Author Topic: ALS.TO - Altius Minerals  (Read 1743982 times)

Eric50

  • Lifetime Member
  • Full Member
  • *****
  • Posts: 216
Re: ALS.TO - Altius Minerals
« Reply #830 on: October 10, 2012, 12:12:46 PM »
Dazel -

I'm surprised Altius hasn't used the steep correction in the Canadian resource sector this spring/early summer to take new positions and make its cash work. I think that's also something you expected as per your previous comments.

It's not that I don't like the buybacks at this price. I'm just surprised they haven't used their cash earlier this year to take advantage of the opportunities that were there and I'd be curious to get your opinion on that.

thanks in advance

Eric


Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 11384
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
Re: ALS.TO - Altius Minerals
« Reply #831 on: October 10, 2012, 12:39:10 PM »
Dazel -

I'm surprised Altius hasn't used the steep correction in the Canadian resource sector this spring/early summer to take new positions and make its cash work. I think that's also something you expected as per your previous comments.

It's not that I don't like the buybacks at this price. I'm just surprised they haven't used their cash earlier this year to take advantage of the opportunities that were there and I'd be curious to get your opinion on that.

thanks in advance

Eric

I'm surprised too, especially after the "bring on the bloodbath" interview many months ago.
"Most haystacks don't even have a needle." |  I'm on Twitter  | This podcast episode is a must-listen

Green King

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 746
Re: ALS.TO - Altius Minerals
« Reply #832 on: October 10, 2012, 03:02:01 PM »
maybe its happening and we just don't see it.
The reason most of us got in is because of the good management right ?
GK

ItsAValueTrap

  • Hero Member
  • *****
  • Posts: 1945
    • Blog
Re: ALS.TO - Altius Minerals
« Reply #833 on: October 10, 2012, 03:07:50 PM »
Maybe it's because they are smart and are waiting around for the fat pitch.

Yes the share prices of juniors have gone down but they were coming down from levels of overvaluation.
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. " -Buffett

my blog

ItsAValueTrap

  • Hero Member
  • *****
  • Posts: 1945
    • Blog
Re: ALS.TO - Altius Minerals
« Reply #834 on: October 10, 2012, 03:50:36 PM »
Look at how Altius has made money in the past.  It wasn't from investing in juniors.  It was from:

A- Buying royalties instead of equity.  Look at all the people who have made personal fortunes in mining.  Teck is one of the rare cases where somebody (Norman Keevil) made a fortune from from equity.  Whereas Lassonde, Schulich, and Dalton made a lot of money from royalties.  The problem with equity is that the equityholders in mines regularly do dumb things.  They chase projects with low rates of returns (e.g. practically the entire gold industry), engage in empire building, have to compete with the publicly-traded miners who bid against you on acquisitions, etc.  And the junior explorers (in aggregate) are huge destroyers of capital.

B- Staking land *when it was cheap*.  That's why Altius is saying "bring on the bloodbath".  It's because they have this huge stash of cash and they want to buy land when it is cheap.  Land may not be cheap right now.  Dalton was visiting China probably because he was trying to "sell" Altius' iron ore land positions through joint venture deals (these JV deals are a subtle form of selling).
This is a business where Altius cannot deploy a lot of capital but has generated obscene returns.

C- Selling shares when they were expensive, buying them back when they were cheap.

And look at what Altius has NOT done.  They have largely avoided the business of exploration (exploration stocks have negative ROI in aggregate).  They have largely avoided the business of developing, building, and owning mines.  That's smart in my opinion as those aren't great businesses.
« Last Edit: October 10, 2012, 03:54:22 PM by ItsAValueTrap »
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. " -Buffett

my blog

Green King

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 746
Re: ALS.TO - Altius Minerals
« Reply #835 on: October 10, 2012, 03:53:33 PM »
Look at how Altius has made money in the past.  It wasn't from investing in juniors.  It was from:

A- Buying royalties instead of equity.  Look at all the people who have made personal fortunes in mining.  Teck is one of the rare cases where somebody (Norman Keevil) made a fortune from from equity.  Whereas Lassonde, Schulich, and Dalton made a lot of money from royalties.  The problem with equity is that the equityholders in mines regularly do dumb things.  They chase projects with low rates of returns (e.g. practically the entire gold industry), engage in empire building, have to compete with the publicly-traded miners who bid against you on acquisitions, etc.  And the junior explorers (in aggregate) are huge destroyers of capital.

