Author Topic: ALS.TO - Altius Minerals  (Read 1739786 times)

sculpin

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Re: ALS.TO - Altius Minerals
« Reply #750 on: July 31, 2012, 12:35:06 PM »
Thanks hohi!


hohi

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Re: ALS.TO - Altius Minerals
« Reply #751 on: August 01, 2012, 06:43:50 AM »
You're very welcome! If there are any errors or if you have some kind of feedback - positive or negative - I would love to hear it.
Cheers,
hohi.

current resource positions: ALS.TO  //  NILSY  //  IVN.TO   //   DPM.TO   //   GAZ

Dazel

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Re: ALS.TO - Altius Minerals
« Reply #752 on: August 01, 2012, 11:13:01 AM »

Hohi,


I am interested to find out where you found the information on major shareholders?

Dazel.

Liberty

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Re: ALS.TO - Altius Minerals
« Reply #753 on: August 01, 2012, 12:19:27 PM »

Hohi,


I am interested to find out where you found the information on major shareholders?

Dazel.

Wondering why you don't see your name on that list? ;)  :D
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hohi

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Re: ALS.TO - Altius Minerals
« Reply #754 on: August 01, 2012, 12:28:02 PM »
@ Dazel:

The information about major shareholders actually can be found in their newest presentation:
altiusminerals.com/uploads/2012-June-QC.pdf

Cheers,
hohi
Cheers,
hohi.

current resource positions: ALS.TO  //  NILSY  //  IVN.TO   //   DPM.TO   //   GAZ

Liberty

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Re: ALS.TO - Altius Minerals
« Reply #755 on: August 07, 2012, 07:12:03 AM »
No surprise, the buybacks continue:

http://www.canadianinsider.com/node/7?ticker=ALS
"Most haystacks don't even have a needle." |  I'm on Twitter  | This podcast episode is a must-listen

hohi

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Re: ALS.TO - Altius Minerals
« Reply #756 on: August 07, 2012, 10:35:17 AM »
Very nice to see them buy at these undervalued levels. One of the smartest things they can do with all that cash right now imho.
Cheers,
hohi.

current resource positions: ALS.TO  //  NILSY  //  IVN.TO   //   DPM.TO   //   GAZ

ItsAValueTrap

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Re: ALS.TO - Altius Minerals
« Reply #757 on: August 08, 2012, 01:44:35 AM »
I did some research on Alderon and I can't get that excited about it. 

1- It is a shady junior exploration company.

They "sponsor" theaureport.com (shills...).

They are probably paying money to penny stock promoters.  see
http://thepennystockpick.com/tag/alderon/
and then their disclaimer
http://thepennystockpick.com/disclaimer/
"Thepennystockpick.com its operators, owners, employees, and affiliates most often have interests or positions in equity securities of the companies profiled on this website, some or all of which may have been acquired prior to the dissemination of this report, and may increase or decrease these positions at any time even after making positive remarks about a company."
"Thepennystockpick.com most often receives compensation from third party(ies) for publication of the information contained in this website, as follows:
This compensation may constitute a conflict of interest as to Thepennystockpick.com ability to remain objective in our communication regarding the profiled company. Thepennystockpick.com may receive stock as compensation for advertising services. Most often Thepennystockpick.com will sell its stock during, before and after making positive comments about the company. Any compensation received for advertising will be disclosed at the bottom of the ThePennyStock.com emails."

2- I think that it will have higher operating costs than Bloom Lake (Cliffs bought that from Consolidated Thompson).

If you look at this Cliffs' earnings press release:
http://www.euronext.com/fic/000/070/720/707207.pdf
Bloom Lake has cash costs of $91/t for the first half of 2012 (estimated to be $85/ton for the entire year).  This is well above what was stated in their technical reports and well above the $30/ton figure thrown around somewhere on the Internet.

Pros for Alderon:
-very close to infrastructure
-management team has built a mine before
-off-take agreement provides partial financing
-vaguely close to turning into a producing mine

Cons for Alderon:
-high manganese levels (and to a smaller degree sulfur) in ore means that they will have smelter deductions and receive a lower price for their ore.  The PEA estimates $15/t   (I have no idea how the smelter deductions will be calculated.)
-high manganese limits their marketing flexibility and they might only be able to sell to China.  The problem with selling to China is that Alderon will have to pay a little ~$20/ton for shipping (depends on shipping rates... overcapacity in the drybulk sector may keep rates down) which may be double that for NA/European customers.
-slightly burdened by 3% royalty to Altius.  Not a big deal.
-slightly burdened by off-take agreement.  Hebei gets a 5% discount on Platts benchmark price for first 60% of 8MT/yr.

