ALS.TO - Altius Minerals

[bizaro86]

I disagree that an IPO in Canada is a brilliant decision. Disagree strongly, in fact. This is an ESG poster child business with its assets in the USA. They should go public via one of the hundreds of SPACs that are looking for a deal.

bizaro...Would a SPAC build a shareholder base?  It depends on what the goal is for raising capital -- it's party about funding, but it's also about building a set of shareholders that will stick with you for the primary raise and for possible secondary raises.  Raising at inflated values via SPAC is one way to raise funds, but it could be a short-term gain that blunts the business' momentum.

 

- O

 

Maybe. Predicting the future is hard, obviously, but I think they would have a reasonable chance at being a successful SPAC. If they had a bunch of cheap capital they could use it as a bit of a roll-up, maybe even buying royalties from existing projects or tax benefit investors. If they could demonstrate profitable growth, they'd likely be able to keep the high valuation and might be able to build a flywheel type effect. Rollup economics can be very compelling.

 

I think they'll probably end up with a decent valuation publicly in Canada, so it isn't a deal breaker or anything, just a bit of an opportunity for a big one-time gain.

[omagh]

Entry point: $6.65 (March 2020)

Current price: $14.50

Return: 155% annualized in 10 months

 

That seems to be better than such things as the SP500 and Consellation Software, but what do I know.

 

Some of us are doing just fine.

 

Bragging about a short-term trade. Very nice, haha.

 

I'm no good at trading, but I'm not disappointed to instead have been owning Constellation Software for many many years instead of ALS...

 

Lovely -- a brag back.  But, wait, it's a humble brag!  Those are the best.

 

You do realize that the risk / reward for CSU going forward isn't very strong.  49x equity for an EBIT that is compounding at 17% for the last 5 years isn't exactly compelling -- it's a 2% coupon if you value CSU as a pre-tax bond and a 1.1% as an after-tax bond.  LOTS of things beat that 'everything is just a cash stream' valuation without the capital risk, so be sure you know what you're doing with your life's savings and take some profits to live another day.  The business model is based on a roll-up which in most people's experience eventually hits an airpocket that blows a hole in the balance sheet.  Oh, but the software business is sticky and our customers don't leave.

http://financials.morningstar.com/income-statement/is.html?t=CSU&region=can&culture=en-US  17% annualized EBIT growth since 2015.

 

For kicks, a 1.1% coupon compounding at 17% for the next 10 years gets up to a 5% coupon.  That 49x equity would become a 10x equity without the market cap going up and that $380M in earnings would grow to $1.8B which fits nicely into its current $34B market cap at a future 18x earnings ten years from now down from 90x today.  But wait, that sounds like 10 years of ALS. Maybe someone is expecting future investors to pay 90x earnings for a 17% grower?  Maybe that CSU valuation is a bit of luck rather than skill on your part.  But what do I know?  I'm no Robinhood.

[Gregmal]

"Well what did the index do?" is one of the lamest talking points in the investing world. If you cant invest or dont know how to invest, the index/ETF method is the way to go. If you are picking specific companies, its stupid to care about such a trivial thing. In fact, if you are trying to "beat the index", the most likely way to do so is by not obsessing over "the index"...I dont think I've bothered to waste time charting my portfolio against the S&P in years. I just focus on the individual companies I am invested in and the trades I current have on and thats enough. And for all the "you'd have been better off just buying the index" folks out there, I have yet to encounter even one who can tell me the exact date they put their entire portfolio into an index fund and then never touched it again, and were thus "better off"...

[TwoCitiesCapital]

Not certain what has been driven the recent price appreciation - but I'm not mad about it.

[Thrifty3000]

Not certain what has been driven the recent price appreciation - but I'm not mad about it.

 

r/WallStreetBets? haha

[Liberty]

Not certain what has been driven the recent price appreciation - but I'm not mad about it.

 

Commodity stuff generally ripping? Probably not-company specific. Look at BHP or CLF or whatever random stuff

[bizaro86]

Not certain what has been driven the recent price appreciation - but I'm not mad about it.

