Author Topic: ALS.TO - Altius Minerals  (Read 1588462 times)

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6930 on: January 11, 2019, 02:41:27 AM »
The Australian private company rolling up Altiusís Aussie properties is BMEx Ltd. headed by Andy Browne. This is the company description from Linkedin:

ďExploration for zinc-cobalt-lead-silver-copper in Australia (Amadeus Basin and McArthur Basin) and Ireland (Irish Zinc Basin). Unlisted public company; intend to IPO Q1 2019. Criteria: stable jurisdictions; rapid access; clear and significant upside potential; rapid cost-effective testing with clear decision paths.Ē

I believe BMEx has also made a deal for Adventus Zincís Irish properties. Altius and Adventus will exit the Q1 IPO as large shareholders (similar to their cooperation in the Canstar consolidation deal).
« Last Edit: January 11, 2019, 02:45:21 AM by linealdin »


linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6931 on: January 14, 2019, 04:40:12 AM »
https://www.yamana.com/English/investors/news/news-details/2019/Yamana-Gold-Exceeds-2018-Production-Guidance-at-Costs-in-Line-With-Expectations/default.aspx

Yamana Gold hits 39 million pounds of Chapada copper production in Q4. New quarterly record? Altius should see C$5 million plus from their royalty if actual sales approach the production numbers.

TwoCitiesCapital

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Re: ALS.TO - Altius Minerals
« Reply #6932 on: January 15, 2019, 06:57:58 PM »
Altius bought back 104,000 shares in December. Share count down to 42.85 million.

The current NCIB only allows them to repurchase 814,972 shares. Theyíve used about half of that allocation. Once they hit the max they can institute a new NCIB. Buybacks continue in January.

So they bought back 0.2% of shares... Let's have a look at share count over time:



I appreciate your feedback Liberty. I'm at a crossroads - I like the business model. I like the developments in the business. I like it's developed from 1 royalty for $3M a year and $200M cash to $60-70M in diversified royalty payments, tons of land, and cash. What I don't like is the market's reaction to that as reflected by the share price - part of which is due to the fact that shares outstanding increasing by 50+% and debt issuance.

I can do patience. I've waited 5+ years on Altius (it's one of my largest portfolio positions!). Even longer on Fairfax. But at some point, one has to cut their losses. I keep hoping for a major change in perception and business results - but Adia hasn't yet moved the needle. Champion hasn't yet moved the needle. Kami and Julienne Lake haven't yet moved the needle. Potash, despite it's massive improvements, hasn't impacted the stock price.

At some point, I need to make money on this or I've wasted my time. I have trouble because the recent business developments are promising and appear to be improving. I keep thinking that some project generation is going to result in the realization of major gains in the equity portfolio. Instead we got 10% net for the 2018 and a major repricing of Evrim equity... I keep thinking that there will be a catalyst at Kami that will impact the stock price..but I keep waiting.

Anyways, your skepticism is refreshing and helps keep a level head about these things even as I remain despondently long.

petec

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Re: ALS.TO - Altius Minerals
« Reply #6933 on: January 15, 2019, 09:40:33 PM »
TCC Iím a recent small Altius long so Iím not in the same position as you, emotion/pain/frustration-wise. But I do have a comment on timeframe. While Altius has a great model itís in a cyclical industry and the cycles can be long. If youíve held for 5+ years Iím guessing you have only really ridden the cycle down. Thatís not going to be fun no matter how good the news flow is. What matters with Altius is how it develops its asset base through a full cycle, and if youíre into timing cycles then the other thing that matters is buying high and selling low. Personally this is the only commodity business model I like enough to make a core long term position and as long as management keeps doing sensible things I intend to hold for the long term. For reference that means 20-60 years. (Whether I have the discipline to follow through on this intent remains to be seen, but if I donít it wonít be because the share price is going nowhere but because Iíve found something cheaper.)

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #6934 on: January 16, 2019, 04:40:25 AM »
http://www.adventuszinc.com/news/122516

More excellent drill results from Adventus:

12.55 meters of 6.05% copper equivalent
10.86 meters of 5.4% copper equivalent
8.74 meters of 6.18% copper equivalent

Along with separate longer intersections of relatively lower grades:

24.4 meters of 3.76% copper equivalent
20.14 meters of 3.03% copper equivalent
« Last Edit: January 16, 2019, 04:48:42 AM by linealdin »

Liberty

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Re: ALS.TO - Altius Minerals
« Reply #6935 on: January 16, 2019, 07:13:36 AM »
I appreciate your feedback Liberty. I'm at a crossroads - I like the business model. I like the developments in the business. I like it's developed from 1 royalty for $3M a year and $200M cash to $60-70M in diversified royalty payments, tons of land, and cash. What I don't like is the market's reaction to that as reflected by the share price - part of which is due to the fact that shares outstanding increasing by 50+% and debt issuance.

