Author Topic: ALS.TO - Altius Minerals  (Read 1762451 times)

Phaceliacapital

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Re: ALS.TO - Altius Minerals
« Reply #1020 on: January 10, 2013, 04:19:30 AM »
http://finance.yahoo.com/news/nalcor-confirms-power-supply-alderons-113000223.html

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"This will fulfill a major infrastructure requirement for the Kami Project and will allow us to continue to move forward on our development timeline. We are now engaged with Nalcor in a process that will lead to the completion of detailed engineering and conclusion of a mutually acceptable Power Purchase Agreement. This is very positive news for Labrador West, as this project will bring tremendous benefits to the region. We are pleased that Nalcor recognizes the importance of supplying power for industrial development right here in Labrador."
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Dazel

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Re: ALS.TO - Altius Minerals
« Reply #1021 on: January 10, 2013, 06:31:53 AM »

Trap,

IOC has advertised in Ireland a great deal to move families there to work at Carol lake. They are looking to create a continuity in the labour force....through experience they realize the Importance. More importantly management needs to know what they are dealing with in the environment. It looks to me like Bloom Lake has blown this since the beginning....from Quesnel on through...great asset but the people matter as you know.

Thanks. I would not have gone in this deep without you Trap...After digging into Bloom Lake...it looks Quesnel was an outsider and building the first mine in the area in sometime you have to cut him some slack i guess...Cliffs picked up where they left off...as we know Cliffs Wabush mine is a disaster

It looks like Morabito learned from this and hired IOC intelligence and local expertise. To me it looks like the management team at Alderon is the Canadian Olympic hockey team (NHL included) which is proven over time (IOC)...compared to the Russian Olympic team who have great talent but you have brought them into Canada to work for 4 years...they are great in Russia and other places but they do not know the lay of the land nor would the people cut them any slack. They lack longterm view because they know they will be leaving shortly.

Sorry...with NHL coming back on line could not help it!

It looks like the media and myself included have been wrong in our comparison of what Alderon's intention is. They are not looking to Bloom Lake to duplicate it...they are looking to Carol Lake to duplicate it using Bloom Lake asset value as a measuring stick.

In other words...they do not want to be the son of Consolidated Thompson....they want to be the brother of Carol Lake.

As an Altius shareholder this what we want to see...longevity.
More to come...

Dazel.

ItsAValueTrap

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Re: ALS.TO - Altius Minerals
« Reply #1022 on: January 10, 2013, 07:01:59 AM »
They talk a good game but then you look at how insiders at Alderon are paid... these guys (Stan Bharti, Forbes and Manhattan) are charlatans who overpay themselves.  How are they going to keep costs down when they are paying their board of directors more money than a mega-corporation like Cliffs?

I think that once the mine is fully financed, Altius will actively look at selling their Alderon shares.  They are obsessed with royalties because they know that the equity is usually terrible... I don't think that Alderon will be an exception (just look at other Forbes and Manhattan companies like Aberdeen International... an example of not making money in a commodities bull market).
I think that Brian Dalton doesn't say anything bad about their joint venture partner because he wants Altius to sell its prospects to other piece of poo juniors out there (backstabbing your partners is not a good idea).  Because in any other world, it would not be unreasonable to fire Stan Bharti and all the other overpaid hacks at Alderon... and to bring other salaries down.

2- IOC's management has been trying to keep its costs down... that is why they keep asking for FIFO from their union.

The labour disputes between the union and IOC suggest that they haven't been great managers on the labour relations front... it seems the union has gone on strike multiple times in the past.

*I own a few hundred shares of Aberdeen International... I'm the idiot scalping that piece of poo trading below liquidation value.

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as we know Cliffs Wabush mine is a disaster
Wabush is a very old operation... it has been around for decades.  A lot of its operational issues are due to age.  Its high operating costs have to do with ages... a mine's economics will get worse over time since you mine the best ore first and things like the stripping ratio usually increase over time.

I have no idea if Cliffs has been doing a good job at operating it.  Usually operational skill doesn't have too much impact on a mine's economics.
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. " -Buffett

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Dazel

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Re: ALS.TO - Altius Minerals
« Reply #1023 on: January 10, 2013, 11:55:08 AM »
http://www.labradorironore.com/files/Labrador%202011%20Annual%20Report_FINAL_v001_m6v0tt.pdf


http://www.theaurora.ca/News/2008-02-11/article-1564051/Largest-getting-larger/1

Alderon's management is stacked with Iron ore company of Canada former leadership that were responsible for IOC's numbers...see page 5 of the annual report linked above..

As Trap said old mines have issues...Tayfun and his team were responsible for the expansion at IOC. The numbers at IOC have been excellent.


Dazel.

beerbaron

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Re: ALS.TO - Altius Minerals
« Reply #1024 on: January 10, 2013, 10:32:35 PM »
The market was expecting Hebei to release the $120m...thinking that Alderon would have already submitted the study 15 business days ago to them....I may "personally speculate" with a short term trade on Alderon...

Hebei will gladly fork over the $120 m...they are going to do very well on their transaction.

Dazel.

