ALS.TO - Altius Minerals

[original mungerville]

Does anyone know if Fairfax or Chou has looked at Altius? Not that I would like to see Fairfax involved (many of us here have learned from past painful experience).  But does not Altius seem to be exactly the type of investment they both look for or am I missing something?

 

China imploding leaving commodities at half their current prices significantly impairing the build out of Kami and Julienne and reducing the value of the royalty deal. That would be the major concern.

[original mungerville]

 

Once the JL deal is negotiated and finalized with the government (gov will want it done quickly) we will get more appreciation...after the PMRL deal is done I will post on what a $70m per annum royalty for 30 years would cost in the marketplace if you were to buy it.

 

Definitely a no brainer - as long as commodity values don't drop in half from a hard landing in the Chinese economy. From my perspective, this is the only material risk at this point.

[cwericb]

"China imploding leaving commodities at half their current prices significantly impairing the build out of Kami and Julienne and reducing the value of the royalty deal. That would be the major concern."

 

Good point, but if China implodes it won't only be commodities that will be in trouble.  :( 

 

However I still find it surprising that Chou and Fairfax have not been dabbling in this stock given the long term potential. Altius just seems to be such a really good fit for Chou & Watsa and perhaps better than some of their present investments. Perhaps it is on their radar and they are waiting for a crash in China or a major correction to jump in.

[FFHWatcher]

"China imploding leaving commodities at half their current prices significantly impairing the build out of Kami and Julienne and reducing the value of the royalty deal. That would be the major concern."

 

Good point, but if China implodes it won't only be commodities that will be in trouble.  :( 

 

However I still find it surprising that Chou and Fairfax have not been dabbling in this stock given the long term potential. Altius just seems to be such a really good fit for Chou & Watsa and perhaps better than some of their present investments. Perhaps it is on their radar and they are waiting for a crash in China or a major correction to jump in.

 

Fairfax has a $20B+ portfolio.  $500k is the daily trading value of Altius.  Market cap is $400M or so. FFH would have to buy 100% of the trading volume for about 80-90 trading days to buy a 10% position worth $40M or so.  As a current shareholder, I am totally up for that! lol

I can't think of anything that Chou or FFH has bought in the last 10 years that is similar to ALS.  Now, if ALS gets their income stream going for a few years and then something blows up HUGE and has investors running for the exit signs, and at the same time ALS gets into a cash crunch and they need $100M within a couple of weeks, and FFH can negotiate a 10% interest rate on a note that is convertible at a really low multiple in 2-3 years, than maybe...FFH would step up.

[cwericb]

Well since I've been burned before by Fairfax I'm quite happy to see ALS staying under their radar although there has been times when Fairfax has dipped into smaller operations, but I would think Francis might be interested. Anyway, there should be interesting times ahead...

[Guest Dazel]

 

Fairfax and Altius would have to make a plan to consolidate the industry...and on that premise Fairfax would (back) invest in a convertible bond issue to them. It would have to be long money and Fairfax would have to be patient for Altius to find the additional royalty buys at the right price while they continued to develop their spin out model.

 

Fairfax would give Altius immediate credibility and the world would know who they are...Altius would only need to raise the money to buy something else.

 

Fairfax would put a Leucadia like company in their stall for a Fair and Friendly deal...Altius track record return is better than Fairfax. Altius will have returned 29% per annum if they close out 2014 at $15.78...you usually have to pay a "lot" more to buy a company like Altius. with their pipeline I believe they will catch Franco Nevada's 40% per annum. In other words, they would get a very good price if they bought at $20 or below.

 

commodities have crashed since 2007.....we are in a buyers market it is the time to buy great assets for good prices. Fairfax is already fully hedged against the China implosion that is a worst case scenario.

 

Dazel.

[cwericb]

Personally I think the "Fair & Friendly" aspect of Fairfax went out the window with the FBK deal, at least as far as shareholders of FBK were concerned. However on a corporate level, a relationship between FFH & ALS would be very interesting and probably a valuable investment and a good fit for both.

At present I am quite content to be invested in both companies for the long term.

[Guest Dazel]

 

 

I don't think anyone would want to wrestle with Brian Dalton! You don't have to worry! Fairfax would have competition if Altius decided to got that route they a have A very prominent group of world class shareholders including your selves on this board.

