ALS.TO - Altius Minerals

[nostradamus]

The release below from Millrock (taken from Sedar) is quite interesting. They announce that they have done a private placement.

 

More interesting is the fact that the following website -

http://new.stockwatch.com/News/Item.aspx?bid=Z-C%3AMRO-2112097&symbol=MRO&region=C

-  identifies the purchaser as 2260761 Ontario Inc, ie the Altius subsidary partly owned and managed by van eeden.

 

We should also remember that Millrock announced in August that it had granted a first right of refusal to a major mining company concerning the Stellar Copper-Gold Project, Alaska, on which Altius has a royality. After conducting an exploration programme in August I think the miner has until end October to decide whether to establish a joint venture to take forward the project. Now I wonder why Altius is investing right now in the equity of Millrock...

 

MILLROCK ANNOUNCES PRIVATE PLACEMENT

VANCOUVER, BRITISH COLUMBIA, October 9, 2013 - Millrock Resources Inc. (TSX-V: MRO)

("Millrock" or “the Company") has arranged and closed a non-brokered private placement. A total of

7,600,000 units at a price of $0.0675 per unit have been issued for gross proceeds of $452,250. Each unit

consists of one common share of Millrock and one share purchase warrant (the “Warrants”), with each

Warrant entitling the holder thereof to purchase one additional common share at a price of $0.15 per share

for a period of five years until October 10, 2018.

The private placement contains an acceleration clause whereby should the shares of the Company trade at

$0.21 or more for more than 30 consecutive trading days, the Company has the right to force exercise of

the share purchase warrants by providing notice to the warrantholder. The warrantholder will have 30

trading days to exercise the share purchase warrants or they will be forfeited.

Proceeds from the financing will be used for project generation and general corporate purposes. The

financing is subject to final approval from the TSX Venture Exchange.

[nostradamus]

Ha, thanks valuetrap, I guessed you might take that view. But it did strike me as a bit odd that Mamba said "no analystical samples have been collected from the summer diamond core program, as the mineralisation appears visually similar to the discovery hole". Well if it looks the same!

[nostradamus]

Looking at Millrock's May 2013 corporate presentation, they had 79.9m shares outstanding, 10% of which were owned by Altius.

 

Their recent private placement gives Altius control over another 7.6m shares and 7.6m warrants. Quite a stake they are building up...

[Guest Dazel]

 

 

It is interesting that Altius trades like a gold stock during times like this. Industrial metals companies are rallying during the recent market jump. The market seems oblivious to the assets that Altius holds...

We thank them...we continue to buy...

 

Dazel.

[Guest Dazel]

 

 

Altius made very good money on their last private placement with Millrock. They sold out above .80 cents...Millrock is cash starved like all small explorers right now...not near material to Altius however, as I said the market paints the company with the gold brush. They have entered gold in a small way in distressed situations or land development (made $6m on Rambler). They have made their money in industrial metals...so what is happening right now is positive for Altius...while the market sees the gold bugs getting hit.

 

 

 

 

 

[Guest Dazel]

http://www.mining.com/slowdown-what-slowdown-chinas-copper-iron-ore-imports-set-records-99571/

 

 

[nostradamus]

I have a question:

 

Altius highlights in a lot of their public material that the Voisey's Bay royalty is world class, and that they stand to reap the rewards of any expansion or successful exploration at zero cost. Regarding expansion I understand that they will benefit from the underground mining aproved this year in terms of extending the life of the mine and royality.

 

So my question is: does anyone know if there is any money being spent at the moment on exploration in the region covered by the Voisey's Bay royalty?

 

 

[ItsAValueTrap]

Once Vale develops the underground shafts, they will likely explore the deeper regions of the deposit.  Because the cost per foot goes up with longer drillholes, it makes sense for them to hold off that exploration until the shafts are sunk.

