Member Info for Cacher

Has*

Good to see some interest in the shares this morning. The growth of the eSmart arm had the potential to be explosive.
https://cardealermagazine.co.uk/publish/rollout-of-ev-charging-points-must-increase-five-fold-before-2030-ban-on-petrol-and-diesel-vehicles/215481

*energy revolution (auto correct!)

Was listening to a recent Consult Energy podcast, where someone from SSE was discussing the work they're doing with BYD in the development of smart charging, bi-directional charging and vehicle to grid applications. Really amazing stuff, and I think SSE's leadership in this sort of innovation gets lost on the wider market. They're certainly going to be front and centre of this every revolution.

Julian on the 121 mining finance discussion panel which took place last week
https://youtu.be/v5IWOikAZxE

Some discussion on NEXS on today's VSA transitional energy podcast
https://soundcloud.com/user-596578261/vsa-capital-tech-transitional-energy

Amazed at the lack of interest here. What a stellar performer this has been, and I'm confident will continue to be...

I too found the LIORC selling somewhat surprising, but then unlike a royalty - we are able to buy it back should we so wish. Although it was listed in the royalty portfolio it isn't actually royalty income. Instead, it's a dividend recieved through the LIORC vehicle. Julian and many other analysts seem to think we're at the top of the iron ore market. If they're right then we'll have the chance to buy back at lower levels, and booking profits would seem prudent. Appreciate that other analysts expect iron ore to continue on its upwards trajectory. You can understand JT going against his comments in the 2019 annual report if he thinks the iron ore price has got ahead of itself.
As you rightly say, time will tell on that one.
I am convinced that there's more to this though. Whether there's a couple of deals near term, or whether there's a very big transaction that requires us to sell down LIORC.... I think the next few months might be a defining period for APF. I'd be very surprised if we haven't put that cash to use and replaced the LIORC income in some fashion.

I wonder whether there's more to the LIORC sell down than meets the eye. Yes, it could be that APF want to realise some of the profit and recycle into other royalties (that's perfectly reasonable)...but there's a part of me that feels that maybe this is a precursor to some possible M&A. Has the LIORC holding been reduced to a point where if it would fit nicely with Altius' LIORC holding, as part of a merger? It's a possibility, albeit a small one at this stage. Both businesses would compliment one another, and I'm convinced that it'll happen at some point in the cycle. Instant scale and critical mass in order to take full advantage of a broad commodity bull market.

I think the LIORC move makes a lot of sense. As Julian says, it could easily be the top of the iron ore market (many analysts I've read seem to expect lower prices going forward) so that can be partially bought back cheaper. Additionally, that cash can be put towards increasing the Piaui royalty, as well as picking up new assets. They're in a good position going forward. What's more, I think JT comes across pretty happy in the interview. I suspect we'll see some significant newsflow in coming weeks

Interview with Julian

https://youtu.be/1sLLN5fhTNU

Pleasing to see the dividend held. Portfolio preformed strongly too, considering the coking coal weakness last year.
Slightly surprised to see them sell down the LIORC holding, though to be honest every analyst I've read is expecting iron ore to settle at $100-120 over the course of this year, so that could prove to be a sensible move. Plenty of firepower for acquisitions - which I suspect are near term l. I also suspect we might see some LIORC bought back on weakness.

Yeah I think you make some great points. The market is changing, and the need to get information out there (it's easier now) is key. I'm not suggesting they sugar coat the portfolio, but updates on projects etc would be very useful. Many other royalty companies feed the market news on key projects as things develop. I'd love APF to be doing that too. It'd be useful to see a more sustained effort in engaging with the North American markets. Other base metal royalty companies (yes, even those with coal exposure) have performed exceptionally well over the last 12 months. The market over there gets the model. Julian does do the occasional podcast, but I think there needs to be a change of direction in terms of PR.
Nickel, uranium, iron ore, vanadium.... With the quality of exposure in some of these hot resources, there should be no reason why APF isn't at the forefront of folk's minds when considering investment into the sector. If Julian plays the opportunity right, APF can be the go to investment vehicle for the sector in forthcoming years...I just hope the market notices it!

Was some time ago, but I read that Ganfeng were keen to get the Lithium Americas JV project and the Bacanora's Sonora project rapidly funded and developed to production. At that point, they were the two main, big development projects that Ganfeng were involved in. Ultimately, Ganfeng wants scale - and both provide that in abundance.
The last Ganfeng presentation identified Sonora as one of the four key upstream resources for them.

Yup, I agree.

Agree with the replies here. I'd also add that developments in pipeline projects are moving rapidly right now. Brazilian Nickel is looking the real deal as far as moving Piaui towards production, with support of the US government. APF will look to commit more funds there, but it's looking likely that Piaui will go a very long way to replacing Kestrel. Things are moving with regards Amapa, Mount Ida and also Dugbe. We've also got Incoa moving forward this year too.
Personally, I'd rather Julian make the right calls, and not be rushed into picking up average deals. He's proven he has the ability to find low cost high return deals, and I'm confident he'll continue to do so. I've seen a few of the new royalty players pick up deals which look great on paper at $3.50/lb copper etc. How will they stack up if we find ourselves closer to $2.50/lb again? What happens when the operator moves out of the small area where that company has the royalty over? We need long life, scalable assets that will give us a solid income through the downturns too. It's a cyclical business, and waiting for the right moment is absolutely key. Sandstorm is a perfect example of being patient for the right deal/s right now.

Min Res have been in the deception pit for quite some time. Unfortunately it looks like they're moving away - as the tonnage attributable to TRR continues to slide each Q. Just serves to highlight the variability in income when the royalty doesn't cover the entire operation. Most of the income from Koolyanobbing ironically came at the front end of 2020, when production in areas covered by the royalty was high, though the iron ore price was around $100. Yes, it's a good ROI, but I'd like to see some colour on what's left in the area covered by the royalty. It seems highly likely Mum Res will blend production from multiple pits going forward until what's covered by the royalty is extinguished.
On the plus side, Mimbula minimum payments kick in this year, so that provides good visibility there.
Don't get me wrong, I'm very bullish about the prospects here. Just a little disappointed by today's figures.

Not yet Albus. Think it'll be very soon - presumably waiting for numbers from Adaro.

Disappointing numbers. Clear we need to reduce the reliance on Koolyanobbing, and pick up more cashflowing royalties - with good visibility on long life assets. Min Res clearly continuing to mostly operate outside of the area covered by TRR's royalty. Frustrating - especially with iron ore prices running so well.

Andrew Monk from VSA Capital mentioned IES on his transitional energy podcast yesterday. He seems to believe that Bushveld are pretty much done with selling what they needed to. Apparently they're freeing up some cash before spinning off their energy arm. Worth a listen.