Author Topic: ALS.TO - Altius Minerals  (Read 1021949 times)

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #4840 on: October 12, 2017, 05:49:44 PM »
I just think there is something intellectually dishonest about acknowledging that we are in a bear market for bulk commodities, yet denying the very basic idea that bear markets create the conditions for the next bull market.

Do you accept that commodities markets are cyclical or not?

« Last Edit: October 12, 2017, 05:51:24 PM by linealdin »


Liberty

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Re: ALS.TO - Altius Minerals
« Reply #4841 on: October 13, 2017, 06:06:19 AM »
I just think there is something intellectually dishonest about acknowledging that we are in a bear market for bulk commodities, yet denying the very basic idea that bear markets create the conditions for the next bull market.

Do you accept that commodities markets are cyclical or not?

Are you talking to me? I've done no such thing, so I don't have to defend myself.
"Most haystacks don't even have a needle." |  I'm on Twitter  | Watch this, please

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #4842 on: October 13, 2017, 07:00:41 AM »
"And the current bear market might not just be a bear market"

The implication is that this may not be a bear market, the kind of market that creates the conditions for the next bull market.

If it is not a "just" bear market what is it? A commodity market that is not cyclical anymore. Flat.

SharperDingaan

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Re: ALS.TO - Altius Minerals
« Reply #4843 on: October 13, 2017, 07:23:20 AM »
It might be worthwhile revisiting some basic mathematics. 

The PV of $1, @ 20%/yr, 5 years in the future is just 40c (1/(1+.2)^5); at 10 years out its just 16c. The ALS Chipada, Potash, and Iron ore exposures are all great exposures – but even if they work perfectly, on time, and as expected; they are so far in the future that the PV is essentially meaningless. They do not contribute to TODAYS price of ALS.

Mining is cyclical, inherently risky, and sentiment changes rapidly. You are also looking at 3 cycles acting together – commodity price, capital, and investor momentum; and trying to forecast it forward over many years. Flea infested turkeys fly in strong winds (up cycle of capital investment), and often look like eagles (when running in the up cycle of momentum investing). And they fly as high, as those companies that are a lot more reputable. ALS’s quality reputation isn’t going to matter when everything is flying.   

It has already been pointed out that there is no royalty if the source mine stops producing. Hence you are TWICE exposed to the commodity market. 1) Revenue (commodity price) has to exceed the cash cost of production, and 2) everything being sold is going at low prices – minimizing the royalty payment. You are also exposed to the capital cycle – because if the source mine cannot make its debt payments, it’ll bankrupt - & production will stop (even If it is still profitable) until a new buyer is found for the deposit. The royalty model is NOT a magic bullet – it has all the same risks as a major.

Get it right, & the mining game will make you VERY rich.
But recognize that it isn’t going to happen by ‘holding forever’, & simply compounding. It just isn’t how mining works.

SD

valcont

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Re: ALS.TO - Altius Minerals
« Reply #4844 on: October 13, 2017, 07:27:58 AM »
Flea infested turkeys fly in strong winds and often look like eagles . And they fly as high

I am copyrighting this quote.

Liberty

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Re: ALS.TO - Altius Minerals
« Reply #4845 on: October 13, 2017, 07:37:34 AM »
"And the current bear market might not just be a bear market"

The implication is that this may not be a bear market, the kind of market that creates the conditions for the next bull market.

If it is not a "just" bear market what is it? A commodity market that is not cyclical anymore. Flat.

I suggest you work on your comprehension skills.
"Most haystacks don't even have a needle." |  I'm on Twitter  | Watch this, please

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #4846 on: October 13, 2017, 07:55:17 AM »
"And the current bear market might not just be a bear market"

The implication is that this may not be a bear market, the kind of market that creates the conditions for the next bull market.

If it is not a "just" bear market what is it? A commodity market that is not cyclical anymore. Flat.

I suggest you work on your comprehension skills.

 "Not just a bear market": You should just stand by your words. You think that the bear market could be a permanent or near-permanent condition. Correct?

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #4847 on: October 13, 2017, 07:59:20 AM »
It might be worthwhile revisiting some basic mathematics. 

The PV of $1, @ 20%/yr, 5 years in the future is just 40c (1/(1+.2)^5); at 10 years out its just 16c. The ALS Chipada, Potash, and Iron ore exposures are all great exposures – but even if they work perfectly, on time, and as expected; they are so far in the future that the PV is essentially meaningless. They do not contribute to TODAYS price of ALS.

Mining is cyclical, inherently risky, and sentiment changes rapidly. You are also looking at 3 cycles acting together – commodity price, capital, and investor momentum; and trying to forecast it forward over many years. Flea infested turkeys fly in strong winds (up cycle of capital investment), and often look like eagles (when running in the up cycle of momentum investing). And they fly as high, as those companies that are a lot more reputable. ALS’s quality reputation isn’t going to matter when everything is flying.   

It has already been pointed out that there is no royalty if the source mine stops producing. Hence you are TWICE exposed to the commodity market. 1) Revenue (commodity price) has to exceed the cash cost of production, and 2) everything being sold is going at low prices – minimizing the royalty payment. You are also exposed to the capital cycle – because if the source mine cannot make its debt payments, it’ll bankrupt - & production will stop (even If it is still profitable) until a new buyer is found for the deposit. The royalty model is NOT a magic bullet – it has all the same risks as a major.

Get it right, & the mining game will make you VERY rich.
But recognize that it isn’t going to happen by ‘holding forever’, & simply compounding. It just isn’t how mining works.

SD

I've already calculated the IRRs of the Callinan, Prairie, CDP, and Chapada purchases. No need for a lecture on discounting future cash flows.

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #4848 on: October 13, 2017, 08:10:00 AM »
In terms of bankruptcy risk of the producer partners:

1) Transalta, Capital Power and Atco are rock-solid companies. Westmoreland as one of the coal mine operators is very financially shaky but probably replaceable by a contract miner.

2) Yamana has a lot of debt repayments. Bankruptcy a possibility if Cerro Morro doesn't come on line as expected. Cerro Morro construction currently on schedule.

3) Hudbay just completed a $242 million equity issue and their operating cash flow has been growing. Very little risk of bankruptcy especially for 777 mine's short remaining mine life.
« Last Edit: October 13, 2017, 09:09:23 AM by linealdin »

linealdin

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Re: ALS.TO - Altius Minerals
« Reply #4849 on: October 13, 2017, 08:17:01 AM »
LIF up a dollar to C$21.10. Not sure why, the dividend date to collect the $1 per share was September 30th.

Altius's 2.5 million shares of LIF worth C$52.75 million.

I expect another LIF special dividend but nothing huge. Maybe just 50 cents per share, payable in January.
« Last Edit: October 13, 2017, 09:08:13 AM by linealdin »