 

When Voisey's Bay was first discovered, there was a exploration rush and hundreds of millions of dollars was spent on exploration.  Unfortunately, the only new deposits that were found were the ones associated with the current Voisey's Bay deposit.  Given that nickel prices crashed since 2007, I don't think that we will see much greenfield exploration now.

[Guest Dazel]

http://www.vbnc.com/Exploration.asp

 

Vale plans on spending $95 million in further exploration...this is free to Altius' continuing royalty.

[nostradamus]

Thanks both, very informative - as always.

[TwoCitiesCapital]

CMB will definetely be constructed, Paladin has been looking at 2018 -2020 for that. Probably the later date. French state has 200 million in security there. (Gave money up front received 60 % something of the resources). Unfortunately it will most likely not be Paladin but some other company doing that. I believe Paladin will not survive the debt situation they are in now and the current price of the uranium.

 

I do believe Julienne lake i posting the biggest possiblilty. It is better than Kami in my opinion. Fingers very crossed these months to hopefully receive the answer we want.

 

The Viriginia Mines Eleonore is very interesting and gold might go up again as the world will see more inflation.

 

The 777 mine will be in production until 2020 at least. It brings in about 15-20 million a year. Altius will get 6 % of that (or more I think they will continue buying now around 1,60 CAD)

 

Yes interesting times ahead......

 

Can anyone point me to where I could find more information on this julienne lake development? I bought this in faith that kami alone was worth more than the market value but having another ace in hole would convince me to make this a larger position.

[hohi]

@ zachmansell

 

http://altiusminerals.com/projects/julienne

 

http://www.nr.gov.nl.ca/nr/mines/Julienne/index.html

 

on the Government site there are tons of information...

 

But basically it's luke this:

- Julienne Lake is an iron deposit of the government

- the gov. wants to see it developed

- altius sent in a proposal to develop it

- altius holds the land surrounding the deposit

- the altius land has the extension of the deposit (so its one big deposit really)

- ALS proposed a 21 million ton a year operation financed by two big chinese steel companies

- ALS retains a 3% royalty + some small equity in the new company

- now the government has to decide who gets the deal

[Guest Dazel]

 

http://www.metalbulletin.com/Article/3266974/Carbon-steel/Boost-for-Europes-steel-sector-as-bank-gives-ArcelorMittal-top-buy-status.html

 

sentiment has changed big time...should be an interesting quarter ahead for Altius.

[nostradamus]

https://app.box.com/s/828v70t0w9rpu6lpacw7

 

The above link is to a Credit Suisse research report on Alderon. Up front it has a price target of C$1 (versus current price of C$1.58) and a neutral rating. The fact that the rating is neutral when the price target is about 30% below the current price I think is a good warning about the quality of the research that follows.

 

The whole piece is about how ADV should give up on Kami and partner with CLF to expand Bloom Lake. It is all based on the view of the analysts that the return on newly invested capital from this point forward will be higher expanding Bloom Lake than building Kami. Irrespective of whether they are correct, it seems like a ridiculous leap to me to jump from this, to the conclusion that the two groups should partner. They seem to ignore the following:

 

1. It is not one or the other. If both projects have a good return on incremental capital invested then both should get built.

2. The shareholders are not the same. The article implies they are both effectively owned by the Chinese government, which is ridiculous. The Chinese investment is from different and competing Chinese steel mills. But more importantly, the largest shareholder in Alderon is not Chinese, it is Altius. And Altius wants Kami to be built to get their royalty.

 

The whole report seems to be built on some silly assumption that the Chinese want 8mt of extra iron ore per year from Canada, and that is it. No more thanks. It is just a matter of the Chinese government choosing which project to take forward.

 

Interested in reactions from the board. Are the conclusions of the report nonsense?

 

N.

 

 

 

[Guest Dazel]

 

 

There is a reason that Buffett calls analyst reports "funny papers"....

 

Let me get this straight put capital into a project that you do not own rather than a resource you do own and expect to use that resource for 30 years.

