ALS.TO - Altius Minerals

[Myth465]

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.

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.

[Liberty]

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...

Hi Rolf,

I know it's an older comment, but I was wondering if you ever finished your evaluation and if you could share it with us? Thanks.

[Dazel]

It appears after some further homework that I have have made a mistake in looking at Brian Dalton's email comments on the  of the Voisey bay Nickel Royalty. I had said previosly that he had indicated that the Voisey bay Royalty was worth $200m under the IRC sale. After looking at it...It looks like he was talking about the entire royalty. That would make Altius' stake substantially lower ($20m) under that evaluation. He did indicate no one would sell more to them and that they had treid to buy merge with IRC for that royalty because of the royatly. Their was a strike at Voisey Bay when this was evalauted and the world was ending.
IRC's royalty rev's from Voisey bay for the 2007 were $47m!!!! So the evaluation looks ridiculous. This has us looking Royal Gold which Altius owns. Looks like they bought at the right time!

After doing some homework $200m is extremely low. Altius bought their stake for $13m at $3.25 nickel. They have recieved almost $20 million from this since 2003..with a two year strike in their. The price for nickel as of today is $12.10. We think the future value of this royalty will be between $120 and $210m.
future average cashflow of between $4m and $7m over 30 years gives us those amounts.
Altius royalty revs before strike.
2007-$4.3m
2008-$5.16m


We will post our full evaluation soon....sorry for the error...

For disclosure we have not sold since this post we have been buying.

Dazel.

[Liberty]

Thanks for the update, Dazel.

[Dazel]

http://finance.yahoo.com/news/Alderon-Appoints-Former-Iron-iw-2428213151.html?x=0&.v=1

Alderon is loading up. interesting that his options were priced at $3.40 (300000). Happy to see that.

Dazel.

[Liberty]

ALS has been falling quite a bit on the market lately. Anybody loading up?

[Dazel]

We were most of the volume Friday so we will step back and hopefully get some cheaper.

Dazel.

[Eric50]

Dazel -

It seems that you keep buying more and more since you've raised this idea. To assess the strength of your conviction, would you mind sharing how much of your total AUM do you have in ALS?

Feel free to ignore my question if you do not want to share that - I'd completely understand.

thanks
Eric

[Dazel]

Eric,

I have a good portion of my net worth in it. This is what we like... unfortunately it is tough on some
investors. It is in our best interest to be quiet...we have played out our case. If you simply add the numbers together you can see what we see. I know it is tough on investors to see investment drops...however, historically averaging down has produced our greatest winners. Remember Fairfax. The difference here is that your down side is protected by cash and 0 debt...we see little risk...we see an investment company not a commodity company...you might want to ask yourself why Leucadia has not had the same pull back.
we still think that the market sees uranium and that is their  mistake.
good luck.

Dazel.

[goldfinger]

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.
And I have noticed that a lot of resource (metals) related stocks have corrected in the last week (maybe end of QE2 approaching or something...).