ALS.TO - Altius Minerals

[bathtime]

Alderon PEA released with a NPV of $3.07 billion:

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

Would that make the NPV of the 3% royalty approx. 90 million?

[Liberty]

“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.

[naboo]

“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.

"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.

[Liberty]

Market has no reaction to this release.

Mr. Market is so strange sometimes. Alderon is barely up and Altius is actually down. I kind of expected it for ALS, but thought ADV would move more on this kind of news.

[naboo]

"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.

It seems like Mills Lake is not that small

From their NI 43-101:

Categorized Mineral Resource Estimate for Kami Iron Ore Project
(Cutoff of 20% Tfe)

Category         Zone                   Tonnes (Million)          TFe%  magFe%   hmFe%   Mn%  SiO2%

Indicated         Rose Central       376.1                          29.8   18.6          8.3          1.56    44.9
                        Mills Lake            114.1                          30.5    22.1         5.7          1.02    45.6

Inferred           Rose Central       46.0                            29.8    19.2         8.0          1.61    44.9
                        Mills Lake            71.9                            30.7    22.2         6.0          1.05    4

[Dazel]

"Would that make the NPV of the 3% royalty to Altius approx. $90 million?"

no.

You are seeing a cash flow model....Altius royalty is gross sales....

This is also half of the asset assuming they release the 43-101 OF $ 800M TO $1 BILLION....that would take the NPV of the project likely to $6 billion!!! Altius will not make $2.5 billion on it with their 39% stake...so lets not get carried away..but Alderon could be "huge".

The price used is $115 per ton....present price is $180.

So using these numbers...and assuming  a closer price to reality....I will let you do the math on how huge Alderon "could" be. Worth a lot more than the value of Altius right now as we have been saying for sometime. The PEA was better than we thought. We would suspect these returns will bring the big boys to the table...China, Vale, BHP, Rio Tinto...more so after the new resource estimate.

disclosure: we own Altius

Dazel.

[Dazel]

http://www.mbironoreindex.com/

This the iron ore price today...at $181.

Someone will figure out what Altius has found sooner or later...The producers that rely on supply of iron ore will be first and the market next.

Dazel.

[biaggio]

Guys, thanks for the update + commentary.

Have been scaling in. Becoming one of my larger holdings. Probably close to my limit for this type of investment (a company that I don t have a direct familiarity i.e I can t see,touch product,operations etc)

I can t help thinking that it is too good to be true. Does anyone else feel that?

I want to ask, without insulting or hurting anyones feeling as I know that a lot of effort has been put into this one especially by Dazel....What are the chances of fraud or bogus reporting?

I am trying to be unemotional.

Market obviously worried re recession, macro turmoil etc + I am comforted by the fact that it is indifferent to Canadian smaller resource based companies.

[Dazel]

"I want to ask, without insulting or hurting anyones feeling as I know that a lot of effort has been put into this one especially by Dazel....What are the chances of fraud or bogus reporting?"
Biaggio...of course you will do your own due diligence...

great question...

Their cash hoard is a number of investment successes since 1997...but the largest of these are Aurora...you can see the press releases of stock sales in 2006 on the website. Obviously the public shares of aurora would have seen the values of these share sales. IRC and Royal Gold were also public transactions. We suggest you look at their other deals as well.

Harry Dobson is a legend in the industry and they have worked with him extensively...

They have dealt with cream of the crop since inception.. Rick Rule, Brent Cook to name a few...these guys would and could not have their reputations around anything but the best.

Brent Cook is an adviser to the company...

It helped us to check all of these people and their backgrounds. You will find many more that i have not identified that are linked to Brian Dalton...who himself has an impeccable record in his home province which we also like.

Alderon- we suggest that you look at the people associated with Alderon and their reputations and past experience.

junior resource company's have a bad reputation and about 90% of the profit is produced by 5 % of the people...Leucadia perked our interest when they entered the resource sector. So we looked for the best of the best and we think we found it. But you should take a look at the people involved.

Dazel

[biaggio]

Thanks Dazel for your reply,

Of course we all should do our due diligence.

Obviously I am a believer in the story.

I generally love balance sheets with a lot of cash on them. I usually assume that the cash is real + trust the auditors in this case Deloite & Touche. 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.

I am also reassured by the insider ownership, and other highly respected share holders (R Rule, H Dobson).

I am going to review their annual reports + other filings on Sedar.