The_buzz
16 Aug 2018
Purchase of a 4.25% shareholding in Labrador Iron Ore Royalty Corp [link] Initial thoughts are that it is a very good deal. It is also a big transaction - APF make a point that with that the dependence on Kestrel is significantly reduced. I will spell out my interpretation and let others correct me! [link] The price of APF is slowly rising - currently 126.5p-129p, yet the market seems to be blind to this deal and initially all deals were sells: [link] Cost C$65.5m for 4.25% of a royalty company. Last year distribution of C$169.6m, so 4.25% gives royalty to APF if same distribution this year is C$7.2m. So the nominal yield is about 11% with quarterly payments. That sounds to me to be a very good return. The royalty is immediately accretive. There is always the option to increase/decrease this holding. One of my immediate concerns is the price of iron ore has been hammered down by the huge iron ore mines in Australia. However we are talking about premium ore pellets with this deal - which currently command a premium of $27/t. Mine life is 25 years so it is a long term income stream. I struggled to find articles on iron ore pellet prices, this is one from June 2018 indicating the premium prices being obtained:- [link] I also noted a much reduced income in the latest RNS of 7.8.2018:_ labradorironore.com Labrador Iron Ore Royalty Corporation Announces Results for the Second Quarter... Labrador Iron Ore Royalty Corporation ("LIORC", TSX: LIF) announced today its operation and cash flow results for the second quarter ended June 30, 2018. Royalty revenue for the second quarter of 2018 amounted to $5.1 million as compared to $33.8... However this has been put down to an extended strike that has now been resolved and a 5 year labour agreement has been reached. The outlook statement includes “IOC is expecting good production and sales tonnages in the third and fourth quarters of 2018.†APF make a big thing about this deal significantly reduces the dependence of income from Kestrel saying its contribution fall from 49% to 41%. A key statement is that APF have so much cash and cash coming in that they only needed £17.3m draw down of their credit facility and without any more deal they will be in net cash by the end of the year!! So a huge purchase funded by its own cash generation. Perhaps things might move after the analyst presentation:- There will be an analyst presentation via conference call at 9:30am (BST) on 16 August 2018. The Buzz
The_buzz
15 Aug 2018
Top Up Time A bit of a market riot today for miners, partly because of fears of a weakening Chinese economy, the ADVFN write up is:- “Mining shares, a heavy weighting in the blue chip index, suffered heavy losses on the back of US dollar strength and falling metals prices, with Anglo American, Antofagasta, Glencore, BHP Billiton and Rio Tinto all under pressure. A stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies, with copper, lead, nickel and zinc all suffering.†but APF does not have any real exposure to copper, lead and zinc - (and nickel is currently a non performing royalty, and the price of nickel is still well up on the year despite today’s fall) markets.businessinsider.com Nickel PRICE Today | Price of Nickel and Chart | Markets Insider Nickel Price: Get all information on the Price of Nickel including News, Charts and Realtime Quotes. What concerns APF is mostly coal and it had another good day today:- [link] Coking coal in December 2018 is $187.5/t - is a historically good price:- cmegroup.com Australian Coking Coal (Platts) Low Vol Futures Quotes - CME Group Find information for Australian Coking Coal (Platts) Low Vol Futures Quotes provided by CME Group. View Quotes Plus interesting announcement yesterday of a big thermal coal contract at $110/mt between Glencore and Japanese utilities - probably setting a benchmark price for all others. in particular this article mentions that Whitehaven sells most of its product to Japan, so $110/mt should underpin the price obtained by Narrabri to at least March 2019. $110/mt is a super price to get. U.S. – 14 Aug 18 Japan utilities, Glencore set annual coal contract at $110/T: sources Japanese utilities and global mining giant Glencore have settled an Australian thermal coal import contract for April 2018-March 2019 at $110 a tonne, according to several people with knowledge of the matter. Plus today evidence that lower grade coal prices are now shooting up:- [link] So in a nutshell I think that APF will still getting a significant royalty for some time to come and I do not understand the market logic other than sentiment. A protagonist would say that I would say that, but then throw in the weakening £ now only about $1.27 to £. BBC News Pound Sterling (GBP) - BBC News All the latest news about Pound Sterling (GBP) from the BBC giving a further increase in the value of the royalty. I guess that one must hope that the sanctions are sorted out quickly - one suspects that the disruption