ALS.TO - Altius Minerals

[Liberty]

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aADV-1917096&symbol=ADV&region=C

Alderon Iron Ore Corp. has commenced the 2012 winter drilling program at its 100-per-cent-owned Kamistiatusset (Kami) iron ore project in western Labrador. The four month drill program will be focused predominately on North Rose and will include up to 18,000 metres of drilling with six drills. The program will concentrate on infill drilling with the goal of upgrading the current mineral resource into the measured and indicated categories in preparation for the Feasibility Study expected in Q3 2012.

"We are excited to get our 2012 program underway and be back drilling on North Rose," says Tayfun Eldem, President and CEO of Alderon. "Our 2011 program was extremely successful and we are looking forward to building on that success as we work to upgrade our resource in advance of completing the Feasibility Study in Q3. The final phase of drilling represents another major milestone in driving Kami through the development stage into production."

North Rose, together with Rose Central and Mills Lake, have a currently defined NI 43-101 indicated resource of 490 million tonnes at 30.0% iron and an additional inferred resource of 598 million tonnes at 30.3% iron.

The proposed drill hole location map is posted on the Alderon website at: http://www.alderonmining.com/projects/kami/

Alderon's exploration work on the Kami Property is supervised by Edward Lyons, P.Geo., the Chief Geologist for Alderon and a Qualified Person as defined by NI 43-101. Mr. Lyons has reviewed and approved the technical information contained in this news release.

[shalab]

This along with talk of a tax in australia will bring more attention to Labrador ...

Fair enough

[finetrader]

Le Plan Nord in Quebec should be good for Labrador as well as they are going to develop transportation and telecommunication infrastructures in that area.

http://www.plannord.gouv.qc.ca/english/potentiel/mineral.asp

[Pick52]

TD has initiated coverage on Alderon with a speculative buy rating and a target price of $5.00.

[Liberty]

TD has initiated coverage on Alderon with a speculative buy rating and a target price of $5.00.

$5? Isn't that less than the cash? 

[value-is-what-you-get]

TD has initiated coverage on Alderon with a speculative buy rating and a target price of $5.00.

$5? Isn't that less than the cash? 

Yes - Altius cash but the price target is on Alderon!   

Every dollar in share price for Alderon is approx. $1.12 value to an Altius share (buybacks notwithstanding)

[Liberty]

Yes - Altius cash but the price target is on Alderon!   

Every dollar in share price for Alderon is approx. $1.12 value to an Altius share (buybacks notwithstanding)

My bad, I misread. This is an Altius thread so my brain was expecting this to be about Altius. Sorry about that 

[Eric50]

Quick summary below (in $m). It's incredibly cheap....

Cash and marketable securities              175.3    As of Oct 31, 2011
Royal Gold                                                36.5    529k @ $69. Nasdaq listed (RGLD), precious metal mines
Alderon Resource                                      108.6    32,285k @ $3.3, iron-ore jr, venture listed (ADV.V)
Millrock Resources                                           2.9    7,932k @ $0.47, venture listed exploration specialists in Alaska (MRO.V)
JV w/ Cranberry Capital                                       Early stage mineral exploration, book value $25m
Voisey Bay                                                      Royalty generating $4m+ a year, $10m in the books
NLRC                                                              Fully w/o, only refinery project in NA approved in years
Collection of Royalties                                      free call option
17 exploration projects (12 JV)                       free call option
Worst case scenario valuation                       323.3    
      
# of shares                                                 28.9    
Current Price                                                 11.2    
Current Market Cap                                       323.6    

[Liberty]

http://www.digitaljournal.com/pr/547026

Alderon Iron Ore Corp. (TSX:ADV)(OTCQX:ALDFF) ("Alderon") is pleased to announce that it has entered into a subscription agreement with Liberty Metals & Mining Holdings, LLC ("LMM"), a subsidiary of Liberty Mutual Group. Pursuant to the subscription agreement, LMM will purchase 14,981,273 common shares (the "Purchased Shares") of Alderon on a private placement basis for an aggregate purchase price of approximately C$40 million at a price per Purchased Share of C$2.67 (the "Placement"). The purchase price was based on the volume weighted average price of Alderon's common shares on the Toronto Stock Exchange for the twenty trading days ended January 11, 2012.

[value-is-what-you-get]

Quick summary below (in $m). It's incredibly cheap....

Cash and marketable securities              175.3    As of Oct 31, 2011
Royal Gold                                                36.5    529k @ $69. Nasdaq listed (RGLD), precious metal mines
Alderon Resource                                      108.6    32,285k @ $3.3, iron-ore jr, venture listed (ADV.V)
Millrock Resources                                           2.9    7,932k @ $0.47, venture listed exploration specialists in Alaska (MRO.V)
JV w/ Cranberry Capital                                       Early stage mineral exploration, book value $25m
Voisey Bay                                                      Royalty generating $4m+ a year, $10m in the books
NLRC                                                              Fully w/o, only refinery project in NA approved in years
Collection of Royalties                                      free call option
17 exploration projects (12 JV)                       free call option
Worst case scenario valuation                       323.3    
      
# of shares                                                 28.9    
Current Price                                                 11.2    
Current Market Cap                                       323.6

I did a DCF calculation on the 3% gross sales royalty on Alderon's Kami project to see what it is actually worth to Altius.  Once again, it appears that there is huge value here, and it's not a lot of "what if" value dependent on financing, infrastructure costs, concentrator build out cost increases etc.  It's just a straight commission on whatever eventually gets shipped out of there by whatever corporate entity sells it.  We're 3 years away from production so you know there could be JV deals with China, share dilution at Alderon (as per todays release) etc and none of it matters - just a net cheque for the selling price per ton x 3% payable to Altius once everything is up and running by whoever gets it up and running.  My point is it's calculable future cash flow with a high degree of confidence.

Using the assumptions of:  3% royalty on an Annual production of 8 million tons, mine life of 15 years, cash flows not to begin until 2015 and a discount rate of 5% (let me know if I'm out to lunch on that one please!) and a selling price of $100 per ton (for margin of safety) I get a Net Present Value of this one royalty stream to Altius of $215.17 million.  If the iron ore price averages $150 it's 1.5 times that amount or $322.8 million (which is approximate current market cap so of course everything else is free at that iron ore price!)  If the iron ore price averages $50 it's still worth $107.5 million or approximately the same amount as their shares in Alderon are worth.

So the value is there.  I would say that at current pricing and even a 5 year horizon there is significant margin of safety in Altius.