ALS.TO - Altius Minerals

[PlanMaestro]

I studied some of Berkshire's late 70s investments a while ago to see what he was up to then.

Turns out Buffett owned Cleveland-Cliffs then as well: http://www.berkshirehathaway.com/letters/1980.html

Sorry for the departure, but what happened to Woolworth as an investment? They tried to reinvent themselves into the discount stores (Woolco) but they failed (Innovators Dilemma, Christensen). Thinking about all these retailers RSH, SVU, OMX, BBY, JCP, SHLD, that I am avoiding for the moment. Also wondering why Buffett/Munger tried retail again after the bad experience with department stores in the 60s.

A short answer would suffice.

[Dazel]

http://www.mineweb.com/mineweb/view/mineweb/en/page504?oid=153722&sn=Detail&pid=102055


Iron ore up....bucking the tread.

[naboo]

ADV June 2012 presentation: 

http://alderonironore.com/_resources/presentations/ADV_PPT.pdf

[Dazel]

http://altiusminerals.com/uploads/April-2012-MDA-ver-7.pdf


As expected...the loss was from their $6.7 m share of the loss from Alderon. We would like to see the $2.7m in interest from their treasury holdings become much higher from buying something in this environment...just to add to the upside of what is there. We are really excited at the prospect of a another international royalty like purchase in this environment.

Near term Alderon continues to be a catalyst....when the feasibility study is done and the cash from their Hebei and Liberty partnership is in the treasury Alderon will rise significantly.

Dazel.

[Dazel]

Altius looks like a sitting duck.

With the industry cash strapped and bargains abound....buying out Altius at these prices makes sense. As we stated above we think Altius has a tremendous opportunity to deploy cash in this environment. However, with tight financing markets it would make sense for someone to be stalking Altius. We have written a great deal about the value in Altius. But In these times cash is "king".

Royal Gold-case study for buying
They get a 46 pe....their largest royalty is Voisey Bay....An Altius purchase is worth $4m x20% tax=$3.2m X 46= $147.2m value to Royal Gold's Mkt value.

The cash and marketable securities become the equivalent of a capital raise at $77...which is $6 off their 52 week high....so they reload with cheap cash available for other acquisitions in this environment...this of course is assuming that they use their shares to purchase Altius.

For free they get the other royalty portfolio....The $30m from Alderon future royalty at a low low 20 pe (less than half their multiple) would be worth $600m in market cap to Royal Gold....and when production hits 16mt it would be worth $1.2b to Royal gold.

The economics are riducluous to other Royalty companies....we would be completey surprised if they were not being approached as royalty mulitples are so high elsewhere in the market...and Altius large cash equivalents make them a sitting duck.

Dazel.

[Liberty]

Altius looks like a sitting duck.

With the industry cash strapped and bargains abound....buying out Altius at these prices makes sense. As we stated above we think Altius has a tremendous opportunity to deploy cash in this environment. However, with tight financing markets it would make sense for someone to be stalking Altius. We have written a great deal about the value in Altius. But In these times cash is "king".

Royal Gold-case study for buying
They get a 46 pe....their largest royalty is Voisey Bay....An Altius purchase is worth $4m x20% tax=$3.2m X 46= $147.2m value to Royal Gold's Mkt value.

The cash and marketable securities become the equivalent of a capital raise at $77...which is $6 off their 52 week high....so they reload with cheap cash available for other acquisitions in this environment...this of course is assuming that they use their shares to purchase Altius.

For free they get the other royalty portfolio....The $30m from Alderon future royalty at a low low 20 pe (less than half their multiple) would be worth $600m in market cap to Royal Gold....and when production hits 16mt it would be worth $1.2b to Royal gold.

The economics are riducluous to other Royalty companies....we would be completey surprised if they were not being approached as royalty mulitples are so high elsewhere in the market...and Altius large cash equivalents make them a sitting duck.

Dazel.

I certainly see how that would be a good deal for a royalty company, but I hope that's not how it plays out. Even at a decent premium, it would still feel like my shares were stolen.. I'd much rather see the team keep allocating capital and reap the full rewards from Alderon/Aurora/etc over the years, rather than see this great team diluted into a bigger company. Hopefully they are under the radar and can stay independent.

[Dazel]

Liberty,

We agree but the selling we are seeing would make a 50 to 60% premium likely be taken by shareholders. Like you we think that is stealing the shares...but that is why we think they are in play...if you look at the Royal Gold numbers....they would be stupid not to consider it.

Dazel.

[rmitz]

Liberty,

We agree but the selling we are seeing would make a 50 to 60% premium likely be taken by shareholders. Like you we think that is stealing the shares...but that is why we think they are in play...if you look at the Royal Gold numbers....they would be stupid not to consider it.

Dazel.

It's also something they've done before... http://www.fasken.com/international-royalty-valued-at-700-million-in-arrangement-agreement-with-royal-gold/

[Dazel]

Royal Gold bought International Royalty...Altius was the key investor in that negotiation...with a 10 % stake in irc...they know each other well...
Brian Dalton could certainly run that company.
Dazel.

[GlennAS]

Hi Dazel. Long-time lurker but my first post on this forum.

You stated, "With the industry cash strapped and bargains abound....buying out Altius at these prices makes sense" and "We agree but the selling we are seeing would make a 50 to 60% premium likely be taken by shareholders ... Like you we think that is stealing the shares...but that is why we think they are in play."

This doesn't make a lot of sense to me. First of all, doesn't Brian Dalton and team have a nack for buying undervalued assets and selling them at the top of a cycle? To sell out to Royal Gold or any other entity under current market conditions, at such depressed valuation - particularly with the upside of Alderon (equity and future royalties), Aurora, cash on the balance sheet, etc. - just doesn't make sense to me. It would be very contrary to their modus operadi IMO.

Definitely it makes sense from Royal Gold's perspective.

Do you really think Altius shareholders would be happy with a 50-60% premium to current market prices? I know you're a large shareholder so maybe you could speak for large shareholders more than I could. But the only reason a large shareholder IMO would be happy getting a 50-60% premium for Altius at current prices if they needed the liquidity. However, it seems to me that Altius shares are largely owned by patient, long-term capital. So I'd be surprised if immediately liquidity was a sufficient rationale.

BTW, how tight is the ownership structure of Altius? Altius has issued so few shares beyond its initial IPO that I would suspect that the stock is fairly tightly held.

Finally, as a long-term lurker, thank you for your informed posts over the months/years. I've learned a great deal about the company from your posts.

Regards,
glenn