 

Commodity stuff generally ripping? Probably not-company specific. Look at BHP or CLF or whatever random stuff

 

Thats probably a factor. I suspect the IPO of their renewables business into a hot market for anything green energy is probably a factor as well.

[Thrifty3000]

I believe copper is their biggest swing item. And, copper just reached a fresh nine-year high above $4 a pound, up 93% from its late April lows. Inflation alert?

[reader]

I believe copper is their biggest swing item. And, copper just reached a fresh nine-year high above $4 a pound, up 93% from its late April lows. Inflation alert?

 

Yes, copper is on a tear, with the March contract closing on  Friday at $4.067 more than double from calendar 03/20 of just over $2.

 

https://www.cnbc.com/quotes/@HG.1

 

 

Also, Iron ore came out strong from the Chinese new year holiday with FE65 at c$195

 

I'd read an announcement from $IPI that they're raising the price of potash by $50

 

[TwoCitiesCapital]

I believe copper is their biggest swing item. And, copper just reached a fresh nine-year high above $4 a pound, up 93% from its late April lows. Inflation alert?

 

Yes, copper is on a tear, with the March contract closing on  Friday at $4.067 more than double from calendar 03/20 of just over $2.

 

https://www.cnbc.com/quotes/@HG.1

 

 

Also, Iron ore came out strong from the Chinese new year holiday with FE65 at c$195

 

I'd read an announcement from $IPI that they're raising the price of potash by $50

 

Things are falling into place. Just need some announcement on Kami and this is probably a $25-30/stock in a year or two.

[reader]

 

A webinar from Feb 17, 2021, at 9:45 AM EST.

 

"Altius Minerals Corporation and John Tumazos Very Independent Research, LLC"

 

"Altius Minerals works to make an IPO of its ARR TSE-listed “Altius Renewable Royalties” renewable energy portfolio to raise C$100 mm and quantify Altius’ retained two-thirds stake at a significant value nearer C$200 mm..

 While progress has been fine on the 4.08 mmt Pickett Mountain zinc polymetallic deposit in Maine"

 

 

https://register.gotowebinar.com/recording/recordingView?webinarKey=964618455920349196&registrantEmail=talran%40yahoo.com

 

[reader]

 

An Altius' portfolio company.

 

"Wolfden Resources and John Tumazos Very Independent Research, LLC"

 

A webinar from Feb 17, 2021 at 4:00 PM EST.

 

 

https://register.gotowebinar.com/register/2213533923269875981

 

 

[nostradamus]

https://www.wolfdenresources.com/wp-content-uploads-2021-02-wlffeb222021q-pdf

 

Thunder Bay, Ontario, February 22, 2021 – Wolfden Resources Corporation (WLF.V) (“Wolfden” or the “Company”) is pleased to announce additional positive drill results from its wholly owned Pickett Mountain Property in Northeastern Maine.  Results include all assays for the final six holes (see Figure 1.) that targeted the Footwall Zone (FWZ) that was discovered approximately150-200 metres north of the Pickett Mt. deposit.  This massive to semi massive sulphide to stringer sulphide lens continues to deliver better than expected silver values.  The results to date exhibit continuity and exceptional grades that suggest the FWZ lens could potentially add significant resources to the overall project if the planned drill holes as indicated on Figure 1. yields positive results.

[Thrifty3000]

 

A webinar from Feb 17, 2021, at 9:45 AM EST.

 

"Altius Minerals Corporation and John Tumazos Very Independent Research, LLC"

 

"Altius Minerals works to make an IPO of its ARR TSE-listed “Altius Renewable Royalties” renewable energy portfolio to raise C$100 mm and quantify Altius’ retained two-thirds stake at a significant value nearer C$200 mm..

 While progress has been fine on the 4.08 mmt Pickett Mountain zinc polymetallic deposit in Maine"

 

 

https://register.gotowebinar.com/recording/recordingView?webinarKey=964618455920349196&registrantEmail=talran%40yahoo.com

 

Thanks for sharing this. Chad offered some optimistic projections about their various initiatives that I've never heard before.

