ALS.TO - Altius Minerals

[linealdin]

https://www.google.com/amp/s/www.cbc.ca/amp/1.5110605

 

Tacora is on schedule and on budget to restart production at Scully in June.

 

Tacora is a possible buyer for the Kami deposit if Alderon fails to finance. Kami has higher grade, cleaner ore than Scully and it’s right next door. Tacora could make a smooth move to abandon the Scully ore encumbered by an ~8% royalty to MFC and pay a 3% royalty to Altius instead.

 

There is inherent value to the Kami deposit that surpasses Alderon’s market value as a shitty junior resources company.

[SharperDingaan]

Nice to see the re-start at Scully.

 

Kami will take a minimum 3 years+ until production - from the date financing is obtained.

Most would also expect another engineering 'refresh' before construction begins. To minimize operating costs, it would be very much in both mines interests to share processing steps wherever practical, and build the largest possible joint-facility to extract economies of scale. Not a big step for the very smart people on both sides.

 

Kami/JL/etc isn't just 60-80 years+ of high quality ore, it's also the tidewater access, and it's location.

Most climate change models forecast the North West Passage becoming ice free; and iron-ore from the Labrador Trench, plus grain and potash out of Churchill, are some of the very few cargoes that can cross the arctic marine reserves at very low risk. Hard to see how Kami/JL is not essentially the iron-ore equivalent of a Potash Corp, and not surprisng to see Altius in both of these.

 

Interesting times for all.

 

SD

 

 

   

[nostradamus]

Brian Dalton talks recently with Dan Ferris of Stansberry Research. Search “How to Collect Income from Gold” in your podcast app. Great interview.

 

Extreme confidence from Dalton as to how well the fundamental Altius business is doing. How to raise the stock price? Continue making gobs of money and compound it at high rates.

Thanks for posting this Linealdin. Just listened. Great interview.

 

I know that there has been a lot of discussion on this board about the value assigned to very long term cash flows like the potash royalties, with some arguing that, because of discounting, very long term cash flows are not worth so much. But, a key point that Brian Dalton makes in this interview is that long term mine lives are a good predictor of expansion capacity, ie those long term cash flows may be pulled forward if the conditions are right.

 

Long forecast mine life = massive resource relative to current production = ability to significantly increase production if prices rise

 

It therefore seems unwise to discount the long term cash flows out of existence.

[TwoCitiesCapital]

Brian Dalton talks recently with Dan Ferris of Stansberry Research. Search “How to Collect Income from Gold” in your podcast app. Great interview.

 

Extreme confidence from Dalton as to how well the fundamental Altius business is doing. How to raise the stock price? Continue making gobs of money and compound it at high rates.

Thanks for posting this Linealdin. Just listened. Great interview.

 

I know that there has been a lot of discussion on this board about the value assigned to very long term cash flows like the potash royalties, with some arguing that, because of discounting, very long term cash flows are not worth so much. But, a key point that Brian Dalton makes in this interview is that long term mine lives are a good predictor of expansion capacity, ie those long term cash flows may be pulled forward if the conditions are right.

 

Long forecast mine life = massive resource relative to current production = ability to significantly increase production if prices rise

 

It therefore seems unwise to discount the long term cash flows out of existence.

 

If it happens in year 3, probably doesn't make sense to discount to zero. If it happens in year 30, probably does.

 

Any increase in cash flow beyond a reasonable average baseline should be valued like an option and not DCF nor revenue at face value.

[TwoCitiesCapital]

Royalty revenue growth will push Altius’s market cap upwards. In the near term.

 

Next Wednesday they will announce a preliminary Q1 royalty number in striking range of C$20 million. Maybe C$19.5 million. The final Q1 total revenue number, with project generation revenue included, will crack C$20 million.

 

Final total revenue for 2019 will be C$80 million or more. Then the march to C$100 million annual revenue begins.

 

I don't doubt royalty revenue may increase, but it's been increasing. Dramatically. And the share price hasn't. I fail to see what makes this quarter different.

