Altius hit $45 a share in 2007...
Congrats - check out QUX.TO too. I think they are pretty cheap COPPER play.
Dazel,
Did you say Sprott owns some? I haven't been able to confirm that it in any Altius filing....
cheers
Zorro
Rolf,
thx for the effort but I think you are at least 6 months behind...Royal Gold was sold a year ago.
Dazel.
Sorry Rolf,
I do not want to seem confrontational....thx for the hard work! at least 25% of Millrock has been sold...and Alderon and the Cranberry capital partnership has not been reported on the balance sheet...so what I am talking about is not obvious...as always we here on the board are ahead of the heard...there is not one analyst covering the stock...Alderon has 5 analysts!
pls look at my previous post on cash and security values they come from Oct 31st....plus Alderon and the Voisey bay Royalty.
Dazel.
Of special interest to us is St. Georges Potash and the Oil shale's in New Brunswick...we think these are unknown to the public...in this environment we think this could generate a lot of partnership interest.
Shareholders might be interested in the New millineum capital story...Tata steel has agreed to finance their Labrador project...Their market cap is $680m...for about the same amount of Iron ore...that Alderon says they have (estimate should be out soon)..the Tata project is further ahead but Alderon thinks they can raise their estimate of iron ore with 2011 drilling that has been successful so far...
Dazel.
Alderon Retains Renmark Financial Communications:
http://www.alderonmining.com/_resources/news/2011-03-11-NewsRelease.pdf
This is available in the US as ATUSF. Just double checking that this is the same company.
sorry guys away....we were buyers yesterday....
Looks like just a standard yearly buyback program announcement. Doesn't seem to necessarily mean they will buy anything back this year only that now that they got the disclosure out of the way, they could be opportunistic at any time this year. Just seems like good standard practice and not necessarily an indication of absolute intention to buy back.
Don't get too excited.
wrt Alderon value, I did a real simple comparison and as Buffett says "it sort of jumped off the page" at me.
Neighbour Consolidated Thompson got $4.9 billion for about 990 million tonnes. That's about $4.95 a tonne. $4.95 x 500 million = $2.475 billion
Consolidated are a producing mine so I looked at the cost of building that to be around $1 billion. Leaves $1.475 billion.
Then I figured that because I probably made some incorrect assumptions and would like a nice margin of safety I'll divide that in half. Leaves $737.5 million for 500 million tonnes.
That's about 2.5x current market cap and that's when it just sort of jumped off the page!
Any further resource increase is just more Margin of Safety above that figure.
Downside is if Iron Ore tanks - who knows?? Not me, but it looks pretty good so far!
I really like the way you look at things.
You guys have beat me to the punch on Alderon...you can see the excitement Altius management sees...It is early in the Alderon project but what is being missed is the 3% royalty (more on royalties later) that Altius owns in addition to it's 40% ownership of Alderon....just like Leucadia's royalty at Fortesque it was nothing and then...pure cashflow...We think that these income streams from future royalty streams are being completely ignored.
example: today's prices
Altius market cap $394m 0 debt.
Alderon shares32m $130m
cash equivalents $200m
The company is trading for $64m...That looks like more of a financial company than a resource company does it not? That is what the market is pricing but what about the other assets?
Royalties of interest
Voisey Bay
We have asked management what it would cost them to buy another 10% stake in the Labrador Nickel Royalty limited partnership that they already own. That way we will find out
what it costs in the market. It covers the entire Voisey bay area so if Vale were to discover further resources, the Royalty rises with output...without any exploration cost. Voisey Bay is the low cost producer in the world with a massive resource base that Vale figures will operate for 30 years with out additional resource finds. After looking at what these royalties cost in the market place..we are convinced that this asset is being ignored. altius is an expert when it comes to royalties as shown by their astute purchase of IRC (International Royalty Corp in 2009) They made $31m on it in 6 months. How did they know it was undervalued? Because IRC was a major holder of the same partnership above. So what's the value?
http://www.altiusminerals.com/lab_nickel.php
Alderon
So what would the 3% Alderon royalty be worth if The Consolidated Thompson model is followed through. That would likely make the royalty that is being valued at less than 0 worth more than the entire market cap of Altius.
Central mineral belt
2% gross sales and 2% smelter..now owned by Paladin..
http://www.altiusminerals.com/aurora.php
Cliffs Natural Resources
They purchased of Consoldidated Thompson for $5 billion...Altius signed an exploration agreement with them in December..Do you think they know Alderon is next door to Consolidated Thompson? They are a big global player. Altius does not usually do projects with large companies but this relationship can't hurt.
http://www.altiusminerals.com/cliffs_natural_resources.php
Having said that...
Rio Tinto partnership-Labrador Iron Ore
http://www.altiusminerals.com/labrador_iron_ore.php
Rio Tinto is a 58% owner of the The Iron Ore company of Canada, 26% Mitsibushi, 15% Labrador iron ore royalty(2.65b market cap) other the other owners. They have produced a billion tonnes of iron ore in the district which has been around since the 1950's..they have 2.5 billion tonnes in reserves...So they are in partnership with the big boys of the area and in contact. We assume that these players are very aware of what these properties are worth and these are the deepest pockets in the world. As discussed earlier New Millenium was taken out by Tata steel for big bucks in the same region.
Energy opportunities
at $105 oil this could be very interesting
http://www.altiusminerals.com/albert_oil_shale.php
NLRC has until October 2011 to sell or finace the refinery project..If they are able to pull off something of value here it would be huge for the stock price as the market still sees this as disasterous for Altius..they forgot to look at the other assets!
http://www.altiusminerals.com/nlrc.php
There are numerous other projects that I did not mention including many gold assets including Rambler that will start producing gold this quarter..but i do not know what they are worth..more than 0! We see the above projects as potentially huge for the company. Now that 43-101 is out for Alderon and it was extremely positive (we are not geologists!!) we have greater conviction that the $64 million the market is valuing this company at is crazy! As was said earlier it jumps off the page at us!
disclosure:We are very biased! and own a large chunk of Altius...
Dazel.
"Neighbour Consolidated Thompson got $4.9 billion for about 990 million tonnes. That's about $4.95 a tonne. $4.95 x 500 million = $2.475 billion"
I have been looking through the Consolidated Thompson filings, and I think they have at least 826 million tonnes at the Bloom Lake properties and 934 million tonnes at the Lamelee & Peppler properties, for a total of 1,760...
My greatest concern here is the fact that base materials like iron ore appear to be in a hell of a bubble -- or, at least, the prices are heavily (entirely?) dependent on continued construction in China, which appears to be a bubble. I know the cash on the books provides a buffer, but clearly the value of Altius will be significantly lowered if/when commodities correct.
For instance, do you think Dalton is itching to book a return on this "hot potato", or has management implied that they are believers in the "commodity super-cycle"?
Their model seems to deal well with that, though, no?
When things go down significantly, it allows them to pick up new projects on the cheap and if the stock also tanks, they have enough cash to do lots of buybacks.
Brian Dalton-Response to our email...I will just give you the facts.
I asked what it would cost to buy the 10% royalty stake they have in Voisey Bay...and if it was as cheap as the market was valuing it in Altius' hands why had they not bought more?
Answers.
No one will sell to them they would buy if they could. When they did the details and metrics for the sale of their IRC stake the Royalty price of Altius stake would be worth $200million...
The Alderon stake will be sold eventually they will stick to their plan...he explained they will not risk capital on production.
The Alderon roylaty is worth a NPV of $100million if the iron ore price were to drop in half..
He is in China so it was short..but we got the answers we wanted. We had similar numbers in our head and I think we have posted them before...using these two assets alone you almost have a double in the stock price.. we will do a detailed analysis of the values and post it soon.
Dazel.
Some additional detail. I'm midway through my own valuation.
Fully Diluted Shares Outstanding
29,816,395 at September 13, 2010
Cash and Liquid investments
$170,000,000 (from Feb 2011 presentation by Alderon) - $5.70/share
etc...etc...
we still think that the market sees uranium and that is their mistake.
It could also be the correction in Alderon shares which was kind of expected.
Anyone care to elaborate on that? Why was it expected, and what's going on there? I haven't been following Alderon too closely lately..
New comer to this Great board. Is there a reason why there is a 5% price difference between between atusf.pk and als.to 12.42 Vs 11.92. Thanks
No sugar coating boys Altius has been hit very hard. tough to watch. we feel your pain!
picking some up here. Dazel.
No sugar coating boys Altius has been hit very hard. tough to watch. we feel your pain!
Thanks again Dazel. I am very jittery about resources and the state of the markets / economy in general, but I think this is an amazing find which will compound overtime. I plan to hold, learn, and Buy the Dip.
Thanks again.
I have picked some up, I am considering adding more if this gets much cheaper. Right now I'm also holding SCP (Sprott Resource Corp) for a couple years now and these two are a sizable chunk of my exposure to resources (not counting my gold and silver).
QuoteI have picked some up, I am considering adding more if this gets much cheaper. Right now I'm also holding SCP (Sprott Resource Corp) for a couple years now and these two are a sizable chunk of my exposure to resources (not counting my gold and silver).
As an anecdote: Paul Van Eeden has been very bearish for more than 3 years now and has sold most of his investments. However he has kept his position in Altius. Now I am not saying it won't get much cheaper in a commodity crash. It will. But from where? What I mean by that is: what happens if the Alderon stake gets sold soon for a good price: the amount of cash on the balance sheet will exceed current market cap by far. In a crash they can buy royalties like nobody else...
Those that have not read Jeremy Grantham's new piece I suggest you do...explaining peak everything...myth posted it.
Read it, but it makes no mention of the $240m. What am I missing?
Iron ore market
Over the last 40 years, iron ore prices have been decided in closed-door negotiations between the small handful of miners and steelmakers which dominate both spot and contract markets. Traditionally, the first deal reached between these two groups sets a benchmark to be followed by the rest of the industry.[2]
This benchmark system has however in recent years begun to break down, with participants along both demand and supply chains calling for a shift to short term pricing. Given that most other commodities already have a mature market-based pricing system, it is natural for iron ore to follow suit. Although exchange-cleared iron ore swap contracts have developed over the past few years, to-date no exchange has established a proper futures market for the largely seaborne $88 billion a year iron ore trade.[6] To answer increasing market demands for more transparent pricing, the pan-Asian multi-product commodity and currency derivatives exchange for global trade Singapore Mercantile Exchange (SMX) is planning to launch soon an iron ore futures contract, subject to regulatory approval from the Monetary Authority of Singapore, based on the Metal Bulletin Iron Ore Index (MBIOI) which utilizes daily price data from a broad spectrum of industry participants and independent Chinese steel consultancy and data provider Shanghai Steelhome's widespread contact base of steel producers and iron ore traders across China.[7]
This move follows a switch to index-based quarterly pricing by the world's three largest iron ore miners - Vale, Rio Tinto and BHP Billiton - in early 2010, breaking a 40-year tradition of benchmark annual pricing.[8]
http://finance.yahoo.com/news/Alderon-Intersects-29-Iron-iw-657365906.html?x=0&.v=1
Alderon continues to have positive drill results.
Dazel.
I have also increased my position. Mr. Market is going crazy.
have also increased my position. Mr. Market is going crazy.
I'll meet you when it is below 10$
have also increased my position. Mr. Market is going crazy.
I'll meet you when it is below 10$
Just wondering, who is selling ???
have also increased my position. Mr. Market is going crazy.
I'll meet you when it is below 10$
Just wondering, who is selling ???
International steel conglomerate ArcelorMittal will invest $2.1 billion to expand its iron ore facilities in Mont-Wright, Quebec.
The facility, near the town of Fermont, will be upgraded to be able to produce 24 million tonnes of iron ore concentrate by 2013 — a major upgrade over the 14 million tonnes currently produced.
The company is also considering upgrades at a facility in Port Cartier. The expansion will create 8,000 construction jobs during the process, and 900 permanent ones once the upgrade is completed, the Luxembourg based steel titan said Friday.
Soaring global demand for the raw materials that allow economic expansion has caused a rush of investment in the commodities sector in recent months and years. ArcelorMittal, which has operations in more than 60 countries, has committed to hike its iron ore production to 100 million tonnes by 2015 to keep up with demand.
The world's largest steel producer, ArcelorMittal acquired most of its Canadian assets during the last round of consolidation in the steel industry in 2006. Among other holdings, they also own the former Dofasco steel-making facilities in Hamilton, Ont.
Earlier this year, the company took over Baffinland Iron Mines Corp. and its massive iron ore development in Mary River, about 160 kilometres south of Pond Inlet, Nunavut.
Potential good news:
http://www.millrockresources.com/news/millrock_provides_update_on_estelle_gold_project_alaska_and_early_exer/
http://www.dailymarkets.com/stock/2011/06/06/cliffs-provides-outlook/
Here are the economics of the Consolidated Thompson mine from Cliffs Natural resource for 2011 and 2012. You can see why they bought it!
Sorry for the overload of info but it shows what Alderon could become...if it grows up like it's neighbour.
