“Never Let a Good Crisis go to Waste” (Casey’s Russian Speculation)

Checking out a Casey Crisis Speculator teaser, plus a few updates for the Friday File

By xiexgp@gmail.com, March 27, 2015

Here comes the dividend!

OK, it’s not that exciting — but, as we’ve talked about quite a bit in the past year, Altius Minerals (ALS.TO, ATUSF) yesterday announced that they will now start paying a dividend. It’s what I would call a “token” dividend, really just a signal of their interest in repaying shareholders for their patience, and a starting point for what could easily grow into a substantial dividend as they pay down debt in the next few years. Eight cents a year, payable quarterly, so it’s a yield of abouut 0.5%. Here’s the announcement if you’d like to see it — and, in other unsurprising news, they announced that they have now paid down a chunk of their debt with some of their proceeds from selling their Virginia Mines stake, which serves both to improve cash flow and to reduce their interest rate. And they’ve also reauthorized their normal course issuer bid, which means they can buy back shares if they wish.

Like I said, not so exciting and not really big news — just a reminder that their cash flow situation has improved for 2015. As I said several times over the past six months or so, the balance sheet and high debt service load were the only thing making me somewhat cautious about Altius, and CEO Brian Dalton and the rest of the management team have very clearly telegraphed that reducing their debt burden is a major priority… and I remain delighted that their deal with Callinan both diversified their revenue stream and helped “fix” their balance sheet. They still carry a bit of debt, and still have a meaningful amount of cash that gives them flexibility to add further to their project portfolio at depressed prices.

I think Altius still fails to get credit for the fact that their cash flow stream is very steady and diversified, and I continue to have great confidence that they’ll generate excellent value for shareholders over the coming decade — but it’s not dirt cheap, by any means, since there’s not necessarily any guarantee that the market will wake up next week or next month or next year and agree with me that Altius should be more highly valued based on their long-lived, cash-flowing royalties. Someone asked recently if I’d buy at $10.50 — my answer is that I have paid more than that in the ...