 

It's a show me market. Until Altius shows the market an appreciable dividend, I have to believe the royalty revenue per share growth rate will continue to outpace the share price growth rate - as has been the case for years.

 

Basically back to where I had trimmed my position back in March despite blow-out earnings release. As said, markets just don't care and it's hard for me to believe they suddenly will without a major change in sentiment or catalyst.

 

Also, hadn't seen this mentioned here. Altius increases ownership in Renaissance Gold.

 

https://www.google.com/url?rct=j&sa=t&url=https://www.proactiveinvestors.co.uk/companies/news/219037/altius-minerals-set-to-lift-stake-in-renaissance-gold-to-99-after-strategic-investment-219037.html&ct=ga&cd=CAEYASoTNTA3NjQ2MDAwNTU1NDQ2OTE3NzIaMWU1YTA4ZWI1ZDQ4YzIxNjpjb206ZW46VVM&usg=AFQjCNG7xwjh33RN1mcDeIR_OQ6ODpfxAw

[mikek]

Investments in Ren are investments that I feel are pretty crappy. It is one thing if you take equity and are getting royalties also but straight equity on a junior miner is basically throwing their money away. It's small but nonetheless I'm not sure why they do investments like that. Seems the only way they will be able to get out of a position like that is a buyout. Just a strange investment to me.

 

As for the stock price, this thing is just dead money, I also don't believe it's entirely a sector thing. Look at Anglo Pacific's performance, they are a base metal royalty company and have outperformed Altius quite a bit in the last couple of years. Still a way overweighted position but like others am highly discouraged with this company. It's a bad sign to me that the last 10 years most companies have went up quite a bit and this stock has moved nowhere. The price of commodities haven't done great in the last 10 years but they have held up well enough for the company to do fine. I don't think Altius can use a bear market excuse for the horrid stock performance.

[reader]

There's a video with an interview REN's CEO on the link TwoCitiesCapital attached.

I guess ALS is betting on the Silicon project.

 

https://www.proactiveinvestors.co.uk/companies/stocktube/13140/renaissance-gold-preparing-for-busy-summer-as-altius-minerals-increases-stake-13140.html

[mikek]

Yeah I'm sure that is it but Ren gave up 100 percent of that project if they decide to exercise their option which it definitely sounds like they will. They do have a 1.0 % nsr on the property so that could be worth something if Silicon proves to be something. I guess they could be betting that the 1.0% nsr is worth more than the market cap but I still don't like straight equity investments without royalties.

 

I do talk about the disappointing stock performance but on the other hand I do have to give credit on the Chapada, 2nd potash investment and LIF investment. All 3 have worked out well and look to continue to be winners in the future.

[linealdin]

Rengold deal reminds me of the Millrock deal. Millrock was the dominant prospect generator in Alaska. Renaissance is the dominant prospect generator in Nevada. Altius wanted exposure to both districts.

 

Reminder: Altius made a crapload of money selling shares of Millrock when it ran up at the top of the market in 2011. The cheap warrants got exercised for significant profit.

 

Renaissance is cheap. C$12.55 million market cap. C$3 million cash position. Anglogold owes Rengold US$2.7 million, or C$3.62 million, for the Silicon remaining option payment. Rengold estimates its partners will spend US$5.125 million, or C$6.86 million, drilling joint venture properties in 2019.

 

Not much downside for Altius. I expect history to repeat itself. Gold stocks will catch fire, Rengold will make what looks like a discovery, and Altius will make a crapload selling REN shares.

[nostradamus]

Adventus Announces Robust Results of its Preliminary Economic Assessment for the El Domo VMS Deposit:

 

http://www.adventuszinc.com/news/122523

 

A question to those in the know, do you think this mine get built?

 

The language of the press release seems somewhat subdued... (I don't really know much about mining, so this is the level of my analysis).

 

N.

 

 

[linealdin]

Adventus Announces Robust Results of its Preliminary Economic Assessment for the El Domo VMS Deposit:

 

http://www.adventuszinc.com/news/122523

 

A question to those in the know, do you think this mine get built?