Dazel.
http://www.dailymarkets.com/stock/2011/06/06/cliffs-provides-outlook/
Here are the economics of the Consolidated Thompson mine from Cliffs Natural resource for 2011 and 2012. You can see why they bought it!
Sorry for the overload of info but it shows what Alderon could become...if it grows up like it's neighbour.
Dazel.
So it seems like ALDERON RESOURCE (ALDFF, ADV.V) at current price is a better choice than Altius.
We own a small position in Alderon...and yes still picking away at Altius....
Dazel.
NLRC does expire Oct 2011....sorry for the brain cramp...as I have said I value it at 0...it does act as a out of the money call option because if there is any new positive development it would be extremely positive frot he company. As we all know Brian Dalton has worked very hard here hopeflly he can pull something off...we know from the finacial reports that they are negotiating with "china and state interests" these parties would not be alone in my opinion...likley they would partner with a major refiner...and they could do one off trades on refined oil in other parts of the world that are closer to China.
This is speculation on our part.
Dazel.
Goldfinger.....at the time the market was pricing in a huge equity component (for nlrc) to their valuations on NLRC alone. They were
partnered with the who's who of the european investment community in the biggest private equity financings of alltime. Yes, I would say they got caught up and then caught by the financial crisis. The truth is if that did not happen we would have never got involved in Altius.. as we would not have invested in that valuation or anything close to it.
That is why 0.
If anything the process scared the crap out of them...they could have deployed way more capital as they were loaded with cash in 2009. They were aggressive in IRC and the buy back but conservative by holding lots of cash. They have no debt which to us may be "too conservative"...we would not be upset to see them issues long term debt at these rates and buy back another 10% of the float. Why? it's the best investment they could make right now. so the long answer is no I am not worried...if anything they are too conservative here. I would assume they would be in a quiet period before earnigs in the next couple of weeks. But I would expect buy backs if we are trading at these levels at that point.
Altius is the only secured creditor of NLRC so they were not that stupid...they get paid first...I do not know if there is any cash left at NLRC...but I am assuming their is some...Altius should get it...if nothing happens...the entire invesment has been written off to 0...so any money recovered would be a bonus.
If Brian Dalton can put something together even with SNC Lavalin..it would be extremely positive and the market values the whole company at less than it's cash and liquid investments right now so it really would be something if he could pull it off.
like we said an "out of the money" call option.
Dazel
I dont know that slightly reaks of talking your book. Though the fact that Dazel's calculation is based on prices falling by 50% is quite interesting.
Commodities are interesting. They seem to follow economic threads to a degree but also appear to be slightly decoupled...
Either way I like them and plan on holding them for a while.
http://canadianinsider.com/coReport/allTransactions.php?ticker=ALS
Altius is buying back shares.
Dazel.
http://canadianinsider.com/coReport/allTransactions.php?ticker=ALS
Altius is buying back shares.
Dazel.
Nice, they got them pretty close to the recent bottom too.
http://canadianinsider.com/coReport/allTransactions.php?ticker=ALS
Altius is buying back shares.
Dazel.
Nice, they got them pretty close to the recent bottom too.
The daily volume is low with this stock.
Pretty unsignificant buyback tough. 200k$ compared with 330M Market cap.
BeerBaron
Pretty unsignificant buyback tough. 200k$ compared with 330M Market cap.
BeerBaron
What I'm more curious about in the mid-term is to see if Altius will be as successful outside of Newfoundland-Labrador. If they can transition their expertise to other hunting grounds, I'll be very happy.
The one thing that worries me about Alderon is the rail capacity, other than that I agree with you on Altius.
I do not think you will see them outside their sweet spot for awhile...I would be very disapointed to see them waste much time outside their current projects unless they were able to buy royalties at a good price. We would rather see a large scale buyback.
They have the largest area of staked mineral rights in all of Newfoundland Labrador...they know the government and they have proven success time and again. it looks like they could pull out $400m plus from Alderon over the medium term...ownership stake and Royalty...if the drilling continues to be successful. This is on a $2m investment!
They have another iron ore project down the road!!!! What will it be worth by the time they are done? We think mr.market has lost his marbles here!
disclosure we continue to buy....we just do not see anything as cheap.
Dazel.
So, I have a hypothetical question: Suppose you were given the choice between receiving one of the two following gifts today: 1) A stock option to purchase 32.3 million shares of Alderon @ 3.50 that can't be exercised until production begins; or 2) the 3% gross sales royalty altius owns. Which one would you choose? Anyone have any thoughts?
http://finance.yahoo.com/news/Alderon-Metallurgical-iw-2155562494.html?x=0&.v=1
Alderon moving forward.
Dazel.
"The positive metallurgical results are another significant step in bringing the Kami Project into operation," says Brian Penney, Chief Operating Officer of Alderon. "The concentrate particle size distribution indicated by the testwork demonstrates that magnetic separation will provide a concentrate acceptable for market demands. The concentrate is expected to have very low deleterious elements with phosphorous being less than 0.01% and alumina at only 0.20%. Manganese is within acceptable range at 0.75%, which will allow for the broadest possible market for the Kami product as it is well below the critical 1% cut-off."
Strange that Alderon would be down 8% on the same day as the news release...
Dazel thanks for the update.
Listen, you gotta stay quiet, you re going to give CLiff or other s ideas, I am just getting into ALS-I was hoping for more than 50% gain over the long term.
Closed at $10. ($284 million mkt cap= no debt + $200 m in cash/securities + Alderon/all royalties)
Dazel thanks for the update.
Listen, you gotta stay quiet, you re going to give CLiff or other s ideas, I am just getting into ALS-I was hoping for more than 50% gain over the long term.
Closed at $10. ($284 million mkt cap= no debt + $200 m in cash/securities + Alderon/all royalties)
Only 50% gain over the long term? If so, I will sell ALS right away.
Crazy times indeed:
Altius Market cap: $300m
Cash: $190m
Alderon shares : $100m
Royal Gold shares: $38m
Total: $328m
Everything else: $-28m
It seems like the market is pricing Altius as if its stake in Alderon was going to zero. Meanwhile it prices Alderon as if development will continue. Something has to give...
I emailed someone there and he said that it would be mailed the last week of September.
this seller or sellers along with the fact Altius is in a "quiet period" before earnings and therefore cannot buy shares have driven the shares to stupid levels.
Crazy times indeed:
Altius Market cap: $300m
Cash: $190m
Alderon shares : $100m
Royal Gold shares: $38m
Total: $328m
Everything else: $-28m
It seems like the market is pricing Altius as if its stake in Alderon was going to zero. Meanwhile it prices Alderon as if development will continue. Something has to give...
What I like is we get Voisey Bay royalty for free. This somewhere between 75-100M worth.
I'm curoius to see what they can recuperate from the refinery project... 5-10M?
I have not seen anybody discounting the ~5M$/year expense in General and administrative.
Would it not more or less cancelled the Voisey Bay royalty ?
Alderon PEA released with a NPV of $3.07 billion:
http://www.alderonmining.com/_resources/news/2011-09-08-NewsRelease.pdf
“We are very excited to see such a high NPV, especially since this PEA is only based on the Rose
Central zone of the Kami Property. There is significant upside once we include North Rose and
Mills Lake,” says Tayfun Eldem, President and CEO of Alderon. “These positive results allow us to
move directly to the Feasibility Study phase and we expect that report by the third quarter of 2012.”
The PEA demonstrates very attractive project economics. Based on a production rate of 8 million
tonnes per year of iron ore concentrate at a grade of 65.5% iron and an iron recovery of 82.8%, the
PEA shows a Net Present Value (“NPV”) of US$3.07 billion at a cash flow discount rate of 8%. The
internal rate of return (“IRR”) for the project is 40.2%.
Quote“We are very excited to see such a high NPV, especially since this PEA is only based on the Rose
Central zone of the Kami Property. There is significant upside once we include North Rose and
Mills Lake,” says Tayfun Eldem, President and CEO of Alderon. “These positive results allow us to
move directly to the Feasibility Study phase and we expect that report by the third quarter of 2012.”
The PEA demonstrates very attractive project economics. Based on a production rate of 8 million
tonnes per year of iron ore concentrate at a grade of 65.5% iron and an iron recovery of 82.8%, the
PEA shows a Net Present Value (“NPV”) of US$3.07 billion at a cash flow discount rate of 8%. The
internal rate of return (“IRR”) for the project is 40.2%.
Wonder what kind of NPV North Rose and Mills Lake have. Anywhere close to Rose Central, or just a small faction? I don't remember seeing anything preliminary on those, but maybe I missed it.
Market has no reaction to this release.
"Alderon is presently exploring the Rose North deposit which is not developed sufficiently to be included in the PEA. As the Mills Lake deposit is anticipated to account for a much smaller portion of the overall resource, it has not been included in the PEA."
As mentioned in the release, Mills Lake is ignored, but I want to know how small that is? (1M, 10M or 100M, or even 1B to be ignored). I am waiting for the number from North Rose too. Hope it could surprise us.
Market has no reaction to this release.
Am I naive to have this belief in light of some of the items in regards to fraud/short selling on the other threads- EBIX, Sino Forest.
Sorry Liberty did not mean it that way,meant the debate on the EBIX thread
Hi, after reading the discussion I think this is a very compelling idea. But, unfortunately for me, this topic (Mining, Exploration) is way out of my "circle of competence". Beside reading Altius´s reports, do you have any recommendations to get a better understanding, how things work in this sector? Websites, books, etc.
Thanks
http://www.bloomberg.com/news/2011-09-21/iron-ore-s-four-year-slide-hitting-mining-earnings-commodities.html
Iron Ore’s Longest Slide Since ’82 Threatens Mining Earnings: Commodities
Alderon Sees Massive Kami Production
http://resourceclips.com/2011/09/28/the-iron-hub/
Dazel, do you have an idea of their average cost on Royal Gold?
http://finance.yahoo.com/news/Alderon-Reports-Results-From-iw-2522420490.html?x=0
more good news...from Alderon corp..the stock has recovered with good reason.
Dazel
Canadian-focused Rambler Metals and Mining has announced the resignation of non-executive directors Brian Dalton and John Baker from its board.
This resignation follows the sale by Altius Investments, a subsidiary of Canadian miner Altius Minerals, of its 12% interest in Rambler in January this year. Dalton is chief executive of Altius and Baker is a director.
Harry Dobson, chairman of Rambler, said: 'On behalf of the senior management and the Board I would like to thank Brian and John for their efforts over the past five years and wish them every success in future endeavours.
'Their guidance and expertise in the minerals sector, particularly in Newfoundland and Labrador, has played an indispensable role in advancing the Ming Mine through the various stages of exploration and into production for the fourth quarter of 2011.
'As Rambler continues to transition into a mid-tier mining company it will continue to look to strengthen the board with members of international pedigree and with quality networks, capable of assisting with the next phase of growth.'
St. John’s – Altius Minerals Corporation (‘Altius”) advises that it has postponed its Annual and Special Meeting from Wednesday, October 26, 2011 to Wednesday November 30, 2011.
Due to an undetected printing error, a significant number of copies of the Altius proxy circular that were
mailed to shareholders for Altius’ upcoming October 26, 2011 annual and special meeting of shareholders
inadvertently omitted certain pages that contained, among other things, disclosure relating to the election of
Altius’ directors, as well as the approval of its stock option plan and ratification of existing options.
As a matter of good corporate governance practice, and to ensure that all shareholders are able to make an
informed decision as to the matters to be considered at the meeting, the meeting has been postponed and a
new circular is being mailed to all shareholders
Alderon Iron Ore Corp. (TSX:ADV) (OTCQX: ALDFF) ("Alderon") is pleased to announce the intended appointment of Bernard Potvin as Executive Vice President, Project Execution, effective as of November 14, 2011 and Keith Santorelli as Chief Financial Officer, effective as of November 28, 2011. Upon the effective date of appointment of Mr. Santorelli as Chief Financial Officer, Ms. Sonya Atwal will resign as Chief Financial Officer.
Mr. Potvin has over 37 years of experience in mining and processing operations and brings with him substantial expertise in engineering, maintenance, project development and construction. Throughout his career Mr. Potvin has held senior roles at Quebec Cartier Mining, Reynolds Metals, Alcoa and the Iron Ore Company of Canada ("IOC"), a Rio Tinto subsidiary. During his tenure at IOC, Mr. Potvin held the role of General Manager of Expansion Projects, successfully managing green and brown field expansion projects in Labrador City and Sept Îles. Mr. Potvin has extensive project management experience in iron ore and aluminum, and has executed a number of successful projects in excess of $1 billion. Mr. Potvin holds a Mechanical Engineering Degree from Laval University.
Mr. Santorelli is a Certified Public Accountant with over 16 years of experience, including working for a publicly traded biopharmaceutical company for the past three years as Vice President, Finance. He has a wide range of expertise in various areas of complex US GAAP and IFRS accounting in both publicly traded and private companies in the United States, Canada and internationally. Keith also has experience in group structuring and financing, IFRS conversion and training, financial management, external reporting and employee professional development. Mr. Santorelli holds a Bachelor's degree in Accountancy from the University of Massachusetts, as well as an MA from McGill University, and speaks four languages.
