the first quarter in 2019 and will aim to delineate additional drill targets within the project area. Surface mapping delineated additional potential litho-structural targets within the Silicon claim block.”

 

*

 

EMU NL provides a drilling update at Vidalita (Altius royalty and equity position in EMU):

 

https://hotcopper.com.au/documentdownload?id=uOMxKKzFkiWRTLKhOROKAxjvTDYD4Q66wRWZpfpske92GA%3D%3D

 

16 holes drilled so far in 2019. First assay result: 23 meters of 11.8 g/t silver from surface. Visual indications of bonanza silver grades in drill core from other holes. Assays pending.

 

[linealdin]

http://www.adventuszinc.com/news/122520

 

The final drill results from the 2018 Curipamba drill campaign. Continued solid results at El Domo. Misses after the discovery hole at Sesmo..

 

Also, a few weeks ago, Ecuador’s mining windfall tax elimination and tax regime modernization were officially enacted in law. That removed some risk for investors interested in Ecuador mining projects (potential buyers of Curipamba). It also decreases the risk for Altius’s purchase of the 2% royalty on Curipamba. Ecuador’s moving in the right direction.

 

 

[linealdin]

https://www.championiron.com/investors/

 

Champion inaugural investor conference call is worth a listen:

 

1) Interest from a Japanese steelmaker in securing all of Phase 2 offtake. But Champion would prefer to have multiple offtake partners. Japanese make high grade steel therefore they are panicked about the Vale situation (Vale dominates the high grade iron ore market).

 

2) O’Keeffe thinks Vale situation will structurally change the market for at least another 2 or 3 years. Expects Vale’s free cash cash to go towards victim compensation and safety measures. Less investment in sustaining capex and new capacity means constrained supply in the high grade market.

 

2) Champion will announce a lower interest restructuring of its C$300 million in debt in the next few weeks. Whichever institutions are chosen to refinance the debt will also likely participate in financing the Phase 2 construction cost. Phase 2 feasibiity delivered this summer with first production by 2021.

 

Champion closed at C$1.62 on Friday. I estimate Altius owns a 15 million share position in Champion worth C$24.3 million currently.

[linealdin]

https://register.gotowebinar.com/register/7012316123006024193?source=Mail+Chimp

 

Excelsior presentation:

 

1) Significant construction progress. See photos on Excelsior website construction timeline.

 

2) Excelsior is signaling that it has basically decided to skip Stage 2 and move directly to a 125 million pound operation in year 4 of production. They believe their cash position and financing partners (Triple Flag and Greenstone) will cover the significant construction costs.

 

Altius’s 1.625% royalty yields C$1.6 million annually from a 25 million pound per annum operation (US$3 copper, current USD/CAD exchange rates).

 

Altius’s 1.5% royalty would yield C$7.4 million annually from a 125 million pound per annum operation (US$3 copper, current USD/CAD exchange rates).

[linealdin]

https://globenewswire.com/news-release/2019/02/25/1741424/0/en/First-Majestic-Announces-High-Grade-Drill-Results-from-2018-Exploration-Program-at-the-Ermitaño-Silver-Gold-Project-Permitting-Status-Update.html

 

Really good news for Evrim (and Altius as its largest shareholder). Evrim's 2% royalty on Ermitano should be in production fairly soon. Final permits expected by March. The processing plant exists already. First Majestic just needs to dig the deposit up. Cash flow to Evrim by late 2019?

 

The latest drill results are likely increasing the initial announced inferred resource. First Majestic plans another 16K meters of drilling in H1 2019.

[nostradamus]

This is good news:

 

Altius Provides Update to Concerned Shareholder Discussions with Labrador Iron Ore Royalty Corporation

 

St. John’s - Altius Minerals Corporation (“Altius”) (ALS:TSX, ATUSF: OTCQX) reports that during a constructive meeting

held with representatives of Labrador Iron Ore Royalty Corporation (“LIORC”) on February 22, 2019, it received positive

assurances that LIORC no longer intends to pursue changes to its current Articles or its passive flow-through mandate

and that it will maintain adherence to its policy of paying dividends to the maximum extent possible.

LIORC also advised that the topic of segregating its respective Iron Ore Company of Canada (“IOC”) related royalty and

equity interests is set to be generally discussed at its next board meeting where, if it is determined by the Board to be in

the best interests of LIORC and its shareholders, the Board will not hesitate to bring it forward. Altius was also invited to

provide LIORC with materials derived from its own internal analysis and consideration of the matter, to which it has

agreed.

Brian Dalton, CEO of Altius, commented that, “We became major shareholders of LIORC on the underlying basis of its

passive flow-through mandate related primarily to its royalty interest in the operations of IOC. We are pleased now to

have received the increased certainty levels we were seeking in order to maintain our indirect interest in this world class

asset. We also look forward to continued positive and constructive future shareholder engagement with LIORC.”

[linealdin]

What this announcement hopefully means for Altius: LIF is telegraphing they will pay the C$4 per share in dividends it should pay in 2019 based upon current iron ore and pellet prices.

 

That means ~C$16 million in 2019 royalty revenue to Altius. The LIF position effectively becomes Altius’s largest royalty (more net revenue than the Chapada stream after Chapada’s 30% cost of sales).

[linealdin]

https://ceo.ca/@nasdaq/alderon-signs-energy-infrastructure-mou-with-envest

 

Alderon signs MOU to secure US$35 million for power equipment infrastructure financing from Envest.

 

Equipment financing is a route towards securing a big part of construction financing. I expect an equipment financing deal to eventually be signed with Komatsu or similar supplier for the mining fleet. That should be over US$100 million.

