Author Topic: ALS.TO - Altius Minerals  (Read 1095302 times)

SnarkyPuppy

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Re: ALS.TO - Altius Minerals
« Reply #5290 on: December 05, 2017, 12:58:29 PM »
Probably lots of risk in asking this question- but I personally find your continued commentary to be helpful.  Given your continued granular review of Altius, in addition to some of the back/forth discussions had on a few pages back, I'm very curious...

What is your estimated range of Altius' intrinsic value today?  And at what rate do you expect intrinsic value to grow long term? 

IMO, the phrase "you don't need a scale to know a man is fat" is the best perspective for determining whether something is cheap, but at the same time a general IV and growth range must be estimated to know that the current price is demonstrably cheap. 


linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5291 on: December 06, 2017, 03:28:30 AM »
Probably lots of risk in asking this question- but I personally find your continued commentary to be helpful.  Given your continued granular review of Altius, in addition to some of the back/forth discussions had on a few pages back, I'm very curious...

What is your estimated range of Altius' intrinsic value today?  And at what rate do you expect intrinsic value to grow long term? 

IMO, the phrase "you don't need a scale to know a man is fat" is the best perspective for determining whether something is cheap, but at the same time a general IV and growth range must be estimated to know that the current price is demonstrably cheap.

Short answer: I donít know the exact intrinsic value. Maybe not particularly useful for my purposes? I am never selling my shares (therefore not looking for when market cap exceeds IV) and I will buy additional shares at the prices that Altius does its buybacks. So right now Iím positioned to buy when the stock pulls back to $11 or below. Yes, it will go all the way back down at some point. Canadian resource investor is a skittish and damaged creature.

Quite difficult to value some of these royalties. Chapada, for example. To do a decent job of valuing the asset I would need to model the monthly cash flows (thatís how Altius gets the money) not on an annual basis as with most free NPV calculators. What discount rate to use? I would need to figure out how mine life will be affected by all the recent deposit discoveries both near mine and regionally. Did they discover a Chapada clone 13 kilometers away from existing mine? Mine life will be 20 years? 30 years? 50 years?  What about these rumblings about expansion? What time frame will that happen and how will stream revenue be affected? What about the recent change in Brazilian mining royalties? Has risk of expropriation increased in Brazil? Should Yamanaís massive debt load affect how Chapada is valued? Copper just had the biggest one day drop in years. Where is the price going in the near and long term?

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5292 on: December 06, 2017, 03:39:22 AM »
https://wcsecure.weblink.com.au/pdf/PXX/01930683.pdf

More assay results from PolarX. Mineralization lengths have been significantly longer than historic drill holes (poor recovery). Opportunity to expand the 1.5 million tonne historic, high grade Zackly deposit. New JORC compliant resource will be completed in early 2018.

PolarX is planning 12,000 meters of drilling in 2018 to search for a large copper/gold porphyry deposit below the higher grade skarn. See interview with CEO at London Mines and Money conference (link on PolarX website).

I love Other People spending Millions (OPM) on Altius royalty land. 2% royalty on Zackly and nearby exploration targets.
« Last Edit: December 06, 2017, 03:52:28 AM by linealdin »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5293 on: December 06, 2017, 06:58:43 AM »
http://www.transalta.com/newsroom/news-releases/transalta-announces-accelerated-transition-clean-energy/

Transaltaís coal to gas conversion plans:

1) No mention of Sheerness. Thank heavens. Transalta is an owner of Sheerness and no mention of CTG for that power complex is a big deal.

2) Sundance and Keephills CTG conversions in 2021 to 2022 timeframe. Change from 2021 to 2023 original timeframe. Not much of a change. I thought they were about to announce a much more expedited schedule. Terrific!

3) Mothballing of Sundance 3, 4 and 5 for one to two year periods starting in April 2018 and April 2019.