to US trading will have an adverse affect on the US economy and perhaps halt the rise in US interest rates - but who knows - and that won’t known for several weeks. It is painful watching the share price continue to slide, possibly helped by stop-losses, but I still believable that the fundamentals are still strong. Indeed with the current market weakness it must play into APF’s hand to buy its next royalty at an advantageous price(?) The other event that ought to help, according to the trading update:- anglopacificgroup.com H1-18-trading-update-FINAL.pdf 234.29 KB "This update is ahead of the release of the half year results on 23 August 2018. " So not long before hopefully we will have some positive news flow. Oh I had a monster dividend payout into my account from APF today. I cannot moan at that! If only I had also retained the capital value as well!! Oh dear looks like another one of my diatribes again. Hope some of this is of use to others? The Buzz
The_buzz
15 Aug 2018
Narrabri Thermal Coal Prodution Figures Just out Narrabri results:- clients3.weblink.com.au 02009098.pdf 712.68 KB clients3.weblink.com.au 02009097.pdf 1997.02 KB They seem to be very upbeat with these results. Production down on last year as previously announced but they had a significant increase in saleable product and sales. Narrabri production guidance for the next year is slightly lower than I would hope for at 6.5-6.9mt, albeit that they have to do a full long wall change and mine through the next two panels with the same fault as the current panel. In the full report it states:- 'The increase in prices for thermal coal in particular during FY2018 was underpinned by the return of the market to supply/demand balance in FY2017 following production cuts in a number of key coal producing countries namely China, Indonesia, the USA and Australia. Global demand for thermal coal continued to grow in FY2018 due to an increasing appetite for high quality thermal coal in the Asian region. In particular, the growth in thermal coal demand was supported by year on year growth in Chinese power demand of 8.5% in the first five months of the 2018 calendar year. Domestic production and infrastructure constraints in China have resulted in an increased draw on the seaborne coal market. That is a very positive statement implying good demand for quite a while. In the mean time thermal coal price seems to go from strength to strength:- Barchart.com ICE NewCastle Coal Apr '18 (LQJ18) Futures Price Quote - Barchart.com Free futures price quote for LQJ18. Latest real-time Bats price quote, charts, financials, technicals and opinions. The Buzz
The_buzz
14 Aug 2018
Largo to Boost Production!!! Record Q2 results from Largo:- largoresources.com Largo Resources Reports Record Second Quarter 2018 Cash Flows Before Non-Cash... Q2 2018 Highlights (unless otherwise noted, all financial amounts in this news release are expressed in Canadian dollars) Net income of $90.7 million and earnings per share of $0.17 after a deferred income tax recovery of $45.6 million Revenues of... Record revenues of $103.3m. APF have a 2% NSR:- [link] Sounds like Q2 will give a bumper royalty just over $2m for Q2 alone. Note that they are soon to start selling high purity V2O5 powder. This royalty just keeps on getting better an better with improved processing performance, higher output and a significantly higher price for their product. With the planned production increases things are looking really promising. The Buzz
The_buzz
13 Aug 2018
Top Up Time Well what a miserable day for the share price. Not sure why there was yet another price fall other than it might be the trend in price. Looking at the chart makes me think that we ought to be near the bottom of the slide, but who am I to say. I note that US coal will soon have a 25% tariff added- so that supply is effectively priced out of the market and there will be more demand for other sources of coking coal. [link] Coking coal price seems to be steadying, cmegroup.com Australian Coking Coal (Platts) Low Vol Futures Quotes - CME Group Find information for Australian Coking Coal (Platts) Low Vol Futures Quotes provided by CME Group. View Quotes but thermal coal price is really strong:- Barchart.com ICE NewCastle Coal Sep '18 (LQU18) Futures Price Quote - Barchart.com Free futures price quote for LQU18. Latest real-time Bats price quote, charts, financials, technicals and opinions. Interesting article about the long term prospects of coking coal; [link] Of course on this Wednesday we get paid 1.625p a share dividend!! [link] Again the £ has been falling boosting the value of the remitted royalties. Now only $1.2758 to the £. BBC News Pound Sterling (GBP) - BBC News All the latest news about Pound Sterling (GBP) from the BBC
The_buzz
10 Aug 2018