Tayfun Eldem, President and Chief Executive Officer of Alderon states, "I am thrilled with the additions of Keith and Bernard to the Alderon team. They will be based in Alderon's growing Montreal office and their expertise and contributions will be invaluable in the continued development of the Kami Project."
Alderon further announces the resignation of Brian Penney as Chief Operating Officer in order to accept a Chief Executive Officer role with another iron ore development company in the Forbes & Manhattan group. Mr. Penney will continue his involvement with Alderon on a consulting basis.
Dazel, thanks for the update.
What's the opposite of a "black swan" i.e. an unexpected good outcome?
Alderon Resource Upgrade Program Continues On Course
Alderon Iron Ore Corp. (TSX:ADV) (OTCQX: ALDFF) ("Alderon") is pleased to announce additional assay results from the ongoing drill program on the 100% owned Kamistiatusset ("Kami") Iron Ore Project in western Labrador. These results are from the Rose Central Zone and are all within the currently defined National Instrument ("NI") 43-101 resource estimate. They will be used to upgrade the resource from the indicated and inferred to the measured and indicated categories in preparation for the Feasibility Study.
Is that me or the concentration on the new drilling holes is lower then their inferred resourced estimates?
BeerBaron
ST. JOHN'S, NEWFOUNDLAND AND LABRADOR, Nov 30, 2011 (MARKETWIRE via COMTEX) -- Altius Minerals Corporation ("Altius") is pleased to report on exploration activities for its earn-in Option Agreement with Rio Tinto Exploration Canada ("Rio Tinto") in western Labrador, Canada. Under this agreement Rio Tinto may earn up to a 70% interest in 15 map-staked mineral licenses comprising 586 claims covering 14,650 hectares in western Labrador. The optioned licenses have been divided into six different prospects as follows: Bruce Lake, Goethite Bay, Carol Lake, Campground, Huguette Lake and Green Water Lake.
During the 2011 field season, Rio Tinto completed a total of 2633 metres of drilling on the Goethite Bay prospect. The Geothite Bay prospect is located approximately 17 km north east of Iron Ore Company of Canada's Carol Lake operation and 6 km north of the Julienne Lake deposit. Rio Tinto has reported to Altius that drill hole 11LB0027 intersected 279 m @ 29.8% Fe, including 157 m @ 31.9% Fe and 90 m @ 31.9% Fe. Additional drill results are pending.
Altius has received formal notice from Rio Tinto that it has met its first option earn-in obligations on Altius' Labrador West project north of Labrador City by incurring $3 million in exploration expenditures and has therefore earned a 51% interest in the properties. Rio Tinto has a second option to earn an additional 19% property interest by spending an additional $4M by December 2013. In addition to its project interest, Altius retains a 3% gross overriding royalty, 1% of which may be purchased by Rio Tinto for $10 million within the 10th anniversary of the agreement.
For Those waiting for an annual report....there is not one coming....fine details are on sedar which is where I do my due diligence...the annual bulletin serves as their annual...the new "information age" they say...I like that saves money!
I have been quiet here for awhile...we love what management is doing...and we are happy to just sit here and watch their shares get cancelled day by day...the market will figure this one out..but hopefully after they retire a ton of shares!
St. John's - Altius Minerals Corporation ("Altius") reported a net loss attributable to common shareholders of $2,868,000 or $0.10 per share for the three months ended October 31, 2011 compared to net earnings of $2,138,000 for the same period last year. The current year's loss includes the Corporation's share of losses in Alderon Iron Ore Corporation ("Alderon") of $1,790,000 and mineral property write-downs totaling $1,055,000. Offsetting these amounts was an increase in royalty revenue to $723,000 compared to $648,000 in the previous year.
Most importantly they are seeing "opportunity" in royalty financing and other deals in the market place....this is the first time we have seen them say this since 2008....
The value of the Corporation’s shares in junior exploration and early stage companies declined
during the quarter in tandem with broader market declines for early stage resource companies.
However, the weaker market conditions have resulted in the Corporation seeing increased
opportunity to provide royalty financing as an alternative to equity and debt financing for
development stage projects. The Corporation is currently evaluating several royalty
financing/investment opportunities in hopes of identifying royalty investments that meet its
objectives in terms of value and underlying asset quality. Considering the Corporation’s strong
balance sheet, with over $175 million in cash available, it is well positioned to take advantage of
such opportunities
A quiet but major event will happen on December 19th....the vote on whether to lift the moratorium on uranium mining in the central belt of Labrador....this would be extremely positive for altius as paladin could move ahead with their project and the altius 2% royalty...would kick in.
JOHANNESBURG (miningweekly.com) - ASX- and TSX-listed uranium miner Paladin Energy on Thursday rejoiced at news that the Nunatsiavut government had decided to lift the three-year moratorium on uranium mining, development and production on Labrador Inuit Lands.
Paladin holds significant uranium assets through its wholly owned subsidiary Aurora Energy within the Central Mineral Belt of Labrador, in Eastern Canada, which includes a measured 15.1-million pound uranium oxide (U3O8) resource, 68.7-million pounds indicated resource, of U3O8, and a 53-million pounds inferred resource over six deposits.
http://www.caseyresearch.com/nexTen.php?id=2
A good piece on Brian Dalton...for those who do not know Doug Casey there is a link below.
http://en.wikipedia.org/wiki/Doug_Casey
Dazel.
One of the province's best known mining executives predicts more business deals with China in the coming years. Brian Dalton, President of Altius Minerals in St. John's, has spent four of the past fourteen months in China looking at opportunities for iron ore developments. Dalton says in China you would never know there are world economic problems as you don't see it or feel it when you are there. He believes China's and Newfoundland and Labrador's futures are intertwined and he sees numerous opportunities in the coming years. Dalton says the biggest growth of new mining companies in the world are from China and they are looking to invest internationally, especially in places like Newfoundland and Labrador, which has an abundance of mineral wealth. Altius, and its joint venture partners, will be spending close to $40-million next year on exploration, almost double what they spent this year. Altius has $185-million in the bank for investment opportunities.
NLRC: while we do not expect anything here...we would like to see them find a resolution with SNC Lavalin that might create am opportunity down the road....the other refinery in Newfoundland is owned and run by Korean state interests that bought Harvest energy in 2009...it's a long shot but deal for something would be great!
Dazel, hope you are right. A friend of mine who happens to be in China has mentioned that housing market is cooling in China and businesses are seeing a slowdown. Whether it lasts or not is a different question - hopefully not. If you look at this article, it seems China wants cheaper supplies of iron which they likely will get from ALS.
http://www.theaustralian.com.au/business/mining-energy/china-seeks-cheaper-iron-ore-supplies/story-e6frg9df-1226128456943
On the other hand, developing world is more than China. So, there should be demand from rest of Asia/Africa which has all the issues you mentioned - chronic power shortage etc. However, China has building infrastructure since the 1980s, tearing up and rebuilding the same infrastructure.
http://canadianinsider.com/node/7?ticker=ALS
Altius continues to shrink the float...daily.
On that Wikipedia page, it mentions the ABC campaign, which seemed to be a rift between the Newfie conservatives and the Stephen Harper-led national conservatives. Is it good to be hiring one of the persons who led that ABC effort?
Alderon Iron Ore Corp. has commenced the 2012 winter drilling program at its 100-per-cent-owned Kamistiatusset (Kami) iron ore project in western Labrador. The four month drill program will be focused predominately on North Rose and will include up to 18,000 metres of drilling with six drills. The program will concentrate on infill drilling with the goal of upgrading the current mineral resource into the measured and indicated categories in preparation for the Feasibility Study expected in Q3 2012.
"We are excited to get our 2012 program underway and be back drilling on North Rose," says Tayfun Eldem, President and CEO of Alderon. "Our 2011 program was extremely successful and we are looking forward to building on that success as we work to upgrade our resource in advance of completing the Feasibility Study in Q3. The final phase of drilling represents another major milestone in driving Kami through the development stage into production."
North Rose, together with Rose Central and Mills Lake, have a currently defined NI 43-101 indicated resource of 490 million tonnes at 30.0% iron and an additional inferred resource of 598 million tonnes at 30.3% iron.
The proposed drill hole location map is posted on the Alderon website at: http://www.alderonmining.com/projects/kami/
Alderon's exploration work on the Kami Property is supervised by Edward Lyons, P.Geo., the Chief Geologist for Alderon and a Qualified Person as defined by NI 43-101. Mr. Lyons has reviewed and approved the technical information contained in this news release.
TD has initiated coverage on Alderon with a speculative buy rating and a target price of $5.00.
TD has initiated coverage on Alderon with a speculative buy rating and a target price of $5.00.
$5? Isn't that less than the cash? :o
Yes - Altius cash but the price target is on Alderon! ::)
Every dollar in share price for Alderon is approx. $1.12 value to an Altius share (buybacks notwithstanding)
Alderon Iron Ore Corp. (TSX:ADV)(OTCQX:ALDFF) ("Alderon") is pleased to announce that it has entered into a subscription agreement with Liberty Metals & Mining Holdings, LLC ("LMM"), a subsidiary of Liberty Mutual Group. Pursuant to the subscription agreement, LMM will purchase 14,981,273 common shares (the "Purchased Shares") of Alderon on a private placement basis for an aggregate purchase price of approximately C$40 million at a price per Purchased Share of C$2.67 (the "Placement"). The purchase price was based on the volume weighted average price of Alderon's common shares on the Toronto Stock Exchange for the twenty trading days ended January 11, 2012.
Quick summary below (in $m). It's incredibly cheap....
Cash and marketable securities 175.3 As of Oct 31, 2011
Royal Gold 36.5 529k @ $69. Nasdaq listed (RGLD), precious metal mines
Alderon Resource 108.6 32,285k @ $3.3, iron-ore jr, venture listed (ADV.V)
Millrock Resources 2.9 7,932k @ $0.47, venture listed exploration specialists in Alaska (MRO.V)
JV w/ Cranberry Capital Early stage mineral exploration, book value $25m
Voisey Bay Royalty generating $4m+ a year, $10m in the books
NLRC Fully w/o, only refinery project in NA approved in years
Collection of Royalties free call option
17 exploration projects (12 JV) free call option
Worst case scenario valuation 323.3
# of shares 28.9
Current Price 11.2
Current Market Cap 323.6
http://www.indexmundi.com/commodities/?commodity=iron-ore&months=240
Question: If iron ore prices collapses from here, how should one think about where the downside is?
http://www.alderonironore.com/_resources/news/2012-01-12-NewsRelease.pdf
Liberty,
If you read more into it...alder on has brought on a specific shareholder with deep pockets....likely with an eye for The future. With in the agreement Liberty llc (is this your hold co.!)...has first option on any other financing and alder on has the right to purchase or to find a purchaser of any shares Liberty wants to sell. They have secured a Long term partner....not speculators. I agree $2.67 is low but it looks like the right color of money.
Dazel.
Hj,
http://thinkprogress.org/romm/2011/05/02/207994/grantham-must-read-time-to-wake-up-days-of-abundant-resources-and-falling-prices-are-over-forever/
Grantham comes up with a 1 in 2.2 million chance that iron ore will reverse it's trend. I like those odds..
Besides you ask what is the down side sarcastically....not much considering none of what has been discussed is in the stock price. If we were at $25 where we should be I would be worried about
downside risks to the 1 in 2.2 millin chance we reverse course.
So actually if we crash as you say...our downside is we pick up everything for 10 cents on the dollar with our quarter of a billion in cash.
Dazel
Any news from NLRC?
Iron ore prices at are at a 2 month high in china.
Things should get very interesting for Altius.
Dazel
Brian Dalton - Entrepreneur of the Year 2011 - Progress Magazine
http://www.altiusminerals.com/files/2011-EY-BFD-progress.pdf
http://www.thebusinesspost.ca/usr/main/docs/22/Vol7issue1.pdf
This would be a pleasant surprise!
TGR: What are some Chinese investment themes that perhaps investors can piggyback on?
PG: China has a tremendous need for resources. That appetite is not going to disappear anytime soon. It's underpinning the commodities bull market, in particular steel and iron ore.
TGR: I read a report recently that said China was seeking alternative sources of iron ore for its smelters as part of an effort to limit its reliance on iron ore from Australia and Brazil. China's looking to northeastern Canada in the Labrador Trough. Do you know anything about that?
PG: A couple of my clients are there and some of my largest personal holdings are there. The Labrador Trough is probably the most interesting play in the world right now. A Chinese company recently did a big deal with Adriana Resources Inc. (ADI:TSX.V; ANARF:OTCBB; A7R:FSE) up there.
I'm very bullish on Alderon Iron Ore Corp. (ADV:TSX; ALDFF:OTCQX). I call it the son of Consolidated Thompson because it has many of the people who were successful at Consolidated Thompson and is following Consolidated's path, but in a more expedited way. I believe it's going to go the same way and be taken over within 12 months.