4) Impact on Altiusís Highvale royalty? Maybe not huge for the next 4 years. They plan to run the 5 non-mothballed units (Keephills 1, 2, and 3, Sundance 6 and one of the other Sundances in a rotation) at full capacity. That takes plenty of coal.

5) Pipeline construction is a big brake on CTG conversions. The Sundance and Keephills complexes will require a new 120 kilometer pipeline. Wonít happen overnight. Will require major investment and time.

This is just the first of multiple pipelines that the Sundance and Keephills complexes will require. Transalta believes that multiple pipelines are required to reduce operational risks, and they are negotiating with other parties. If one pipeline leaks the other pipelines can make sure the electricity keeps flowing in Alberta.

All these pipelines will take years. Even in a doomsday scenario of Capital Power announcing early conversion of Genesee today it will still take until 2021 to get the multiple pipelines for Genesee contracted, permitted, constructed and commissioned.

6) Mothballing will raise electricity prices for remaining units in Alberta market. Genesee, Sheerness, and Keephills coal electricity generation will be in demand because no replacements have shown up to cover the mothballed capacity.
« Last Edit: December 10, 2017, 03:50:32 AM by linealdin »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5294 on: December 06, 2017, 07:42:25 AM »
If Transalta manages to convert one of its coal units to gas on schedule in 2021 it will be the first CTG conversion in Canada.

Does this seem like an "Accelerated Transition to Clean Energy" to you? Not to me. 2021 seems far away.

Don't believe the hype. Ain't nothing happening to Altius's electrical coal revenue for a very long time.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5295 on: December 06, 2017, 08:37:20 AM »
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.

Take another look at the pile of royalties Glencore tried to sell for US$300 million (C$383 million). I'm certain Altius heard the price and had a good laugh.

As I said above the Callinex and Canadian Zinc royalties are pure exploration projects at this point, similar to many exploration royalties Altius owns. The Horne 5 and El Pilar projects are at the feasibility stage but also no certainty they will reach production. And the royalties are not huge (2% and 1% respectively).

The two crown jewels assets are on Antamina and Highland Copper, both large mines, but they are not NSR royalties. They are NPI's, or net profit interests. So when the mines are not profitable during low parts of the commodity cycle the NPI holder gets nothing.

This is not academic. Highland Valley Copper over the last 9 months has negative C$42 million in profits. Glencore, even in a booming copper market, was receiving nothing or little from its 0.5% NPI on Highland Valley over the last 9 months. No wonder they wanted to sell it.

Antamina is currently a big profitable mine and a 1.67% NPI is currently throwing off lots of cash. But there is significantly less safety versus a 1.67% NSR.

I think Ontario Teacher's got a pretty bad deal. They paid a great deal of cash for a 50% stake in this portfolio of royalties. I suppose they are also paying for Glencore's savvy. Maybe Glencore will figure out how to steer this vehicle to a successful IPO.
« Last Edit: December 06, 2017, 08:46:12 AM by linealdin »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5296 on: December 06, 2017, 12:24:59 PM »
Franco Nevada Q3 revenue: US$171.5 or C$219.49 million

Altius Q2 revenue: C$17.90 million

Franco-Nevada market cap: C$17.9 billion

Altius market cap: C$568 million

Franco-Nevada's market cap is 31.5X larger than Altius's market cap, but its revenues are only 12.3X Altius's revenue.

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Is Franco-Nevada expensive? Is Altius cheap? Yes and yes.

