TSX ekes out small gain, Aug. 20-24

Markets ended the trading week in positive territory, with the S&P/TSX Composite Index climbing 0.20% to finish at 16,356.05. The S&P/TSX Global Gold Index rose 2.03% to 161.26 and spot gold increased 1.75% to US$1,205.30 per ounce. The S&P/TSX Global Mining Index advanced 1.70% to 54.12.

Labrador Iron Ore Royalty (LIORC) jumped $1.10 per share to $25.68 on no news. The company is still riding high from an Aug. 16 announcement that Anglo Pacific Group has invested US$50 million for a 4.25% share in the company. Anglo Pacific expects its 4.5% stake in LIORC will bring between $4.7 million and $5.7 million of royalty-related revenue in 2019. LIORC holds a 15.1% equity position in Iron Ore Co. of Canada (IOC) and receives a 7% gross overriding royalty and 10¢-per-tonne commission on all iron ore products produced, sold and shipped by IOC. IOC is a leading Canadian producer of iron ore pellets and concentrate and has a 25-year mine life ahead, along with possible mine life extensions. Shares of Anglo Pacific Group were down 15¢ to $2.15. The company reported first-half results on Aug. 23, with adjusted earnings of £15.4 million (US$19.8 million), or 8.56 pence per share, up 15% year-on-year. Total royalty and financing income in the six months ended June 30 reached £20.8 million, up 20% year-on-year.

Altius Minerals rose 52¢ to $12.42 per share. The company announced it has renewed its normal course issuer bid and may buy at market price up to 814,972 common shares (1.89% of its 43.2 million issued and outstanding shares as of Aug. 10). Any shares bought during the NCIB will be cancelled and returned to treasury. The NCIB began on Aug. 22 and will end on Aug. 21, 2019. During the previous 12 months, Altius bought 48,400 shares at a weighted average price of $12.45 per share.

An updated preliminary economic assessment of Avalon Advanced Materials’ Separation Rapids lithium project in Ontario lifted its shares 20% to 9¢. The PEA is based on a simpler model focusing on initial production of lithium mineral concentrates, with potential expansion to the battery materials lithium carbonate and hydroxide. The PEA envisions plant throughput of 475,000 tonnes a year — down from 950,000 tonnes in the 2016 PEA. The study outlined a 20-year operating life with annual production of 71,500 tonnes of petalite concentrate; 11,800 tonnes of lepidolite concentrate (both for 18.5 years); and starting in year six, 100,000 tonnes of feldspar through to year 20. Upfront capital expenses are $77.7 million, with another $13.7 million planned for the feldspar circuit in years five to six (or once payback of the initial capital is complete). Average annual revenue is estimated at $90 million — compared with average annual costs of $60 million — for a post-tax net present value at an 8% discount rate of $156 million, and 22.7% internal rate of return.


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