Author Topic: ALS.TO - Altius Minerals  (Read 1995603 times)

Dazel

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Re: ALS.TO - Altius Minerals
« Reply #770 on: August 23, 2012, 01:22:08 AM »


Royal gold is trading near an all-time high today. There PE is now 51.67.

To put that in perspective...51.67 times ( Altius Voisey bay royalty) $4m

Over $200 m pre tax valuation to Royal Gold market cap.

Dazel.


biaggio

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Re: ALS.TO - Altius Minerals
« Reply #771 on: August 23, 2012, 05:57:31 AM »


Royal gold is trading near an all-time high today. There PE is now 51.67.

To put that in perspective...51.67 times ( Altius Voisey bay royalty) $4m

Over $200 m pre tax valuation to Royal Gold market cap.

Dazel.

That s because the shareholders of royal gold are not as smart as the ALS shareholders (I don t include myself, though I have accumulated a significant amount). I think most current holders will be long gone way before 51  times.
Personally I am not counting on that type of valuation- it seems crazy to me
Dazel (and other posters) appreciate all your updates + posts.

Dazel

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Re: ALS.TO - Altius Minerals
« Reply #772 on: August 23, 2012, 06:43:22 AM »
Biaggio,


As you know I post things that I see...what I take from the 51 pe and Franco Nevada valuation is that there are very very few royalty companies out there. So the lack of supply of this type of investment has investors fighting over theirs shares.

What this means to us... is that Altius has a hidden asset in Voisey Bay royalty that if sold to Royal Gold would be worth many many times at Franco Nevada or Royal Gold when compared to Altius.

This should give Altius a currency in this market. Do we want them to sell it? No. Unless they could
get $100m out of it. Take 25 years of payments out now. We are not saying this is going to happen but that the assets are being misplaced at Altius...the value of their assets will be priced in the market...there are  many ways to unlock hidden value.

The Voisey's Bay Royalty remains Royal Gold's largest royalty and the main reason they took out International Royalty from Altius.





Dazel.

value-is-what-you-get

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Re: ALS.TO - Altius Minerals
« Reply #773 on: August 23, 2012, 06:56:14 AM »
3- Alderon is no Consolidated Thompson in my opinion.  Alderon's ore will be penalized for manganese content.  I think that Hebei did protect itself by stipulating deductions for deleterious minerals in its off-take agreement (it's a pretty standard practice).  Otherwise Alderon could cut corners on mineral processing costs (e.g. not spend the electricity and mill capacity on grinding the ore finely) and ship a product with high levels of silica, manganese, etc.

I believe you are here for alterior motives based on the nature, tone and language used in your posts and even your username. 

Having done some subsequent research on your assertion above, I can find absolutely nothing indicating that 0.6% Manganese is a bad thing.  As a matter of fact Manganese is added in the steel making process up to 8% concentrations:

"Steel
Manganese is essential to iron and steel production by virtue of its sulfur-fixing, deoxidizing, and alloying properties. Steelmaking,[27] including its ironmaking component, has accounted for most manganese demand, presently in the range of 85% to 90% of the total demand.[26] Among a variety of other uses, manganese is a key component of low-cost stainless steel formulations.[24][28]

Small amounts of manganese improve the workability of steel at high temperatures, because it forms a high melting sulfide and therefore prevents the formation of a liquid iron sulfide at the grain boundaries. If the manganese content reaches 4%, the embrittlement of the steel becomes a dominant feature. The embrittlement decreases at higher manganese concentrations and reaches an acceptable level at 8%."

Please provide some sort of proof or citing that indicates 0.60% manganese in iron ore is considered a high level and subjects the ore to price discounts.

As far as Grandich not adding any value for saying good things about Altius/Alderon, it follows logically that we can do away with all forms of advertising as well on the same basis of not adding value.

I think the intelligent posters on this thread understand you better than you understand them.  The proof will lie in subsequent posts.

ItsAValueTrap

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Re: ALS.TO - Altius Minerals
« Reply #774 on: August 23, 2012, 12:48:56 PM »
Hi value-is-what-you-get

1- When I first tried to sign up for this forum, my username was GlennC but my membership was never approved for whatever reason.  (Perhaps it is too similar to another username on this forum that also starts with Glenn.)

2- In regards to the manganese content of Alderon's ore, please refer to the technical report that Alderon filed on SEDAR and that can also be found on its website:
http://alderonironore.com/_resources/kami/PEA_Final2011.pdf

If you search for the phrase "Quality Penalties" in 16-4, you will see that the technical report anticipates a $15/t penalty.  (The technical report notes that sulfur and manganese are the two main issues.)

