Author Topic: ALS.TO - Altius Minerals  (Read 1508121 times)

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6850 on: November 28, 2018, 08:04:28 AM »
The case for LIF paying at least a $1 dividend in Q4 remains intact.

LIF should have a C$62 million cash position (after receivable royalty revenue from IOC pays for the Q3 LIF dividend).

I expect LIF to receive C$40 in total royalty revenue in Q4, along with an IOC dividend of around C$20 million.

Unless LIF management does something unusual (they have been doing strange things) the cash position should decline to around C$40 next quarter. Still a high cash position based upon their history.

The C$22 million drawdown from the cash hoard plus the aftertax income from C$60 million in royalties and IOC dividends should easily cover a C$64 million LIF dividend payment ($1 per share).

*

If LIF is still holding more than C$60 million cash at the end of Q4 then they would likely be punishing their shareholders for being against their proposed bylaw change. Every LIF investor wants that pass through royalty income.

« Last Edit: November 28, 2018, 08:07:09 AM by linealdin »


linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6851 on: November 28, 2018, 10:27:05 AM »
LIF received a C$59 million dividend from IOC in Q3 (based on its 15.1% equity ownership of IOC). Part of the reason for that bumper payment was catch-up from the strike interruption (no IOC dividends paid in Q1 or Q2). Another part is the increase in rail haulage fees IOC receives from Champion (Bloom Lake had full production quarters in Q2 and Q3).

Champion estimates it will pay C$16.88 per tonne in rail transportation fees:

C$16.88 x 7.4 million tonnes = C$125 million in annual rail haulage fees.

Tacora Resources re-starting Scully will likely be at similar rates:

C$16.88 x 6 million tonnes = C$101 million in annual rail haulage fees.

IOC is going to enjoy an extra C$226 million in rail haulage revenue annually if these two mines are successful. Some of the profit from that revenue will eventually filter down to LIF because of its 15.1% IOC equity position.

(The Tata Steel DSO mine also pays IOC to use its railway.)
« Last Edit: November 28, 2018, 10:31:43 AM by linealdin »

bizaro86

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Re: ALS.TO - Altius Minerals
« Reply #6852 on: November 28, 2018, 03:53:49 PM »
Surprised no one has mentioned the real royalty news on Tacora restarting. MFC Bancorp has a 7% royalty that will start paying out. Should be pretty close to half their market cap in cash flow every year. Lots of moving parts and low quality management, but that's a pretty big catalyst.

I wonder if they'd sell it to ALS...

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6853 on: November 29, 2018, 02:57:33 AM »
Surprised no one has mentioned the real royalty news on Tacora restarting. MFC Bancorp has a 7% royalty that will start paying out. Should be pretty close to half their market cap in cash flow every year. Lots of moving parts and low quality management, but that's a pretty big catalyst.

I wonder if they'd sell it to ALS...

It could be an outlandish royalty. Set to pay C$40 million a year for the next 25 years. If MFC were to auction the royalty Altius doesn’t have to have the money to pay “full” price.

On the other hand the royalty is worth nothing if the mine fails. Tacora is applying an innovative manganese removal technology. If it doesn’t work the economics of the mine collapses. I think the 7% royalty itself is a serious burden on the mine if we reach a low iron ore price environment.

Making a takeover offer for MFC is probably the safest route if Altius likes the royalty. MFC is trading at a pitiful market cap, and has a good deal of cash on the books. Strip out the cash and royalty, dispose of the rest.

bizaro86

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Re: ALS.TO - Altius Minerals
« Reply #6854 on: November 29, 2018, 06:25:07 AM »
Dispose of the rest would be a tall order, but potentially very value enhancing. That royalty is worth way more than 100% of MFC 's market cap.

The Cypriot bank, hydro assets, and European rental property probably all have positive value as well. I doubt the alberta gas plant is worth anything, and don't know about the metals assets.

All that said, I'd be thrilled if ALS bought them out and was able to recoup anything over the cost of shutting it down/dealing with liabilities. Market cap is only $65 MM. Even if they paid $100 MM that is a low single digits multiple of royalty revenue. Hugely value accretive.


linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6855 on: November 29, 2018, 07:34:10 AM »
Altius project generation update: Farm-out deals for Mt. Isa and Broken Hill are in the due diligence stage and expected to close next quarter.

The Finland gold and nickel land has been dropped.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6856 on: November 29, 2018, 10:55:31 AM »
Nutrien is starting to talk about production growth at the recent CITI Basic Materials Conference.

10.8 MT production in 2016
12.2 MT production in 2017
~13 MT in 2018

After 13 MT Nutrien has an additional 5 MT of unused capacity. They plan to slowly bring on that capacity as the potash prices moves to an “average” mid-cycle price of US$400 per tonne. Nutrien obviously wants to keep BHP’s Jansen mine from being built.

I want to see 14 MT of production in 2019, heavy on Rocanville.

Beyond 18 MT Nutrien claims it can bring on brownfield capacity more economically than any greenfield operation on the planet.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6857 on: November 29, 2018, 12:58:43 PM »
https://www.thereminder.ca/news/local-news/hudbay-eyes-2021-for-flin-flon-mine-closure-1.23512086

Hudbay sends memo to Flin Flon staff that 777’s end date will be in 2021. The “remnant strategy” to extend mine life past 2021 seems to have failed.

Hudbay is still spending millions on exploration in Manitoba (partially on Altius royalty land) but they are unlikely to find a deposit before the 777 closure date.

SharperDingaan

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Re: ALS.TO - Altius Minerals
« Reply #6858 on: November 30, 2018, 08:01:30 AM »
Re disclosure.
We added new funds to our IRON position over the summer, and completed our position over the last week.
We will also be voluntarily refraining from any comment on IRON until well into Q1.

SD

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6859 on: December 01, 2018, 08:35:52 AM »
Re disclosure.
We added new funds to our IRON position over the summer, and completed our position over the last week.
We will also be voluntarily refraining from any comment on IRON until well into Q1.

SD

By mid-Q1: A new strategic investor on Alderon equity level. Then a restructured project-level deal with HBIS to follow. That’s the best we can hope for.