Compared to Bloom Lake, Alderon might have a margin that is lower by ~$20-30+/t. 
Cliffs is getting a price of $128/t - $175/t between 2011-2012 for its Eastern Canadian ore (some of this is affected by the output of high manganese pellets from Wabush, which I believe sells at a premium to Bloom Lake fines output?).
If D&A runs $16/t and cash cost is $85/t-$91/t for Bloom Lake, then the total costs are $101/t-$107/t.  Add 20-30/t to that and Alderon might run $121/t-$137/t in costs.  The profit margin might be anywhere from -$9/t to $54/t.  It could be marginally profitable and could very well turn into a producing mine.  I definitely would not short it.  But perhaps it is not worth as much as you might like to hope?

3- Other iron ore mines have cash costs far lower than Bloom Lake.  Cliffs has operations at $62/ton cash costs.  I haven't checked other miners but they might be at $40-50/t.  Many of the $60/ton and below operations are being expanded (e.g. Fortescue is taking on debt and expanding).  So you might make the argument that eventually new supply will bring iron ore prices down.  A smart buyer might stay away from really marginal stuff like Alderon.  (But if iron prices rise... boy oh boy will Alderon go up along with Altius' iron ore portfolio.)

4- I think that the mining sector in general has some serious problems.  This is why Altius' royalty strategy is brilliant. Whenever miners do dumb or crazy things, Altius stands to benefit if it is holding the royalty.  If somebody puts a marginal mine into production, Altius' royalty isn't killed by any losses on the equity/debt side if commodity prices slide.  And sometimes mining companies will mine at a loss (e.g. Yukon-Nevada Gold I am looking at you)... great for the royalty holder, terrible for the equity owners.

Yes Altius does own Alderon stock (which has been diluted by equity raises).  But I think that's most because they have to, not because they want to.  They took a higher royalty presumably in exchange for less shares.  I am guessing Alderon was a cash-strapped junior when it acquired the property and it wouldn't have made sense for it to pay cash (juniors are almost always undercapitalized).
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jjsto

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Re: ALS.TO - Altius Minerals
« Reply #758 on: August 10, 2012, 09:19:30 AM »
Recent article:

http://www.miningweekly.com/article/labrador-trough-positioned-to-feed-canadas-iron-ore-exports-2012-08-10

And, my understanding is that the initial higher cash costs at bloom lake were due to a fire and extended down-time from equipment failures.  I remember reading (dont have link) management is still confident they will bring costs down to their low 60s target.

ItsAValueTrap

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Re: ALS.TO - Altius Minerals
« Reply #759 on: August 10, 2012, 02:15:24 PM »
Hmm if you read Cliff's press release, they seem to be staying that cash costs will stay at high levels.  If the first half of the year was $91/t, and the forecast for the full year is $85/t, then the second half would have costs of $79/t.  That's still well above $60/t.

2- Opex versus cash costs:  Cash costs will include things like equipment leases and royalties (Bloom Lake has none AFAIK).  So this may explain part of the gap between cash costs and projected operating costs but not all of it.

3- Actually if you read Cliff's press release things are a little nastier.  They are going to keep production at about 7.2MT/yr instead of the 8.0MT/yr that was supposed to happen.

So if BBA did technical report work for Bloom Lake and they are now doing the work for Alderon and other juniors in the area, you might expect that the technical reports are on the very aggressive side.

3b- There are legitimate reasons why technical reports can be wrong.  There is uncertainty in the metallurgical process.  What works on a bench/laboratory scale doesn't necessarily behave the same on a production scale.  What the metallurgical engineers can do (if they have the money) is to run tests on a large sample of ore (you need a bulk sample) at various scales (bigger and bigger).  And from that they try to extrapolate to what would happen on a production scale.  It's an educated guess.

However, the problem with juniors is that they sometimes find authors who are aggressive in their educated guess or they pressure the author to be aggressive.  And I guess I was fooled as I didn't see anything in the Bloom Lake report that immediately struck me as very aggressive.  (It was the reverse... I was surprised that they used such a low price for the commodity price assumption.  It's unusual to use a price lower than the 3-year average.)

3c- Honestly, because there are legitimate reasons why technical reports can be wrong, it's hard to prosecute technical report authors for being way too aggressive.  Canadian regulators have been pretty lax about this and I don't recall anybody getting punished for putting out a really aggressive technical report (Peter George / Barkerville Gold takes the cake... but AFAIK he got a slap on the wrist).

4- Basically, I really have no idea what's going on.  I don't know what accounts for the miss between BBA's technical report and what Cliffs is reporting. 
"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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