Telegraph on Brazilian Nickel largoresources.com Largo Resources to Release Q2 2018 Financial Results on August 13, 2018 Investor Conference Call and Webcast with CEO Mark Smith and CFO Ernest Cleave will be conducted at 10 a.m. EDT on Thursday, August 16, 2018 Largo Resources Ltd. ("Largo" or the "Company") (TSX: LGO) (OTCQX: LGORF) will release its second quarter... Advance warning of results on 16th August. This is a key royalty so it should be of significant interest to us, especially on pricing, the diversification in their vanadium products and most importantly future production plans. The Buzz
starastar
08 Aug 2018
Top Up Time Thanks The_buzz - I am reading your posts and appreciate them. The new system is very difficult but I have tonight gone to the effort of signing up in order to post. Did a small top-up today as well. starastar
The_buzz
08 Aug 2018
Top Up Time Apologies for this diatribe, but I ought to mention that another key factor is the US$ to £ exchange rate. The bottom line is that the big fall in the value of the £ (and the projected exchange rate) makes a huge increase in the value of APF’s royalties as they are all accrued overseas. BBC News Pound Sterling (GBP) - BBC News All the latest news about Pound Sterling (GBP) from the BBC BBC News Pound falls as Brexit sell-off gathers pace Sterling touches a near-one year low against the dollar as worries about a no-deal Brexit continue. Egg on face this morning with the share price? Some lucky person bought some at 127.51!!! Missed that one as I was busy elsewhere - just sold a dollop of GSK for a useful profit so had some cash to hand… I have found this really useful share price link that seems to give real time share transactions!! [link] My perception of trading was that there was a bounce and the closing price was 129p-131p consistent with a 130p share support level? - (and my purchase price!). Coking coal hit $190/mt today surprising market participants:- [link] So my perceived green shoot for an increase in the price of coking coal is growing well! Coking coal price is so crucial to APF’s royalty from Kestrel so this is very positive news. The Buzz
The_buzz
08 Aug 2018
Top Up Time I am sucker for more shares. Yes the share price has been drifting lower, but 130p seemed yet another support level. With all the positive RNS statements and JT interviews I just felt the share price recovery prospects and dividend yield were just too appealing. So I was watching for a fall to 132p based on last night’s uncrossed price spread, and low and behold the price suddenly moved to 130-131.5p So have just topped up with 3031 shares at 130.86p. The spread dipped to 129.5p-131.5p but is now 130-131.5p. No doubt if the trend down continues there will be an even better price. My top ups are based on what I perceive to be a low share price and good dividend and a hope that the price has bottomed. Plus the market seems to have missed the bounce in coking coal prices:- cmegroup.com Australian Coking Coal (Platts) Low Vol Futures Quotes - CME Group Find information for Australian Coking Coal (Platts) Low Vol Futures Quotes provided by CME Group. View Quotes With a sustained strong thermal coal price:- Barchart.com ICE NewCastle Coal Oct '18 (LQV18) Futures Price Quote - Barchart.com Free futures price quote for LQV18. Latest real-time Bats price quote, charts, financials, technicals and opinions. Agreed the price of nickel has fallen fromits recent exceptionally strong price:- markets.businessinsider.com Nickel PRICE Today | Price of Nickel and Chart | Markets Insider Nickel Price: Get all information on the Price of Nickel including News, Charts and Realtime Quotes. and vanadium might be slight down:- [link] but these are still very strong prices in a volatile market - especially nickel. The Buzz
The_buzz
05 Aug 2018
Nickel Video Just spotted a video on the Brazilian Nickel web site Brazilian Nickel Limited Brazilian Nickel Limited | Nickel and Cobalt Technologies for Industry Brazilian Nickel provide low cost technology, supplying nickel and cobalt products for electric vehicles, sustainable energy and aerospace technologies. It is on the right hand side of the page and about half way down. Unless I have been dozing, I think that the write up for the nickel project has been updated:- [link] The Buzz
The_buzz
03 Aug 2018
Uranium price 'jump' U.S. – 3 Aug 18 Shanghai steel resumes rise, coke rallies as China eyes winter curbs Shanghai rebar steel futures climbed almost 2 percent on Friday to near a 5-1/2-year high amid China's plans to impose industrial production curbs during winter for the second year in a row. Coking coal in demand again. [link] Coking coal price is the main driver for APF’s royalties so this is potentially a significant development, or at the very least indicates that the coking coal price is unlikely to fall further for quite a while. The Buzz
reevesfamily4224
03 Aug 2018
Uranium price 'jump' Many thanks Buzz, really good information and points. I certainly agree re the dividends. A difficult stock market at the moment but APF with no debt and cash pouring in should be extremely well placed for the upturn when it comes.