I can do patience. I've waited 5+ years on Altius (it's one of my largest portfolio positions!). Even longer on Fairfax. But at some point, one has to cut their losses. I keep hoping for a major change in perception and business results - but Adia hasn't yet moved the needle. Champion hasn't yet moved the needle. Kami and Julienne Lake haven't yet moved the needle. Potash, despite it's massive improvements, hasn't impacted the stock price.

At some point, I need to make money on this or I've wasted my time. I have trouble because the recent business developments are promising and appear to be improving. I keep thinking that some project generation is going to result in the realization of major gains in the equity portfolio. Instead we got 10% net for the 2018 and a major repricing of Evrim equity... I keep thinking that there will be a catalyst at Kami that will impact the stock price..but I keep waiting.

Anyways, your skepticism is refreshing and helps keep a level head about these things even as I remain despondently long.

I think it's a case of: "It's great to have a good battle plan, but at some point you should look at the battlefield to see if it's working."

When you have a stock that is trading where it was first trading in 2007, you have to wonder if there are easier ways to make money, even if on paper it sounds like a good model. Maybe it's all been a long down-cycle and there will be upswing at some point, but if it's outside the control of management, it's more speculation than anything else. And if what they've done in the past few years is the best that can be done in a downcycle (I remember the quotes from them about waiting for blood in the streets and such), then is it good enough? How high would it need to go, how fast, for you to make a good IRR on it?

Don't even interpret all these questions as me necessarily being bearish on the stock. I'm more in the "too uncertain to be bullish" camp. I used to like the model, but it just hasn't performed very well, and since then, I've learned that commodity businesses (and their derivatives, which I consider this company to be) aren't for me.

Maybe they'll hit a huge homerun soon, but that's fine. There are companies going up a lot every day that I don't own. I just have to focus on what I'm comfortable with, and waiting for capex-heavy mines to be built and commodity prices to go up isn't something I want to fill my mental cycles with.
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petec

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Re: ALS.TO - Altius Minerals
« Reply #6936 on: January 16, 2019, 08:59:58 AM »
I think it's a case of: "It's great to have a good battle plan, but at some point you should look at the battlefield to see if it's working."

When you have a stock that is trading where it was first trading in 2007, you have to wonder if there are easier ways to make money, even if on paper it sounds like a good model. Maybe it's all been a long down-cycle and there will be upswing at some point, but if it's outside the control of management, it's more speculation than anything else. And if what they've done in the past few years is the best that can be done in a downcycle (I remember the quotes from them about waiting for blood in the streets and such), then is it good enough? How high would it need to go, how fast, for you to make a good IRR on it?

Don't even interpret all these questions as me necessarily being bearish on the stock. I'm more in the "too uncertain to be bullish" camp. I used to like the model, but it just hasn't performed very well, and since then, I've learned that commodity businesses (and their derivatives, which I consider this company to be) aren't for me.

Maybe they'll hit a huge homerun soon, but that's fine. There are companies going up a lot every day that I don't own. I just have to focus on what I'm comfortable with, and waiting for capex-heavy mines to be built and commodity prices to go up isn't something I want to fill my mental cycles with.

Your comments are well thought out and appreciated. However 2007 was the absolute epicentre of one of the biggest commodity bull markets ever. The stock traded on 3-4x book as far as I can tell. Bluntly - and I really don't mean offence to anyone - anyone who bought it then didn't really understand commodities. Since then TBVPS has doubled, and that's a peak-to-trough (or at least peak to midcycle) performance. That's not incredible, but it's also not awful. (It looks much better if you use 2006 as the base - TBVPS doubled in 2007.)

So here we are at about 1.4x TBVPS (reported - I have it cheaper on SOTP but let's not get into discount rates again!) sitting probably nearer the bottom of the cycle than the top, with a stock where the model makes intuitive sense (battle plan) and the TBVPS has grown fairly healthily (battlefield), with quite a number of potential catalysts (good drilling results, potential potash price hikes, etc).

I worry about China, but I can also get excited about India. Then I look at a graph of commodities vs the S&P and see that commodities are at the bottom of their very long term range, and I think OK, I don't like commodities as an asset class, but maybe I want a tiny little hedge in case inflation picks up a little more and all that money they printed that went into equities starts flowing into commodities (1970s redux). Now there are a lot of things I'd like to own in that scenario, but exploration & royalties have traditionally been a better way of making money in commodities than buying producing mines, so I arrive at Altius.

That, at least, is my thinking. Could be a lot of drivel ;)

« Last Edit: January 16, 2019, 09:02:31 AM by petec »

Liberty

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Re: ALS.TO - Altius Minerals
« Reply #6937 on: January 16, 2019, 09:06:53 AM »
Your comments are well thought out and appreciated. However 2007 was the absolute epicentre of one of the biggest commodity bull markets ever. The stock traded on 3-4x book as far as I can tell. Bluntly - and I really don't mean offence to anyone - anyone who bought it then didn't really understand commodities. Since then TBVPS has doubled, and that's a peak-to-trough (or at least peak to midcycle) performance. That's not incredible, but it's also not awful. (It looks much better if you use 2006 as the base - TBVPS doubled in 2007.)

