ALS.TO - Altius Minerals

[ItsAValueTrap]

Junior stocks like Alderon tend to be crazy volatile.  A lot of the time the volatility means nothing.  You usually want to buy the dips and sell the rallies.

Take Queenston Mining for example.
http://www.google.com/finance?q=qmi.to&ei=VaESUZnLDse1qgGeYQ

Traded as low as <$3.20, bought out at over $5 in the same year.

2- Altius is easing back on the share repurchases a little now that the share price shot up by about a quarter:
http://www.canadianinsider.com/node/7?menu_tickersearch=als

[gurjot]

heibi date extended!
wonder whats the real reason?

[naboo]

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. 

[zippy1]

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.

I am long AXX myself. 

However, I feel quite uneasy about this delay.  Chinese New Year holidays are a bit like American Christmas holidays. The official time off this year is Feb 9th-15th.  So it is like American Christmas-New Year in terms of length, roughly.   

Also, it is not like business people do not know which days Chinese New Year(CNY) fall in advance.  So to have this CNY coming up as a reason, in my mind, is a bit strange.  We all plan our milestones here taking into account of CNY.  Someone has to be quite incompetent to not to do so.

AXX/Hebei could have set it at March 15th in the first place if CNY is really the reason.

I guess either AXX do not have good staff that "understands" Hebei or Hebei is using CNY as an excuse to delay payment, which is a known tatics in this part of the world anyway.

[beerbaron]

I deal with China every day and altough CNY is stated to to from the 10th to the 15th in China it's usually much longer. For example some contract manufacturer stopped production on feb 1st and are starting back around the 25th. Office workers are starting backon the 18th at the earliest. No real work can be performed. I expect an answer around the 25th. One thing that needs to be understood about CNY is that most people that live in the cities go back to their family in the country, this is their one time a year to see their family and they don't care about their job.

I'm not surprised one bit there is delays, the 15 days was probably negociated at the signing of the first contract. Nobody could know that Alderon would send the results just prior to CNY.

BeerBaron

[Dazel]

Agreed.
There is no advantage to rushing things...it does not touch the timeline of the build out and will give great credibility to the process. We are talking about a 30 plus year marriage and Hebei are smart people...They are going to want to see the numbers in the feasibility study and compare to the operational numbers to know how things things have played out and cover their jobs with their own analysis.

We expected this with Chinese new year. It is a much bigger deal than any holiday time we see in North America...

Iron ore prices are holding strong at $157 a ton...the project remains an incredible opportunity for Hebei.

Dazel.

[original mungerville]

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.

[zippy1]

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.

I agree. I actually work at a large semiconductor company in this part of the world handling customers locating in North America, Japan and Europe. I have seen people here using CNY as the reason for a few days delay. But this is the first time I see people use it as the reason to push it out by 5 -6 weeks.

More importantly in my mind is what if Hebei wants to change the terms of the contract in timing or amount of money? Can AXX really go sell this thing to a higher or at least different bidder?  If I were to be Hebei, I will try to squeeze AXX if I could get away with it. 

[Dazel]

Agreed.
Certainly not putting anything positive on this other than the original contract is a little stupid. Fifteen days really?!

It is not just $120 million...after you spend the first $190 million ( equity investment included) you are going to spend the other $200 million to get your discounted ore and keep your 25 % stake in the  project for over 30 years. So do you think you would have some questions when you are putting in almost half a billion dollars? And all this going on around Chinese New Year...silly...you need more time. Alderon was stupid with their press on this and rumour has it they have fired their PR team over it.
Hebei's normalized market cap is around $50 billion. This is as big as AIG!!!! 15 days...what were they thinking?
Dazel

[ItsAValueTrap]

Maybe the 15 days was reasonable.  Presumably, Alderon could have been sharing the results of the feasibility study with Hebei beforehand.  What you really need to do is to double-check Alderon's work and see if their assumptions are correct... this goes far beyond what is printed in the technical report that they file on SEDAR.

I think that the real reason for the delay is that Hebei may be having cold feet.  Everybody else is cutting their expansion plans (e.g. Cliffs) due to the drastic drop in iron ore pricing.  The mining industry tends to exhibit herd behaviour.

If Alderon was overcapitalized and could build the mine themselves, they should kick Hebei to the curb and therefore get rid of the option that they gave/sold to Hebei.  Instead, they are effectively extending Hebei's option to invest in Alderon... it's sort of like giving away free money.  If Hebei doesn't invest in Alderon, it's a vote of no confidence and might make it very difficult for Alderon to raise capital.
Dalton and Baker are on Alderon's board... I am sure they know what's going on.  Altius is sitting on a lot of cash and has slowed down its repurchases and hasn't been buying Alderon stock.

2- In general, juniors will often extend options/warrants (and effectively give away free money to the options/warrant holders) because they badly need financing.  Extending options/warrants has less fees than an underwriting or a rights offering.  (Even a rights offering can be very expensive if you need somebody to backstop the warrants; on top of that, the brokers don't like it when you do a rights offering and won't pump your stock.)

3- To some degree, you need to be greedy when others are fearful.  You want to buy when share prices are really low and fears are overblown.  (Too bad Altius ran up and isn't as good a buy as it was before.)