The_buzz
02 Aug 2018
Uranium price 'jump' Glad that my research (good and bad news!) is of help. A few more bits of info. Largo (vanadium) have just announced another big step in refinancing themselves - they need money to expand production:- largoresources.com Largo Resources Announces Repayment of Brazilian Debt Largo Resources Ltd. ("Largo" or the "Company") (TSX: LGO) (OTCQX: LGORF) is pleased to announce that, further to its press release of July 17, 2018, it has now repaid in full an aggregate of US$144.1 million in debt owing to the Brazilian... Note that they advise that the V2O5 price has gone up again and is now $19.65/lb I had a pre-arranged chat today with APF to discuss Pilbara. My interpretation of the conversation is that this is a big royalty but is a long way off as it needs BHP /RTZ to build the mine first. Despite the immense investments being made in developing mines in the area, they have yet to reach the 3 APF tenements with the railway deposit. Current work on the “Mining Area C†is close to APF’s tenements and once that has been worked out then APF starts to get a look-in. So we are probably talking in a 5 to 10 year time frame. However this royalty will stay on the back burner and when its time comes it will yield a significant royalty at 1.5%. It is valued at about 5% of APF’s assets, but is non performing for now. I am not sure how to value it - if this was APF’s only asset, what would its share price be? Back to coking coal. Earlier I was concerned that tariffs might depress the coking coal market (still getting stronger today) - I have just found this article that supports that concern:- [link] The implication is a better position once the tariffs get sorted out? As for new investments. Someone mentioned that something like 100 potential royalties are considered each year. The process of evaluation is now well tried and trusted and about 90% of the candidates get quickly eliminated. That leaves about 10 possible investments to apply more detailed due diligence to. I guess a short list is drawn up and then the directors pore over the various options. Right that the end of today’s news letter, apart from a peeved look at the APF share price of about only 134p. As an aside I was having a look at my recent APF dividend payments - they make a really substantial contribution! The Buzz
reevesfamily4224
02 Aug 2018
Uranium price 'jump' Hi Buzz,many thanks.I would just not spot these bits of info if it wasn’t for you. AP price staying reasonably stable but I hope we hear news of an acquisition soon. It is lovely the money is coming in but is equally at the expense of presumably assets being used up. However, if it continues to be a cash cow so to speak maybe a special dividend or uplift .
The_buzz
02 Aug 2018
Uranium price 'jump' Just noticed an update to the uranium price on this web site showing price for July 2018:- [link] There is evidence of an increase in the price of uranium. Spot has gone up from $22.65 to $25.78 Long term has finally gone up after ages drifting down, from $29 to $31.5. This is good news for APF as they have interest in uranium. Dusty42 should be able to fill in more detail. It looks like the reduced production has finally resulted in a higher price? News on production cut backs hot off the press:- [link] streetwisereports.com Uranium Firms Price Target Gets Raised on Recent Market News [UUUU, EFR] A ROTH Capital Partners report opined on what the announcements mean for the uranium price and this company. FNArena – 31 Jul 18 Uranium Week: Price Jump - FNArena The spot uranium price saw its biggest weekly rise year to date last week but given the reasons behind it, can it be sustained? Well that is quite dramatic news in the usual very quiet uranium market! The Buzz
