Author Topic: ALS.TO - Altius Minerals  (Read 1886413 times)

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6840 on: November 27, 2018, 11:42:23 AM »
https://projects.eao.gov.bc.ca/api/document/5be1e5e7c4337d0024da316e/fetch

Project Description for Allegiance Coal’s Tenas Project, filed for the environmental permitting process. Impressive document.

I expect no issues with permitting. Allegiance is professional and has consulted with stakeholders and experts. They’ve put in the work.

Tenas is going to be a mine because it ticks all the boxes: low capex, excellent joint venture partner, clear path forward in permitting process.


linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6841 on: November 28, 2018, 03:53:24 AM »
https://www.spglobal.com/platts/en/market-insights/latest-news/metals/112718-analysis-iron-ore-pellet-demand-in-europe-supported-by-carbon-credits-met-coal-and-coke-price-rise

Iron ore pellet demand is stronger in Europe because of higher carbon emission pricing. Steelmakers have to use less coke and more high purity pellets to avoid carbon pricing. The Port of Sept Iles shows IOC’s bulk carriers have been heading to Europe at high rates.

60% or more of IOC’s sales will be pellets going forward. Specialty product. What happens in the general iron ore market is less important than what happens in the specialized pellet market.

LIF is oversold.


Williams406

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Re: ALS.TO - Altius Minerals
« Reply #6842 on: November 28, 2018, 05:11:29 AM »
I'll be interested to see if Altius takes their LIF stake toward 10% if they get good enough pricing. Now its a pass-through royalty asset for them, but closer to 10% combined with perhaps Anglo Pacific bumping up their stake--to the extent Altius and Anglo are like-minded--and strategic considerations emerge.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6843 on: November 28, 2018, 07:19:59 AM »
https://www.google.com/amp/s/www.argusmedia.com/en/news/1797983-atlantic-pellet-steel-slump-rattles-2019-talks%3famp=1

The recent steel and iron ore slump has affected current negotiations for 2019 Atlantic pellet premiums. Will premiums for blast furnace and direct reduction pellets be US$5 or US$10 higher than the record-setting 2018 pellet premiums?

No indication that the premiums will go lower than 2018 levels. The pellet market is tight for specific reasons: Samarco not returning until 2020 at the earliest (at a third of capacity) and no announcements of new pellet supply capacity. LIF will prosper for the next few years based upon their royalty on pellets.

Altius is likely on the bid for more shares.


linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6844 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 #6845 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 #6846 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 #6847 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 #6848 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 #6849 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.