 

Funny.

 

[Guest Dazel]

 

Funny continued....The analyst actually stated that it would be a good way for Cliffs to preserve it's balance sheet?

 

Was this person drunk when they wrote this? Short sellers used to be smart when they paid for analysts for reports what is this world coming to?

 

 

[ItsAValueTrap]

Meanwhile in the US, investors are asking us what CLF is going to do about Bloom

Lake. As discussed in our CLF note yesterday, one of the options on the table is to

shut the project down entirely. For the benefit of our Canadian readers, we remind you

that excluding the CLM acquisition cost, the total capex spent on Bloom Lake to date

is around $2.5bn, but it will be closer to $3.0bn once the TSF has been completed.

That's correct, the Bloom Lake capex is more than double ADV's guidance – both are

7-8mtpa projects located 30km apart. The good news, however, is that to complete the

expansion from 7 to 14mtpa probably only costs an incremental $400-500mn.

Uh... the expansion might cost a lot more than that.

 

The main push-back ADV advocates will have to this proposal is that Bloom Lake is a high

cost mine, and that Kami should have lower costs. Both are true statements, but the main

cash cost benefits of Kami rel. Bloom Lake relate to the flow sheet and the port

arrangements.

I personally think that Kami will have higher costs than Bloom Lake.

 

We do not believe ADV's $42/t cash cost guidance is accurate in the context of what we

know about the economics of existing operations in the area, and our analysis suggests

that mid-$60/t cash costs would be a best-case outcome for Kami.

So close!!!  The analyst recognizes that $42/t cash cost is probably BS.  But then he doesn't go on to do his work and make his own estimate about what costs will be.

 

For whatever reason, he goes on to use a model that doesn't make much sense at all.  The benefit of expanding Bloom Lake would be that future cash flows are accelerated.  You need to model out the mine over its entire life at 7 and 14 mtpa.  You could make a minor adjustment for economies of scale from the 14mtpa mine.

 

A discount rate of 10% is probably too high.

 

Also, his numbers and model make no sense at all.  He predicts that Bloom Lake will bleed money.  But if it is expanded, it will lose less money???

[SharperDingaan]

Keep in mind that he was paid to write an attack piece ...... & this piece passed all the quality controls in his firm.

 

So who would like to buy ALS cheap, & if you owned enough of it what/which mines would you control/own. In O/G it is a common practice to buy the company vs buying the assets that the firm controls ... & you really hope that nobody tips off the market while you are trying to execute your high risk strategy :) . 

 

Pay up gentlemen.

 

SD

 

[Blue Macaw]

Cliffs 3rd quarter results will be out today after closing. That will be interesting reading.

 

The analysis is not very good to put the least. There are of course some of these out there but I assume it is like any profession. You have good engineers and bad ones, good doctors  and bad ones. This person I would put in the .... box. I read another analysis of some comapny (don´t remember now) the other day where the analyst had the wrong number of outstanding shares of the company and not by few but by a factor of 3. Amazing...and people read these, don´t think much for themselves and then invest accordingly. Poor people.....

 

He is right though, that the cash cost will be higher than 42. Probably around 70-80. Payback a little longer I assume but still good enough for Altius.

[Blue Macaw]

Cliffs news

 

"Eastern Canadian Iron Ore sales volume was 2.6 million tons, an increase of 9% versus the prior year's quarter. The increase was primarily driven by higher product sales from Wabush Mine due to the timing of vessel shipments. During the third quarter of 2013, sales volume at Bloom Lake Mine was flat year over year at 1.4 million tons. Wabush Mine sold 700,000 tons of iron ore concentrate and approximately 450,000 of iron ore pellets during the quarter.