B- Staking land *when it was cheap*.  That's why Altius is saying "bring on the bloodbath".  It's because they have this huge stash of cash and they want to buy land when it is cheap.  Land may not be cheap right now.  Dalton was visiting China probably because he was trying to "sell" Altius' iron ore land positions through joint venture deals (these JV deals are a subtle form of selling).
This is a business where Altius cannot deploy a lot of capital but has generated obscene returns.

C- Selling shares when they were expensive, buying them back when they were cheap.
+1
GK

nostradamus

  • Sr. Member
  • ****
  • Posts: 270
Re: ALS.TO - Altius Minerals
« Reply #836 on: October 11, 2012, 11:15:14 AM »
Hello all

I have been following the discussion on this board for a while now and thought it was about time for me to contribute. But first a disclaimer: I have quite a sizable investment in Altius and I know next to nothing about mining. So I am both biased and uninformed.

Anyway there are a couple of things I have noticed recently that I don't think have been posted:

First off, some recent news on Julienne lake:

http://www.thetelegram.com/News/Local/2012-10-10/article-3096301/Call-for-expressions-of-Interest-for-Julienne-Lake-development/1

I guess that the Altius management had flagged that this was anticipated, but the announcement is clearly positive. As I said at the outset, I don't really know anything about mining, but if the goverment is encouraging a developer to spend a huge amount of money to turn their property into a mine, it seems to me that the developer would want to make that capex go a bit further by aquiring the right to mine the adjacent (submerged) land that altius owns as well. I assume we will hear more about this when altius reports back on the outcome of their 2012 winter drill programme.

Secondly, I came across this presentation:

http://altiusminerals.com/uploads/RIF-2012.pdf

It includes a few things that I had not seen before. 1. info on the Chile expansion, 2. a statement that they intend to dividend out the Kami royality cash flow, 3. their own NAV calculation of the current value of the Voissey Bay and Kami royalities (C$172m).

Regarding point 2. They project a royality of C$55.2m by 2017 on Kami. Divide this by the 28,759,675 shares outstanding give a dividend of C$1.91 per share, or a yeild of around 18% at current prices!

Regarding point 3. Take a look at the slide on their capital structure. I think this means that if you just consider the cash, marketable securities and two royalities (Voissey and Kami), you get a valuation of 182 + 114 + 172 = C$468m or 16.27 per share. Ie just these aspects of the business are worth about 60% more than the current share price.

Then there is all the potential from their other interests, eg CMB royalty and Julienne lake.

I think this stock might be cheap.

N.

biaggio

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1200
Re: ALS.TO - Altius Minerals
« Reply #837 on: October 11, 2012, 02:16:20 PM »
Nostradomus, thanks for posting presentation.

If they think they will dividend out $55 million from Kami I wonder why they are allocating only $172 million to NAV (internal valuation)

Wow, $1.91 per share in dividends- I was not banking on this- I'll take it.

I am not sure where that presentation was made (made in Sept 2012) but certainly I don t think that this story is known by the market as the shares still sell in low volume without much upward price movement, not that I care. Will be fairly priced when 2015 comes when + if they have Kami operating as projected

ALS is slowly becoming one of my larger holdings.

biaggio

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1200
Re: ALS.TO - Altius Minerals
« Reply #838 on: October 11, 2012, 02:27:58 PM »
http://altiusminerals.com/uploads/2012-Sept-Chicago.pdf

another similar presentation posted Oct 1 at "Chicago Hard Asset Conference" with similar info.

$1.90 dividend projected for 2017- who knows what will happen by then- in the long run I think hard assets are going to be worth more than today- being able to collect the royalty you don t have to worry about the increasing cost to mine the stuff.

Ross812

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 816
  • Move over KY
Re: ALS.TO - Altius Minerals
« Reply #839 on: October 11, 2012, 02:36:09 PM »
How many tons of iron can Alderon produce? The release this morning suggested 8 million tonnes? 4.8 million tones purchased by Hebei for 95% the market cost. Lets assume $100/ton so Alderon is now making at least grosses 456 million. Altius gets 13.7 million? ($100*95%*4.8*3%) DCF discounted at 11%, 0% growth. The 3% royalty is worth 124 million on the extreme low end...
At $140 per ton 8 million per year the royalty is worth 305 million...

Voisey .3% Royalty, 2.25 million per year
0% growth, 11% discount 20 million


I came up with this a while ago. I came up with a royalty value between 125 and 300 million. At this point it's all speculation. Will kami be completed? What will the discount rate be? What is the level of production? What is the iron ore price? Your number seems on the low side of my range, so they may be being a little conservative. I'm not sure where the 55 million royalty is coming from...
96% Fixed Income CDs, Muni, Corporate Debt - 4% SPX Options