Author Topic: ALS.TO - Altius Minerals  (Read 1433750 times)

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6550 on: September 14, 2018, 12:36:32 PM »
Heh, I stand by my initial comment, definitely got taken to the cleaners. Not sure why they caved so easily. So they didn't even get anything for the two years that Vale stopped paying or we talking even prior to that? If they got zero cash that would be quite laughable if they didn't get anything for the 2 years that they stopped paying. Have to wonder what the Royal Gold/ Altius lawyers were doing.

Zero cash. Period.


StevieV

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Re: ALS.TO - Altius Minerals
« Reply #6551 on: September 14, 2018, 12:46:05 PM »
Heh, I stand by my initial comment, definitely got taken to the cleaners. Not sure why they caved so easily. So they didn't even get anything for the two years that Vale stopped paying or we talking even prior to that? If they got zero cash that would be quite laughable if they didn't get anything for the 2 years that they stopped paying. Have to wonder what the Royal Gold/ Altius lawyers were doing.

Zero cash. Period.

They say anything else nice about the settlement.  E.g., we didn't get any cash, but ...

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6552 on: September 14, 2018, 12:56:44 PM »
The upside is a commodity price bull scenario. If nickel goes to the moon again Altius will receive more cash under the new terms than it would have received under the old way Vale did things.

Remember how the dispute started. The nickel price went over US$20 per pound but the annual royalty Altius was receiving was stuck at C$5 million. It didn’t make sense. Vale was “selling” the nickel in inter-company transfers that basically ignored that nickel was trading over $20 on the spot market.

Now the royalty will measure the “gross metal value,” based upon published commodity prices, of the concentrate Vale produces at Long Harbour, NOT what value it “sells” the concentrate for in made-up intercompany transfers. This change matters. Vale made big cuts to the royalty with those transfers.

But Altius only gets a royalty on 100% of the gross metal value if commodity prices are much higher. If Vale is making a lot of money from VB in a bull market then Altius also makes a lot of money. If commodity prices fall the royalty revenue decreases in an accelerated manner.

Altius is betting on higher prices.

mikek

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Re: ALS.TO - Altius Minerals
« Reply #6553 on: September 14, 2018, 01:09:49 PM »
So all those years Vale underpaid, stopped paying for 2 years and Altius got 0 back payment, 0 for 2 years of no payment and now 50% of their current royalty amount.  Sounds like Altius lawyers did quite an amazing job on that one.  Maybe we can buy them a cookie or give them a pat on the head for doing such an amazing job on that one.  Well done!  Not to mention this trial was taking place in Altius own backyard.  Definitely gives me great confidence if these guys ever have to go to litigation again.  Heck, maybe we can even pay for Vale's lawyer fees also.  Very embarrassing and not a good look for Altius.

"They say anything else nice about the settlement.  E.g., we didn't get any cash, but ..."

LOL!  I needed a good laugh- thank you sir.  A better question might be- What in the world were you guys thinking with this settlement?  All I can say is I really hope that contract was worded very badly and Royal Gold/ Altius didn't have much leg to stand on.  It's definitely possible that this is what truly happened but definitely was a unexpected loss.
« Last Edit: September 14, 2018, 01:39:12 PM by mikek »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6554 on: September 14, 2018, 01:42:16 PM »
Important update from management:

Altius didn’t take a 50% haircut on the VB royalty. Complete misunderstanding on my part.

A typical NSR on a base metals deposit captures 56% to 60% of the “gross metals value” after taking into account typical processing and marketing charges and metal recoveries.

Altius and Royal Gold estimate their royalty will capture 50% of the “gross metals value” at current commodity prices, a higher percentage at higher commodity prices, and a lower percentage at lower commodity prices.


mikek

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Re: ALS.TO - Altius Minerals
« Reply #6555 on: September 14, 2018, 01:50:22 PM »
That is a good clarification, thank you for that.  Still not happy with the overall result but that definitely is a big change compared to thinking that they were only going to get half of the prior amount.

bizaro86

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Re: ALS.TO - Altius Minerals
« Reply #6556 on: September 14, 2018, 01:51:08 PM »
I don't think the 50% charge is as big a loss as people think. Vale was saying the smelter charges were 100% of the metal value, which is ridiculous, but zero isn't the right number either, and they are a permitted deduction.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6557 on: September 14, 2018, 02:07:26 PM »
https://republicofmining.com/2011/09/26/vale’s-massive-newfoundland-nickel-refinery-takes-shape-by-paul-brent-canadian-mining-journal-–-september-2011/

This describes what happens at Long Harbour. Vale delivers a concentrated ore to Long Harbour, which will be 20% nickel, 2.4% copper, and 1% cobalt. This concentrate will, at that point, have a “gross metals value” based upon market prices for those commodities.

Then Long Harbour crushes, grinds, gases and leaches the concentrate to produce saleable rounds of pure nickel, copper and cobalt.

Of course the process can’t capture all the metal in the concentrate. There’s a target recovery rate for each commodity. Then there are processing and marketing charges.

After all that what Altius receives is a 0.3% royalty on 50% of the original gross metals value of the concentrate that arrived at Long Harbour. That percentage was negotiated to rise if commodity prices rise.
« Last Edit: September 14, 2018, 02:12:10 PM by linealdin »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6558 on: September 14, 2018, 02:21:35 PM »
http://www.labradorironore.com/News-Releases/Press-Release-Details/2018/Labrador-Iron-Ore-Royalty-Corporation---Cash-dividends-for-the-third-quarter-of-2018---055-per-common-share-comprised-of-a-regular-dividend-of-025-and-a-special-dividend-of-030/default.aspx

LIF declares a 55 cent dividend for Q3. Altius receives C$1.733 million.

IOC gave an huge C$59 million dividend to LIF (92 cents per LIF share) but LIF decided to build its cash position “pending the outcome of relevant strategic considerations.”

Meaning they are waiting to see if shareholders vote to allow them to buy a copper royalty, which they can probably pay for in cash.

Crazy! LIF could have paid a $1.25 dividend this quarter if they had decided to pass the IOC dividend on to its shareholders.

(And they still can if shareholders reject their copper royalty plan.)
« Last Edit: September 14, 2018, 02:27:30 PM by linealdin »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6559 on: September 14, 2018, 02:26:36 PM »
LIF just got a C$59 million dividend for its 15% equity shareholding in IOC. That means IOC just paid out a shocking C$393 million to all its shareholders. As a quarterly dividend!

IOC is rolling in cash because of quality and pellet premiums.