Author Topic: ALS.TO - Altius Minerals  (Read 1094233 times)

TwoCitiesCapital

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Re: ALS.TO - Altius Minerals
« Reply #5280 on: December 04, 2017, 06:23:25 PM »
December 04, 2017 08:13 ET

Adventus Zinc Announces C$10 Million Bought Deal Private Placement

Adventus Zinc Corporation ("Adventus Zinc" or the "Company") (TSX VENTURE:ADZN) has today entered into an agreement with a syndicate of underwriters co-led by Cormark Securities Inc. and Haywood Securities Inc. (the "Underwriters") pursuant to which the Underwriters have agreed to purchase on a "bought deal" private placement basis 11,363,637 common shares of the Company (the "Shares") at a price of C$0.88 per Share (the "Offering Price"), representing total gross proceeds of C$10,000,000.56 (the "Offering"). It is anticipated that Adventus Zinc's strategic shareholders including Altius Minerals Corporation, Greenstone Resources LP and Resource Capital Funds will participate in the Offering. Closing is expected on or about December 21, 2017 and is subject to regulatory approval including that of the TSX Venture Exchange and the securities regulatory authorities.

In addition, the Company has granted the Underwriters an option (the "Underwriters' Option"), exercisable in whole or in part, on the closing date, to purchase up to 1,704,546 additional Shares at the Offering Price. In the event that the Underwriters' Option is exercised in its entirety, the aggregate gross proceeds of the Offering will be C$11,500,001.

The net proceeds of the Offering will be used by the Company to fund the Curipamba Project in Ecuador and its Ecuadorian Exploration Alliance, general and administrative expenses, corporate activities as well as working capital for the Company.

The Shares will be offered for sale on a private placement basis pursuant to applicable exemptions from the prospectus and registration requirements in the following jurisdictions in all of the Provinces of Canada and elsewhere.



Will cost Altius C$2.7 million of this offering to keep its current 27% position in Adventus.

Adventus had C$6.7 million in cash at the end of September, and they aren't drilling anywhere yet, so this is just taking advantage of the unusually high stock price. Opportunistic. With the bought deal they will be cashed up for the next 2 years.

I know that 2.7M isn't much, but if that is the case, I would prefer Altius let itself be diluted instead of increasing a commitment to a company who is simply looking for a cash grab.

Would much rather see an announcement from Adventus in the next month or two about some development that requires the use of these proceeds that would show that at least Altius provided for some growth opportunity as opposed to putting money in Adventus' bank account.


linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5281 on: December 05, 2017, 03:32:53 AM »
Curipamba was a great deal. No doubt Adventus is going to close more accretive deals. They work hard chasing deals and are cashed up for opportunities.

Environment should be target rich for a project acquisition. Juniors with good projects are still cash strapped (investors as fascinated with blockchains and marijuana as they are with resources) and the majors haven’t opened up the floodgates of exploration spending. Things are better than in January 2016, when the commodity cycle hit bottom, but not that much better.

Same logic applies to Altius. Their $50 million in new Fairfax money won’t buy a producing royalty from a major (too expensive) but will find equity and debt opportunities in the resource sector. LIF paying a 13% dividend but investors would rather buy blockchain farms. That is an opportunity.


linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5282 on: December 05, 2017, 03:52:19 AM »
http://www.allegiancecoal.com.au/irm/PDF/1276_0/Acquires100OwnershipofTelkwaMetCoalProject

Altius gives 100% ownership of Telkwa project to Allegiance in exchange for 40.6 million shares. Allegiance had owned only 20% of the project with the opportunity to earn up to 90% by completing various milestones.

Allegiance claims the simplied ownership structure will allow them to close joint venture and offtake deals with potential partners. There have been negotiations with steel mills, commodity trading and investment houses in recent months. Allegiance wants to sell off a minority percentage of the project, and offtake, for a big chunk of cash. Capex is not huge so a joint venture deal would significantly derisk the project.

Altius probably likes what Allegiance has done so far (intelligently structured PFS reduces startup capex to US$35 million), trusts the management team, and believes they can get a JV/offtake deal done quickly. They’ve now taken off the training wheels.

Signing a JV deal could easily quadruple Allegiance's meager market cap. Currently priced like a cash shell.

Coking coal, like iron ore, is on an unexpected bull run. Now is the time to lock down investments.
« Last Edit: December 05, 2017, 07:05:53 AM by linealdin »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5283 on: December 05, 2017, 07:15:04 AM »
http://www.alderonironore.com/index.php/news/2017/420-

Alderon releases updated economic impact assessment for Kami. Will add C$21.3 billion to Canada's GDP. I very much like the supportive quotes from Graham Letto and Yvonne Jones, the legislators for Labrador West. Government is going to have to get involved to finalize the rail and power deals.

The iron ore price is cooperating. If we get to US$90 for the benchmark 62% iron ore price I think Kami will lock down construction financing in late 2018.

Goldman Sachs has to be very, very wrong about the direction of the iron ore price. They've been wrong before.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5284 on: December 05, 2017, 09:11:40 AM »
LIF owns a 7% royalty on IOC's gross revenue, as well as a 15.1% equity stake in IOC. The royalty revenue has increased in the last year but the equity stake has been providing the real torque for LIF.

