ALS.TO - Altius Minerals

[linealdin]

From Bitterroot Resources’s most recent MD&A:

 

“In January 2019, Altius and Trans Superior completed the sale of 30 acres of mineral rights for gross proceeds of US$125,000.”

 

Altius originally spent C$1 million to buy into 250 square miles of Voyageur freehold mineral rights in Michigan. Now they are starting to monetize that enormous land package (which is held without paying annual fees to the government, as with most exploration leases). 30 acres is a very small portion of the 250 square mile  land package and the price is terrific.

[linealdin]

LIF position has increased slightly since the LIF letter was sent on January 25th. The LIF position is now 6.3% of the total 64 million shares, or 4.032 million shares. They bought an extra 61K shares.

 

So the Q1 LIF royalty revenue will be C$1.05 per share x 4.032 million = C$4.234 million.

 

On the conference call Dalton associated the sale of the 5 million Champion shares to the increase in LIF shares. Decreasing Trough iron ore equity exposure in favor of increasing Trough iron ore royalty exposure.

[linealdin]

https://hotcopper.com.au/documentdownload?id=uOMxKKzFkiWRTLKhOROKAxjvTDYD4Q27wBeZof9oke92GA%3D%3D

 

Allegiance delivers a remarkable definitive feasibility study for the Tenas project: A$407.3 million NPV and 56.9% IRR (pretax). The project will have the lowest position on the global met coal cost curve. If it gets a permit this is going to be a mine for a very long time. Tenas is only 15% of Allegiance’s total resources at Telkwa. This is going to be mined for a century.

 

The feasibility study delivery triggers an C$1.5 million payment from Itochu.

[linealdin]

http://m.miningweekly.com/article/kinross-acquires-97-of-wolfden-resources-2019-03-20/rep_id:3861

 

Wolfden raises C$2.5 million with a strategic investment from Kinross Gold. Wolfden and Kinross form a joint exploration committee for Mt. Pickett.

 

Validation that Mt. Pickett is a good project. Kinross becomes a possible acquirer of Wolfden if the project proves up.

 

[linealdin]

 

John Kaiser has been a big proponent of Midland Exploration’s Mythril copper/gold/ moly project (Altius 1% royalty and equity position in Midland). He discusses it at 13:34 of this Discovery Watch podcast. Highlights:

 

1) No pyrite in deposit, the usual false positive for positive IP surveys. Surface prospecting has found a lot of chalcopyrite with high grades of economic metals. Previous airborne surveys had been searching for obvious rusty outcrops (pyrite) but this unusual deposit has no pyrite, and thus had been undiscovered.

 

2) Kaiser estimates it could be a 200 to 300 million tonne deposit based upon the IP and the ground prospecting. Huge ore body, close to surface, open pit potential.

 

3) It all depends on the grades found by the current 2200 meter drill program. This is in a remote part of Quebec. High grades will be required to justify the transportation infrastructure required to haul the copper concentrate to Sept-Iles. Government people with Plan Nord watching this project closely. Could be key to developing the region if discovery is made.

 

4) Midland stock has run up to C$1.35 in anticipation of assay tesults.

[Williams406]

I don't recall if someone linked to this presentation earlier in the thread:

 

http://altiusminerals.com/projects/iron-ore

 

Altius' presentation to LIORC Board on merits of separating equity interests from royalty interests.

[linealdin]

https://www.bloomberg.com/news/videos/2019-02-25/anglogold-ashanti-ceo-discusses-m-a-possibilities-video

 

Anglogold Ashanti CEO praises the Silicon project at the recent BMO conference. Calls it a “very interesting deposit” and the “base” of their goal to increase their North American gold production weighting.

 

No drill results released from Silicon yet. Most likely because Anglogold needs to take over Corvus Gold, Silicon’s neighbor, for a reasonable price. Holding their cards close.

 

Altius holds a 1.5% royalty on Silicon. I believe Anglogold has made a discovery. Remember this is the world’s 4th largest gold producer. Only big deposits move the needle for them. Their CEO is only going to discuss Silicon on Bloomberg if it’s a potential difference-maker. This could become a very valuable royalty for Altius.

