ALS.TO - Altius Minerals

[beerbaron]

Jjsto,

Alderon.

Thompson consolidated ramped up in a hurry at prices below $75...the cost to build the alderon project have dropped significantly  in the last 8 months...engineering, material, labor, all of the inputs have dropped because in times of uncertainty everyone stops....if they were to do the build out at $150 a ton....everything would be extremely expensive because every one would be trying to build out. We are seeing projects pull back and anyone without the right economics will hold off until the price rises. Alderon will benefit on the build out at a lower iron ore price and be able to negotiate better deals with their suppliers...They want the price high when they produce not when they build.

Dazel.

Dazel, which model are you using to state the costs have been reduced significantly? Do you have any similar examples where the drop of cost of developing the asset made the future asset more viable even if the resource price fell.

BeerBaron

[Dazel]

Beer baron,

Iron ore do not sell futures like copper or platinum..they used to price iron ore once a year...they may go back to this method who knows...

The future price of iron ore has not been accounted for because the contracts are in real  time...they are not futures like copper or oil for say december... They are negotiated prices between real buyers and sellers...not hedge funds or hedgers etc...No bid...guess what.. Prices plummet.

When china decides to cut inventory this is what happens...the steel makers were readily paying
$140 a ton 4 months ago....they are not now...when they need it again they will pay what is needed
to get product...it is that simple. To build a mine takes a lot of capital....but when the entire iron ore community is trying race to cash in on $140 iron ore pricing the costs to build a mine escalate. Look
at Fortescue they were a billion dollars off on their capital expansion program. They have said costs
have come down significantly....but a billion dollars off!! That is spending recklessly. Like all
producers they will cut back.

I hope that helps....when supply is cut which is what is happening already with iron ore pricing dropping like it is...it sets up for higher prices later on...that is all I am saying. There is race in Labrador to be the first "new producer" because there was limited rail room electricity etc...if Alderon does not have to compete for all of these services, labour, engineering, surveying, environmental prices for their build out will come down.


Dazel.

[Dazel]

http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=157890&sn=Detail&pid=102055


Rogers calls the mining slowdown a blip...."buy the commodities that have fallen the most."

[ItsAValueTrap]

I think I'd be more bullish on nickel than on iron ore.

IRON ORE:
production has gone up several times over the past decade
price has gone up several times over the past decade
pretty easy to find... a lot of the juniors in the Labrador trough have found iron ore deposits that are economic.  Pretty much every iron ore miner has increased production at their mines and have ongoing expansion plans.  e.g. Fortescue is expanding, Bloom Lake is expanding, etc. etc.

NICKEL:
production has stayed flat over the past decade
price has gone up over the past decade, but nowhere as much as iron ore
HARD to find low-cost sulfide deposits.  None of the juniors exploring near Noront's Eagle One deposit and around Voisey's Bay have found any nickel.  In each area, there were hundreds of millions of dollars spent and 30+ juniors with staked claims.

2- All miners have seen very significant price inflation... this will drive commodity prices higher.  This is good for Altius when it owns royalties; not so great when it owns mining companies or exploration companies.

3- Jim Rogers is mostly into commodity futures and not so much into commodity stocks.  He avoids commodity stocks as futures tend to outperform commodity stocks by 3 times.  But he says that if you find the right commodity stock, you can make a lot of money.  Hopefully Altius will do that for us.

[Liberty]

Email from Alderon:

http://alderonironore.com/_resources/news/2012-09-04-NewsRelease.pdf

Alderon Iron Ore Corp. (TSX: ADV) (NYSE MKT: AXX) (“Alderon” or the “Company”) is pleased to announce that it has closed the Alderon common share (“Common Share”) subscription component of the previously announced transaction with Hebei Iron & Steel Group Co., Ltd. (“Hebei”). Pursuant to the terms of the subscription agreement (as amended) (the “Subscription Agreement”), Hebei has acquired 25,858,889 Common Shares at a price of C$2.41 per Common Share for gross proceeds to the Company of approximately C$62.3 million, representing 19.9% of the issued and outstanding Common Shares. Alderon and Hebei have also executed the remaining definitive agreements, including the Investor Rights Agreement, the Off Take Agreement and the agreements required to form and operate the limited partnership that will own the Kami iron ore project (the “Kami Project”).

Concurrent with the Hebei closing, Liberty Metals & Mining Holdings, LLC (“LMM”), a subsidiary of Liberty Mutual Insurance, has acquired 3,816,181 Common Shares at a price of C$2.41 per Common Share for gross proceeds to the Company of approximately C$9.2 million, allowing LMM to maintain its relative proportionate interest in Alderon. Also concurrent with the Hebei closing, Alderon is repaying the $10.5 million bridge loan previously advanced by LMM.

Mark Morabito, Executive Chairman of Alderon, said “The closing of the private placement component of Hebei’s strategic investment in Alderon and its Kami Project is a major milestone for both parties. One of Alderon’s next milestones will be the completion of its Feasibility Study, which is expected in Q4 2012. Once Alderon delivers to Hebei a Feasibility Study that meets the required criteria, Hebei will contribute the remainder of its C$182.2 million investment. I would also like to acknowledge and thank Liberty for its continued support of Alderon.”

Hebei’s initial investment in Alderon and the Kami Project will total C$182.2 million. Pursuant to the terms of the definitive agreements, within 15 business days of Hebei receiving a feasibility study that meets certain criteria, Hebei will contribute the remaining C$119.9 million of the initial investment and Alderon will contribute the Kami Project and relevant properties to the newly formed limited partnership which is owned as to 25% by Hebei and 75% by Alderon.