Dazel, watch out! You are probably having a psychological bias here. The market did not discount Alderon by 10% for a 15 days delay, even Mr Market is not that short sided! Take some time to think what you would think of the situation if you were short Alderon, maybe you'll get some balance. :)

BeerBaron

Green King

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Re: ALS.TO - Altius Minerals
« Reply #1025 on: January 10, 2013, 11:07:36 PM »
what will happen if Hebei doesn't pay ?
GK

ItsAValueTrap

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Re: ALS.TO - Altius Minerals
« Reply #1026 on: January 11, 2013, 03:49:33 AM »
I think the stock would drop a lot.  It would imply that Hebei doesn't think that the project is economic (even after their sunk costs).

I think that Hebei will pay though... unless there is some subtlety / unexpected surprise that popped up in the feasibility study.
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original mungerville

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Re: ALS.TO - Altius Minerals
« Reply #1027 on: January 11, 2013, 04:22:48 AM »
I understand far fewer of the details than Dazel and Itsavaluetrap but from a bird's eye view, I would look at this whole thing like a series of independent probabilities for each independent event. Interestingly, if 3 of the big required events have a 90% chance of success, then the overall odds of success are low 70s% (ie 0.9*0.9*0.9). I would suggest those more familiar with Altius put some numbers to these events. This would be the mental framework I would use.

Anyway I might see these three things as roughly the following: 1) project funding, 2) guess?: environmental assessment, 3) implementation/operational issues

1) Project funding: Hebei paying (maybe 90% odds?) - I think Hebei paying is pretty key as with that plus the market cap of Alderon, there should be enough to work with to raise the equity and debt to fund the project (95% sub-odds here maybe; so virtually 100% so let's neglect the odds of raising the rest of the funding if Hebei pays in). Given the funding (which is likely post Hebei paying in), the next hurdle I see may be...

2) Environmental assessment? - do others agree this is the next big hurdle?...no idea but I would not put the odds higher than 80%,...then...

3) all other operational / implementation issues - odds no higher than 90% chance of success.


Before Hebei pays, I am at something like mid 60s% chances of success. Post Hebei payment, those odd rise to low 70s. Once the EA is done, I am at 90%.

I would expect Altius stock to rise with each of these hurdles, and as the discounted project implementation timeframe approaches continuously. From this perspective, I can see why the market is very focused on the Hebei payment.

Finally, I don't think the mine will be operational in 2015. I would guess 2016.

Now, wrap all that up and don't forget iron ore prices can either go up or down a lot in the meantime - so there is risk here too (to the upside and to the downside). On this front there is more risk to Alderon than to Altius. Same for the 2015 vs 2016 start and same for the operational issues.

I see the main risk to Altius being Hebei payment and the EA. (whereas Alderon, in additional, would have more exposure to the operational issues, and also a delayed start date.)

Would love Dazel and Valuetrap to puts some odds on the EA (and assess whether I have the right 3 components listed above or not)






ItsAValueTrap

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Re: ALS.TO - Altius Minerals
« Reply #1028 on: January 11, 2013, 04:42:13 AM »
I don't think that the EA will be a big hurdle.  They will almost certainly get it... the question is when.  I don't believe there are any First Nations or environmentalist/NGO issues that would cause unusual delays to the EA.

I don't see operational issues as being that likely.  All the technology is pretty well understood.  There might be unexpected cost inflation due to shortages of labour and housing (if you make less than 65k you are eligible for affordable housing.... no joke) in the area... the feasibility study may have already taken some of this into account.  I wouldn't be surprised if Alderon underestimates cost inflation... it has been going up dramatically in the past decade.  On cost inflation you probably won't miss by more than 10%.
Of course the BBA feasibility study is a joke.  I think Hebei has a better idea than most people what the real numbers are.

The biggest factors likely would be:
1- Iron ore prices.
2- Risk appetite.  People will pay different prices for iron ore assets depending on how optimistic or depressed they are... it's just like Mr. Market.  Sometimes seniors will get into bidding wars over deposits because nobody knows what the correct price should be.
Mood swings among investors will affect Alderon's share price and its ability to raise equity financing.
Mood swings among senior miners will affect their appetite for M&A.  A lot of seniors right now are selling iron ore assets and their low share price makes it difficult for them to finance new mines.  In the future, this could all change.  (Plus, you usually want to buy at the bottom of a cycle anyways when everybody is fearful.)
3- The relative attractiveness between Kami and other deposits in the area could play a factor.  A better deposit could get bought out/financed first.
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ItsAValueTrap

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Re: ALS.TO - Altius Minerals
« Reply #1029 on: January 11, 2013, 04:53:50 AM »
What I would expect to happen is this:

A- Hebei puts in the rest of their money.
B- Alderon will go ahead and start constructing the mine... even though they may not necessarily have all the permits and financing in place.  Because of A, they have the money to start early construction.
The benefit of being crazy like this is that it means that the mine will get built faster (assuming no permit delays and they get financing)... which increases the present value of an eventual mine.
C- They definitely do not have financing in place.  So they will really get aggressive about promoting the stock and trying to raise equity.
If senior miners were in the mood for M&A (many aren't), I am sure that Alderon would shop the project to them too.  Alderon wants to get bought out or to raise capital to build the mine themselves.
D- If the mine doesn't seem like it will be economic, the Alderon team may try to raise money and get it built anyways.  (But Hebei's investment in Alderon is a big vote of confidence assuming they did their due diligence.)

There is a good chance that Altius will not use its cash to help finance the mine.  Altius wants to be in the high-margin/high-value added prospect generation business (and royalties and what Cranberry is doing and royalty/stock flipping), not in the mediocre mining business.
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