So here we are at about 1.4x TBVPS (reported - I have it cheaper on SOTP but let's not get into discount rates again!) sitting probably nearer the bottom of the cycle than the top, with a stock where the model makes intuitive sense (battle plan) and the TBVPS has grown fairly healthily (battlefield), with quite a number of potential catalysts (good drilling results, potential potash price hikes, etc).

I worry about China, but I can also get excited about India. Then I look at a graph of commodities vs the S&P and see that commodities are at the bottom of their very long term range, and I think OK I don't like commodities as an asset class but maybe I want a tiny little hedge in case inflation picks up a little more and all that money they printed that went into equities starts coming out and flowing into commodities (1970s redux). Now there are a lot of things I'd like to own in that scenario, but exploration & royalties have traditionally been a better way of making money in commodities than buying producing mines, so I arrive at Altius.

That, at least, is my thinking. Could be a lot of drivel ;)

I picked 2007 because it was the earliest date, but I could've picked 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017...

I've heard this one before. It's little comfort when the stock has been flat for over a decade while a lot of obvious companies have gone up multiples since then (even a behemoth like BRK has doubled since then) and both inflation and the CAD have further been headwinds.

I think that if your thesis is the 1970s redux, it's speculation, not investment. As Buffett has said, when there's inflation, good businesses with pricing power do well, you don't need commodities.
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petec

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Re: ALS.TO - Altius Minerals
« Reply #6938 on: January 16, 2019, 09:31:30 AM »
I picked 2007 because it was the earliest date, but I could've picked 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017...

I've heard this one before. It's little comfort when the stock has been flat for over a decade while a lot of obvious companies have gone up multiples since then (even a behemoth like BRK has doubled since then) and both inflation and the CAD have further been headwinds.

I think that if your thesis is the 1970s redux, it's speculation, not investment. As Buffett has said, when there's inflation, good businesses with pricing power do well, you don't need commodities.

1970's redux is certainly a speculation but it's not my base thesis. It's just a bit of optionality that I like.

2010-2014 were all cycle top years as QE money sloshed around the world. I wouldn't have expected the stock to do very well since then, personally.

And of course, you pick your time periods at your peril. If you'd bought this in 2002 you'd be up >20x.

To put it in context, this is about a 1% position for me and is dwarfed by my positions in things like BRK.


Liberty

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Re: ALS.TO - Altius Minerals
« Reply #6939 on: January 16, 2019, 11:27:00 AM »
And of course, you pick your time periods at your peril. If you'd bought this in 2002 you'd be up >20x.

This is a common way to hook people in. When it was a tiny small cap, the dollar amount that went in was tiny, what you needed to move the needle was tiny... then it got much bigger, and that's when most people noticed it, but since then nobody has made anything.

Used to be a common phenomenon with "hot" mutual funds. They get a great track record when they're small, money pours in, and then at the bigger size they can't perform like they used to anymore (or it was all just survivorship bias to begin with) and the dollar-weighted performance since inception is pretty mediocre even if the CAGR still looks good.

One way to think about it is that some businesses are good at compounding money, and others have more trouble scaling up and redeploying ever larger amounts of capital.

Another thing that I've been thinking about with Altius is the whole royalty model to begin with. It looks great when you think about it from the point of view of the merchant bank, but let's think about it from the seller's point of view. Why do you even sell a royalty to someone like Altius to begin with? It's just a form of financing to pay for your mine, right? You could also borrow from the bank or raise equity or sell preferreds. Why would you give away the store if you can do these others things? And if you can't at all raise anything, what are the chances that your project is that promising and company that solid to bring it to fruition? There's gotta be plenty of risk with partners that can't raise the debt or equity for a project, right? Or if they can but would just rather sell a royalty anyway, do you think they'll sign conditions that are radically better than debt or equity? Why would a royalty have an expected return of 20% IRR for the buyer or whatever? You have to be lucky and the seller miscalculates, but that's a gamble too, especially since the people who are developing the project have a good chance of knowing it better than outsiders. That's why when I did some math, it seemed to me like Altius has often gotten single digit returns on the capital it put in for royalties, which isn't that far from debt or equity. It's possible to get lucky and get better than that, but it's also possible to get unlucky and get worse. If there's a huge commodity boom, the royalties will do better, and vice versa. Pretty equity-like, just with cashflows swaped for the possibility of capital gains (probably a good trade safety-wise, but still, not exactly a magical instrument that guarantees good returns)...
"Most haystacks don't even have a needle." |  I'm on Twitter  | The importance of saying 'oops'