[linealdin]

https://www.bloomberg.com/news/videos/2019-02-25/anglogold-ashanti-ceo-discusses-m-a-possibilities-video

 

Anglogold Ashanti CEO praises the Silicon project at the recent BMO conference. Calls it a “very interesting deposit” and the “base” of their goal to increase their North American gold production weighting.

 

No drill results released from Silicon yet. Most likely because Anglogold needs to take over Corvus Gold, Silicon’s neighbor, for a reasonable price. Holding their cards close.

 

Altius holds a 1.5% royalty on Silicon. I believe Anglogold has made a discovery. Remember this is the world’s 4th largest gold producer. Only big deposits move the needle for them. Their CEO is only going to discuss Silicon on Bloomberg if it’s a potential difference-maker. This could become a very valuable royalty for Altius.

 

http://www.rengold.com/i/pdf/2019-03-27_NR-ha862iamjhw4.pdf

 

Renaissance Gold’s press release on the recent comments from the Anglogold CEO about Silicon. They believe “all indications point to a significant success” in exploration results at the property.

 

 

[linealdin]

If exploration success continues Altius (1.5%) and Renaissance (1%) could auction off their respective Silicon royalty interests in a package deal to one of the many gold royalty companies hunting for new assets.

 

A 2.5% royalty on a big gold deposit mined by Anglogold Ashanti would be highly attractive.

[linealdin]

https://www.thereminder.ca/news/local-news/777-mine-life-extended-into-second-quarter-of-2022-1.23774146

 

777 mine life extended to Q2 2022, based upon Hudbay’s recently announced reserve update. That doesn’t include any of the indicated or inferred resources.

 

On a related note Hudbay has been drilling on Altius royalty land to find the next 777 deposit. They drilled diamond holes near Centoba Park (Altius 3% royalty) last summer and will drill within Flin Flon this summer (Altius 4% royalty). I bet they find another economic deposit (likely smaller than 777) on Altius royalty land in the next 5 years.

[linealdin]

https://www.adiaresources.com/pdf/2019-02-28-PR.pdf

 

https://www.adiaresources.com/pdf/cp-3-1-19.pdf

 

Press release and PDAC presentation for Adia Resources:

 

1) Altius now owns 58.8% of Adia following participation in a seed financing round for C$600K.

 

2) Adia has raised a total of C$3.528 million in seed money to finance a 3000 meter drill program, which began in February. The presentation has pictures of drill core. Drill program will help determine location of the proposed bulk sample.

 

3) De Beers is providing C$1.5 million worth of services (sample processing and analysis of the drill core at their facilities). A phase 2 C$5.5 million tranche of services from De Beers is expected post drilling and before the IPO in fall 2019.

[linealdin]

http://www.mining.com/japans-mitsui-injects-30m-sigmas-lithium-project-brazil/

 

Mitsui injects US$30 million and promises additional US$40 million debt financing for Sigma Lithium’s Grota Do Cirilo project. Construction should begin soon. The partners have mapped a plant expansion option requiring additional investment and offtake by Mitsui.

 

Altius spent only C$984K for a small royalty on Grota. This one’s going to become a very rewarding deal.

[linealdin]

Champion closes the week at C$2.29. Altius’s remaining 5 million shares worth C$11.45 million.

 

Champion is around a C$1 billion market cap. The path to C$2 billion involves bringing the Phase 2 expansion to 15 MTA online successfully. Only US$300 million required to complete Phase 2. Piece of cake to find that financing in this iron ore environment.

 

Champion is also considering an option to increase its 63.2% ownership of Bloom Lake on the project level and also refinance its longterm debt at better rates. Near term catalysts.

[hohi]

OT, but I just wanted to thank you for for input again, linealdin.

I recently doubled my position in ALS and although your post had nothing to do with it I really appreciate the frequent updates on all the small deals that are going on. Otherwise I would miss out on a lot of it, I'm sure.

 

Keep it up.

[mikek]

Looks like Altius management gave themselves a nice pay raise. Unfortunate, seems management is the only ones really benefiting from this company.

 

Just curious Hohi since you recently doubled your position, in your opinion, what do you think will change the perception of the company from a stock price perspective? The only thing I really see that could move the needle a lot would be Alderon but I really don't see that getting built.