[Williams406]

https://globalminingobserver.com/going-green-mining-money-flips-208

 

Some thoughts on Altius' renewables royalty push. Funny sidenote: "...the company is now backed by insurance giant Fairfax and its chairman Prem Watsa, known for his punishingly long-term investment time horizons."

 

 

[linealdin]

https://globalminingobserver.com/going-green-mining-money-flips-208

 

Some thoughts on Altius' renewables royalty push. Funny sidenote: "...the company is now backed by insurance giant Fairfax and its chairman Prem Watsa, known for his punishingly long-term investment time horizons."

 

“Royalties in wind will be even more valuable than royalties in gold or copper, Dalton believes. Whereas oil and mining assets deplete and roll onto new land, the biggest bottleneck in building a wind farm is planning approval; once a site has been built, it is likely to expand, with ever-bigger turbines generating rising levels of power.”

 

The genius of Tri Global Energy’s strategy is only developing wind farms in areas where they’ve earned widespread social approval (by sharing royalties with all landowners and stakeholders). This is farmland far from population centers. The wind farms co-exist with farming.

 

Once the farmers get used to the royalty income they will be the ones pushing Tri Global to add more turbines to the land package (expansion) and for repowering with bigger, more efficient turbines once the initial turbines wear out in 25 to 35 years.

 

Solar doesn’t co-exist well with farming. The panels spread out over the ground. Solar needs a nice desert land package?

 

 

[linealdin]

http://www.explorationmidland.com/en/Communique.aspx?ResourceId=c6fda646-1abf-4d95-b2fd-d62da1ad9cf8

 

Midland’s IP geophysical survey results at Mythril. Chargeable zone corresponds well with rock and soil sampling. The high grade copper in the chalcopyrite they’ve found in rock samples is the source for the zone of chargeability? Midland thinks they are on to something.

 

2000 meters of drilling starts in March. Altius holds a 1% royalty on Mythril (according my communications with Midland president Gino Roger). Altius also owns an equity position in Midland.

 

http://www.explorationmidland.com/MediaHandler.ashx?MediaId=d043feb1-3f18-4c42-90ca-5ce8c2498b56

 

Midland new presentation shows possible deposit models for Mythril on slide 37, along with a lot of other info on the property. This is now their flagship project. I share their high hopes.

[linealdin]

Adia Resources is making moves as a private company. SEC Form D filing shows they just raised US$303K.

 

Board of Directors is comprised of Rosie Moore (consulting geologist), Pierre Labbe (CFO and Osisko Gold Royalties board member), Roland Butler (co-founder of Altius), Peters Ravenscroft (mover and shaker in diamond industry) and Julie Kong (Senior Exploration Manager for De Beers).

[linealdin]

http://www.aethonminerals.com/news/122499

 

Aethon Minerals finally makes a move, signing a preliminary deal to acquire an option on Diablillos silver/gold deposit in Argentina. It has 126 million silver equivalent ounces, open pit likely mining method.

 

Similar move to Adventus acquiring Curipamba. Taking on country risk because the deposit looks to be worth the risk. Adventus got into Ecuador at the right time, after a period of leftist anti-mining regulation. Now Argentina is emerging after 12 years of leftist policies.

 

Salazar, which held Curipamaba, and Abraplata, which developed Diablillo, are both underfunded juniors who couldn’t advance their flagship projects any further. I credit Sam Leung of both Adventus and Aethon for recognizing the opportunity.

[wachtwoord]

https://globalminingobserver.com/going-green-mining-money-flips-208

 

Some thoughts on Altius' renewables royalty push. Funny sidenote: "...the company is now backed by insurance giant Fairfax and its chairman Prem Watsa, known for his punishingly long-term investment time horizons."

 

“Royalties in wind will be even more valuable than royalties in gold or copper, Dalton believes. Whereas oil and mining assets deplete and roll onto new land, the biggest bottleneck in building a wind farm is planning approval; once a site has been built, it is likely to expand, with ever-bigger turbines generating rising levels of power.”

 

The genius of Tri Global Energy’s strategy is only developing wind farms in areas where they’ve earned widespread social approval (by sharing royalties with all landowners and stakeholders). This is farmland far from population centers. The wind farms co-exist with farming.

 

Once the farmers get used to the royalty income they will be the ones pushing Tri Global to add more turbines to the land package (expansion) and for repowering with bigger, more efficient turbines once the initial turbines wear out in 25 to 35 years.

 

Solar doesn’t co-exist well with farming. The panels spread out over the ground. Solar needs a nice desert land package?

 

I wonder why Dalton believes energy royalties to be better than metals. Metals (at least on earth) have limited supply while the potentials supply of energy on earth lies many orders of magnitude above the current levels produced. I guess I don't like the commodity "energy".

 

Any thoughts there?

[Haasje]

Yes, Wachtwoord that seems concerning to me too. Royalty model on land to build windmills or solar systems doesn't seem to work as well. No saying whether electricity will follow inflation. We could see a lot of deflation in energy prices or even particular types of energy like we are already seeing in Germany.

 

It seems like lending money where they only pay interest IF they are generating revenue.

 

Also not clear why (in case of a bankruptcy or something) another operator would take over and the royalty would remain valuable.

 

I

[bizaro86]

Aside from the rights to the land, a generating facility will have a grid connection.  This ability to raise energy to line voltage, measure it, and connect to the transmission system is valuable. That's a big reason why I think the vast majority of alternative energy sites will continue to get re-powered indefinitely.

 

That said, I doubt the returns on an energy royalty are likely to be sufficient to be interesting, and I'd prefer they stick to what they know. (Spin off the energy royalties if desired)

[Liberty]

What competitive advantage does Altius have with renewable energy that would allow it to earn superior returns compared to other players in the space?