Author Topic: ALS.TO - Altius Minerals  (Read 1433561 times)

nostradamus

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Re: ALS.TO - Altius Minerals
« Reply #6520 on: September 14, 2018, 06:27:57 AM »
Royal Gold's news release:

https://www.royalgold.com/investors/news/news-details/2018/Royal-Gold-Resolves-Voiseys-Bay-Royalty-Dispute/default.aspx

Weird slight difference in the language used:

Royal Gold:

Royal Gold expects the 3% royalty rate will apply to approximately 50% of the gross metal value in the concentrates at existing nickel, copper and cobalt prices.

Altius:

Altius expects the 3% royalty rate will apply to approximately 50% of the gross metal value in the concentrates at existing nickel, copper and cobalt prices, after accounting for acceptable processing and marketing related charges and metal recoveries.



nostradamus

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Re: ALS.TO - Altius Minerals
« Reply #6521 on: September 14, 2018, 06:30:38 AM »
nostradamus
it looks like the past royalties were expunged and vale will only be responsible for payments beginning in april 2018

so the approximately $10m in back payments is lost...

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6522 on: September 14, 2018, 06:31:26 AM »
https://www.marketwatch.com/press-release/royal-gold-resolves-voiseys-bay-royalty-dispute-2018-09-14

The Royal Gold version of the press release. The payment to the Nickel Royalty Partnership for Q2 of US$2.2 million, or C$2.86 million, will be paid in October. Subsequent quarterly payments will be paid 45 days after quarter end.

Altius’s 10% share of the Q2 payment will be C$286K.

Cash compensation payments would likely be the confidential part of the settlement, but we will see the payments in the Royal Gold and Altius financials (if they exist).

StevieV

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Re: ALS.TO - Altius Minerals
« Reply #6523 on: September 14, 2018, 06:44:39 AM »
Quote
By this December 31st the Voisey’s Bay royalty will have been non-paying for a little under 3 years. With interest I calculate about C$10 million is owed on that basis.

In the lawsuit for chronic underpayment due to inter-company transfers, filed in 2009, the Labrador Nickel Royalty partnership was asking for US$29 million. That underpayment number has probably doubled since then. So let’s say US$58 million.

Altius would get 10% of the chronic underpayment award: US$5.8 million, or C$7.63 million.

A total of C$20 million with interest? That’s about the most I would expect.

More important is that the royalty keep paying in the future. Voisey’s Bay certainly has more rich underground bodies which will extend mine life for 50 years or more. Once the underground mine is built they will drill extensively and deeply.


Above is what linealdin said earlier.  I agree that the forward payments are more important.  It is hard to tell whether this is a good settlement or not.  I read Altius's statement that the payments are in line with that they would have expected before the dispute, but the companies are always going to put a positive spin on a settlement.  So, it's hard to know if it is true.

It is possible there are back payments in the settlement agreement, though my impression is that there are not.  I guess we will see.  That could be what Royal Gold and Altius gave up to get the settlement.

Not getting any market quotes yet to see if there is a reaction in the stock price.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6524 on: September 14, 2018, 06:48:04 AM »
The settlement ties the royalty to commodity price escalators.

At current commodity prices (US$5.67 nickel, US$2.67 copper, US$28.46 cobalt) there’s 50% coverage of total Voisey’s Bay production.

At $8 nickel and $4 copper there’s, let’s say, there’s 80% coverage. And a corresponding decline in coverage percentage if commodity prices decline.

Royal Gold and Altius are betting that today’s commodity prices are trough prices and expect a multiplier effect for their royalty with higher commodity prices (higher prices X higher proportion of Voisey’s Bay production subject to the royalty).

nostradamus

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Re: ALS.TO - Altius Minerals
« Reply #6525 on: September 14, 2018, 06:49:32 AM »
286k * 4 = CA$1.14m annualised. Isn't this a lot lower than they were getting previously?

The ALS website says "LTM (as of January 31, 2016) Royalty Revenue $2.2 million".

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6526 on: September 14, 2018, 06:56:25 AM »
It’s a defeat for Royal Gold and Altius. Vale has effectively cut the Voisey’s Bay royalty in half at current commodity prices. RG/Altius will get some of their original royalty back as commodity prices rise.

But the original royalty agreement was for a royalty on 100% of the metal value produced by Voisey’s Bay (after customary net smelter deductions).

The only justification for taking the deal: worry that Vale could lose at trial and then still drag out multiple appeals for another 10 years. Litigation takes forever, costs millions, and you may not get paid even if you win in the courts.

bizaro86

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Re: ALS.TO - Altius Minerals
« Reply #6527 on: September 14, 2018, 06:56:42 AM »
Re: the Silicon project - it looks like renaissance sold the project for cash payments, so the most they can get out of it of all goes well is $3mm total, 300k  received so far. Does that seem right?

If so, the vast majority of the upside is in the royalty not the equity, since REN shares won't move much on a $3mm prospective gain.

Shows the value of not capping the upside if it works out...

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6528 on: September 14, 2018, 07:02:30 AM »
Re: the Silicon project - it looks like renaissance sold the project for cash payments, so the most they can get out of it of all goes well is $3mm total, 300k  received so far. Does that seem right?

If so, the vast majority of the upside is in the royalty not the equity, since REN shares won't move much on a $3mm prospective gain.

Shows the value of not capping the upside if it works out...

Renaissance was granted a 1% royalty on Silicon (Altius has 1.5%). So both companies benefit if Anglogold discovers a big deposit and puts it into production. Altius had a modest share position in Renaissance: 583,000 shares (Callinan had shares in Kinetic Gold, then Renaissance bought Kinetic for shares).
« Last Edit: September 14, 2018, 07:08:32 AM by linealdin »

mugwump

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Re: ALS.TO - Altius Minerals
« Reply #6529 on: September 14, 2018, 07:17:30 AM »
re: vale settlement
I agree with linealdin- it's better to get PRESENT CASH flow than to
win pyrrhic victories and get No CASH flows