Other transaction highlights include:
Hebei agrees to use its best efforts to assist in obtaining project debt financing for the Kami Project from financial institutions, including Chinese banks.
Alderon and Hebei will be required to contribute to capital expenditures for the development of the Kami Project not covered by initial capital contributions and project debt financing, in accordance with their respective interests.
Upon Hebei's acquisition of its 25% interest in the Kami Project, it will be obligated to purchase upon the commencement of commercial production, 60% of the actual annual production from the Kami Project up to a maximum of 4.8 million tonnes of the first 8.0 million tonnes of iron ore concentrate produced annually at the Kami Project. The price paid by Hebei will be based on the monthly average price per DMT for iron ore sinter feed fines quoted by Platts Iron Ore Index (including additional quoted premium for iron content greater than 62%) (“Platts Price”), less a discount equal to 5% of such quoted price. Hebei will also have the option to purchase additional tonnage at a price equal to the Platts Price, without any such discount.
Hebei has agreed to co-operate with Alderon in its efforts to attract additional off-take partners in respect of the annual production from the Kami Project that has not been committed to Hebei.
Alderon will be the manager of the Kami Project and will receive a fixed annual management fee during the construction period of the project. Once the Kami Project has reached commercial production, Alderon will receive a management fee on a per tonne of iron ore concentrate basis.
The entire C$182.2 million of investment proceeds from Hebei will be used for the exploration and development of the Kami Project, the repayment of the $10.5 million bridge loan from LMM and other relevant corporate expenses of Alderon.
Alderon has granted Hebei a pre-emptive right to maintain its interest in Alderon in certain circumstances.

As a term of the transaction, Hebei was entitled to nominate two directors to the Board of Alderon. Hebei has nominated Ms. Zheng Liangjun and Mr. Tian Zejun and they have been appointed to the Board of Alderon. The Board would like to welcome the new directors and looks forward to a long term and successful partnership.

Ms. Zheng, B.Eng., M.Eng., MBA, brings 21 years of international trade and investment experience to Alderon. Ms. Zheng was Deputy General Manager of Handan Iron and Steel Group Import & Export Co., Ltd., a subsidiary of Hebei from 2006 to 2008. Since 2009, she has been with Hebei Iron and Steel Group International Trade Corporation, also a subsidiary of Hebei. In 2011, she became Deputy General Manager of Hebei Iron and Steel Group International Trade Corporation, responsible for overseas investment and projects as well as equipment imports. Ms. Zheng received the title of Senior Engineer in 1999 and holds a Bachelor of Engineering degree from Hebei University of Technology, a Masters Degree from Wuhan University of Science and Technology and a Masters of Business Administration from Beijing Jiaotong University.

Mr. Tian, B.Eng., MBA, has 24 years of experience in mining, geological and metallurgical technology and management. Since 2010, Mr. Tian has been Deputy General Manager of Hebei Iron and Steel Group Mining Co., Ltd and General Manager of Laiyuan Non-ferrous Metals Co., Ltd., each a subsidiary of Hebei. Mr. Tian has served as a Standing Committee member and Deputy Secretary of Laiyuan County in Hebei province since 2009. Mr. Tian received the title of Senior Engineer in 1997 and holds a Bachelor of Mining Engineering degree from Xi’an University of Architecture and Technology and a Masters of Business Administration from the University of Texas at Arlington.

Stepping aside from the Alderon Board to allow for the appointment of the Hebei nominees is Mr. Stan Bharti. Mr. Bharti was one of Alderon’s founding directors and he has been instrumental in attracting the necessary capital to support its development. Mr. Bharti, through Forbes & Manhattan, Inc., will continue to advise Alderon on a consulting basis and Alderon will retain the benefits of his experience and expertise. The Board would like to acknowledge and thank Mr. Bharti for his significant contributions to the Company’s development to date.

[jjsto]

Grandich Update:

http://www.grandich.com/2012/09/grandich-client-alderon-iron-ore-11/

[SouthernYankee]

Has anyone visited these areas like Labrador and/or the rest of Newfoundland? The pictures on the Altius website are beautiful, but I am trying to comprehend the amount of land that is up there!

[FFHWatcher]

Has anyone visited these areas like Labrador and/or the rest of Newfoundland? The pictures on the Altius website are beautiful, but I am trying to comprehend the amount of land that is up there!

Ever been to Wyoming?  Labrador is 20% larger by area.   Wyoming is desolate.  Wyoming is the least populous state with 2nd least population density and Labrador makes Wyoming look like New York City.  Wyoming has 568,000 people.  Labrador has about 30,000.  Biggest city is Labrador City with something like 7,500 which is close by the Kami project. 

Unless you are a geologist, you haven't visited Labrador City, as a guess.

[LTVALUE]

China continues to move along......


http://www.reuters.com/article/2012/09/07/markets-ironore-idUSL4E8K707L20120907

[naboo]

China won't stop the construction in the near term.  There are still a lot of projects need to be done.

 http://www.businessweek.com/news/2012-09-06/china-approves-plan-to-build-new-roads-to-boost-economy

".....................The approvals on Sept. 5 for a total of 25 new subway and inter-city rail projects are worth more than 800 billion yuan ($126 billion), or 1.7 percent of 2011 gross domestic product, according to HSBC. The spending will run from the second half of the year to 2018, it said. "