[linealdin]

http://altiusminerals.com/uploads/2019-04-09-Altius-Q1-2019-Project-Generation-Update-FINAL.pdf

 

Project generation update:

 

1) First time Altius has confirmed it owns a 1% royalty on Midland’s Mythril. John Kaiser discusses Mythrill brewing the next great Canadian area play:

 

 

2) PG equity portfolio worth C$60.7 million at the end of Q1. That doesn’t include C$7.7 million generated from the sale of equities during the quarter. I believe most or all of the C$7.7 million was from the sale of 5 million Champion shares for around C$1.50 per share.

 

3) Global resource for Ermitano is now around 780,000 gold equivalent ounces. It will grow with First Majestic’s aggressive drill program. This is near term potential royalty income for Evrim. I believe Evrim is undervalued.

[cwericb]

As mikek says:  “Looks like Altius management gave themselves a nice pay raise. Unfortunate, seems management is the only ones really benefiting from this company. “

 

That seems to be the trend dating back for years. I have had too much invested in this company for far too long with nothing to show for it - other than a loss.

 

While I appreciate all Linealdin’s information and optimism, past history tends to indicate that no matter how great Dalton and his crew may be, nothing ever seems to benefit the shareholders. 

 

In the eight years that I have held shares in this company I have watched it bounce between $10 and $14 and after all those years the stock price still sits at $12.50.

 

Yes, we are all waiting for the next commodity boom but how much impact is it ever going to have on ALS share price?

 

Hohi, you have been in Altius for quite a few years, any particular reason for doubling your stake at this particular time?

 

 

[mikek]

Yeah commodity stocks have even rallied lately and Altius is basically stuck in the mud doing nothing like always. I agree cwericb, this company has gone absolutely nowhere for way too long and I still don't see an actual catalyst to really move them unless Alderon gets built which isn't happening. Alderon was the big catalyst for Altius but over the years  Alderon's management made some really bad mistakes that likely has caused this mine not to get built for the foreseeable future. The problem is, even if they find something big on the PG side, the market really isn't going to assign much value to the royalty because we're talking 10 years to get that mine built. I think the market sees 777 coming to an end and the thermal coal royalties has been a huge disappointment and basically sees it just as a boring stock. It is what it is but I do remember a prior shareholder mentioning that he felt most value was going to management and not the shareholders, looks like he could be right.

 

Also, I don't consider that a great deal that Altius did on Midlands mythril property, if I understand it correctly, altius traded 50 percent of that property for 1 percent nsr and 400k shares, if that is true they possibly got ripped off pretty badly.

 

Management might talk a good game but the facts remain that shareholders haven't benefited at all for a very long time. I do believe that share price matters over long periods of time.

[linealdin]

On Mythril: the $508K plus in shares issued to Altius compensated them dollar for dollar for what it had spent on Midland JV projects up to August 2018. The 1% royalties on a suite of properties, including Mythril, were free.

 

Midland is spending C$3 million plus in 2019 on geophysical surveys and drilling at Mythril. As a 50/50 JV partner Altius would have had to contribute C$1.5 million or more. That's not their business model. When Midland couldn't attract a funding partner and decided to drill Mythril themselves Altius decided to take the low risk route of taking the shares and the royalty.

 

There's still upside. If Mythril turns out to be a large and economic copper/moly/gold deposit Altius will reap hundreds of millions from its 1% royalty. That's their business model.

 

 

[hohi]

Looks like Altius management gave themselves a nice pay raise. Unfortunate, seems management is the only ones really benefiting from this company.

 

Just curious Hohi since you recently doubled your position, in your opinion, what do you think will change the perception of the company from a stock price perspective? The only thing I really see that could move the needle a lot would be Alderon but I really don't see that getting built.

 

preface:

- I trust managmenet

- I am pretty young (under 40)

- I believe management is smart (but not the smartest)

- I believe management is conservative (in combination of being smart potentiates the upside)

 

1) I don't see a lot of downside

2) best royalties on the planet (potash) with mines that will run for 100s of years. ppl need to eat. without a miracle we'll need a lot of potash

3) Kami will be built - some day. I actually hope it'll take a while so I can buy more ALS at lower prices. If my assumptions don't change I see a lot of intrinsic value to be

realized over the next 10-20 years.