3- Don't get me wrong... I am bullish on Altius.  I think that they are the best managed mining-related company out there.  (Northfield Capital would be #2.)
"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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ItsAValueTrap

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Re: ALS.TO - Altius Minerals
« Reply #775 on: August 23, 2012, 01:27:46 PM »
To add on...

4- I am just extremely cynical about juniors.  And to a lesser degree, I don't like mining stocks.  If I was forced to index, I would never want to index these stocks.  These stocks are screwed up because:
a- Even Goldcorp (a large cap) pays for people to shill for them.  Goldcorp sponsors theaureport.com
b- Gold miners should have made more money in a bull market.
c- As far as juniors go, their lack of capitalization means that they constantly have to spend money to raise money.  For some juniors, not that much money is spent on actual exploration (sometimes less than 50%).
d- Sometimes juniors will extend warrants (this is sort of like giving away free money) because it's a cheap way of raising money.  Because the alternatives have paperwork costs and you may need to pay brokers several percent.  Very few companies do rights offerings (arguably the fairest for shareholders) because it costs money to do it and it doesn't make brokers happy so they won't pump your stock.  Raising money is expensive... but they have no choice.

Rick Rule (he/Sprott is long Altius):
It is critical for gold stock speculators to remember that the junior market, in aggregate, is always overvalued. If we were to merge every gold junior in the world into one entity (let's call it Junior Goldco), that company would lose (profits and corporate acquisitions less industry expenditures) somewhere between two billion and eight billion dollars per year.
http://www.caseyresearch.com/cdd/rick-rule-why-im-excited-about-market

Harris Kupperman, hedge fund manager (no idea if he is long Altius):
Quick, what’s the world’s worst investment sector?
Airlines? Autos? Biotech? Give up? Junior mining is way worse. Airlines limp on for years in quasi-bankruptcy—so do autos. A few companies like Toyota even do well. Biotech companies sometimes find something interesting. Even if your junior mining company finds something, you still will probably lose money.
http://adventuresincapitalism.com/post/2010/03/07/Mining-worse-than-airlines.aspx
*He may be making a reference to Warren Buffett's shareholder letters where Warren points out that airlines have made no money for investors.

5- I hope you see why Altius is brilliant.  The royalty structure protects them against a lot of the problems in the mining sector.  And usually those problems work to the royalty holders advantage.

If somebody chases an uneconomic mine, the equity holders lose a lot of money but the royalty holder still makes some money.  If Alderon turns into a mine and the equity owner goes into empire building mode and expands production at the mine, the royalty benefits.

On the exploration side, sometimes juniors will keep on drilling so that they can generate news flow to raise more money to pay insiders' salaries.  Why do exploration yourself when you can get a junior to do it?

6- Assuming that everybody was rational and that juniors act in the best interest of shareholders, it doesn't entirely make sense for Altius to seek royalties on their joint venture deals.  If they took equity instead, they would be helping out more in terms of raising capital to build a mine.  Altius has a lot of cash on its balance sheet.  In theory it would make sense for it to deploy its capital into building mines.

Building mines is not that good of a business.  Altius isn't buying more shares of Alderon to push it towards production (even though it could).  It is exercising capital discipline and waiting for really high rate of return opportunities.  They are really smart.
"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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jjsto

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jjsto

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Re: ALS.TO - Altius Minerals
« Reply #777 on: August 29, 2012, 09:03:40 AM »
Interesting article on spread between domestic and imported iron ore prices in china:

http://blogs.ft.com/beyond-brics/2012/08/29/iron-ore-tests-the-chinese-floor-theory/#axzz24nQ97pcb

Dazel

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Re: ALS.TO - Altius Minerals
« Reply #778 on: August 29, 2012, 10:30:47 AM »


Itsavaluetrap,

We agree on junior miners in general...we also agree that Altius are the smartest guys in the room. Rick Rule and Brent Cook refer to Altius as a merchant banker. All we care about is return on capital. Altius like Leucadia are lumpy returns for now.

We would love a return on the cash that is sitting there...we will see what happens.

Dazel.

Dazel

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Re: ALS.TO - Altius Minerals
« Reply #779 on: August 29, 2012, 10:46:02 AM »


Jjsto,

Alderon.

Thompson consolidated ramped up in a hurry at prices below $75...the cost to build the alderon project have dropped significantly  in the last 8 months...engineering, material, labor, all of the inputs have dropped because in times of uncertainty everyone stops....if they were to do the build out at $150 a ton....everything would be extremely expensive because every one would be trying to build out. We are seeing projects pull back and anyone without the right economics will hold off until the price rises. Alderon will benefit on the build out at a lower iron ore price and be able to negotiate better deals with their suppliers...They want the price high when they produce not when they build.

Dazel.