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Game plan should be to monetize assets during a long and glorious bull market for $500 million or so. They made $250 million monetizing assets in the last bull market from 2003 to 2011. Doubling that benchmark should be the minimum goal. Enter the ensuing bear market with that cash, and with the Fairfax and other lender relationships, and start making FNV-size deals in the base metals space. Gain some real weight. Buy $1 billion in royalties and streams. (Last bear market: around C$470 million in royalties and streams purchased.)
« Last Edit: December 06, 2017, 01:06:56 PM by linealdin »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5297 on: December 06, 2017, 02:04:14 PM »
https://docs.wixstatic.com/ugd/8d6671_6e72a00aec504c92917db3f8ddbb0b1d.pdf

Emu NL raises A$600K. I think Altius likely participated to maintain its equity position. Drilling equipment arriving in Chile from Australia.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5298 on: December 07, 2017, 04:29:32 AM »
http://www.wolfdenresources.com/files/PickettMtn-Stakeholders.pdf

New Wolfden presentation for local Maine public info session. 10,000 meters of drilling planned starting mid-December. Two holes completed by Christmas. 2 or 3 locals will be hired to help with the drill program.

Airborne geophysical over whole property in January. Environmental survey work to begin this Spring.

A small underground mine would have a very small disturbance area (800 meters x 500 meters), less disturbance than the logging that has been taking place on the property. No processing facilities would be on site. Environmentalists will still protest any kind of development.

Should be fairly low cost exploration. No need for an exploration camp, drillers can stay at accommodations in the nearby town. Near highway and existing logging roads for bringing in the drilling equipment. (Much less expensive than EMU's project in a remote part of Chile.)

From Donald Hoy's comments at the public forum, and from Wolfden's corporate history, it sounds like the plan is to prove up the resource, then sell it to a major to actually permit and build the mine. It will be very tricky to navigate the permitting (open pits forbidden and other rules) and environmental protesters. Wolfden doesn't have the skill set, they are pure explorers.

Ewan Downie, founder of Wolfden, sold 400,000 shares at 36 cents last week. Bad form to sell so early in the project's development?
« Last Edit: December 07, 2017, 07:28:38 AM by linealdin »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #5299 on: December 07, 2017, 09:53:55 AM »
Couple of more thoughts on Transalta's news from yesterday.

1) Cost. Transalta's press release didn't include the cost of the pipeline. Tidewater Midstream's press release did:

https://globenewswire.com/news-release/2017/12/06/1233869/0/en/Tidewater-Midstream-and-Infrastructure-Ltd-Enters-Into-Agreement-With-TransAlta-to-Construct-an-Inter-Alberta-Pipeline-Network-supported-by-a-15-year-Take-or-Pay-Proposed-Issuance-.html

C$150 million in capex for the 120 km pipeline. That's a cost of C$1.25 million per kilometer. It's an expensive project, way more expensive than the cost of the CTG conversion itself.

2) Timing. Transalta and Tidewater are signing a deal in December 2017 for a pipeline that has to be ready for a CTG conversion plant operational sometime in 2021. That's more than three years away. That's how early these pipeline deals have to be made. No pipeline = no gas plant.

3) Location. Why is this pipeline 120 km long? Isn't natural gas everywhere right under the feet in Alberta? Gas is everywhere but an economic, reliable source of gas will likely come from an existing gas processing plant like Tidewater's Brazeau Complex. These complexes may be pretty far away from your planned CTG plant.

4) Double Trouble. This pipeline, once it is expanded to maximum capacity, will be able to provide 50% of Transalta's gas requirements at Keephills and Sundance. At its initial capacity this pipeline will only provide 19% of Transalta's needs. So Transalta still needs to sign another pipeline deal with another provider for just as much capacity. They may even need to do a third pipeline deal to ensure reliability.

5) ATCO's been threatening gas conversions for years. Capital Power, at its investor day today, mentioned the possibility of a staged conversion to gas (whatever that means). All of it is just talk to sound eco-friendly until these companies actually sign take-or-pay pipeline construction deals for hundreds of millions of dollars. Once pipeline deals are signed then a 3 year clock begins until the pipeline gas is commissioned and available. Nothing happens overnight.

6) I dislike Transalta's gas conversion news because it casts a pall over Altius but doesn't actually affect its royalty revenue. The Highvale mine operation was already set to leave Altius royalty land by 2023 (see Altius website). The Highvale royalty is going to die a natural death, totally unrelated to the gas conversions.