TGR: Alderon has the Kami iron ore project near to Consolidated Thompson's Bloom Lake deposit in the Labrador Trough. A recent preliminary economic assessment (PEA) on the project reported a pre-tax net present value (NPV) of just above $3 billion (B). How does the Kami deposit compare with its peers?
PG: Alderon should be able to develop Kami at a lower cost, which is key in that area. There's no question that there's a lot of iron ore up there, but success is a question of cost, efficiency and effectiveness. The expectation is that it will get port access in a relatively short period. The last missing ingredient will be an offtake agreement with a Chinese company, and the company seems to be suggesting that it's in advanced talks. All in all, the next big deal in that area appears to be Alderon.
A year from now, Alderon could be worth $10–12/share based on what Consolidated Thompson was worth. It's a legitimate target to have in the back of our minds.
Liberty,
I think we will start calling Alderon
"TC2" Thompson Consolidated 2...
Not to be mistaken with T2 which grossed only $500m. TC2 will make a lot more!
Dazel
The ministers announced today that the Government of Canada will invest up to $55 million and will contribute to the construction of a new multi-user deep water dock at the Port of Sept-Îles equipped with two ship loaders, as well as two conveyor lines. This investment will help the port meet global shipping standards for the iron ore industry, which is the largest commodity shipped through the port to overseas markets. It will also boost the effectiveness and capacity of port operations. The Port of Sept-Îles is an important part of Canada's Continental Gateway system.
Remember that Altius could own a real nice chunk of century iron ore!
http://altiusminerals.com/labrador_trough_iron_ore.php
Disclosure: we own Altius minerals and Alderon shares....we do not own Centruy iron ore
Dazel
I can't quite remember where I saw that, but the "bonus shares" that they mention altius getting if certain targets are met or exceeded, if I remember correctly thats quite a lot of shares (if anyone remember where that info was published, I'd appreciate the pointer). This could be a nice double whammy if Century hits jackpot, because Altius has a sliding royalty of 1-4%, and on top of that they could be getting more than the base 5 million shares of Century.
We will post what our updated value of Altius is soon..when I get back from Aruba...but it sure is not in the teens....they have created a lot of value in the last couple of years.
http://www.labradorironore.com/Corporate-Information/default.aspx
You can plug numbers in using Labrador iron ore royalty to get an idea of what Altius' royalty at Alderon could look like. As large as The iron ore company of Canada is they are producing 15m tonnes of ore right now (they are raising production) less than the 16m that Alderon is planning...we are using these numbers for comparability. Labador iron ore royalty has a 7% payout compared to Altius' 3% and they own 15% equity in the Iron ore company of Canada....their market cap is $2.3b and they do not have any other assets. Keep in mind that they have paid out $100's of millions of dollars in dividends already...$134m last year!
I hated to leave you hanging Liberty.
QuoteI hated to leave you hanging Liberty.
You can still send me a private message, y'know ;) It's not like I have enough capital to move this stock one way or the other, and I'm already one of the converts, so it would be more out of intellectual curiosity than to convince me to make a move :-X
Alderon Iron Ore Corp. (TSX: ADV) (OTCQX: ALDFF) (“Alderon” or the “Company”) is pleased to announce that its common shares have been approved for listing on the NYSE Amex. Alderon anticipates trading on the NYSE Amex exchange will begin on Friday, March 9, 2012 under the symbol “AXX”. The Company will continue to trade on the Toronto Stock Exchange under the symbol “ADV”.
“This NYSE Amex listing represents another significant milestone in Alderon’s growth,” stated Mark Morabito, Alderon’s Executive Chairman. “The listing will provide greater trading accessibility for United States investors, is expected to enhance liquidity and will provide Alderon with exposure to a wider audience of investors.”
Alderon Iron Ore – In the Right Backyard: The Kami project's manageable size of eight
million tonnes per year and favourable location close to existing infrastructure, combined
with a management team with extensive iron ore experience, positions Alderon as a
developer that could potentially advance to production for relatively lower capital and
without the need of a partnership. Initiating coverage with an Outperform and $5.10 target
price.
Quiet is good guys....we only want to be on the front page once...Look at the press Viterra is getting for a possible bidding war! In two years I think my Viterra post got maybe 3 responses here on a value investing board!!...
When you think about business you need to understand what the assets are worth to other businesses. Individual investors are driven by sentiment and the crowd..A good business is thinking about maximizing their assets everyday..not the value of their market caps...Is it cheaper to build? Is it cheaper to expand the workforce? How much will it cost to enter another country? And then they always ask the question.
" would it be cheaper to buy out another business" and when it is...they do it...that simple.
Boone Pickens famous line "it is cheaper to drill for oil on the New York stock Exchage than than anywhere else." is true right now and there is trillions of dollars on corporate balance sheets on the sideline...
Altius is in the boring Viterra situation because of the fact no one knows them...Their assets are world class (not unlike Viterra) but their cash in the bank, no debt, and future cashflows make it an incredible business over the next few years unlike Viterra.
Dazel.
For example the PEA for Alderon is at $118 iron ore price....Dazel
Don't you think they are sitting on too much cash? Do they need the cash for some sort of cap exp? or they are waiting for deals?
did they deploy any during last Oct - Dec?
I don't think they did, I see some buybacks but very light, probably constrained by the volume.
Buyback by Altius:
http://www.altiusminerals.com/files/PR0512-NCIB.pdf
I like companies doing buyback compared to dividend.
For all the noise about China...iron ore prices are solid... they are back close to $150....remember the Australian mining tax coming up will help Altius and Alderon...it evens the playing field a little with the geographic location advantage that Aussie miners have with china....Alderon' bankable feasibility study will extremely good at these iron ore prices.
Dazel.
Link01,
Altius is trading like iron ore is trading at $75...so no I am not worried. Your report is from June 2011...the world was ending as Europe was imploding which would end china, the u.s was about to default on their debt as they were done too...I can find you reports that will say iron ore will be $200 a ton too...I think they are also useless.
China's slow down has slowed down iron ore production....brazil produced less in 2011... I am comfortable with $118... I do not want to see anything above $150 because it does not help long term.
China will build out their infrastructure for the super power of an economy you can be sure...there WILL be hiccups as there is now...but we are in the Jeremy Grantham camp that puts iron ore trend reversal odds of 2 million to one...we like those odds. However, I can not tell you what the price of iron ore will be in 2016.... But more importantly no one else can either.
The best part is we do not have to pay for any risk at Altius...it is in the price already!!
Dazel
Dazel
Do you know they calculate those odds ? Game theory ??
Thanks
GK
Link01,
Altius is trading like iron ore is trading at $75...so no I am not worried. Your report is from June 2011...the world was ending as Europe was imploding which would end china, the u.s was about to default on their debt as they were done too...I can find you reports that will say iron ore will be $200 a ton too...I think they are also useless.
China's slow down has slowed down iron ore production....brazil produced less in 2011... I am comfortable with $118... I do not want to see anything above $150 because it does not help long term.
China will build out their infrastructure for the super power of an economy you can be sure...there WILL be hiccups as there is now...but we are in the Jeremy Grantham camp that puts iron ore trend reversal odds of 2 million to one...we like those odds. However, I can not tell you what the price of iron ore will be in 2016.... But more importantly no one else can either.
The best part is we do not have to pay for any risk at Altius...it is in the price already!!
Dazel
Beer baron,
I am referring to the work that was done by Jeremy grantham...a link has been posted here before..the thread is getting a little long...it was not due to volatility in their analysis...
It was the probability of reversing the iron ore trend...2 million to one chance of that...they used 100 years of data...
As we know GMO...does their homework.
Dazel.
Beer baron,
I am referring to the work that was done by Jeremy grantham...a link has been posted here before..the thread is getting a little long...it was not due to volatility in their analysis...
It was the probability of reversing the iron ore trend...2 million to one chance of that...they used 100 years of data...
As we know GMO...does their homework.
Dazel.
Beer baron,
I am referring to the work that was done by Jeremy grantham...a link has been posted here before..the thread is getting a little long...it was not due to volatility in their analysis...
It was the probability of reversing the iron ore trend...2 million to one chance of that...they used 100 years of data...
As we know GMO...does their homework.
Dazel.
You do not and will not know if they are right...but their analysis is different from Taleb who is always pedi ting a black swan will appear....
Globe and Mail article on Alderon as possible takeover candidate:
http://www.theglobeandmail.com/globe-investor/alderons-pedigree-makes-it-a-takeover-target/article2397582/
Alderon press release here:
http://www.alderonironore.com/_resources/news/2012-04-13-NewsRelease.pdf
From last Q:50.6 is cash + income tax receivable on the 31 Jan 2012 report. As for124.4 in marketable securities, their description was veg. Does this include alderon? They made 1m, off the top of my head, in interest expense. So these marketable securities, ie bonds are yielding .8%? Something doesn't add up unless this is revering to shares in partners. The 80m on the last reported as interest with partners is not enough for alderon and cranberry.
Cash $49.5
Marketable Securities $124.4
"Marketable securities consist of Canadian government guaranteed and corporate backed commercial paper,
bonds and marketable securities with original maturities of greater than three months at the time of
purchase."
I think it's pretty safe to call that cash or "cash equivalents." Where/how are you getting $50.6?
http://www.businessweek.com/news/2012-04-24/coal-seen-rebounding-as-china-sets-steel-output-record
No one talks much about India but they have big plans for steel as you can see from the article.
Dazel.
Alderon Iron Ore Corp. CA:ADV +2.46% AXX +1.58% ("Alderon" or the "Company") is pleased to announce the first set of assay results from the ongoing drill program on its Kamistiatusset ("Kami") Iron Ore Project in western Labrador. The majority of these results are from the North Rose area and are all within the currently defined mineral resource estimate. The program, which began in mid-January, has concentrated on infill drilling with the goal of upgrading the current mineral resource into the measured and indicated categories in preparation for the Feasibility Study expected in Q3 2012. Highlights include:
Code: [Select]-----------------------------------------------------------------------
-----
From To Interval
Drill Hole (metres) (metres) (metres) Total Iron %
----------------------------------------------------------------------------
K-12-176A 242.0 305.0 63.0 27.1
----------------------------------------------------------------------------
and 338.0 593.2 255.2 30.1
----------------------------------------------------------------------------
K-12-179 281.0 398.3 117.3 28.0
----------------------------------------------------------------------------
and 398.4 527.8 129.4 32.6
----------------------------------------------------------------------------
K-12-182 85.5 111.0 25.5 31.2
----------------------------------------------------------------------------
and 177.0 430.4 253.4 29.3
----------------------------------------------------------------------------
K-12-184 59.0 98.0 39.0 29.3
----------------------------------------------------------------------------
and 182.0 452.0 270.0 31.1
----------------------------------------------------------------------------
K-12-188 66.0 101.6 35.6 31.7
----------------------------------------------------------------------------
and 126.0 237.0 111.0 32.3
----------------------------------------------------------------------------
Uranium has been forgotten because of Japan...that will not last long..the cost base of the Aurora royalty is $200m....uranium has huge catalysts
http://www.zerohedge.com/news/rick-rules-primer-contrarian-speculation
Possible opportunities for ALS to make good deal in depressed/distressed junior resource sector?
We like what is happening....tough on some to see the market price their ownership of shares at a lower rate...
We do not feel that way....oil falling helps the world...it brings down costs everywhere...we love to see iron ore fall to 100.... Because it will take high cost producers out of the market...remember we will not be producing for a couple of years...and a fall in commodities will be extremely helpful for input costs in building the mine at Alderon and Aurora. Alderon like Thompson Consolidated will go ahead regardless of what happens...remember Thompson went ahead in 2009!!!!! We have a $40 a ton cost...but the build out costs can be brought down significantly by a pull back in their input costs. The inflationary pressure in china and India....Europe is enormous...this will be a helpful pullback....we do not want china going full speed ahead now...we want to see it in 2 years when we are looking production. Alderon's partner is not looking at this year or next they are looking at the next decade...they have to...the money for the buildout is there
hmm.. they stop buying since Jan and now setting this up. I wonder if they have material info going on.
Does Altius have a new website? I don't remember it being such a nice design:
http://www.altiusminerals.com/
Why couldn't the auto-buyback be because the stock has gotten quite a bit cheaper recently?
What am I missing here - don't private placements normally get priced at around or a slight discount to market price? Is it possible the largest steel producer in China and second largest in the world have their numbers wrong? ;D
Interview with Alderon CEO by Grandich:
http://www.grandich.com/2012/05/grandich-client-alderon-iron-ore-4/
Regarding the Hebei investment, I don't understand the phrase, "if the stock price rose or fell between announcement of the deal and closing a contractual mechanism is in place to shift allocation as between the stock price and the project interest." That implies to me the terms can change, but then he proceeds to say the deal will go ahead as announced.