 

The language of the press release seems somewhat subdued... (I don't really know much about mining, so this is the level of my analysis).

 

N.

 

Curipamba meets some rules of thumb. After tax NPV is significantly higher than initial capex. After tax IRR is a robust 40%. I think the mine is an attractive candidate to be financed.

 

So it comes down to local permitting conditions. Some projects in Ecuador have been stalled by local native-type opposition (Loma Larga for example). Some have sailed through (Fruta Del Norte). I don’t know if Curipamba is disfavored on the local level. Having Salazar as a local Ecuadorian partner should help.

[nostradamus]

Adventus Announces Robust Results of its Preliminary Economic Assessment for the El Domo VMS Deposit:

 

http://www.adventuszinc.com/news/122523

 

A question to those in the know, do you think this mine get built?

 

The language of the press release seems somewhat subdued... (I don't really know much about mining, so this is the level of my analysis).

 

N.

 

Curipamba meets some rules of thumb. After tax NPV is significantly higher than initial capex. After tax IRR is a robust 40%. I think the mine is an attractive candidate to be financed.

 

So it comes down to local permitting conditions. Some projects in Ecuador have been stalled by local native-type opposition (Loma Larga for example). Some have sailed through (Fruta Del Norte). I dont know if Curipamba is disfavored on the local level. Having Salazar as a local Ecuadorian partner should help.

 

Thanks linealdin

[linealdin]

http://www.explorationmidland.com/en/Communique.aspx?ResourceId=774975eb-5030-4ffd-a3fa-3322906e100c

 

Midland has completed 2400 meters of drilling at Mythril. Results due in mid-May. A 5000 meter drill program is set to begin in June to follow up on initial drill testing and to test eastern extensions discovered by geophysical surveys.

 

I think they’ve seen enough good visuals in the initial drill core to authorize investment in a Phase 2 drill program. They hit something good.

 

Altius has a 1% royalty on Mythril and equity in Midland.

[linealdin]

http://altiusminerals.com/uploads/2019-04-17-Corporate-Presentation-FINAL.pdf

 

Interesting detail on slide 6 of this Altius presentation: “15% Unlevered Revenue Yield Against Combined Portfolio Purchase Price (2019E).”

 

What does this mean? Altius is estimating it will receive roughly C$80 million royalty revenue in 2019, which is ~15% of their net combined royalty portfolio purchase price of ~C$533.33 million.

 

(That C$533.33 million is a little lower than my estimate of total royalty purchase price. I think they are including only what they’ve actually paid McChip so far, C$3.5 million of C$8 million total, and the CDP purchase is mostly being accounted for as a land bank purchase. The C$5 million plus they’ve received from Alberta land sales is not counted as royalty revenue. Also some of the deals had lower net prices than the headline numbers: for example, the latest potash acquisition cost C$63.5 million net, not C$65 million, after taking into account the cash the acquired entity had on the books).

 

Anyway, at a C$80 million to C$90 million annual clip, Altius will very, very quick achieve payback on the C$533.33 million net total purchase price. Maybe just another 3 years (from April 1st, 2019).

 

After payback is achieved there will still be many billions to collect. And, yes, every dollar of those billions will be put to use (into interest bearing accounts, new royalties, debt repayment, shareholder dividends etc) as they are received every month. Glorious.

 

 

[hohi]

Has anyone heard some rumours about Julienne Lake? It has been suspiciously quiet for many months now, I have a feeling that something is boiling under the surface. If ALS can manage to reactivate this play It would be a game-changer. Totally discounted at this time, the market doesn't even has it on the radar. For me JL was one of the reasons I built a big ALS position initially.

Apart from ALS I own a small chunk of EMX, another prospect generator. I feel it could be a very good match for ALS to acquire. Reminds me of Callinan some years back. They have $65M USD+ in the bank, a whole bunch of royalties and only an Enterprise Value of about C$30M. Problem could be, that insiders and those close to them own about 90% of the company, but those ppl are the same that own most of ALS (Rick Rule, US Global investors etc.).

