Author Topic: ALS.TO - Altius Minerals  (Read 1781540 times)

Dazel

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Re: ALS.TO - Altius Minerals
« Reply #700 on: June 27, 2012, 08:05:24 AM »

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

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Re: ALS.TO - Altius Minerals
« Reply #701 on: June 27, 2012, 09:02:06 AM »

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.
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Dazel

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Re: ALS.TO - Altius Minerals
« Reply #702 on: June 27, 2012, 10:09:57 AM »

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

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Re: ALS.TO - Altius Minerals
« Reply #703 on: June 27, 2012, 11:14:47 AM »

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

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Re: ALS.TO - Altius Minerals
« Reply #704 on: June 27, 2012, 12:51:07 PM »


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

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Re: ALS.TO - Altius Minerals - Dazel
« Reply #705 on: June 27, 2012, 05:08:45 PM »
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

Dazel

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Re: ALS.TO - Altius Minerals
« Reply #706 on: June 27, 2012, 06:10:51 PM »
Glenn,

What in play means to us is an unsolicited bid...we agree with all that Altius is in the sweet spot..we also agree that 50 to 60 % is low....however, if you have a hedge fund come in that has a low average cost 50 to 60% return is pretty damn good.

Remember Altius did the exact same thing to Irc shareholders...they wanted a deal and got it done they owned 10% of IRC and made 80%... had they held they would have made a lot more...but they wanted the money...

We are not saying that the same thing will happen here but the shares are so undervalued that we could see the same scenario playing out. We only used Royal Gold as an example of what Altius assets are worth to someone else....the market does not see this..but other royalty companies will as Altius did with International Royalty Corp.

We do not see management happy with any of what we have said....but we are in a market and undervalued Assets draw the attention of other businesses....that is all I am saying...it can only go on so long before someone realizes it would cost more than double and many years to re create it...when it can be bought over a couple of phone calls.



Dazel.

Dazel

GlennAS

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Re: ALS.TO - Altius Minerals - Dazel
« Reply #707 on: June 27, 2012, 06:37:15 PM »
Aah. Thanks for the clarification re: "in play".

A quick follow-up. Do you know how tightly held the stock is? Does Dalton and team have enough support from a majority of shareholders in your opinion to block an unfriendly takeover attempt?

TIA.

glenn

Liberty

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Re: ALS.TO - Altius Minerals
« Reply #708 on: June 27, 2012, 06:46:42 PM »
One thing I find strange is that we haven't gotten reports that Altius has been buying back shares in a while. The last time they did, last year (iirc), they filed every few days and it popped up on CanadianInsider. But lately, nothing, despite them putting the buybacks in third party hands to avoid conflicts with material info.

I hope they are buying as much as possible and we're just not seeing the reports filed as quickly as before...
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beerbaron

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Re: ALS.TO - Altius Minerals
« Reply #709 on: June 27, 2012, 07:48:59 PM »
Anybody considering Alderon shares for arbitrage? Soon the Hebei money will come trough at 3.42$/shares, each of these dollars will be added in the treasury of Alderon. So if each of the 100M shares are currently worth 2.23$ and Hebei adds another 25M shares at 3.42$/share that bring the value of Alderon to (100*2.23 + 25*3.42)/125=2.46$.

A nice 10% arbitrage yield.

BeerBaron