---
Q- The share price for Alderon has come off from the $3.42 close at the time of the Hebei announcement. Is there any risk the deal won’t close?
“ The real deal we have with Hebei is for C$194m for 19.9% of the corporate equity and 25% of the project. Our Chairman Mark Morabito was alive to the market volatility issue at the time the deal was being constructed and he convinced Hebei to agree to the C$194m price with the understanding that if the stock price rose or fell between announcement of the deal and closing, a contractual mechanism is in place to shift allocation as between the stock price and the project interest. So, the short answer to your question is that market volatility was considered and factored into the negotiations and both sides are comfortable with the outcome. Look at today’s news release on Liberty Metals and Mining firming up their C$13m commitment alongside Hebei for $13M and you get a strong indication this deal is going ahead as originally announced.
---
I have been following this forum for some time. Great posts!
Altius has posted a presentation by Brian Dalton in Europe
http://altiusminerals.com/uploads/europe-2012-website.pdf (http://altiusminerals.com/uploads/europe-2012-website.pdf)
Slide 4: Pending agreement on Snelgrove Lake and a significant exploration alliance in Quebec anticipated
Cheers!!
Alderon/Hebei subscription agreement attached. They needed the lawyers for this one, long document.
Article on Alderon's "all star" team in The Business Post:
http://www.thebusinesspost.ca/usr/main/docs/24/Vol6issue8.pdf
Thanks for linking to that new presentation.
I noticed cash has gone from $173m as of 1/31/12 (per the last quarterly report) to $162m in the new Europe presentation. Any thoughts on what accounts for the reduction in cash?
Some discussion of iron-ore, Fortescue and mention of Alderon:
http://brontecapital.blogspot.co.il/2012/06/how-business-decisions-are-made-in-boom.html
Probably belongs in the LUK thread but iron ore seems to be mentioned here more often
Liberty,
I agree...the longer term...brings Great gains when shorts are wrong...I do not want to sound off the alarm bells...
Those that were around for The Fairfax debacle say some crazy shit! The good news is that many fortunes were made on this board.
If investors are prepared for a short attack they will do well...they have to understand the assets they own...however....as was the case with Fairfax when a $1.3 b company dropped 45% in minutes...it tests your metal.
The good thing is that Fairfax is now worth over $8b
Dazel
Dazel
Also, pulled this link off the stockhouse forum. Interesting discussion of power needs in the area:
http://www.nl.dailybusinessbuzz.ca/Provincial-News/2012-06-07/article-3002164/NL%3A-Mining-industry-needs-Muskrat-Falls,-says-Alderon-chairman/1
Millrock Resources Inc. CA:MRO +11.90% ("Millrock" or the "Company") announced today that it has entered into an option agreement with Vale Exploration USA, Inc., a wholly-owned subsidiary of Vale S.A. ("Vale"). The agreement is being entered pursuant to the strategic alliance agreement between Vale Exploration Canada Inc, a wholly-owned subsidiary of Vale S.A. and Millrock made October 11, 2011 (see press release dated October 17, 2011: http://millrockresources.com/news/millrock_and_vale_form_strategic_alliance_for_copper-gold_porphyry_dep/ ). The objective of the alliance is to discover large-scale copper - gold porphyry deposits in target zones of Alaska identified by Millrock. This is the first "Designated Project" under the strategic alliance agreement.
The subject of the new option agreement is the AUDN project, a promising porphyry copper-gold target situated approximately 100 km southwest of the world-class Pebble deposit. The Millrock claim block is situated along a trend of porphyry occurrences. Aeromagnetic, gravity and radiometric potassium survey data indicate possible buried, mineralized intrusions within the AUDN project area. Millrock and Vale plan to carry out geophysical and geochemical surveys in 2012.
Under the terms of the option agreement, Vale may earn a 65% interest by expending US$3.5 million for exploration on the project over a three-year period and by paying Millrock US$200,000. Upon earning its initial interest, Vale may elect to carry the full cost of further exploration and development until a feasibility study has been completed, and thereby earn an additional 10% interest, for a total 75% joint venture interest. Further development of the project would proceed with the parties contributing on a pro-rata basis. In the event that a joint venture party dilutes below a 10% interest, such interest would convert to a Net Smelter Returns royalty of 2% on gold, silver, platinum, palladium and rhodium and 1% on all other metals.
Under the terms of the strategic alliance agreement, Vale is providing funding to Millrock for research and early-stage exploration to identify targets that may be nominated for Designated Project status. The work is focused on specific, defined areas of interest in the Alaska Range and Alaska Peninsula porphyry belts. Strategic Alliance funding consists of a minimum US$1.0 million in the first year, and a further US$1.0 million at Vale's option in the second year. Funding for the strategic alliance may continue in subsequent years at funding levels to be determined between the parties.
Initial investigations carried out by Millrock in 2010 were done with funding that Millrock received under a separate strategic alliance with Altius Minerals Corporation CA:ALS +1.04% ("Altius"). By virtue of that agreement Altius is entitled to a royalty on any mineral production that occurs from most of the claims comprising the AUDN project.
Special Offer – To the party or parties who advocated shorting ADV, I like to make this offer to you; I will wager $100,000 that ADV makes a new, all-time high above $4 without ever going under $1 (That’s $1.78 higher from here versus just $1.22 below). If I win, you donate $100k to my favorite charity (http://www.fealgoodfoundation.com/) and if you win, I’ll donate $100k to yours). You know where to reach me if you’re interested.
I studied some of Berkshire's late 70s investments a while ago to see what he was up to then.
Turns out Buffett owned Cleveland-Cliffs then as well: http://www.berkshirehathaway.com/letters/1980.html
Altius looks like a sitting duck.
With the industry cash strapped and bargains abound....buying out Altius at these prices makes sense. As we stated above we think Altius has a tremendous opportunity to deploy cash in this environment. However, with tight financing markets it would make sense for someone to be stalking Altius. We have written a great deal about the value in Altius. But In these times cash is "king".
Royal Gold-case study for buying
They get a 46 pe....their largest royalty is Voisey Bay....An Altius purchase is worth $4m x20% tax=$3.2m X 46= $147.2m value to Royal Gold's Mkt value.
The cash and marketable securities become the equivalent of a capital raise at $77...which is $6 off their 52 week high....so they reload with cheap cash available for other acquisitions in this environment...this of course is assuming that they use their shares to purchase Altius.
For free they get the other royalty portfolio....The $30m from Alderon future royalty at a low low 20 pe (less than half their multiple) would be worth $600m in market cap to Royal Gold....and when production hits 16mt it would be worth $1.2b to Royal gold.
The economics are riducluous to other Royalty companies....we would be completey surprised if they were not being approached as royalty mulitples are so high elsewhere in the market...and Altius large cash equivalents make them a sitting duck.
Dazel.
Liberty,
We agree but the selling we are seeing would make a 50 to 60% premium likely be taken by shareholders. Like you we think that is stealing the shares...but that is why we think they are in play...if you look at the Royal Gold numbers....they would be stupid not to consider it.
Dazel.
One thing I find strange is that we haven't gotten reports that Altius has been buying back shares in a while. The last time they did, last year (iirc), they filed every few days and it popped up on CanadianInsider. But lately, nothing, despite them putting the buybacks in third party hands to avoid conflicts with material info.
I hope they are buying as much as possible and we're just not seeing the reports filed as quickly as before...
Have wondered that myself especially with recent price weakness.
Because a 3rd party is purchasing would it show up in Canadian insider
ALTIUS MINERALS CORPORATION (TSX:ALS) ANNOUNCES STRATEGIC ALLIANCE WITH VIRGINIA MINES INC. Altius and Virginia to jointly undertake grass roots exploration in Quebec and Labrador
St. John’s - Altius Minerals Corporation (“Altius”) is pleased to announce that it has signed a Memorandum of Understanding (“MOU”) with Virginia Mines Inc. (TSX:VGQ) ("Virginia") whereby Altius and Virginia will cooperate to explore for base metals and precious metals on the North Shore area of Quebec and in southern Labrador .
This strategic alliance merges two project generation teams that have exhibited excellent track records of exploration success and also in attracting strong partners to their respective home jurisdictions in eastern Canada. Altius and Virginia will share their collective experience and databases, co-fund early stage exploration programs, and jointly seek partners for any new projects that are created in eastern Quebec and southern Labrador. Target evaluation is underway and an initial reconnaissance field campaign is being planned for the upcoming field season. Altius will be the operator during the first year.
more buybacks:
http://canadianinsider.com/node/7?menu_tickersearch=als
Alderon off-take partner Hebei Steel gets Chinese government approval
http://in.reuters.com/article/2012/07/08/hebei-invest-idINL3E8I800X20120708 (http://in.reuters.com/article/2012/07/08/hebei-invest-idINL3E8I800X20120708)
Alderon Iron Ore Corp. (TSX: ADV) (NYSE MKT: AXX) ("Alderon" or the “Company”) is pleased to announce the results of the final mineral resource estimate on its Kamistiatusset (“Kami”) Iron Ore Project in western Labrador. The estimate includes a Measured and Indicated mineral resource of 1.1 billion tonnes at 29.8% iron and an Inferred mineral resource of 277.4 million tonnes at 29.5% iron (refer to tables below for tonnage and grade details) based on a cut-off grade of 20% iron.
“We are extremely pleased with this final resource estimate for Kami,” says Tayfun Eldem, President and CEO of Alderon. “The completion of each successive drill program has resulted in an increase in the mineral resource estimate, while continuing to confirm consistent grades. The final numbers clearly underline the potential and the value of the Kami Project. The Measured and Indicated mineral resources will form the basis for Kami’s Feasibility Study that is expected to be completed before the end of this year."
i think there was a link to blog post a while back on this thread about that.Yes I remember a blog post saying Alderon could only expand output to 16 million tonnes if the dam was built and that it wa no sure thing that it would, but this is the first I'd heard of Altius possibly securing a royalty on the power dam output. Maybe Im reading this wrong but thats what it looks like to me.
i think there was a link to blog post a while back on this thread about that.Yes I remember a blog post saying Alderon could only expand output to 16 million tonnes if the dam was built and that it wa no sure thing that it would, but this is the first I'd heard of Altius possibly securing a royalty on the power dam output. Maybe Im reading this wrong but thats what it looks like to me.
Hey guys!
I am new to this board - although I was reading as a guest for some month now. I finally decided to join your greatly appreciated discussion!
Personally I love ALS and am very comfortable that it represents about 12% of my portfolio right now. In fact I am planning to accumulate more as these price levels represent a great opportunity to buy quality with upside (I estimate fair value at about 21$ / share) and very, very limited downside.
Doing my DD I created a Fact Sheet (A3-format) which I updated today. So as my first contribution to this board I uploaded it and maybe someone of you will find some value in it. I would love to hear some corrections or some missing facts that are important.
Anyway here is the link
http://ihre-hoheit.de/2012_07_13_DD_ALS_%28A3%29.pdf
Best regards from germany,
hohi
Alderon Iron Ore Corp. (TSX: ADV) (NYSE MKT: AXX) ("Alderon" or the “Company”) is pleased to
announce that it has signed an agreement (the “Port Agreement”) with the Sept-Îles Port Authority (the
“Port”) to ship up to 8 million metric tonnes of iron ore annually via the new multi-user deep water dock
facility that the Port is constructing (see Alderon press release dated February 14, 2012).
“We are extremely pleased to have concluded this port agreement, which represents another significant
milestone in the development of our Kami Iron Ore Project,” says Tayfun Eldem, President and CEO of
Alderon. “This agreement provides Alderon with confirmed access to the international iron ore markets
and substantially de-risks the Kami Project.”
Port Agreement Details
Pursuant to the Port Agreement, Alderon has reserved an annual capacity of 8 million metric tonnes of
iron ore that it can ship through the Port. In order to finance the estimated $220 million cost of the new
multi-user dock facility, the Port required binding commitments from the potential end-users to provide a
portion of the necessary funds. This buy-in payment will constitute an advance on Alderon’s future
shipping fees (wharfage and equipment fees) and, as a result, Alderon will receive a discount on its
shipping fees until the full amount of the buy-in payment has been repaid through the discount.
Based on its reserved annual capacity, Alderon’s buy-in payment is $20.46 million, payable in two
installments of $10.23 million each. The first installment of $10.23 million was paid upon signing of the
Port Agreement and the second payment of $10.23 million is due no later than July 1, 2013. As security
for the second payment, Alderon is required to provide an irrevocable guarantee of equivalent value.
The Port Agreement includes a base fee schedule regarding wharfage and equipment fees for iron ore
loading for Alderon’s shipping operations. The rates commence in 2014 and are on a sliding scale
based on the volume of iron ore that is shipped. The term of the agreement is for 20 years from the
execution date, with the option to renew for further five year terms, to a maximum of four renewals.
