Author Topic: ALS.TO - Altius Minerals  (Read 1884590 times)

Dazel

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Re: ALS.TO - Altius Minerals
« Reply #910 on: November 24, 2012, 07:10:10 AM »
I agree with all of the recent posts...here is an older article that encompasses Altius' strategy. They are disciplined...and have learned from putting good money in after bad at Nlrc...they have pinched pennies looking for the perfect add on royalties like irc and Voisey bay. They will be the lowest cost...highest return on capital royalty company on the planet. This takes time to do it right.

If miners continue to struggle for capital...gold miners included...Altius will be there. We would really like to see this huge sell off in junior miners give us an opportunity to deploy capital....Ala IRC...for now they are buying back shares daily which we love.

They are naturally hedged with their cash hoard...The worse it gets the better chance of deploying capital...they are in the drivers seat...to us this makes them an obvious take out target.

Whatever happens...as shareholders you should know they will decide what is the best route to go forward. they are the best jockey in the industry.

http://altiusminerals.com/uploads/2010-feb-BP.pdf

Dazel.






Dazel

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Re: ALS.TO - Altius Minerals
« Reply #911 on: November 24, 2012, 07:33:21 AM »

As for cranberry capital.....we suspect that a lot of the investments are in precious metals...as for sparkly...well...will leave that one alone. Altius network including Cranberry capital, Rick Rule etc is the best the industry...if there is an opportunity they will see it.

We had contemplated uses for the cash...value investing being our specialty and preference...

However, we trust management to the right things. They are focused on their industry and have all the tools and track record to prove their allocation of capital skills. We would love to see a juicy big investment on a sure thing!

http://www.mineweb.com/mineweb/content/en/mineweb-junior-mining?oid=133091&sn=Detail&pid=92730

Dazel.

ItsAValueTrap

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Re: ALS.TO - Altius Minerals
« Reply #912 on: November 24, 2012, 08:23:42 AM »
Thanks all for helping to answer some of my questions, and thanks in particular to Dazel for getting this board going. As time goes on I become increasinly convinced that there is significant (and increasing!) value in this stock that is not recognised by the market. However, I think biaggio is right that it is important to think about and be aware of all potential negatives - even if, like me, you believe they are massively outweighed by the positives.

For me the negatives are:

1. They are overweight industrial metals and underweight precious metals. If the global economy falls off a cliff I would feel more confortable if they had a royalty stream in precious metals. (That said, given their cash pile, I think the downside is limited)

2. Their track record is excellent, but not perfect. The NLRC was a mistake. Hindsight is a great thing, and maybe at the early stages of the project they were completely correct given all the available information, but they should have cut their losses sooner (I have read an interview in which Dalton admits this). So it is not possible to image that they could again get drawn into some mega project that does not work out. (However, I take the view that they have learnt the lessons from the NLRC experience, plus if in the future they do decide to get involved in some mega project that puts a lot of the equity of the company at risk, I can always decide to exit at that point).

3. Cranberry capital. For me, I invest in Altius so that they can put my money to good work based on their real underlying competative advantage - prospect generation. I don't like the fact that they take some of my money and give it to someone else to manage (irrespective of who that person is and how supportive he has been to altius in the past). Sparkfly?!! Stick to mining.

Any disagreements? Any negatives missing?

N.

Couldn't you make very similar arguments against Berkshire Hathaway?

-If the economy fell off a cliff, then Hathaway (like almost all companies) would get hurt.  (And didn't the price of gold go down slightly in the 08-09 recession?)
-Track record not perfect.  (I don't think any company's track record is perfect.)
-Cranberry capital:  It's about finding ways to deploy your capital with favorable risk/reward.  The investment in the Voisey's Bay royalty is an example where Altius was successful in the past in something other than prospect generation.  I don't see it as a mistake.

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to us this makes them an obvious take out target.
I doubt management would like that.  The reason why Altius is obsessed is royalties is because they know that most players in the mining industry do dumb things and didn't compound capital at a ridiculous rate.

Maybe Altius would sell if markets are frothy, the purchase price overvalues Altius, and insiders feel like taking it easy in their lives.  If they know about what happened with AT&T's purchase of Malone's TCI, then I think that Altius management would insist on being able to sell their shares after a takeover.  Such a takeover could happen because a lot of the royalty companies out there have ridiculous valuations and can use their overpriced stock to buy other companies.
"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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biaggio

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Re: ALS.TO - Altius Minerals
« Reply #913 on: November 24, 2012, 10:20:03 AM »
Has anyone been to a General Meeting or had opportunity to meet/talk to management?

I am glad their record has not been perfect-if it was perfect I would worry even more that this is too good to be true.

In the last presentation they are projecting a dividend of almost $1/share in 2015 growing to $2/share in 2018 just on distributing their royalties- obviously Mr Market does not know this or does not believe this. Market may believe once they start the mine- but better if he never gets it (but it will make us feel better)

Could this be a value trap? Tell tale signs of a value trap that I found a while ago while evaluating some of the mistakes I have made in the past:


1. Is the sector (commodity sector in this case) in long-term secular decline?

- not according Jimmy Rogers or Jeremy Granthem

2. Is the risk of technological obsolescence high?

-No. Engineering/technological innovation may help

3. Is the company’s business model fundamentally flawed?

Royalty business is a good model

4. Is there excessive debt on the books?

No

5. Is the accounting flawed or overly aggressive?

or is there fraud/ previous overly optimistic engineering assessment (iron content of Kami)
I think this for me is what I worry the most about...can we trust the guys at the top. Their track record with previous projects indicates that we should trust them + they have a lot of their own money in ALS.
Biggest immediate problem is if there is a problem getting Kami going- for me this is hedged by all the cash and other projects.