 

Bought a few thousand more shares. Not much, but I expect my children to keep adding to the position ;).

[linealdin]

Adventus Announces Robust Results of its Preliminary Economic Assessment for the El Domo VMS Deposit:

 

http://www.adventuszinc.com/news/122523

 

A question to those in the know, do you think this mine get built?

 

The language of the press release seems somewhat subdued... (I don't really know much about mining, so this is the level of my analysis).

 

N.

 

The Curipamba PEA fleshes out what revenue Altius’s 2% royalty will actually bring in.

 

Mine life will be 16 years (16 years open pit, with the last 6 years of operation also going underground).

 

19,000 tonnes of annual payable copper equivalent production. 19,000 tonnes = 41.887 million pounds of copper equivalent.

 

41.887 million x US$3.15 per pound copper (base case for PEA) = US$132 million annual revenue.

 

Altius’s 2% royalty on that US$132 million = US$2.64 million annual royalty revenue. Altius paid US$10 million for the royalty.

 

The juice is in how many additional ore bodies they can find at Curipamba and how any years they can extend mine life beyond 16 years.

[linealdin]

Has anyone heard some rumours about Julienne Lake? It has been suspiciously quiet for many months now, I have a feeling that something is boiling under the surface. If ALS can manage to reactivate this play It would be a game-changer. Totally discounted at this time, the market doesn't even has it on the radar. For me JL was one of the reasons I built a big ALS position initially.

Apart from ALS I own a small chunk of EMX, another prospect generator. I feel it could be a very good match for ALS to acquire. Reminds me of Callinan some years back. They have $65M USD+ in the bank, a whole bunch of royalties and only an Enterprise Value of about C$30M. Problem could be, that insiders and those close to them own about 90% of the company, but those ppl are the same that own most of ALS (Rick Rule, US Global investors etc.).

 

Bought a few thousand more shares. Not much, but I expect my children to keep adding to the position ;).

 

All’s quiet at Julienne Lake. No exploration dollars spent since 2014. Altius did spend C$2300 to renew the license in 2018. They can hold the land until 2023 at minimal expense.

 

EMX has a lot of cash and producing gold and copper royalties (equal amounts). More of a takeover candidate for Sandstorm Gold?

[linealdin]

http://www.adventuszinc.com/news/122524

 

Adventus raises C$12.1 million, including C$7.38 million from a private Ecuadorian business conglomerate. The Ecuadorian group is financially and politically influential. Will likely help negotiate an impacts and benefits agreement with the Ecuador government.

 

Altius likely takes C$1 million to C$1.5 million of the placement.

 

http://www.adventuszinc.com/storage/presentations/adzn---corporate-presentation---may-2019-final-1557148619.pdf

 

2019 will focus on exploration drilling. 6000 meters to find new ore bodies at Curipamba and initial drill programs at Pijili and Santiago.

 

Slide 14 shows just how few new copper mines are coming online in the next few years. Altius has royalties on 2 of them, Gunnison and Curipamba.

[SharperDingaan]

Has anyone heard some rumours about Julienne Lake? It has been suspiciously quiet for many months now, I have a feeling that something is boiling under the surface. If ALS can manage to reactivate this play It would be a game-changer. Totally discounted at this time, the market doesn't even has it on the radar. For me JL was one of the reasons I built a big ALS position initially.

Apart from ALS I own a small chunk of EMX, another prospect generator. I feel it could be a very good match for ALS to acquire. Reminds me of Callinan some years back. They have $65M USD+ in the bank, a whole bunch of royalties and only an Enterprise Value of about C$30M. Problem could be, that insiders and those close to them own about 90% of the company, but those ppl are the same that own most of ALS (Rick Rule, US Global investors etc.).

 

Bought a few thousand more shares. Not much, but I expect my children to keep adding to the position ;).

 

All’s quiet at Julienne Lake. No exploration dollars spent since 2014. Altius did spend C$2300 to renew the license in 2018. They can hold the land until 2023 at minimal expense.