 

He expects the project development portfolio - with junior equities currently worth $55 million - to produce 10x that value over the "fulness of the cycle." So, that's $500 million of value.

 

He expects the value of ARR to be $150 to $200 million for Altius from the outset of the IPO, and for ARR to eventually dwarf the value of the originating commodities business; because of the favorable timing, circumstances, partnerships, demand for capital, etc. So, that's at least another $500 million of expected future value.

 

They also discussed the current economics of iron ore making Alderon feasible, which would add a couple hundred more million of value to Altius should Champion decide to start production. (There's an interesting conversation at the 28 minute mark about China demand outpacing world supply - which makes projects like Alderon feasible.)

 

If you add this to Brian Dalton's comment a few months ago expecting the Potash assets to likely be worth north of $400 million in a decade, you're looking at a management team that seems pretty confident they're building a business that will be worth over $2 billion by 2030. That's certainly a lot higher than I had been forecasting in my financial projection, but I'm glad to hear management is thinking big.

 

 

 

 

 

[Williams406]

Anglo Pacific making similar (to Altius) operational moves and marketing hard their pivot from thermal coal.  AP sold a big chunk of their LIORC stake to fund VB Cobalt stream.

 

https://www.anglopacificgroup.com/wp-content/uploads/2021/02/Anglo-Pacific-Voiseys-Bay-Cobalt-Stream-Acquisition-Announcement-FINAL.pdf

[nostradamus]

https://www.altiusminerals.com/storage/press-releases/2021-02-25-altius-announces-arr-ipo-pricing-final-1614280511.pdf

 

15.6m shares at CA$11 each = CA$172m

 

Not bad!

[SouthernYankee]

Pardon the beginner question:

 

Does Alderon stock continue to have any value? Trying to find news about what will happen up there is quite the tough job.

 

Cheers!

[bizaro86]

Pardon the beginner question:

 

Does Alderon stock continue to have any value? Trying to find news about what will happen up there is quite the tough job.

 

Cheers!

 

Maybe. Champion paid some cash for the Kami project. There is a receiver going through assets and liabilities now, and if there's anything left shareholders will get it.

 

The receivers website is here: https://www.insolvencies.deloitte.ca/en-ca/pages/Kami-Mine.aspx

 

I present that as a place to start digging not as a finished conclusion of any kind. But given the huge run up in Alderon shares in the last few days if I wasn't positive they'd be worth more than the current price and I owned some I'd be looking pretty hard at selling.

[TwoCitiesCapital]

Beginning of a sustainable uptrend in inflation? 

Or another temporary spike before years of disinflation like post-2011?

 

[Thrifty3000]

On 5/8/2021 at 12:04 AM, TwoCitiesCapital said:

Beginning of a sustainable uptrend in inflation? 

Or another temporary spike before years of disinflation like post-2011?

 

Copper is Altius’s biggest swing item. 
 

The blurb below on copper economics was in Almost Daily Grants on Friday. Seems like conditions are right for higher long term copper prices (which is exactly what Altius’s management has been saying for years).

 

I’m looking forward to the investor day presentation this Thursday to get more insights.

 

From Almost Daily Grants:

 

Captain of Industry

The doctor is in.  Copper futures prices reached $10,417 per ton in London this morning, eclipsing the prior record high set in 2011 with a 30% year-to-date gain and more than doubling from their March 2020 nadir.

Broad economic acceleration has underpinned that rally, while the emergence of popular green energy pillars like electric vehicles and solar power installations (which both require ample copper to operate) has put further wind in the bulls’ sails.  

Accommodating the brisk demand for the industrial metal will be no easy task, as much of the globe’s more accessible deposits have already been tapped. “You will need $15,000 copper to encourage a lot of this more difficult investment,” Ivan Glasenberg, CEO of commodity giant Glencore, told listeners-in at a Financial Times event yesterday.  Suppliers “are not going to go to those more difficult parts of the world unless they’re certain [a project is economic].” Industrywide capital expenditures will foot to $16.2 billion this year and remain near that level through 2023, analysts at ANZ bank predict.  That’s only marginally above the $15.2 billion in capex during the pandemic-addled 2020.