Bridge Financing Details
Liberty Metals & Mining Holdings, LLC (“LMM”), a subsidiary of Liberty Mutual Insurance, one of
Alderon’s strategic investment partners, provided a bridge loan to Alderon in the amount of $10.5
million in order for Alderon to make the first instalment payment and has agreed to provide a further
$10.5 million, if necessary, in order for Alderon to obtain the guarantee required for the second
installment. The intention is that the loan will be a short term bridge loan that will be repaid from the
funds of the Hebei Iron & Steel Group (“Hebei”) transaction after it closes.
The maturity date of the bridge loan is September 30, 2012; however, Alderon has the ability to extend
the maturity date to March 31, 2014. In the event of such extension, the loan becomes convertible at
LMM’s option into Alderon common shares at a conversion price equal to the volume weighted average
trading price of Alderon’s common shares on the Toronto Stock Exchange for the five days prior to the
date that LMM delivers a conversion notice.
The loan is secured with a mortgage over the Kami property and bears interest at a rate of 8% per
annum, calculated and payable on September 30, 2012. In the event the Company exercises its option to extend the maturity date, the interest rate will increase to 9.5% per annum beginning on October 1,
2012.
Hohi,
I am interested to find out where you found the information on major shareholders?
Dazel.
Wouldn't all suppliers including South America and Australia (70+% of global supply) have similar exposure to dry goods shipping rate fluctuations?Yes. Brazil to China is a longer route than Australia to China. Shipping costs are a big reason why Vale decided to build unusually large ore carriers (larger than capesize). The larger vessels are more efficient. And owning its vessels reduces their exposure to shipping costs.
Is .60% manganese considered to be a high level?Yes. According to the technical reports, sulfur is also a little on the high side.
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.
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.
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.
Alderon Iron Ore Corp. (TSX: ADV) (NYSE MKT: AXX) (“Alderon” or the “Company”) is pleased to announce that it has closed the Alderon common share (“Common Share”) subscription component of the previously announced transaction with Hebei Iron & Steel Group Co., Ltd. (“Hebei”). Pursuant to the terms of the subscription agreement (as amended) (the “Subscription Agreement”), Hebei has acquired 25,858,889 Common Shares at a price of C$2.41 per Common Share for gross proceeds to the Company of approximately C$62.3 million, representing 19.9% of the issued and outstanding Common Shares. Alderon and Hebei have also executed the remaining definitive agreements, including the Investor Rights Agreement, the Off Take Agreement and the agreements required to form and operate the limited partnership that will own the Kami iron ore project (the “Kami Project”).
Concurrent with the Hebei closing, Liberty Metals & Mining Holdings, LLC (“LMM”), a subsidiary of Liberty Mutual Insurance, has acquired 3,816,181 Common Shares at a price of C$2.41 per Common Share for gross proceeds to the Company of approximately C$9.2 million, allowing LMM to maintain its relative proportionate interest in Alderon. Also concurrent with the Hebei closing, Alderon is repaying the $10.5 million bridge loan previously advanced by LMM.
Mark Morabito, Executive Chairman of Alderon, said “The closing of the private placement component of Hebei’s strategic investment in Alderon and its Kami Project is a major milestone for both parties. One of Alderon’s next milestones will be the completion of its Feasibility Study, which is expected in Q4 2012. Once Alderon delivers to Hebei a Feasibility Study that meets the required criteria, Hebei will contribute the remainder of its C$182.2 million investment. I would also like to acknowledge and thank Liberty for its continued support of Alderon.”
Hebei’s initial investment in Alderon and the Kami Project will total C$182.2 million. Pursuant to the terms of the definitive agreements, within 15 business days of Hebei receiving a feasibility study that meets certain criteria, Hebei will contribute the remaining C$119.9 million of the initial investment and Alderon will contribute the Kami Project and relevant properties to the newly formed limited partnership which is owned as to 25% by Hebei and 75% by Alderon.
Other transaction highlights include:
Hebei agrees to use its best efforts to assist in obtaining project debt financing for the Kami Project from financial institutions, including Chinese banks.
Alderon and Hebei will be required to contribute to capital expenditures for the development of the Kami Project not covered by initial capital contributions and project debt financing, in accordance with their respective interests.
Upon Hebei's acquisition of its 25% interest in the Kami Project, it will be obligated to purchase upon the commencement of commercial production, 60% of the actual annual production from the Kami Project up to a maximum of 4.8 million tonnes of the first 8.0 million tonnes of iron ore concentrate produced annually at the Kami Project. The price paid by Hebei will be based on the monthly average price per DMT for iron ore sinter feed fines quoted by Platts Iron Ore Index (including additional quoted premium for iron content greater than 62%) (“Platts Price”), less a discount equal to 5% of such quoted price. Hebei will also have the option to purchase additional tonnage at a price equal to the Platts Price, without any such discount.
Hebei has agreed to co-operate with Alderon in its efforts to attract additional off-take partners in respect of the annual production from the Kami Project that has not been committed to Hebei.
Alderon will be the manager of the Kami Project and will receive a fixed annual management fee during the construction period of the project. Once the Kami Project has reached commercial production, Alderon will receive a management fee on a per tonne of iron ore concentrate basis.
The entire C$182.2 million of investment proceeds from Hebei will be used for the exploration and development of the Kami Project, the repayment of the $10.5 million bridge loan from LMM and other relevant corporate expenses of Alderon.
Alderon has granted Hebei a pre-emptive right to maintain its interest in Alderon in certain circumstances.
As a term of the transaction, Hebei was entitled to nominate two directors to the Board of Alderon. Hebei has nominated Ms. Zheng Liangjun and Mr. Tian Zejun and they have been appointed to the Board of Alderon. The Board would like to welcome the new directors and looks forward to a long term and successful partnership.
Ms. Zheng, B.Eng., M.Eng., MBA, brings 21 years of international trade and investment experience to Alderon. Ms. Zheng was Deputy General Manager of Handan Iron and Steel Group Import & Export Co., Ltd., a subsidiary of Hebei from 2006 to 2008. Since 2009, she has been with Hebei Iron and Steel Group International Trade Corporation, also a subsidiary of Hebei. In 2011, she became Deputy General Manager of Hebei Iron and Steel Group International Trade Corporation, responsible for overseas investment and projects as well as equipment imports. Ms. Zheng received the title of Senior Engineer in 1999 and holds a Bachelor of Engineering degree from Hebei University of Technology, a Masters Degree from Wuhan University of Science and Technology and a Masters of Business Administration from Beijing Jiaotong University.
Mr. Tian, B.Eng., MBA, has 24 years of experience in mining, geological and metallurgical technology and management. Since 2010, Mr. Tian has been Deputy General Manager of Hebei Iron and Steel Group Mining Co., Ltd and General Manager of Laiyuan Non-ferrous Metals Co., Ltd., each a subsidiary of Hebei. Mr. Tian has served as a Standing Committee member and Deputy Secretary of Laiyuan County in Hebei province since 2009. Mr. Tian received the title of Senior Engineer in 1997 and holds a Bachelor of Mining Engineering degree from Xi’an University of Architecture and Technology and a Masters of Business Administration from the University of Texas at Arlington.
Stepping aside from the Alderon Board to allow for the appointment of the Hebei nominees is Mr. Stan Bharti. Mr. Bharti was one of Alderon’s founding directors and he has been instrumental in attracting the necessary capital to support its development. Mr. Bharti, through Forbes & Manhattan, Inc., will continue to advise Alderon on a consulting basis and Alderon will retain the benefits of his experience and expertise. The Board would like to acknowledge and thank Mr. Bharti for his significant contributions to the Company’s development to date.
Has anyone visited these areas like Labrador and/or the rest of Newfoundland? The pictures on the Altius website are beautiful, but I am trying to comprehend the amount of land that is up there!
St. John’s - Altius Minerals Corporation (“Altius”) reported a net loss attributable to common shareholders of $2,857,000 or ($0.10) per share for the three months ended July 31, 2012 compared to a net loss of $1,588,000 for the same period last year. The current year was affected primarily by the losses in the share of associates, decreased royalty revenue, and a general decline in the market value of investments.
A summary of the financial results is included in the following table.
Three months ended July 31, (unaudited) 2012 2011 $ $ Revenue 1,335,000 2,156,000 Net earnings (loss) attributable to shareholders (2,857,000) (1,588,000) Diluted earnings (loss) per share (0.10) (0.06) Net cash flow from operating activities 4,647,000 (6,751,000)
Significant progress on its wholly owned and partner-funded project interests continued during the period, particularly in the Labrador West iron ore mining district. Additional information on the Corporation’s results of operations is included in the Corporation’s MD&A, and Financial Statements, which were filed on SEDAR today and are also available on the Company’s website at www.altiusminerals.com.
Well first of all Zerohedge is always bearish. Secondly, I'm not sure it logically follows that you should be bearish on commodities.
If steel inventories are being falsified, then technically that is bullish for steel.
If hyperinflation occurs, technically that is bullish for real assets.
On a practical level, the ghost inventories of steel suggest a high level of fraud in China. In practice, we've seen from the Chinese reverse mergers that frauds are rampant and that there is adverse selection going on. (Little penalties for committing fraud, not surprisingly, leads to rampant fraud.)
Studesy. So I know this is a value investor forum, and the macro picture is often treated as background noise compared to "underlying value", margin of safety, and other core value investing metrics.
But in my experience, combining value investing with macro credit analysis has been very fruitful. Like value investing, it can require a lot of patience, because just like Mr. Market can bee irrational when pricing a stock, he can be extraordinary irrational when pricing assets in the midst of a credit bubble.
Of course, the big problem when credit bubbles burst is the impact the lack of liquidity can have on the prices of financial assets - even assets with good "underlying value". Furthermore, the impact credit busts have on commodity prices, the cost of credit, etc. can really change underlying fundamentals.
Anyway, I view macro credit analysis as another tool in my toolbox to buy great businesses at distressed prices. So not so different really.
Regards,
glenn
Wow, lot's of negativity re: zerohedge apparently. I really appreciate their macro analysis. Go figure. ...Sorry I didn't mean to crap on Zerohedge like that. They do post interesting stuff from time to time. However, I take their articles with a grain of salt because they are always bearish.
http://www.canadianinsider.com/node/7?ticker=ALS
Altius share count continues to fall.
Dazel
If these shares that they repurchase come through public markets (I assume), why aren't they showing up or matching up in daily volumes? Perhaps they buy small amounts daily and then cancel them at the end of each month? For example, that report shows the trade date as Sept 30th at 103,464 shares. 1/ Sept 30th was Sunday. 2/ 103,464 is more than the daily trading volume for everyday except for Aug. 28th.
Perhaps they are issuing shares internally for options, etc. and then simply using cash to buy back the shares at market prices, although Sedi.ca does show them as Public Market transactions. Altius is coding the transactions as "NCIB - returned to Treasury" which makes sense.
Either way, good news that share count is falling
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
Look at how Altius has made money in the past. It wasn't from investing in juniors. It was from:+1
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.
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
So...Our question to you then is what is Altius worth to someone else in the royalty business?Not that much? Iron ore != gold or silver.
QuoteSo...Our question to you then is what is Altius worth to someone else in the royalty business?Not that much? Iron ore != gold or silver.
Bloom Lake's opex was $88 per ton for the quarter.
The Wabush mine has ore that is very high in manganese content. I'm not sure but I think that Cliffs may be mixing the cleaner ore from BL with the Wabush ore to have a product that is reasonable in manganese levels. So maybe you could just assume that Kami's ore will sell at a similar price to Cliffs' Eastern Iron ore operations...? *BUT* that price is for 1/3 of the product being pellets, which has a higher price than fines. With Cliffs, the operations produce a lot of (super) fines that are turned into pellets. Kami may get a lower price without a pellet plant.
Revenue for the quarter was $110 per ton
Royalties and offtake will be at least $7 (it's 6% at 8MT/yr, slightly higher if it turns out to be like BL and production turns out to be 7MT/yr)
The same technical report calls for quality deductions of $15/ton. Unfortunately, it seems like nobody on this forum knows how smelter/quality deductions are calculated.
2- The big issue is that these technical reports are a joke. BBA did technical report work for Consolidated Thompson when it owned Bloom Lake and before Cliffs bought out CT. The BBA technical report wasn't even close... it projected opex below $40/ton. This quarter it is around $88/ton. (How cash costs and operating costs are defined can make a difference... but does not explain the entire difference.)
Guess who is doing technical report work for Alderon? BBA.
*I also own Altius.
Add the operating costs for the mined raw ore:There is a difference between $/t mined, $/t milled, and $/t FeCon.
1a- Mining Cost (Ore, Waste) $2.10 + Mining Cost (OB) $1.05 + Processing Cost $1.95 + General and Administration (G&A) $1.13 = 6.23 $/t raw unprocessed ore.
Hebei is not stupid. They would not have negotiated a price of 95% Platt if they could get Platt - $15. The Platt price is based off 62% Fe. Alderon ore is 65.5% which would fetch a premium of Platt + $5/%Fe if pricing gets really competitive. Using Platt for the product price assumption seems pretty reasonable and a little conservative.The way the benchmark pricing works is that it is a price for iron ore of a certain quality. It will have limits for the levels of impurity in the product... Alderon's ore likely exceeds that.