ItsAValueTrap, are there any other things you look at that would indicate a "value trap"

ItsAValueTrap

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Re: ALS.TO - Altius Minerals
« Reply #914 on: November 25, 2012, 11:04:39 PM »
Quote
1. Is the sector (commodity sector in this case) in long-term secular decline?

- not according Jimmy Rogers or Jeremy Granthem
According to Jimmy Rogers, you should invest in commodity futures.
Commodity stocks are extremely difficult to invest in and I do not believe that he does it.  Futures outperform stocks by three times.

If you really want to understand mining, here is some reading I would recommend:
http://glennchan.wordpress.com/2012/11/04/reading-round-up-books-on-mining/

The mining sector in general is a value trap.  Especially the juniors.
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Dazel

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Re: ALS.TO - Altius Minerals
« Reply #915 on: November 26, 2012, 04:43:38 AM »
It's value trap,

Jim Rogers owns a commodity index bit of a conflict of interest...when you see him sell it...you will know he thinks the cycle is over.

This is not a junior mining thread...but I agree 90 % of juniors are a value trap...That is why there are very few operators that create value. They are widely known and Brian Dalton is one of them...

We like you are drawn to the royalty side...Rogers is getting is his royalty on his commodity index...same premise.

We could see Grantham investing In companies like Altius...however, he is huge at $100 billion...he would need scale.

The royalty company huge premium in the market is because investors are hedging against inflation less risk from mining operations and income. We do not expect these conditions to stop anytime soon.

The junior Mining capital destruction you mention is to the benefit of Altius as they will simply wait until the opportunity is right...as Royal Gold has done with Thompson Creek...

Dazel.

Dazel.

ItsAValueTrap

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Re: ALS.TO - Altius Minerals
« Reply #916 on: November 26, 2012, 01:58:18 PM »
Altius is my largest position right now.

Here's an interview with Rick Rule that is relevant to the sector:
http://www.thedailybell.com/4334/Anthony-Wile-Rick-Rule-on-Gold-Silver-and-Why-Junior-Mining-Stocks-Have-Languished

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BargainValueHunter

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Re: ALS.TO - Altius Minerals
« Reply #917 on: November 27, 2012, 10:35:13 AM »
Rick Rule on Altius:

Quote
If you talk to a prospect generator, Altius Minerals Corp. (ATUSF.PK) might be an example, its exploration budget this year may be $20M, and joint venture partners are going to spend $17M of that. So its net exploration expenditure is $3M. Its G&A budget is $2M. So it needs to find $5M and it has $180M in cash and securities. The question is answered. You have a yes. You see another company, however, that is operating on its own nickel, whose budget is five or six times the cash it has, and if it can't give you a very, very, very good answer as to where it is going to get the money, you get to walk away.

http://www.theaureport.com/pub/na/14773
Albert Einstein called compound interest "the greatest mathematical discovery of all time".

nostradamus

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Re: ALS.TO - Altius Minerals
« Reply #918 on: November 28, 2012, 06:48:04 AM »
Hi all

I just listened to the following presentation by Tayfun Eldem at the Scotiabank mining conference.

http://www.newswire.ca/en/webcast/play/1078703/1174817

The vast majority of the presentation is simply stating what is already included in the slides of Alderon's corporate presentation. Regarding the DFS he says that the delay is to continue work on pit optimisation to ensure they are choosing the highest value options for the projects. He also says that "it is expected to conclude in the coming weeks, at the latest early January."

However, more importantly, in the last minute of the presentation he is asked about the delivery of the feasibility study and how this relates the next tranche of funding from Hebei. In response he says that there are four conditions that the DFS needs to meet to complete the transaction with Hebei and these relate to:

1. Timing of delivery of DFS by end-Jan
2. Total capital
3. Size of resource/minable reserves
4. Handful of specs around product quality

He then goes on to say that "we have already covered this ground and know that we meet all of these criteria and therefore there is absolutely zero risk in terms of delivering what Hebei is looking for to complete the rest of the transaction."

Regards

N.

Liberty

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Re: ALS.TO - Altius Minerals
« Reply #919 on: November 28, 2012, 07:32:26 AM »
Meanwhile at Cliffs, things are pretty rough..

http://www.canadianbusiness.com/article/107288--cliffs-natural-resources-delays-expansion-at-bloom-lake-mine-in-quebec

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Cliffs Natural Resources Inc. has delayed portions of its Bloom Lake mine expansion in Quebec while also idling some production at two of its U.S. iron ore operations. [...] The postponement will reduce Cliff's Eastern Canadian iron ore sales volumes to between nine million and 10 million tons for 2013 compared with an earlier expectations for 13 million to 14 million tons
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