Author Topic: ALS.TO - Altius Minerals  (Read 1965080 times)

Liberty

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Re: ALS.TO - Altius Minerals
« Reply #7370 on: July 27, 2020, 05:56:33 AM »
"Altius to Acquire Additional Royalty Interests from Liberty Metals & Mining Holdings, LLC"

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entered into an agreement with Liberty Metals & Mining Holdings, LLC (“LMM”), to acquire its 44.9% interest in certain royalty based limited partnerships, of which Altius acts as general partner.  Upon closing, Altius’s partnership interests will increase from 52.4% to 97.3%.

These limited partnerships hold tonnage-based, cash-flowing royalties relating to coal operations that are predominantly integrated with several Alberta, Canada based electrical generation plants. The underlying electrical generation plants are subject to regulations and/or compensation agreements that require the cessation of coal fuelling by 2030 as part of federal and provincial government policy initiatives. While revenues from the acquired royalty units are expected to decline progressively as the phase out of coal based power generation within Canada continues toward an ultimate deadline of 2030, Altius expects to receive a strongly accretive return on its capital and an enhancement of free cash flow that it intends to allocate towards investment in our long-term renewable energy royalty growth strategy.

Under the agreement structure, Altius will acquire a company that holds LMM’s units in the partnerships for C$11.25 million before positive working capital adjustments, which it will fund using existing cash-based liquidity.

More coal

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Brian Dalton, CEO of Altius, commented on the transaction, “This acquisition may seem at first glance to be contradictory to our strategic objective of providing royalty focussed alignment with major sustainability-based growth trends, including the fossil fuel to renewable energy transition.  Three years ago however, rather than choosing to divest our coal royalty interests, we took the decision to proactively allocate remaining revenue from these interests to direct investment in the growth of the renewable energy sector. Divesting would have changed nothing other than the name of the royalty revenue recipient while reinvestment of proceeds into renewable energy developers allowed Altius to become a leader in supporting the sustainability transition - and we have met this goal with actions. At that time, we expected around $100 million in coal-based royalty revenue before scheduled phase outs were complete.  We have since committed this full amount into the innovative funding of wind, solar and hydro based renewable energy projects through our emerging renewable energy royalty subsidiary.  With this partnership consolidation we can now even further accelerate the growth and impact role of Altius Renewable Royalties.”


mikek

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Re: ALS.TO - Altius Minerals
« Reply #7371 on: July 27, 2020, 07:26:57 AM »
Yeah but with that purchase price you would be a fool not to do it.

I make that deal all day. It's a no brainer. I don't like the coal royalties just as mucH as the next guy but with that price I'm glad they did it.
« Last Edit: July 27, 2020, 07:59:06 AM by mikek »

StevieV

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Re: ALS.TO - Altius Minerals
« Reply #7372 on: July 27, 2020, 07:58:24 AM »
Yeah but with that purchase price you would be a fool not to do it.

This is the Gennessee coal partnership?  Altius had about $1.3 CAD in Q1 royalty.  This would add about $1.1 million/quarter at that rate.

mikek

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Re: ALS.TO - Altius Minerals
« Reply #7373 on: July 27, 2020, 08:13:53 AM »
No this is the entire coal royalty, they can make that investment back in one year

4.7 million in the first 6 months is what the royalty earned for altius with a 52.4 percent holding. They are acquiring the other 44.9 percent for 11.25 million Canadian.
« Last Edit: July 27, 2020, 08:19:59 AM by mikek »

StevieV

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Re: ALS.TO - Altius Minerals
« Reply #7374 on: July 27, 2020, 08:24:00 AM »
No this is the entire coal royalty, they can make that investment back in one year

4.7 million in the first 6 months is what the royalty earned for altius with a 52.4 percent holding. They are acquiring the other 44.9 percent for 11.25 million Canadian.

Well then, great.  If Liberty wants to make an uneconomic deal in order to exit the coal space, take it.

Thrifty3000

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Re: ALS.TO - Altius Minerals
« Reply #7375 on: July 27, 2020, 08:35:23 AM »
Yeah but with that purchase price you would be a fool not to do it.

This is the Gennessee coal partnership?  Altius had about $1.3 CAD in Q1 royalty.  This would add about $1.1 million/quarter at that rate.

I emailed investor relations to clarify if this encompasses Genesee, Sheerness, and Paintearth, or if it's a subset. Those 3 generated about $11 million in 2019, and were producing about 30% less royalty revenue in the 2nd quarter (due to Covid induced power demand reduction). About half that revenue is scheduled to end in 2024 (Sheerness), and the rest around 2030 (Genesee).

Even if it's just Genesee it's a really good deal. If it's just Genesee then we're talking about $40+ million of cash flow over the next 10 years.

Thrifty3000

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Re: ALS.TO - Altius Minerals
« Reply #7376 on: July 27, 2020, 08:45:44 AM »
Yeah but with that purchase price you would be a fool not to do it.

This is the Gennessee coal partnership?  Altius had about $1.3 CAD in Q1 royalty.  This would add about $1.1 million/quarter at that rate.

I emailed investor relations to clarify if this encompasses Genesee, Sheerness, and Paintearth, or if it's a subset. Those 3 generated about $11 million in 2019, and were producing about 30% less royalty revenue in the 2nd quarter (due to Covid induced power demand reduction). About half that revenue is scheduled to end in 2024 (Sheerness), and the rest around 2030 (Genesee).

Even if it's just Genesee it's a really good deal. If it's just Genesee then we're talking about $40+ million of cash flow over the next 10 years.

I got confirmation this encompasses all; Genesee, Sheerness, Paintearth, and Highvale! (Paintearth and Highvale are small and expire this year.)

This is an amazing deal. We're talking at least $50 million of royalty revenue over the next 10 years, purchased for $11 million.

Bravo, Altius.

Thrifty3000

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Re: ALS.TO - Altius Minerals
« Reply #7377 on: July 27, 2020, 09:03:07 AM »
Editorial comment: I feel like this deal nicely redeems the decision to dump $10 million of LIORC in March. Especially since LIORC (and IOC) are so fickle about paying dividends.

Liberty

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Re: ALS.TO - Altius Minerals
« Reply #7378 on: July 27, 2020, 11:17:22 AM »
Yeah but with that purchase price you would be a fool not to do it.

I make that deal all day. It's a no brainer. I don't like the coal royalties just as mucH as the next guy but with that price I'm glad they did it.

So you're saying their partners, Liberty Metals & Mining, are really dumb?

Thrifty3000

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Re: ALS.TO - Altius Minerals
« Reply #7379 on: July 27, 2020, 11:23:54 AM »
Yeah but with that purchase price you would be a fool not to do it.

I make that deal all day. It's a no brainer. I don't like the coal royalties just as mucH as the next guy but with that price I'm glad they did it.

So you're saying their partners, Liberty Metals & Mining, are really dumb?

I’d assume they’re more rational than dumb. Whatever they think is the value of that holding, it sounds like it’s worth more than that amount to them to exit investments that aren’t “green.” (Or maybe they have some insider info that Alberta is going to shut down coal plants even earlier than expected.)
« Last Edit: July 27, 2020, 11:26:42 AM by Thrifty3000 »