I’m in the midst of the Annual Review of all the stocks on the Gumshoe spreadsheets. As I said last week, we bumped Sandstorm Gold (SAND) down to a “speculation” because of the uncertainties with some of their streaming deals as a few of their partners have hit hard times (though I haven’t sold any personally), and to take its place as the minerals royalty stock in our “core” portfolio we scooched Altius Minerals (ALS in Toronto, ATUSF on the pink sheets) up a notch.
That’s probably not a big surprise, since I said pretty much the same thing (“Altius much more stable, better downside protection than Sandstorm”) at least a couple times last year, but I thought I should look a bit more closely at Altius today because their huge Christmas Eve deal makes them a substantially different company … and though I am even more confident in them as a core holding now, that doesn’t necessarily mean it’s a screaming buy after climbing 30%+ since I last added shares right around Halloween.
So what’s the story with Altius, our speculation that has become a core position for me and is moving to the “core” category on our spreadsheet?
Well, Altius Minerals is among the most fiscally responsible companies I’ve ever seen in the mining industry — and that’s because they’re not a miner. Their goal is to use other people’s money to leverage their expertise and discovery, so they’ve been a prospect generator in Eastern Canada for many years, turning promising early-stage mineral discoveries or claims into huge payoffs. The Altius model under CEO Brian Dalton is to discover or stake a prospective area, find something valuable, then spin it off to someone else or bring in a partner who will pay for drilling in exchange for control of the property, while Altius keeps a junior position and/or a royalty on eventual production.
Over the years they’ve had some remarkable successes. They opportunistically picked up a small royalty on the huge Voisey’s Bay mine many years ago that essentially covers Altius’ administrative expenses (currently it spins off about $3 million to Altius a year, it vacillates based on production levels and the price of nickel but has already returned more than twice what Altius paid for the royalty and Voiseys’ Bay is likely to produce for at least 20 more years). They also built up a ...