Author Topic: ALS.TO - Altius Minerals  (Read 1854020 times)

Haasje

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Re: ALS.TO - Altius Minerals
« Reply #7320 on: February 06, 2020, 02:25:17 PM »
There are a lot of things that underperformed this particular index over that timeframe though.


Liberty

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Re: ALS.TO - Altius Minerals
« Reply #7321 on: February 07, 2020, 07:12:04 AM »
There are a lot of things that underperformed this particular index over that timeframe though.

That's factually true. But the point of investing is to make money, no? So I'm not sure it helps to say that other things also did poorly. The index is literally the default, something you can invest is for a few 10s of bps. So you should definitely compare yourself against it, at least in part, if you're an active investor. Not over-performing it all the time is normal. Under-performing it by 150% over a decade shows that something is definitely problematic with the approach.

And in the case of Lin, he said that 100% of his portfolio was in this one stock, and I was trying to warn him might not be good risk control and that the stock might not be getting good enough ROIC on the whole capital base, as well as had reinvestment and terminal value challenges, to perform well going forward. I may be wrong, but it's certainly something to consider and discuss, and it wasn't much looked at in this thread.
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petec

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Re: ALS.TO - Altius Minerals
« Reply #7322 on: February 07, 2020, 08:08:47 AM »
Under-performing it by 150% over a decade shows that something is definitely problematic with the approach.


Or that the starting valuation was very wrong.
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Liberty

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Re: ALS.TO - Altius Minerals
« Reply #7323 on: February 07, 2020, 08:42:13 AM »
Under-performing it by 150% over a decade shows that something is definitely problematic with the approach.


Or that the starting valuation was very wrong.

In hindsight, obviously, it either was overpriced then, or it wasn't too badly priced if they had executed on the future value creation that was expected. Everybody was screaming how cheap it was at the time and they had compounded capital 40% CAGR since the company was created and so on. They had all these call options on potentially huge homegrown projects that had been generated at low cost, and almost no downside risk because of the huge cash pile on the balance sheet and the royalty model that capped the downside and let others spend on capex, the smartest management in the space, would create lots of value in a downturn, etc. So what happened, right? Turns out that there are benefits to the model, but it's not magic, and doesn't automatically allows them to get high ROIC on the whole capital base.
« Last Edit: February 07, 2020, 12:50:13 PM by Liberty »
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bizaro86

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Re: ALS.TO - Altius Minerals
« Reply #7324 on: February 07, 2020, 12:00:55 PM »
As a look back, I think while getting cheap options on things is great, the ALS price had shareholders paying significant sums for those options, especially kami. While ALS didn't pay much for that royalty position, it was certainly valued by the market.

I think in many ways the biggest operational mistake they made was the guys they picked to sell that rock to. If they had gone with someone less promotional/better operator Kami would probably be a mine right now, which would be huge even if they had a lower royalty.

SharperDingaan

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Re: ALS.TO - Altius Minerals
« Reply #7325 on: February 07, 2020, 04:05:05 PM »
Kami will eventually become a very profitable and long-lived mine, but the problem is when.  A dollar of profit 10 years from now, discounted at 20%/yr, is worth just 16c today. If you are an IRON shareholder, and expect 50% dilution through the eventual financing process; 8c in the dollar.

Thing is, that once construction starts; it's only around 4 years until that first dollar, and the PV of each dollar is 48c. 3x the value for just getting the mine financed, then multiples again once it starts producing. But until then - your investment is dead money.

Of course there are ways 'around' this, but it's not for everyone.

SD   

 

bizaro86

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Re: ALS.TO - Altius Minerals
« Reply #7326 on: February 07, 2020, 04:17:09 PM »
Kami will eventually become a very profitable and long-lived mine, but the problem is when.  A dollar of profit 10 years from now, discounted at 20%/yr, is worth just 16c today. If you are an IRON shareholder, and expect 50% dilution through the eventual financing process; 8c in the dollar.

Thing is, that once construction starts; it's only around 4 years until that first dollar, and the PV of each dollar is 48c. 3x the value for just getting the mine financed, then multiples again once it starts producing. But until then - your investment is dead money.

Of course there are ways 'around' this, but it's not for everyone.

SD

For sure. I just think that at the top of the last cycle the market was probably discounting a high probability of kami starting construction soon. So given that didn't happen, the price of ALS was much too high.

I agree Kami will eventually get built. But it is starting to look like they missed this cycle. So it could 10-20+ years...

SharperDingaan

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Re: ALS.TO - Altius Minerals
« Reply #7327 on: February 08, 2020, 05:07:01 AM »
Kami's development/non-development fed base-level volatility into the ALS stock price.
When the mine was 'happening' it added an additional 30-40% to ALS price volatility; that decayed as Kami's prospects changed.

Our own thoughts are that Kami will eventually become a feeder mine, ultimately developed by those already in the area. They best know the local risks, and as the investment in their own mines progressively pays back, the pool of potential investment capital steadily accumulates. They will also have a material voice in what happens with licence extensions.

We own some IRON, but it is entirely funded with house money - not our original capital.
After-tax 'opportunity cost' < 2%/yr

SD

« Last Edit: February 08, 2020, 12:23:35 PM by SharperDingaan »

Williams406

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Re: ALS.TO - Altius Minerals
« Reply #7328 on: February 24, 2020, 04:57:19 AM »
Anglo Pacific announcing no more thermal-coal royalty acquisitions. Another data point underscoring the impact ESG focus having on resource companies:
https://www.anglopacificgroup.com/refinement-of-portfolio-investment-strategy/


Liberty

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Re: ALS.TO - Altius Minerals
« Reply #7329 on: February 25, 2020, 10:39:08 AM »
Back below $10 CAD. First time since 2016.
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