 

EMX has a lot of cash and producing gold and copper royalties (equal amounts). More of a takeover candidate for Sandstorm Gold?

 

Assume that Kami and JL are a package deal.

Develop Kami and you'll also process the tonnage at JL once Kami is mined out.

High grade, tidewater, easy to process ore - for a very long time

 

SD

 

[bizaro86]

I'd really prefer they not put more equity dollars into Adventus. Keep the initial free shares from the property vend, but why buy more when your stake is already too big to be illiquid. If curipamba pans out the royalty and existing stake already gives ALS tons of upside. But if it doesnt you've converted cash into another Alderon type situation.

[TwoCitiesCapital]

I'd really prefer they not put more equity dollars into Adventus. Keep the initial free shares from the property vend, but why buy more when your stake is already too big to be illiquid. If curipamba pans out the royalty and existing stake already gives ALS tons of upside. But if it doesnt you've converted cash into another Alderon type situation.

 

I'm not crazy about the additional junior investments either, but Altius has proven themselves somewhat adept in this space AND control/having a seat at the table can help preserve their interests in the mine-building process.

 

While I'd prefer they didn't make these investments myself, not every single one is an Alderon.

[TwoCitiesCapital]

Q1 revenues slightly better than telegraphed. Also upped the dividend to C 0.05/share per quarter. A 20% increase from the current payout, but still sub-2% total yield so likely to be shrugged off by the market.

 

https://seekingalpha.com/pr/17503462-altius-reports-q1-2019-royalty-revenue-21_8m-adjusted-ebitda-17_4m

[linealdin]

Altius has made a call that we are now likely past the trough of the cycle:

 

“Given the recovery of commodity markets since 2016 to levels that are beginning to translate into stronger operator margins and cash flow, Altius foresees decreasing opportunity for M&A based royalty growth in the near term. This is being more than offset however by the improved confidence of operators to sanction asset level investments to build, extend or expand operations at several of our royalty projects. As conditions begin to favor this type of non-capital requiring organic royalty growth, versus providing deep value M&A type opportunities, we will transition our capital allocation prioritization towards the repayment of borrowings that we utilized for our many acquisitions during the cyclical trough period.”

 

So they are done with their big royalty purchases (picked up LIF, Liberty potash, McChip, Mt Pickett, Curipamba, Excelsior royalty option, lithium royalties, Tri Global, Vermont hydro royalty during the latter part of the trough period). Now their substantial royalty cash flows and junior portfolio stock sales will shift to debt repayment and dividend growth.

 

At the end of Q2 the debt position will be C$119 million (C$5 million mandatory + C$11 million voluntary debt repayment). Divvy is up another 25%.

 

I suspect Altius sold most of the rest of the Champion position (well above C$2 bucks per share) to finance the debt repayment). There will continue to be aggressive asset sales from the junior portfolio as prices rise. Altius has the connections and ability to buy and sell very large block positions of juniors. A side benefit of Brian flying regularly to major financial centers to visit brokers and institutions.

 

The idea that Altius is trapped in its Adventus equity position until Adventus as a company is acquired does not conform with reality. The junior equity is acquired cheaply to be sold at the top of the market.

[linealdin]

MD&A has the latest royalties created by the PG business:

 

3 projects with Teck Australia (only deal done recently not with a junior that could offer a big chunk of their equity)

 

7 projects with Bmex Exploration (private)

 

A Spanish cobalt project with LRH Resources (private)

 

 

[linealdin]

Altius paid 4 cents a quarter for 2018 dividends. Now 2019 dividends will be 5 cents a quarter.

 

I believe the decision has been made to turn Altius into a dividend compounding machine, a la Fairfax Financial.

 

By the time I retire I expect Altius will be paying C$2 to C$5 a share in annual dividends per share. Not an outrageous prediction considering Altius's low share count, low debt (versus cash and assets), revenue growth, and ultra long life royalties.

 

I'm reinvesting dividends now but will be taking the dividends in cash during retirement. Basically it will be a nice salary.