In looking at IOC's financials (from Rio Tinto) their policy seems to be to dividend out net earnings on a pro rata basis to the equity partners (Rio Tinto 58.7%, Mitsubishi 26.2%, LIF 15.1%).

*

In 2015 and the first half of 2016 IOC wasn't making any money:

IOC net earnings in 2015: US$12 million.

IOC net earnings in H1 2016: negative US$9 million

No earnings, therefore no IOC dividends were paid out to the equity partners in those six quarters. A real trough.

*

In H2 2016 IOC started to make money because the iron ore price rose, along with pellet and quality premiums:

IOC net earnings in H2 2016: US$73 million.

No dividend in Q3 but IOC in Q4 2016 paid LIF a US$11.325 million dividend. Roughly 15.5% of net earnings for H2 2016.

*

In H1 2017 IOC really started to make money:

IOC net earnings in H1 2017 of US$122 million.

IOC in H1 2017 paid a total of US$18.775 million in dividends to LIF. 15.4% of net earnings.

*

IOC's net earnings for Q3 2017 have not been revealed yet but it must have been huge.

IOC in Q3 paid US$26.4 million in dividends to LIF. If the dividend payout percentages hold that means IOC made US$171.4 million in net earnings in Q3. A massive step change from previous quarters. It means IOC has become a real profit center for Rio Tinto and its equity partners.

*

The IOC dividend for Q4 should be announced this week. I'm very interested to see if IOC net revenues have remained as high as they were in Q3.

*

True profitability at IOC will lead to plans for expansion. It is inevitable.





« Last Edit: December 05, 2017, 09:34:08 AM by linealdin »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5285 on: December 05, 2017, 09:53:28 AM »
If the Q4 IOC dividend is in the same range as the Q3 IOC dividend of US$26.4 million that has implications.

LIF pays out the IOC dividends it receives right to its shareholders:

US$26.4 million x 4 = US$105.6 million or CAD$134 million.

LIF could be paying over $2 in annual dividends sourced just from its IOC equity earnings.

Add to that another $1.50 in dividends sourced from its 7% royalty revenues. (C$40 million in royalty revenue a quarter minus 20% royalty tax, admin costs and income tax).

LIF could be paying out $3.50 per share in dividends in 2018. (At current production levels and current iron ore prices.)
« Last Edit: December 05, 2017, 09:56:07 AM by linealdin »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5286 on: December 05, 2017, 10:30:30 AM »
If LIF's ridiculous 7% royalty didn't exist IOC would be waaaaay more profitable.

Rio Tinto's financials indicate IOC is receiving roughly US$100 a tonne in revenue, while its cash costs are somewhere around US$35. That is terrific.

[IOC had US$871 million gross revenue and 8.71 million tonnes of pellets/concentrate sold in H1 2017. $871 million / 8.71 million tonnes = US$100 per tonne revenue. Cash costs per tonne sourced from media comments.]
« Last Edit: December 05, 2017, 10:32:21 AM by linealdin »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5287 on: December 05, 2017, 11:56:53 AM »
https://www.teck.com/news/news-releases/2017/teck-updates-steelmaking-coal-guidance---December-5,-2017

Teck updates Q4 steelmaking coal guidance. Average realized price of US$165 to US$170. (Q3 realized price was US$159.)

Sales of 6.5 million tonnes. (Q3 sales of 7.54 million tonnes.)

Price slightly up, sales volume down.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5288 on: December 05, 2017, 12:04:20 PM »
Transalta Investor Day is tomorrow, December 6th. Expect some news regarding early (pre-2020) coal to gas conversions at the Sundance and Keephills plants. I'll be happy if no mention is made of Sheerness (Transalta only owns 25% of Sheerness; ATCO has 50%, and two of Transalta's Asian partners own the final 25%.)

Only Genesee and Sheerness really count (87% of electrical coal royalties). The rest can die.
« Last Edit: December 05, 2017, 12:06:58 PM by linealdin »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5289 on: December 05, 2017, 12:19:06 PM »
https://www.prnewswire.com/news-releases/glencore-and-ontario-teachers-pension-plan-announce-the-creation-of-a-new-partnership-focused-on-base-metals-streams-and-royalties-662053893.html

Glencore and Ontario Teachers form the BaseCore Metals LP, a joint venture base metals royalty vehicle. They will be pursuing new stream and royalty financing. Now Altius's main competition in base metals royalties.

The secret to winning this competition? Don't compete until the time is right. Let BaseCore expend its reserves by buying increasingly expensive streams/royalties in a bull market. They will feel institutional pressure to spend. Hard to be contrarian when your very high salary is only justified by constant deal flow. 

Funny that Glencore felt the need to include the Callinex and Canadian Zinc royalties on the list to add a little weight. All are exploration projects with no production in sight. Altius actually financed a spinout of Paragon Minerals who consolidated the South Tally pond property. Then Paragon was acquired by Canadian Zinc.
« Last Edit: December 05, 2017, 12:31:22 PM by linealdin »