Government diktat could serve to aggravate the sluggish supply picture. Yesterday, Chile’s lower house approved a bill increasing taxes on copper producers towards potentially confiscatory levels, via a sliding scale depending on the price of the red metal. The legislation, which will now advance to the Chilean senate, could discourage production in the country that accounts for nearly one-third of global supply.  Enactment of the new tax schedule “would at the very least delay any new capacity, extending the lengthy timeline to bring on a new mine,” comments Bloomberg analyst Grant Sporre. 

While recent virus- and green energy-related developments have underpinned the rally, natural resource investors Leigh Goehring & Adam Rozencwajg, believe the stage for the copper bull market was set long ago.  In their soon-to-be-released first quarter investor letter, Goehring & Rozencwajg point out that a surge in high-quality supply beginning in the late-1980’s has given way to steady depletion in both the quantity and quality of copper extracted. For instance, the average head grade of remaining reserves (which measures the metal concentration within the copper ore) was less than 0.6% last year, compared to more than 1% in the mid-1990s.  

Similarly, data from S&P show that new discoveries have declined precipitously in recent years, averaging 8 million tons annually since 2010, compared to 50 million tons per year over the prior two decades.  That’s despite a trebling of copper industry exploration budgets to $2.5 billion annually in the post-2010 period from the 20 year prior average.  The pair put it plainly: “We are strong believers that copper prices are heading significantly higher.” 

The Goehring & Rozencwajg Resources Fund (ticker: GRHIX) is one way that commodity bulls can express their views.  The open-end fund, which sports $83.3 million in assets and charges a 92 basis point expense ratio, is up 43.4% year-to-date and trades at its highest net asset value since October 2018.

[TwoCitiesCapital]

Did Altius mention something negative on the earnings call yesterday? 

I know broader markets were down, and this thing sometimes moves erratically on its own, but was just surprised to see it down 10% in a single day in an environment where it seems it should be firing on all cylinders with Copper/Iron prices being what they are.

Just seemed too much of a coincidence that it happened on the same day they hosted the earnings call. 

[omagh]

Investor day presentation.
https://altiusminerals.com/storage/webcasts/altius---investor-day-vpub2-1620911300.pdf

[Williams406]

Champion's David Cataford joined the Altius investor day presentation. He stated "targeting Kami for quite a while" giving me the impression not just an opportunistic, distressed add-on. Feasibility study being re-done to focus on highest-grade ore. I think I heard some reference to 8-12 million tonnes/year.

[omagh]

7 minutes ago, TwoCitiesCapital said:

Did Altius mention something negative on the earnings call yesterday? 

I know broader markets were down, and this thing sometimes moves erratically on its own, but was just surprised to see it down 10% in a single day in an environment where it seems it should be firing on all cylinders with Copper/Iron prices being what they are.

Just seemed too much of a coincidence that it happened on the same day they hosted the earnings call. 

Who knows? The whole mining/metals aftermarket is littered with speculators who are very reactive as a group.  They are Graham's Mr Market.  A value-oriented approach ignores the daily fluctuations.

The free cash flow story is still intact.  The royalty coupon stream has increased.  The long-term call option on their project generation portfolio is still intact.  They spun out ARR.  They repurchased shares.

[TwoCitiesCapital]

3 hours ago, omagh said:

Who knows? The whole mining/metals aftermarket is littered with speculators who are very reactive as a group.  They are Graham's Mr Market.  A value-oriented approach ignores the daily fluctuations.

The free cash flow story is still intact.  The royalty coupon stream has increased.  The long-term call option on their project generation portfolio is still intact.  They spun out ARR.  They repurchased shares.

Sure - was just wondering. Had recently sold a handful of shares at C $17.50 and was wondering about repurchasing them after the weakness over the last two days. Wasn't certain if it was justified or not, but think I've decided to hold off for now and see if prices get even better.