ALS.TO - Altius Minerals

[Liberty]

Well, that was dumb. I didn't think to check Alderon. Up a lot on 4x volume, so some of that probably spilled over to altius, though I'm still not sure if there's a specific reason for the jump.

This piece has a lot of nice things to say about Alderon, though nothing really new:

http://www.businessinsider.com/rodney-cooper-bullish-on-iron-ore-and-copper-2011-8

[Dazel]

"Over 100k shares traded today. Wonder if there was a news item that hasn't hit the wires I monitor yet.. Anyone has seen anything? Could be just a random fluctuation in the spatio-temporal-continuum, though  "

we were part of the buying......there was a large seller in Altius over the last 2 weeks....yesterday they were dumping at $10.30....odd for us to have liquidity in buying so we assumed it was forced or tax loss selling. This was before the pop in Alderon.

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.



Dazel.

[Dazel]

http://www.mbironoreindex.com/

iron ore is now at a 3 month  high! just in time for the Alderon scoping study that is out this month. We expect the numbers to look very good for production at Alderon at which time the world will take notice of the value of Alderon's potential.

The really wonderful part for both Alderon and Altius is that the potential suitors are awash in cash and have the ability to take on massive amounts of leverage for capital build outs at record low interest rates. Things could get very interesting.

Dazel.

[Liberty]

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.

That's a good point. What's the rule on the quiet period & buybacks? How long? Is it the same in the US as in Canada?

As for the prices being stupid, indeed. I bought some at 10.15 on Monday

[Dazel]

I am pretty sure they are different for each company....not positive though.

Altius usually releases results around September 10th ...so I am assuming they are in a black out period.

[finetrader]

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 ?

[jjsto]

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 ?

Don't forget about interest on cash.  I think that currently pays for about half the General and administrative.  Conceptually, to be conservative, I think about the company as essentially being funded by the royalty and the interest on cash.  Even if you cancel the voisey bay royalty out with the G&A it is still cheap.  In my own spreadsheet I also haircut cash and subtract all the liabilities.  But, that is just to look at the numbers in an extra conservative way.  In reality, if you are investing in the company for the long run, you are implicitly assuming that management will be bringing significantly more than $5 million in added value per year...

[goldfinger]

I remember having read in a letter or article explaining the Voisey Bay royalty Dalton claiming that the company was essentially funded with it for the next 25 years or so...

[Dazel]

Voisey Bay... is Royal gold's largest royalty and is trading there at aPE of above 60 right now...$37 million for less than 6 months will make it the largest contributor to Royal Gold's portfolio in this calender year...
Now if you assumed Royal Gold wanted the rest of it from Altius, how much would they pay for it? If I were getting a multiple like like that I would think about paying a good amount of money to get it...half of their multiple is 30 times...which makes it worth well over $100 million....and immediately at a value in range $ 300 million to Royal Gold. Actually things get better for the value....As Vale is spending about $2.6 billion in capital at Voisey Bay....

http://www.vbnc.com/NickelProcessingPlantCareerInfo.asp

As for admin expenses they were $2.5m, $4.8m in the previuos years...obviously in good years there are bonuses paid.
Income 2 years ago was $4.5 m and this year the Royal Gold share appreciation will add $20m plus. We are not worried about the admin costs as you can see there is a ton of value in this company if you have a look. We think it is ridiculous what you could get for this company in an auction of their assets....
Royal Gold could buy the whole company for less than cash and get the entire purchase price out of their new multiple on Voisey Bay alone!

Dazel

[Thrifty3000]

Alderon PEA released with a NPV of $3.07 billion:

http://www.alderonmining.com/_resources/news/2011-09-08-NewsRelease.pdf