4) if you look at instant value creation I guess Excelsior, Wolfden or Aldron might trigger some upside (but not huge, maybe 10-30%).

 

So to summarize, I don't really see an instant trigger for price appreciation, but I won't mind as I'd like to buy even more. If management keeps doing what they are doing I am fine. It's okay to give themselves some  bonus payments, I don't mind. I am sure that they could land another job paying a lot more dollars, but choose to stay with the baby until it's grown. I feel they understand loyalty, and that is valuable to me.

[cwericb]

So Hohi and Lineadin both are in this for the long haul.

 

I was of the same opinion when I bought into Altius - eight years ago. Today the share price is less than what I paid for it. I too, like the company, think  management is competent and like their direction and potential.

 

However, there comes a time when shareholders needs to be rewarded for their support and patience. It is great to say you like the share price staying low so you can accumulate more shares, and that is fine until the time comes that you decide it is time to sell and find that share price still hasn’t moved appreciably. In the meantime what other opportunities have you passed up?

 

I have invested in several companies over time that seemed to have a bright future only to find that years later the share price had remained stagnant but company management seemed to have done very well for themselves.

 

I will likely be stuck in this for a while yet, but my patience is wearing thin.

 

 

[TwoCitiesCapital]

I've adjusted my expectations some. It seems to me that Altius will not trade at the same multiple of it's peers any time soon - likely because it's dividend is paltry and because of the end-results of some of their purchases (like coal). 

 

This is great for patient, long-term investors who can accumulate shares on the low while Altius is reinvesting it's cash flows at higher incremental returns via the junior portfolio and options on royalties and will hopefully re-rate in the future when royalty revenue is significantly high enough that they can pay out the bulk of it.

 

What that means in the mid-term is that the share price is likely to be entirely controlled by sentiment - which is reflected in the gain/loss of the junior portfolio and whether or not a major catalyst like Kami gets pushed through. Trade accordingly.

 

I reduced my position by ~20% @ 9.50 USD a few weeks back.

[Liberty]

So Hohi and Lineadin both are in this for the long haul.

 

I was of the same opinion when I bought into Altius - eight years ago. Today the share price is less than what I paid for it. I too, like the company, think  management is competent and like their direction and potential.

 

Time is your friend when you have a business that is getting a high return on capital/equity, and can reinvest the capital generated at incremental high returns. ALS is trading like a business that isn't making much more than its cost of capital, sideways (which is actually worse than it seems since the rest of the market has gone up a lot in this time, so the differential is widening). They rode a huge commodity boom in their early years, and built something impressive from a tiny base. But it's not the same doing this in a non-boom time and from a larger base.

[hohi]

When the last one of us sold his last shares, that'll be the ultimate bottom. I'll try to control my urge to sell, but in the end we are emotional beings... who knows. All I know is that you have to be a contrarian, particularly in a highly cyclical industry. I trust management to deliver on its strategy of playing the cycle. Yes, its long. Yes, its boring. Yes, opportunities fly by every day. But I never expected a 15% return year after year after year. I knew what I got into. It'll come in small increments and then tsunamis, like Aurora. And sometimes it doesn't work out, like the refinery. But I want a front seat when the upside action starts. I am too dumb to buy the day before and invest in other opportunities in the meantime. If you can do it, great.

 

Be right, sit tight. Only time will tell who was right, but at least I am comfortable sitting tight ;).

[SharperDingaan]

We hold our position in IRON as the precursor to a position in ALS. The expectation being that when IRON is eventually financed, we will roll proceeds into ALS; then reap a steadily rising dividend yield once Kami & other projects start contributing cash-flow down the road. No different to buying a 'widows & orphans' bank, & collecting a rising dividend over time.

 

Point is; this is a dividend investment - not a trading play.

Buy at the low, recover your capital outlay over maybe 10 years through dividends received, and retain the shares as collateral against a margin loan.

Use the margin loan to buy a house, deduct the interest cost, and avoid paying capital gains (as there was no sale of shares).

 

SD