 

Revenues per ton in Eastern Canadian Iron Ore were $109.52, up 3% from $106.57 in the prior year's third quarter. The higher per-ton revenues were attributable to a 17% year-over-year increase in seaborne iron ore pricing. The increase was partially offset by lag pricing that benefited the prior year's third quarter. Also, revenues per ton were unfavorably impacted by increased freight rates and the quarter's product mix, which was comprised of a higher proportion of iron ore concentrate versus pellets. The price premium has been historically lower for iron ore concentrate versus pellets.

 

Cash cost per ton in Eastern Canadian Iron Ore was $99.96, down 6% from $106.06 in the year-ago quarter. Third-quarter 2013 cash costs at Wabush Mine were $108 per ton, down 18% from 2012's comparable quarter, primarily due to absence of pelletizing costs from the Pointe Noire pellet plant, favorable foreign exchange variances, and a decreased cost rate due to the unsalable inventory and lower-of-cost-or-market adjustments recorded during the second quarter of 2013 at Wabush Mine. 

 

The year-over-year decrease in Eastern Canadian Iron Ore's cash costs per ton was partially offset by higher cash costs at Bloom Lake Mine of $92 per ton, up 5% from the prior year's comparable quarter. The increase was primarily due to increased mine development and maintenance expenses"

 

Eastern Canadian Iron Ore Outlook (Metric Tons, F.O.B. Eastern Canada)

For 2013, Cliffs is increasing its full-year sales and production volume expectations of 8 - 9 million tons to 8.5 - 9 million tons. Cliffs will sell approximately 1.5 million tons of iron ore pellets from its Eastern Canadian Iron Ore segment, with iron ore concentrate sales making up the remainder of the expected full-year sales volume range. 

 

The Company is maintaining its full-year cash-cost-per-ton expectation for Bloom Lake and Wabush mines of $90 - $95 and $115 - $120, respectively. Further, Cliffs is maintaining its full-year 2013 cash cost per ton in Eastern Canadian Iron Ore of $100 - $105. Depreciation, depletion and amortization is expected to be approximately $19 per ton for full-year 2013.

 

The Eastern Canadian Iron Ore revenues-per-ton sensitivity is included within the 2013 revenues-per-ton sensitivity table above.

 

Looking ahead, the Company continues to evaluate the long-term strategic fit of Wabush Mine and viability of Bloom Lake's Phase II expansion project. Driven by this ongoing evaluation, the Company will only provide its expected full-year 2014 sales volume for Bloom Lake's Phase I of approximately 5.5 - 6 million tons of iron ore concentrate.

 

 

 

 

[Blue Macaw]

So for Bloom lake we have a cash cost of 92 and a dep./amort of 18 dollars making it up to $110 dollars. Revenue $109,52 which makes this a quarterly loss, however slight. Revenue for 4th quarter is expected to be in the range of 110-115 per ton.

 

I assume the 3% royalty (Kami) would be in the cash cost somewhere contributing of approx $3 dolars. (If Bloom lake and Kami are to be identically compared). Is there a royalty at the Bloom lake?

 

So for a start I believe they (Cliifs) should close down the Wabush mine since that is the one that brings the eastern Canada iron down for Cliffs.

[Guest Dazel]

" the increase in cash cost is from increased mine  development and maintenance"....

 

Does that not sound capex being expensed? I have said that in the past...the reason you would do this is to expense capex immediately rather than Over a straight line basis in the life of the mine. Less tax payable now.

 

There is tax in Quebec on mining profits...Alderon is not in Quebec.

 

 

[ItsAValueTrap]

I think that they would keep one set of books for taxes and another set of books for GAAP reporting.

 

It also looks like Cliffs has continued to overpromise and underdeliver.  They've been saying that Bloom Lake's cash costs would be going down.

[Guest Dazel]

 

 

Bloom Lake changed models to a higher quality premium product....it really looks like they do not know what they are doing in operating Bloom Lake.

 

I will post IOC's numbers they are doing very differently than Cliffs...it will interesting to compare.

 

 

[ItsAValueTrap]

I don't think that their operating results would be much better if a more skilled group of mine engineers came in.