QuoteAdd the operating costs for the mined raw ore:There is a difference between $/t mined, $/t milled, and $/t FeCon.
1a- Mining Cost (Ore, Waste) $2.10 + Mining Cost (OB) $1.05 + Processing Cost $1.95 + General and Administration (G&A) $1.13 = 6.23 $/t raw unprocessed ore.
Of everything that is mined, some of it is waste and goes to the waste pile.
Of everything that is milled, some of it is waste tailings and goes to the tailings storage.
And then you have your iron ore concentrate.
1b- The mining costs are different for ore/waste and overburden. You don't add both costs up together.
2- The pit optimization may use more conservative assumptions than the economic assessment. This is so if the ore price falls, you won't have a pit that was optimized for a higher price and you lose even more money.QuoteHebei is not stupid. They would not have negotiated a price of 95% Platt if they could get Platt - $15. The Platt price is based off 62% Fe. Alderon ore is 65.5% which would fetch a premium of Platt + $5/%Fe if pricing gets really competitive. Using Platt for the product price assumption seems pretty reasonable and a little conservative.The way the benchmark pricing works is that it is a price for iron ore of a certain quality. It will have limits for the levels of impurity in the product... Alderon's ore likely exceeds that.
What normally happens is that the price will be reduced for impurities (e.g. smelter deductions) and increased/decreased for iron content above/below the 62% level. The smelter deductions will be linked to the level of impurities. We don't know what the exact level of impurities will be (since there are uncertainties as to resource estimation and metallurgy). The level of impurities may vary from shipment to shipment (it varies within the ore deposit). So if Hebei is smart, they will link their price to the level of impurities in the ore. This will protect them.
Otherwise Alderon could buy extremely low-quality ore from somebody else and sell that to Hebei.
So basically, Hebei will be getting 95% of Platt + adjustment for iron content - quality penalties / smelter deductions for manganese (and sulfur).
I don't know if the quality penalties will be $15/ton.
Manganese increases hardenability and tensile strength of steel, but to a lesser extent than carbon. It is also able to decrease the critical cooling rate during hardening, thus increasing the steels hardenability much more efficient than any other alloying elements. Manganese also tends to increase the rate of carbon penetration during carburizing and acts as a mild deoxidizing agent. However when too high carbon and too high manganese accompany each other, embrittlement sets in. Manganese is capable to form Manganese Sulphide (MnS) with sulphur, which is beneficial to machining. At the same time, it counters the brittleness from sulphur and is beneficial to the surface finish of carbon steel.http://www.leonghuat.com/articles/elements.htm
For welding purposes, the ratio of manganese to sulphur should be at least 10 to 1. Manganese content of less than 0.30% may promote internal porosity and cracking in the weld bead, cracking can also result if the content is over 0.80%. Steel with low Manganese Sulphide ratio may contain sulphur in the form of iron Sulphide (FeS), which can cause cracking (a “hot-short” condition) in the weld
The manganese content in the ore, which is a specific characteristic of the Scully Mine deposits,
is the primary market limitation to exploiting more of the remaining resources than is currently
planned and that are not included in the most recent reserve estimates.
Cleveland-Cliffs Inc., as the managers of the Wabush Mines joint venture, have been examining
the possibility of installing a manganese reduction plant and if feasible this project could allow the
current blend of pellet products to be produced through to 2021. Encouragement and support for
this endeavour should be given by all stakeholders because of the significant benefits of extended
mine life for the employees of Wabush Mines and the community of Wabush
3- Strathcona wrote a report for the government regarding the Wabush mine and problems with the manganese content in its ore.
Can you explain again how the high manganese matter ?I'm not sure why but apparently it was a big deal for Wabush. (As Dazel points out, Wabush's manganese content is far higher than Alderon.)
If you can just blend or build one of those plants for 40 million ?
sorry i am very new to the sector. It was very hard to keep up. :(I am too.
As I stated earlier the spike in cash cost at Bloom Lake is over how they have implemented their new strategy and
their cash cost will come down now...
Dazel.
For the full year 2012, Cliffs said it anticipates Bloom Lake iron ore concentrate sales and production volume to be approximately 8 million tons, with a revenue rate of approximately $170 - $175 per ton, based on current iron ore spot prices. With the additional volume expected and resulting fixed cost leverage, Bloom Lake's 2012 cash costs per ton are anticipated to decline to $45 - $50.http://ir.cliffsnaturalresources.com/releasedetail.cfm?ReleaseID=582597
In addition, Cliffs anticipates 2012 capital expenditures related to Bloom Lake to be approximately $350 million, including sustainable and expansion capital.
It seems that the ideal level of manganese is different for different types of steel? For steel that will be welded, manganese should be lower than 0.8%. There are other types of steel where more manganese is better.... most of the world's manganese mined is used as a additive for steel.
2- The Platts index specifies sulphur below 0.02% for one of its indexes but not the others.
PDF of the specification here:
http://www.platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/ironore.pdf
Beyond that the index would make some kind of adjustment to normalize for the difference in quality.
3- Strathcona wrote a report for the government regarding the Wabush mine and problems with the manganese content in its ore.
"Cleveland-Cliffs have previously examined the possibility of installing a manganese reduction plant
that would reduce the manganese content of ore processed to allow production of the current pellet
products to continue, with their manganese content of either 1.2% or 2.0%, from ores that would
contain up to 4.0% manganese."
from with in the old Strachcona report.
Alderon is at 1.6% maganese well with in the range of 1% or 2 % that Cliffs is desiring at Wabush. It explains their high cost 40 year
old mine ($125 cash cost a ton last quarter) with very little desirable reserves left without the additional cost and hence why they bought Thompson Consolidated...where once they get operations on track they will do very well.
Not sure why Wabush is being compared to Alderon or Bloom lake very different.
dazel.
$9.35. Mr. Market really doesn't like Altius right now.
As for the feasibility study on the Kami Property, we had been expecting, as indicated in prior MD&A’s, to
complete this study during the third quarter of 2012 and to release the final results during the fourth quarter of
2012. However, while the progress of the study itself has continued to advance, certain engineering studies and
optimization analyses within the overall feasibility initiative are taking more time to conduct and finalize than we
had originally anticipated. The results still may be released during the fourth quarter, but in any event, the results
of the feasibility study will be released prior to January 31, 2013.
how much they have left in their buyback program?
Obviously there is the potential for some signficant near-term newsflow that could have a positve effect on the stock price (eg Kami feasibility study and subsequent funding, Julienne lake proposal).
But another thing that had dropped off my radar was their NLRC interest. This is clearly less significant than the above, but may not be immaterial. From the altius website:
On November 20, 2009 the Court accepted an NLRC proposal to the creditors for a project care and maintenance plan for up to 36 months and dismissed all further requests for creditor's claim adjustments for voting purposes. NLRC continues to seek qualified interested parties for the potential purchase of its refinery project and associated permits
So the creditor standstill ends around now. Looking back at their annual reports it seems that Altius have a $30m secured loan to NLRC on the books at zero. From their 2008 report:
In December 2007, the Corporation loaned $30,093,000 in the form of a convertible demand loan to NLRC. The non-interest bearing demand loan is secured by the assets of NLRC and is convertible at the Corporation’s option into 1,440,000 shares of NLRC. NLRC used the funds to make a milestone payment to IJK consortium regarding the purchase of steel and manufacture of heavy wall vessels, which are considered long-lead time items required for the proposed oil refinery project.
Does anyone on the board have any more information on this that might help work out how much Altius could get back? Or whether NLRC are likely to apply for a further extension of the creditor protection?
N.
Sorry for the tardy reply. NLRC remains in creditor protection and as per our quarterly MDnA filings on pg 9 - http://altiusminerals.com/uploads/fs_1331242067.pdf
“…NLRC
The Corporation currently holds a 39.6% equity interest in NLRC, a private company that has earned permitting rights to and proposed the construction of a new 300,000 barrel per day crude oil refinery at Southern Head, Placentia Bay, Newfoundland and Labrador, Canada. NLRC is currently operating under a creditor standstill period with a mandate to sell its assets or complete financing of the project.
NLRC continues to seek out a strategic partner or buyer for the refinery project. Efforts of late have focused mainly on Asian based state owned interests.”
There have been a lot of legal challenges in the structure of the Legal Claim filed by SNC and as such the Claim is yet to be heard by the Court and probably never will as it will die due to lack of credence.
No news because there has been little to report and at this stage of the Claim it is essentially immaterial from an Altius perspective.
If you like to better understand please feel free to call me at 1.877.576.2209.
Regards,
Chad
Weird why is Alderon being valued lower every day then...
BeerBaron
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.
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.
1. Is the sector (commodity sector in this case) in long-term secular decline?According to Jimmy Rogers, you should invest in commodity futures.
- not according Jimmy Rogers or Jeremy Granthem
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.
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
You have to love buying back shares at these prices...
http://finance.yahoo.com/news/commodities-super-cycle-not-ending-151801007.html;_ylt=Asrw9h6WY32S.P1257huz2.iuYdG;_ylu=X3oDMTN1OTExYzhrBG1pdANGaW5hbmNlIEZQIE1lZ2F0cm9uIDIEcGtnAzA1MTViMDIzLTk0YzgtMzhmYS1iZTAzLTkyNjE3ODZlNzhlZARwb3MDMQRzZWMDbWVnYXRyb24EdmVyAzg1ODBiOTMzLTNmOWMtMTFlMi1iYmY1LTQ2MzQxZjdiZDQyYg--;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3
Goldman says super cycle not ending.
Jeremy Grantham
Jim Rogers
Leucadia
What are the odds that they are all wrong?
Dazel.
In regards to the comparison to other mines, I have read that there are issues with the quality of the iron concentrate at Alderon's upcoming mine. According to the articles I have read, there are higher levels of Manganese than is standard and as such it has to be sold offshore as North American plants won't process it. The articles also suggested that there could be a $15 price reduction as a result of the quality. However, this would seem to contract Hebei's agreement to purchase 60% of the product at a 5% discount to spot. What is your guys take on this? Will the remaining 40% go for a lower price?
Smelter deductions as far as I can tell don’t really come into play with respect to iron ore. Smelter credits/deductions are given to compensate the smelter for waste above a certain benchmark. For iron smelting this is usually in the form of credits or deductions above an agreed upon %Fe. The factory has to use the same amount of energy regardless if 58% Fe or 64% Fe ore is used and the recovery from 58% Fe ore is lower and waste higher so a credit/debit is given in the form of $5/%Fe to compensate. Sulfur and Manganese are not smelter deductions because they are actually incorporated into the steel (not a waste product). Quality deductions may come into play. Most European iron ore contracts I could find state a max allowed sulfur % at 0.05. As far as Manganese goes, 0.4-1.1% is desirable. Alderon ore will have 1.6% Manganese and .053% sulfur which means it will probably be blended with lower manganese/sulfer/fe content ores during sintering. The ore as-is is acceptable to make steel in China, but blending a lower quality 60% Fe Indian ore with Alderon’s 65.5% Fe ore would create a product that could be sold in Europe. Manganese does not start affecting the quality of the steel produced until ~4%. 65.5% Fe 1.6% Mn or can only produce 2.45% Mn steel. Sulfur and the grain size distribution are the two main detractors to this ore’s marketability.
Kami ore is also 65.5% Fe which means it would be priced at a premium to the 62% Platt price. This is about +$5-5.50/%. Which means Kami ore could fetch a price at Platt + $17.5. Hebei was smart when they locked in a price at 95% Platt. Manganese levels do not particularly matter when selling to China. Sulfur levels are just outside the range of what is acceptable in Europe (6% too high), but they are not selling to Europe anyway. Prices for ore are negotiated directly; Hebei gets preferential treatment at 95% Platt. I don’t think other companies are going to get this sweet heart deal. I would look for Platt + $5-17 for everyone else.
Hebei is not stupid. They would not have negotiated a price of 95% Platt if they could get Platt - $15. The Platt price is based off 62% Fe. Alderon ore is 65.5% which would fetch a premium of Platt + $5/%Fe if pricing gets really competitive. Using Platt for the product price assumption seems pretty reasonable and a little conservative.
I would like to read the articles you read about manganese content in the Kami ore. Can you provide a link?
• Hebei will purchase 60% of the annual production
up to a maximum of 4.8Mt of the first 8.0Mt of
iron ore concentrate produced at the monthly
average price per DMT for iron ore sinter feed
fines quoted by Platts Iron Ore Index (including
additional quoted premium for iron content
greater than 62%) less a 5% discount.
• Hebei will also have the option to purchase
additional tonnage at a price equal to the Platts
Price, without any such discount.
Hebei is not stupid. They would not have negotiated a price of 95% Platt if they could get Platt - $15.
http://glennchan.wordpress.com/2012/08/08/iron-ore-miners-mainly-in-the-labrador-trough/That's my blog by the way ;)
The article has a link to a scotiabank analysis of Alderon as well. Well the link is purportedly from scotia, it's actually hosted on a different site which is kind of strange.Technically those analyst reports are the intellectual property of the firm that put it out. Sometimes there are bootleg copies floating around because there are people who want to pump a stock. Sometimes you will find copies of analyst reports hosted (presumably with permission) on a junior's website.
