ALS.TO - Altius Minerals

[Dazel]

Ross182,


I would love to see a short thesis but more importantly I would love to see a large short percentage literally...an illiquid stock sometimes acts strangely. A short would have had it's way with Altius shares as they would have been able to move the price at will. I know you are doing an exercise...just saying a squeeze would be deadly for a short...

Altius position in Alderon is $32mx $3.50...$112m.  A little over one third market cap...

Dazel.

[Ross812]

Dazel,

I've owned Altius since August of 2010 after I read your posts and ran the numbers. It has stayed about a 5% position which is pretty typical if I haven't spent the time to become really comfortable with it. I've just kept up with your commentary and read reports from the company. I'm about 20% cash right now and have another 20% coming if Jef stays above 17 on options expiration.
I really need a place to put the cash and Altius looks to be the cheapest thing I'm watching right now. It seems to be a great place to put some money, but I need to understand it better. Thus, getting to know it from the other side of the trade. I'll post if I find anything else interesting. So far, other that macro problems, I haven't turned up anything.

You're right on the Alderon position. I was typing faster than I was thinking. Alderon makes up a huge portion of the Altius market cap. If Alderon was backed out, Altius seems fairly valued in an ideal liquidation situation. So the margin of safety is Alderon, which seems to be a great investment so far. 

[Dazel]

Ross182,

It is a very important exercise you are doing...I would look at all assets individually...negatively...remeber that Alderon stock and Alderon 3% royalty are different assets...they do not effect each other unless Altius uses it's control position to secure that Alderon comes to production.

So what is Alderon stock worth?
What is the 3% royalty worth on their own?

In a negative analysis (what the market is pricing) the royalty is worth 0. You do not have to do much math in inversion because the market has already done it.



So the billion dollar question is when do you add the royalty to the value of the stock?

[jjsto]

Chinese investment finally arrives.  (I guess this explains recent alderon sp movement)

http://www.bloomberg.com/news/2012-04-13/hebei-steel-to-spend-195-million-on-alderon-stake-ore-venture.html

[jjsto]

Alderon press release here:

http://www.alderonironore.com/_resources/news/2012-04-13-NewsRelease.pdf

[value-is-what-you-get]

Nice development.  Like the ongoing management fee for Alderon, the minimal 5% discount for ore with a cap on volume and the nice steady pace at which this is developing.  They are delivering good results on schedule without giving away the farm.

[Liberty]

Haven't read all the details yet, but seems like a very good deal.

[naboo]

It is more and more likely that Alderon will be CT2.

Couldn't get ALS at $10 any more. Big Loss!

Alderon press release here:

http://www.alderonironore.com/_resources/news/2012-04-13-NewsRelease.pdf

[Dazel]

The world resource sector will now take notice of Altius....This is the biggest steel producer in China. Global news will have companies looking at Altius' assets and value.

What exactly is that 3% kami royalty worth now? This is a game changer absolutely huge for Altius.

Dazel.

[Ross812]

How many tons of iron can Alderon produce? The release this morning suggested 8 million tonnes? 4.8 million tones purchased by Hebei for 95% the market cost. Lets assume $100/ton so Alderon is now making at least grosses 456 million. Altius gets 13.7 million? ($100*95%*4.8*3%) DCF discounted at 11%, 0% growth. The 3% royalty is worth 124 million on the extreme low end...
At $140 per ton 8 million per year the royalty is worth 305 million...

Either way you could put a conservative and say the Alderon Royalty and shares are worth 230 million.

Millrock 7.93 million shares worth $2.06 million
3.45 million warrants worth $.24 million

NLRC
0

Voisey .3% Royalty, 2.25 million per year
0% growth, 11% discount 20 million

CMB
2% uranium ?
2% smelter ?

Viking Gold 2-4% sliding royalty ?

Rambler
12 million shares worth 7.2 million

Labrador Iron Ore
I think this one is huge. Rio Tinto agreement for 3% or 10 million + 2%
Ill go really conservative here and say all 4 projects are only worth the Rio Royalty -$30 million

Cash and Income Tax Receivable - $58 million

What I consider a very, very conservative of the cuff valuation-
347.5 million

Very conservative, not even considering:
Viking gold royalty
Alberta Oil Shale holdings
CMB Royalty
NLRC loan recovery

Any one of those is easily worth 5-10 million...


The market is saying 348 right now...