Author Topic: ALS.TO - Altius Minerals  (Read 1907609 times)

bizaro86

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Re: ALS.TO - Altius Minerals
« Reply #6550 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 #6551 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 #6552 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 #6553 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.


linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6554 on: September 14, 2018, 04:44:35 PM »
Last full year of VB nickel royalties was the fiscal year ended April 2015: only C$2.5 million revenue. Nickel prices were significantly higher that year versus today’s price.

Lower prices and lower production = don’t expect great results in the short term. VB will be below C$2 million for a while. Nickel is still in a trough and Long Harbour is still ramping up. Neither of those things will last forever.

I’m certain we will see $10 nickel and max design capacity reached at Long Harbour during this bull cycle. You will see the renegotiated royalty produce outsize returns in that environment.

« Last Edit: September 14, 2018, 04:49:41 PM by linealdin »

Cigarbutt

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Re: ALS.TO - Altius Minerals
« Reply #6555 on: September 14, 2018, 05:13:02 PM »
I don't mind this from a current value perspective, because I think the savings on legal fees, reduction in uncertainty, and getting the payments started now (present value) probably offsets the lost money somewhat.

I like the "concept" that includes an adjusted and variable NPV going forward and a "sunk" cost.
Details need to be analyzed but the settlement seems OK, just in the lower range of the more unfavorable outcomes.
Legal costs are probably very significant too.

Helpful to match past expectations with actual results once in a while. When a projected slam dunk becomes a rimshot, somehow the expected asset of this situation from the past has to be written down. When an asset write-down is officially recognized, the interesting questions are not about the actual timing of the recognition but more about when and especially why those assets should have been written down. With the new info now in the open, one could always evolve the "narrative" but perhaps, if the discount rate is to be "untouched", conservatively, a range of cash flow scenarios should be included and should take into account both the positive and the negative potential.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6556 on: September 14, 2018, 06:45:46 PM »
I don't mind this from a current value perspective, because I think the savings on legal fees, reduction in uncertainty, and getting the payments started now (present value) probably offsets the lost money somewhat.

I like the "concept" that includes an adjusted and variable NPV going forward and a "sunk" cost.
Details need to be analyzed but the settlement seems OK, just in the lower range of the more unfavorable outcomes.
Legal costs are probably very significant too.

Helpful to match past expectations with actual results once in a while. When a projected slam dunk becomes a rimshot, somehow the expected asset of this situation from the past has to be written down. When an asset write-down is officially recognized, the interesting questions are not about the actual timing of the recognition but more about when and especially why those assets should have been written down. With the new info now in the open, one could always evolve the "narrative" but perhaps, if the discount rate is to be "untouched", conservatively, a range of cash flow scenarios should be included and should take into account both the positive and the negative potential.

Writedowns? The Voisey’s Bay royalty has a book value of C$5.717 million. How much of a writedown should Altius take? C$3 million? C$5 million?

Why not discount rate it to zero?

bizaro86

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Re: ALS.TO - Altius Minerals
« Reply #6557 on: September 14, 2018, 07:40:01 PM »
I don't mind this from a current value perspective, because I think the savings on legal fees, reduction in uncertainty, and getting the payments started now (present value) probably offsets the lost money somewhat.

I like the "concept" that includes an adjusted and variable NPV going forward and a "sunk" cost.
Details need to be analyzed but the settlement seems OK, just in the lower range of the more unfavorable outcomes.
Legal costs are probably very significant too.

Helpful to match past expectations with actual results once in a while. When a projected slam dunk becomes a rimshot, somehow the expected asset of this situation from the past has to be written down. When an asset write-down is officially recognized, the interesting questions are not about the actual timing of the recognition but more about when and especially why those assets should have been written down. With the new info now in the open, one could always evolve the "narrative" but perhaps, if the discount rate is to be "untouched", conservatively, a range of cash flow scenarios should be included and should take into account both the positive and the negative potential.

Writedowns? The Voisey’s Bay royalty has a book value of C$5.717 million. How much of a writedown should Altius take? C$3 million? C$5 million?

Why not discount rate it to zero?

I doubt he means an IFRS writedown, as obviously this was a great investment in hindsight. However, I doubt anyone doing a sum of the parts valuation of ALS had Voisey's at $5.7 MM. If the expected value before was $20 MM in refunds plus an annual royalty per year (and you had suggested $20 MM in back payments very recently) then the fair value of the company is less when they don't collect any refunds.

That isn't an accounting refund but it does change the fair value of the company. 

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6558 on: September 14, 2018, 08:09:30 PM »
I wrote that C$20 million arrears was the max that Altius could possibly receive. I also acknowledged the possibility Altius could get zero: not a cent of arrears and not another cent of royalty. Vale could have lost at trial, dragged out multiple appeals for 15 years then declared bankruptcy for their Canadian subsidiary. These things happen.

The real result was something in the middle.

I’m not interested in these imaginary fluctuations in value. Altius was stupid cheap yesterday. It remains stupid cheap today.

bizaro86

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Re: ALS.TO - Altius Minerals
« Reply #6559 on: September 14, 2018, 08:16:30 PM »
Sure, but probably the expected value of that decision was $10mm or so. Figure they lose on the underpayment but win on the zero payments. Since an expected near term paymentof $10 mm evaporated, ALS is absolutely worth 10mm less.

I still think it's cheap, especially with the results coming out of LIF, but it's 10mm or so less cheap than it was.

I am glad the royalty is starting again, that helps, as getting those payments now has a better present value than after appeals are exhausted at some indeterminate future point.