Great hypothesis and all.
I am a business man.
So I will give you a hypothetical question on your business "bloom lake" mine.
You have made a large sum of earnings last year " 2011" because you are very profitable...
You have some operational trouble in your expansion of the mine "capital cost"....
For your 2012 year where you see that the iron ore price drops precipitously making your expansion plan that has operational issues look pretty bad...how do you book it for tax purposes?
As capital expenditure that depreciate over 25 years or do you book it as operational production cost for the 2012 and incur the full tax expenses of it in 2012?
If you are a business man you know the answer to that question. That would inflate the production cost now even though most of the work went towards expansion or capital cost for future production. It is smart business and tax strategy but it makes short term productions cost look bad...however, future production cost will fall and look stellar...making you look great. Analysts don't understand business because they have models and straightline thinking.
Anyone involved in business knows that quarterly and even yearly numbers can be massaged how you want them...and why everyone happens to hit their numbers..by a penny! That is nonsense...it is the longterm "cash production" that matters.
It's a value Trap.....I agree with you that 80% of juniors are a ponzi scheme....producers are business people.
Dazel.
GK,
Its not a hypothesis...it's what I would do if it was my business...they would be idiots if I could prove it! Cliffs shuttered production in the U.S where production costs are much lower....only time will tell at bloom lake what the production cost will look like...but a couple of quarters is ridiculous to speculate over production costs in a mine or any business. My bet is costs drop significantly for a number of reasons...this being one of them...and when that happens and they get too low...they will also be wrong! It is what they average out to be over time that matters.
I have no interest in Cliffs...
Dazel.
To take Cliffs production costs for a mine "bloom lake" where they have had nothing but operational troubles and a change in strategy for a couple of quarters is "wrong".I guess I am cynical... :P There are a lot of companies that overpromise and underdeliver. You can always blame failures on "operational troubles"... every mine has them.
I looked at your blog...you have asia pacific production costs at half of what they are.I don't know. I could definitely be wrong but I don't know which part you are talking about.
Your timing of your report is at the crash point of the iron ore market...your assumptions are on prices that are unsustainable for producers in the market globally not just the Labrador Trough.I really don't know where iron ore prices are headed and I don't have a strong opinion on it.
Example of the Alderon bash was that they used $115 in their PEA...instead of the market price of $135 at the time of production....The standard practice is to use the 3-yr trailing average. I believe that's what the engineers are taught in school.
"which may indicate that they think the price of iron ore is coming down over time"....should they use $170 for the feasibility study if they think it will go up from the current $155?
As for the bloom lake and Alderon bashing you have been doing...I will give you the benefit of the doubt as you and everyone else that joined the crowd in being wrong on iron ore pricing in August to October...I don't really know where iron ore prices are headed.
We are talking about nothing when prices are this high...bloom lake production costs will come down and Alderon will be a successful mine.I don't think Bloom Lake's opex will come down much. I don't think that they will find operational efficiencies because they should have found them all after a few years of operation. Larger operations (BL is expanding) will reduce opex since there are some economies of scale to larger operations.
And in your genius you will make a fortune on Altius!!!!Yes we are both long Altius... why are we arguing!! ;)
Cliffs immediately tried to expand it to take advantage of high prices...there is no way to know what was capex and what was production cost so I feel the cash production costs are wrong for now..the mine does not have scale yet.In the press releases for earnings, I believe that Cliffs states operating costs along with D&A. That suggests that they separate out capex from production costs.
What does this mean for Alderon? Well, the above deal implies a value of $7.3B for 100% of the asset (15% for $1.1B), which is located approximately 17km from Alderon’s Kami Project. Using a spot price of $110/tonne of concentrate (current price is around $140/tonne), mining analysts estimate the EBITDA to be $1.2-$1.3B annually. This would in turn imply an enterprise value/EBITDA of approximately 5.5x. Assuming the same spot price of $110/tonne, EBITDA for Alderon’s 75% interest in the Kami Project should be approximately $370M after general and administrative expenses. At 5.5x, this works out to an implied enterprise value (EV) of just over $2B. Using the results of Alderon’s Preliminary Economic Assessment, Alderon’s 75% share of the capital expenditures for the Kami Project is $800M. This would work out to a market cap of about $1.2B once the project is in production – current market cap is only $240M.
Another way to value the Kami Project is to look at the implied EV/tonne of annual production. The AMMC mine can produce 15M tonnes per year (mtpy) of iron concentrate. If you assume a cost of $2.5B for the pellet plant and rail/port infrastructure, then the mine and mill would be valued at $4.8B ($7.3 – $2.5 = $4.8). Based on 15mpty, this works out to $320 per tonne. Alderon plans on producing 8mtpy (they plan on ramping up to 16, but I’ll ignore that for this exercise) from Kami. 75% of 8mpty translates to 6mpty. Multiplying that by $320 per tonne gives an approximate value of $2B. Subtract the $800M capital cost and you also have an implied future market cap of $1.1B – again, current market cap is only $240M
Alderon Announces Feasibility Study Results Demonstrating $3.244 Billion NPV and 29.3% IRR for the Kami Projecthttp://finance.yahoo.com/news/alderon-announces-feasibility-study-results-080500452.html (http://finance.yahoo.com/news/alderon-announces-feasibility-study-results-080500452.html)
"The study demonstrates robust economics on the Kami Property and the results meet all of the threshold criteria under our agreements with Hebei. Our schedule anticipates receipt of permits toward the end of 2013 and construction to follow immediately, with initial production in Q4 2015."
Bulk Commodities: Iron ore markets have moved sharply higher over the past month and we believe that prices could reach USD170/tonne over the next quarter. This reflects a combination of expected re-stocking in China and possible weather issues affecting supply in Brazil over the next few weeks.
The market was expecting Hebei to release the $120m...thinking that Alderon would have already submitted the study 15 business days ago to them....I may "personally speculate" with a short term trade on Alderon...
Hebei will gladly fork over the $120 m...they are going to do very well on their transaction.
Dazel.
The feasibility study states operating costs of $42.17 per ton of concentrate. This includes transportation costs to Port of Sept-Iles and loading/port costs ($25.98/ton without those costs). This would make Alderon one of the lowest-cost iron ore mines in the world. Yeah right.
This will likely be a repeat of history considering BBA authored this report. Real-world operating costs will likely be slightly above those of Bloom Lake. (If you compare BBA's reports for Kami versus Bloom Lake, Kami has slightly higher opex and quality deductions.)
If you simply compare Kami to Bloom Lake/Consolidated Thompson, I think Alderon's stock still looks undervalued.
2- Hebei's investment in Alderon is a big vote of confidence in it in my opinion. They likely have done a very high level of due diligence on Alderon. Technical reports by BBA are a joke... Hebei likely did their own homework.
Am I naive to think that a smart (I assume), sophisticated buyer like Hebrei would do a very thorough evaluationIn rare cases, companies don't actually do due diligence when buying a junior. There was some example in Pierre Lassonde's book on gold which I forget.
Can you tell the board why IOC has costs in the range that Alderon is talking about? And go through the points from the conference call that describe the high cost structure at Bloom Lake.I didn't listen to the conference call... hopefully there is a transcript.
-they fly in labour (like IOC, Alderon will employ and house locals)
-Cliffs as a large organization has associated costs (this is likely a nice way of describing my accounting theory)I would figure that Alderon would have higher G&A as a percentage of its market cap.
-they have 3 rd party managers...Alderon will be doing it in housedunno
-They truck out tailings
-they boat material and then load to ship
-rail deal at Cliffs is not as good as Alderon is looking for...(there was a question asked on the call on how Alderon think they will get a better deal)
Conference call...Part of the increased capex cost at Kami was that their housing complex they initially had planned was too small...it will have to be larger...they will not be flying workers in and out. They will be following IOC's business plan.
"This will fulfill a major infrastructure requirement for the Kami Project and will allow us to continue to move forward on our development timeline. We are now engaged with Nalcor in a process that will lead to the completion of detailed engineering and conclusion of a mutually acceptable Power Purchase Agreement. This is very positive news for Labrador West, as this project will bring tremendous benefits to the region. We are pleased that Nalcor recognizes the importance of supplying power for industrial development right here in Labrador."
as we know Cliffs Wabush mine is a disasterWabush is a very old operation... it has been around for decades. A lot of its operational issues are due to age. Its high operating costs have to do with ages... a mine's economics will get worse over time since you mine the best ore first and things like the stripping ratio usually increase over time.
The market was expecting Hebei to release the $120m...thinking that Alderon would have already submitted the study 15 business days ago to them....I may "personally speculate" with a short term trade on Alderon...
Hebei will gladly fork over the $120 m...they are going to do very well on their transaction.
Dazel.
Anyway, the point is that I think the Hebei payment is probably a big deal and it would probably make sense for Mr Market to be cagy until that comes in.I honestly don't think it is a big deal. It really comes down to the economics of the mine... if the economics are good, Hebei will buy in. (They have sunk costs and the off-take agreement which makes it more economic for them.) If the economics aren't good, then they probably will not unless they are stupid.
Dazel probably decided to load up the truck. Maybe he's getting close to control ownership by now :)
BeerBaron
It was a recommendation in a US newsletter. As there where no Alderon news I guess that probably was it - nothing more to it.
Cheers,
hohi
It was a recommendation in a US newsletter. As there where no Alderon news I guess that probably was it - nothing more to it.
Cheers,
hohi
Which newsletter? I'm curious.
Any commentary on the just filed NI 43-101 Study by Alderon? I guess that's the reason ALS has been popping. Do they just all back date the filings on Sedar? Since none of us saw the filing last week, but it shows up as filing on Jan 15.
Do they just all back date the filings on Sedar?In Canada, you are allowed to issue a press release and then file the actual technical report 45 days later. I'm not sure why this is allowed but it is.
Mamba begins drilling the 7th of february. Stock is also showing strength - it's near its all-time-high. Current Mcap of about $15M... once Altius gets its 20% stake that will be worth $3M+. I am pretty confident Mamba will hit some nice Fe intercepts as they are for sure trying to get investors attention to do another financing in a year or so. So they'll probably drill some higher risk holes to hit it big. 6 holes in total in Phase I.
http://www.reuters.com/finance/stocks/MAB.AX/key-developments/article/2677417
Cheers,
hohi.
Is ALS involved with Mamba?
Is The 15 days Business days or normal days?
So Hebei investment timing is sometime in the first, second (outside chance of third) week of February based on:15 business days will point to Feb 7th. Chinese will have Feb 9th to 15th off for their New Year holidays.
"As stated in our news release, the feasibility study results meet all of the threshold
criteria for Hebei’s project-level investment of $120 million dollars. We will be delivering
the official feasibility study to Hebei in the latter half of this month and expect to close lderon Feasibility Study Results – January 9, 2013 5
the next tranche of their investment sometime in February and this is consistent with the
timeline captured in our agreement. "
Nev Power, chief executive, said he expected the benchmark price to average US$120 a tonne in 2013, down from its current level of US$147.70. But he said the price would be underpinned around US$120 by the pro-growth policies of the Chinese government.
..
UBS expects the spot price to hit US$110 by the end of the year.
heibi date extended!
wonder whats the real reason?
I am long AXX myself.heibi date extended!
wonder whats the real reason?
I didn't think 15 business days were reasonable, especially close to Chinese New Year.
The Chinese New Year in this year is Feb 10, but in Chinese tradition, it started one week early (lunar year 12/23, 02/03/2013), and will end (Lantern Festival, lunar year 01/15 02/24/2013) . Hebei (North of the Yellow River) is a province in North China, and people there celebrate Chinese year in a very traditional way, please don't expect anybody will do the serious work during this period of time.
There is an advantage to Hebei doing what they said they would do by the time they said they would do it which they are not doing. That press release raises a lot of questions.
Feasibility came out 11 January, in the press release, Alderon has said, after discussion with Hebei, that they have agreed with themselves to extend to 15 March. That is either a poorly written press release or something weird is going on.
Chinese New Year is one week of vacation. 11 January to 15 March is 9 weeks. They said they would be it done in 3 weeks after the feasibility was released. Further, the feasibility released 11 January was already delayed from an earlier timeline giving Hebei even more time. You can't spin this positively. I hope their project management isn't this bad.
Canadian National Railway Co has halted a study into the feasibility of building a C$5 billion ($4.99 billion) rail line to ship iron ore from northern Quebec to port, the railroad said on Friday, as miners delay projects due to low prices.
..
Iron ore prices plunged to $86.70 a tonne in September from above $180 a tonne in September 2011. Prices have since recovered to about $155 a tonne.
Iron Ore/Steel
It is instructive to look at the solar industry over the last two years for what is about to play out in the steel industry. In both cases, there is an industry