Author Topic: ALS.TO - Altius Minerals  (Read 1512732 times)

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6300 on: August 02, 2018, 04:59:30 AM »
USD to CAD conversion. I started with C$12.9 million annual net royalties to Altius. Then factored in temporary ramp-up effect, expansion rate reduction, production increase for 1.5% tail. Ended at 25 years, 5% discount rate.

Altius reports topline revenue, before 30% cost of sales. Standard accounting practice, like all the royalty companies. Most of the streamers have deceptively high revenue, must deduct cost of sales.
« Last Edit: August 02, 2018, 05:14:18 AM by linealdin »


petec

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Re: ALS.TO - Altius Minerals
« Reply #6301 on: August 02, 2018, 06:08:40 AM »
USD to CAD conversion.

D'oh. Thanks.

Altius reports topline revenue, before 30% cost of sales.

Yes I figured that out after I wrote the post. Forgot the fx conversion though. Thanks.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6302 on: August 02, 2018, 06:21:38 AM »
I have a very good idea how the next 5 years plays out (bull market mania, discoveries monetized, debt paid off, copper at $5, potash at $500.

This is the only thing I disagree with. It's certainly possible, but to have confidence that this will happen in a short timeframe is going too far for me.

Thatís the upside scenario. Thereís also a downside scenario: replay of 2013 to 2016. I believe Chapada, potash, electrical and LIF are robust enough to not shut down and muddle through. Altius puts in another C$150 million royalty purchase in a downside scenario. Junior equity portfolio devastated.

petec

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Re: ALS.TO - Altius Minerals
« Reply #6303 on: August 02, 2018, 06:29:51 AM »
I have a very good idea how the next 5 years plays out (bull market mania, discoveries monetized, debt paid off, copper at $5, potash at $500.

This is the only thing I disagree with. It's certainly possible, but to have confidence that this will happen in a short timeframe is going too far for me.

Thatís the upside scenario. Thereís also a downside scenario: replay of 2013 to 2016. I believe Chapada, potash, electrical and LIF are robust enough to not shut down and muddle through. Altius puts in another C$150 million royalty purchase in a downside scenario. Junior equity portfolio devastated.

Yes, that's a fair way to think about it.

I have 126m for Chapada - 50y mine life per your recommendation but I am discounting at a higher rate than you.

Does Altius publish the cumulative amount produced by Chapada towards the 75m threshold? I haven't seen that.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6304 on: August 02, 2018, 07:13:22 AM »
I have a very good idea how the next 5 years plays out (bull market mania, discoveries monetized, debt paid off, copper at $5, potash at $500.

This is the only thing I disagree with. It's certainly possible, but to have confidence that this will happen in a short timeframe is going too far for me.

Thatís the upside scenario. Thereís also a downside scenario: replay of 2013 to 2016. I believe Chapada, potash, electrical and LIF are robust enough to not shut down and muddle through. Altius puts in another C$150 million royalty purchase in a downside scenario. Junior equity portfolio devastated.

Yes, that's a fair way to think about it.

I have 126m for Chapada - 50y mine life per your recommendation but I am discounting at a higher rate than you.

Does Altius publish the cumulative amount produced by Chapada towards the 75m threshold? I haven't seen that.

Can add up amounts from the MD&Aís. 7.39 million pounds from Chapada delivered through Q1 2018. Roughly 8.4 million pounds through Q2 2018.

At the recent improved production rates (running processing plant at max capacity + better recovery circuits) I expect 5 million pounds delivered annually.

Under Yamanaís staged expansion plan the earliest the Altius royalty rate could be reduced to 2.65% is H2 2023 (commisioning plant at beginning of 2023 then a 5 month run-rate proving test).

Iím rooting for a delayed expansion (as these construction projects usually are). I want as much of the 75 million pound allotment delivered under the 3.7% rate as possible.

Altius only really benefits from expansion after its 1.5% tail rate kicks in. 1.5% of 175 million pounds is better than 1.5% of 134 million pounds.

Expansion to 32 MTA opens the possibility of further expansions if they continue finding lots of new near-mine resources. Chapada is Yamanaís best mine by far and they will try to maximize the benefit.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6305 on: August 02, 2018, 12:39:01 PM »
http://newfoundgold.ca

Nice new website for New Found Gold. Altius will own 14% of the company once the IPO completes in Q4 2018. Other strategic investors: Palisade Global, ThreeD Capital and McEwan Mining.

ThreeD Capital, which will own 20% of NFG, currently has its New Found Gold holdings listed as worth C$5.4 million. If that value holds through the IPO Altiusís 14% position will be worth C$3.8 million.

C$1 million of that Altius pays for as an investment, C$2.8 million in shares is payment for Sail Pond.

Website has an excellent project page for Sail Pond. Exciting project. Lots of silver and copper.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6306 on: August 02, 2018, 01:34:36 PM »
Sokoman closes at 31 cents. Spectacular run from 3.5 cents. Altius position, with executed warrants, is worth C$3.3 million. I think SIC is going to $2. The market is hungry for an exciting gold discovery.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6307 on: August 03, 2018, 06:58:07 PM »
https://midasletter.com/2018/08/sokoman-iron-corp-strikes-gold-rises-760-in-8-trading-sessions/

Sokoman finishes the week at 42 cents. Incredible. A preview of the bull market mania to come.

A Midas Letter interview with Sokomanís CEO linked above. The Phase 2 program has been increased to at least 10,000 meters with 2 drill rigs, scheduled to begin before October (was originally just 2000 meters).

Will have C$5 million in the bank after the Eric Sprott private placement and miscellaneous warrant exercises.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6308 on: August 08, 2018, 04:08:42 AM »
http://www.avrupaminerals.com/news/index.php?content_id=288

Alvito update from Avrupa Minerals. 2437.5 meters drilled in 18 holes. IOCG style mineralization has been found in two to four of the target areas. Assay results due in the second half of August.


petec

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Re: ALS.TO - Altius Minerals
« Reply #6309 on: August 08, 2018, 07:48:21 AM »
I dipped my toe today. For anyone interested:
- I discounted potash royalties at 4% into perpetuity (using q2 payments)
- I discounted Chapada at 6% for 50 years (having modelled volumes and assumed $2.7/lb flat)
- I applied a multiple of 3x to 777 and 4x to thermal coal
- I valued IOC and the other major equity holdings (i.e. the ones where they give the # of shares on the website) at market
- I applied zero value for the smaller equity holdings and the exploration royalties
- I included the debt and Fairfax prefs at face value
- I discounted holdco costs at 10%

This gets me to a p/nav of 1x. I'm happy there given optionality around commodity prices moving up, exploration success, and sensible deployment of future capital.

The discount rates were based off the idea that I want a 6% real return on a very safe long run cash flow stream. Assuming that prices will rise with inflation long term I can ignore inflation, hence the 6% discount rate for Chapada. Potash got 4% to allow for 2% volume growth, which ought to be reliable given world demand is growing faster than that and these are low cost assets with a weighted average inferred resource of >500 years.

I accept that will look aggressive to some but these are very assured cash flows with zero maintenance capital requirement, volatile in the short term but fairly predictable on a retirement-type timeframe (which is what I am thinking about - this goes into a "forget for 30 years" bucket for me).

I discounted holdco costs at 10% because I always do. Maybe I should have used a lower rate here to be consistent with the assets (which would being down my NAV as this is a liability) but the cash flows would keep coming even if they decided to retire and stop all operating costs tomorrow, which is a fairly unique attribute.