ALS.TO - Altius Minerals

[Dazel]

 Ross182,

Thanks...i know you are being negative...so added a few corrections and higher assumtions.


-Kami has apllied for 16 million tons a year...on your numbers at $140t x 16mt Alderon would be $460m

-if they would sell the Voisey bay for $20m they would be locked up...$4m normal annualized. 30x $4m=$120 we think higher because of the nickel situation in indonesia.

-rambler gone.

- where is the $175m cash and the $25m with Cranberry capital?

Dazel.

[JAllen]

8M tons a year implies a 60 year mine life at ~500M tons.  They have, very probably, 1B+ tons.  A 50 year mine life implies 20 tons a year.  These iron ore companies typically ramp up to twice, at least their initial production 5 years after the initial mine has started.

The Alderon royalty NPV is $17.5 per Altius share with these assumptions: $80 beginning iron ore price growing at 3% per year; 9% discount rate; 8M tons (starting 2016), 10, 12, 14, 16 up to 30 M tons production in 2028 staying at 30 tons per year until 2046 (cumulative 767 tons of production).

Change the starting price to $120 and it's $27 per Altius share; $150 and it's $34/share.

[FFHWatcher]

Questions/Comments

What am I missing with your math numbers?
-Kami has apllied for 16 million tons a year...on your numbers at $140t x 16mt Alderon would be $460m
$100*95%*4.8*3%  Why did you use 4.8M mt ?  That is just what Hebei is buying.



Alderon Corp Presentation shows 15 year mine life

Is this a correct summary as to what the transaction is?
$106M for 25% of Kami project in the new LP (Alderon retains 75% of LP)
25% ownership in Alderon via $88M share purchase of treasury Shares
All money ($88M + $106M) spent to develop this $1B project.
Remaining $$ ($500m - $1B) needed will be financed via debt/equity/other JVs

Hopefullly Altius' 3% royalty is on the entire mining operations at Kami, not just 3% on Alderon.

Is Altius potential 3% royalty as easy as;
8M mt x $100-140/t x 3%? Maybe $25-30M/yr once it gets into commercial production in approx. 2015/2016. Or am I missing a step?

[Ross812]

Dazel,

I was working off memory and some jotted notes from reading the 2010 annual report.

Current assets are 176 million 31 Jan 12. Of that 50.6 million is cash and taxes receivable. They don't have 175 million in cash.
I didn't see the 25m Cranberry capital anywhere. How do you value the J/V? at 50% or 80%?

I very well may be off on the NPV of the Alderon 3% Royalty. 4.8mt has been spoken for by Hebei; they may hit 16mt but even at 8mt the valuation is compelling. pof4520, this is going to be a show me stock, no one is going to give them a NPV on 20mt a year. I started with a ore price growing at 3% a year but went back to 0% because I don't see Iron ore growing in excess of inflation from here. China is going though a major build out right now. I don't see it increasing in speed. 9%, 11% what is the correct benchmark? Should you discount iron or at the developing world's GDP growth rate? I chose the risk free rate + China's current GDP growth rate... It seemed conservative.

I value Alderon Shares at $3.4, cost at the Hebei investment 33m shares = $112m

In the 2010 annual report Altius recognized 15.3 million in 7 years of owning the Voisey BAy Royalty, 2.18m per year; I used 2.25m. They made 3m 9 months ending 31 Jan 12, 4.1m 2009, 1.7m 2010. I like your 4m number. A DCF at 0% growth, 11% discount gives NPV of 36.3m.

Alderon shares + Royalty NPV (8mt at $100, 0% G, 11% D)
112 + 218 = $330m

Voisey- 36 m

Millrock- 2.3m

Labrador Iron Props- 30m

Cranberry at 50% - 12.5m

Cash- 50m

Total - $460m + free options galore
24% margin of safety at today's price
Back out Alderon though (if something goes bust, 10% chance?) the valuation gets a lot harder to justify...

Basically assigning value to the Alderon royalty. Discounting their 80m in investments in associates. And assigning a more reasonable value to Voisey (on the books for 9.6m)

[barminov]

From last Q:

Cash $49.5
Marketable Securities $124.4

"Marketable securities consist of Canadian government guaranteed and corporate backed commercial paper,
bonds and marketable securities  with original maturities of greater than three months at the time of
purchase."

I think it's pretty safe to call that cash or "cash equivalents." Where/how are you getting $50.6?

[JAllen]

Altius invested $25M in Cranberry.

http://www.24hgold.com/english/news-company-gold-silver-altius-partners-with-cranberry-capital-to-create-new-company.aspx?articleid=650579

[Green King]

So this is done right ?
Is there any other risks out there other than China Blow up? (Very Low)
ALS can get 15% ROE no problems over the next five years ?

We are just arguing about how much. Right?

[Ross812]

From last Q:

Cash $49.5
Marketable Securities $124.4

"Marketable securities consist of Canadian government guaranteed and corporate backed commercial paper,
bonds and marketable securities  with original maturities of greater than three months at the time of
purchase."

I think it's pretty safe to call that cash or "cash equivalents." Where/how are you getting $50.6?

50.6 is cash + income tax receivable on the 31 Jan 2012 report. As for124.4 in marketable securities, their description was veg. Does this include alderon? They made 1m, off the top of my head, in interest expense. So these marketable securities, ie bonds are yielding .8%? Something doesn't add up unless this is revering to shares in partners. The 80m on the last reported as interest with partners is not enough for alderon and cranberry.

As for cranberry, thanks it wasn't in the reports I read.


[/quote]

[Dazel]

I know it sounds wrong but the cash equivalents are $175m...the Alderon shares are separate.....if you include the Alderon shares altius basically trades for cash...an absolutely stupid price.

The yield is low because interest rates are low on government paper. None of the royalties are in the Altius price...

I will do some detail on this and start another thread...this one is too long...

Dazel.

[shalab]

Total equity is 287 million per last Quarter report. (Jan 12) It maps Alderon stake separately (investment in associates ) and values that and the sparkfly stake together around 85 million. See section 8 of the quarterly report attached.

Page 3 has total equity at ~287 million.