ALS.TO - Altius Minerals

[link01]

the big debate: deflation vs inflation....

i'm in the camp that believes deflationary pressures will outweigh inflationary ones in the nearer term, but i'm mindful of the fact that this stance could turn out to be wrong sooner than i'm prepared to see or admit it. pippa malmgren has a few provacative insights:

"The US is Defaulting on its Debt As Well

I have argued for some time that the US would default through haircuts at the local level (municipal defaults) and through inflation at the national level. In addition, austerity is making its way into the US debt picture but through local, not national, initiatives...

The Federal Reserve remains on the increased inflation trajectory, in spite of their denials. ..And this is exactly why we see Chairman Bernanke making it crystal clear that the “Fed has latitude to set inflation goal”. You can be sure that the inflation goal will be higher than expected and that it will be raised over time.

The greatest policy mistake now building in the system is this: policymakers will confuse the temporary fall in commodity prices with a permanent reduction of inflation pressures: China, India, Australia come to mind. I think the opposite will turn out to be true. The recent crisis caused commodity prices to fall somewhat but the production constraints are now worse than ever due to lack of bank lending and working capital. So, commodity prices jump back up again very fast. This means central banks especially in emerging markets may start easing way too soon. I bet inflation pressures worldwide are barely beginning. "

[Liberty]

English and Chinese. guess it shows who they've been talking to lately!

[Liberty]

http://www.vocm.com/newsarticle.asp?mn=2&id=19715&latest=1

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.

[Dazel]

Dalton has spent 4 months out of the last year in china. Their deal flow from this year has been significant despite the fact the market has ignored it. Their recent deal with century iron ore is an example of his work as they are backed by chinese interests...we would like to see more of the same for 2012.
Here is our wish list for 2012:

Alder on: we would like to see their stake sold to a chinese operator who is in a hurry to develop the property. We are not concerned about altius' selling price of their controlling position we see the future royalty as "huge" to the company. The developer and their time to production is key. This would move the stock significantly. We would rather see altius sell this stake and realize the future royalty than get taken out by someone wholly...we do not think that altius would get the premium they deserve.

Cash: we want to see this money put into a strategic investment similar to the irc deal....we what a significant return on this money...there is plenty of opportunity as the sector has been killed and there are great opportunities...we would like to see them partner in a large deal...they being the aggregator and investing along side someone like Fairfax or Leucadia or Sprott (Rick rule)...we would also accept some leverage for the deal.

Central mineral belt royalty: The market will realize that this future royalty is substantial....It would be interesting to see some discussion on what Paladin and Cameco might be doing in Labrador now that uranium moratorium has been lifted...the Hathor take over fight has made many take a look at where the uranium price is going....in 2007 when altius sold Aurora...it was $170 pound...$52 a pound now...no tsunami's!

Cliffs: we would like to see more upside on the nickel and alloy side as far as exploration

Century partnership: develop as planned and gain be interest of other major players...

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!

While the share price had a tough year like all commodity companies (even gold)...altius had a significant year of future development into a significant royalty company.

Disclosure: we continue to buy...including today!

Good luck in the new year!

Dazel

[link01]

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!

what happened there with NLRC? i'm still not sure i understand after reading thru some of the relevant links & documents via the ALS website. yea, NLRC was hit by the runaway freight train that was the 2008-2009 economic tsunami, but where was the supervisional influence & financial oversight by ALS considering their substantial interest? It seems NLRC basically spent & spent & spent them selves into a deep dark hole, completely oblivious to the imploding credit markets on which they were totally reliant for continued funding, & the brass at ALS were snoozing all the while this was unfolding as well.

i didnt get the sense that mngt at ALS addressed that very openly at all. which is surprising considering that some analysts at the time thought that more than 50% of ALS's value resided in their NLRC interests at the time.

and if ALS lacks the staff or financial acumen to guide or influence such major investees then it become even more incumbent on them to look to sell their stakes while retaining their royalty rights, doesnt it?

[shalab]

With China slow-down or outright recession, not sure if ALS is doing the right thing.

I don't feel comfortable with Dalton's observation from the ground about China economy. If you are in Washington D.C or NY City, there is no recession.

[Dazel]

Shaleb,

China slow down...yes they have tried to slow down...why? Bubble if you read our financial times...but there is more to an economy than the stock market...
China has a shortage of power everywhere....they have to regularly shut down the grid because they do not have the resources to full-fill their power needs...read Mark mobius and his take on china...he is on the ground there while chanos et all have never been there.

Uranium-look at cameco's ceo's latest comments on china's nuclear plant plans...he says Japan was a not even a hiccup.

Our news...is crash, depression, bubble, etc...that is because north America and Europe are old and are not Building ing anything...we are stuck in finical trickery to make money where as the developing world is building infrastructure for the future...

China had record use of oil in November!!!! Do you wonder why oil is at $100? It is not us....
I have not seen that headline anywhere...only that they are "crashing".

Alder on has a plan at $118 per ton of iron ore....$139 is just fine for their project.


Dazel

[Dazel]

Shaleb,

On the other hand...for our business...which is financial..if altius were to go to auction tomorrow and sell off the company piece by piece we would double our money. So I can see how some investors would Want to see this rather than see how much china slows down. Fair enough.

Maybe That is what they will do...or be forced to do...if that were to happen...I think you would see a splitting of the company...projects sold...royalties kept as the new altius.

Dazel.

[Dazel]

Link01,


You are correct...their plan has always been to sell their stakes and keep the royalties...we see NLRC as a major mistake for Altius. We think  they got in over their head with Harry Dobson et all and thought they were bullet proof....their lack of clarity about the mistake is likely due to the SNC Lavalin litigation which effectively killed the project in its form of that time. The other suppliers agree to a standstill where SNC Lavalin took them to court.

I have not seen or heard anything with regards to the Oct 2011 deadline for their settlement with SNC....hopefully they are negotiating something that benefits both parties. SNC Lavalin is an obvious partner as they have global scale.....a side note...the refinery would have been up and running in 2011! And we would never have invested in Altius because their share price would be too high!

Dazel.

[shalab]

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.