 

 

[Liberty]

Dazel, sorry if you've mentioned this in the past and I forgot, but I'm curious to know if you've personally met Brian Dalton (and the rest of the Altius team)? As always, thanks for your work on this idea.

[TwoCitiesCapital]

This is how I think about Altius:

 

1) current price is a fair price for Sherritt royalty assets, non-iron royalties, and other investments, and the continued performance of Dalton and team. Kami and JL are essentially free at this price.

2) if China goes through severe depression mode then short term pressure will persist and economic consequences and delays may occur at Kami and JL which are still free to you.

3) long term, inflation and further development of EM nations (like India) and future recovery of China will still direct long term supply and demand dynamics affecting iron ore prices which are already significantly off of their highs.

4) supply and demand are only short term determinants at any given time. Expected shifts in S/D can result in very volatile prices but cost of production prevails in the long term. If there's not much supply below $100 then $100 is our long term floor and still leads to very favorable economics for Kami and JL.

5) prolonged weakness provides a better environment to reinvest our 16M annual income at.

6) lastly, we have the added benefit of ulterior motives driven by economic factors that aren't mine specific that give our individual projects more wiggle room in terms of getting it done at lower iron prices.

 

I think long term downsides is pretty well covered. The upside will take care of itself. Just a matter of how many multiples we all will earn in our investment.

[Guest Dazel]

 

Liberty,

 

No. Altius is a small busy group...I keep threatening to go back to Newfoundland (I have been there several times)... But it has not worked out...I have done my homework on Brian and his team and the result is obvious....integrity, energy and smarts.

I do not meet with the CEO's of the companies we own as a habit I think Brian and I may have too much in common so it may not be a good idea and they are certainly  a lot smarter than me...

 

As for the "wrestling" comment...Dalton when asked who would play him in a movie he responded " Russell Crowe" and if you heard him speak you would know why. Russell Crowe interestingly enough is in a band with "Great big sea's" Alan Doyle of Newfoundland.

 

However, the "Rock Star" of Newfoundland is Dalton.

 

Dazel.

 

 

 

 

[Liberty]

 

Liberty,

 

No. Altius is a small busy group...I keep threatening to go back to Newfoundland (I have been there several times)... But it has not worked out...I have done my homework on Brian and his team and the result is obvious....integrity, energy and smarts.

I do not meet with the CEO's of the companies we own as a habit I think Brian and I may have too much in common so it may not be a good idea and they are certainly  a lot smarter than me...

 

As for the "wrestling" comment...Dalton when asked who would play him in a movie he responded " Russell Crowe" and if you heard him speak you would know why. Russell Crowe interestingly enough is in a band with "Great big sea's" Alan Doyle of Newfoundland.

 

However, the "Rock Star" of Newfoundland is Dalton.

 

Dazel.

 

Great, thanks. I've been to NL once, and it is an amazing corner of the world.

[Guest Dazel]

http://business.financialpost.com/2014/04/24/potash-corp-of-saskatchewan-inc-profit-plunges-but-ceo-bill-doyle-sees-signs-demand-is-on-the-rebound/

 

 

Did Altius pick a Potash bottom?

 

 

[Blue Macaw]

http://business.financialpost.com/2014/04/24/potash-corp-of-saskatchewan-inc-profit-plunges-but-ceo-bill-doyle-sees-signs-demand-is-on-the-rebound/

 

 

Did Altius pick a Potash bottom?

 

Don´t know really because I was not following potash berfore. But apparently the royalty is now down to 5,5 million a year for altius instead of 10. Coal seems to hang in there around 20 per year.

[cwericb]

Interesting little jump in Alderon today - up about 6% ($0.10- 0.12) on double average volume. Any news? Or just people realizing it undervalued. If it behaves as usual, it will probably slide back at the end of the day.

 

All the positive news about Alderon drove the price up to about $2.00. Since then, with no negative news and in face of even more positive news, the price slid back into the $1.60 range - about exactly where it was before the power agreement.

 

Now I realize the price of ore has had an impact, but is it possible that Altius has been dumping some of its shares in Alderon and that is why the price has kept the price down? And what's with someone dumping shares at the end of the trading day depressing the price? Coincidence?

[Liberty]

Now I realize the price of ore has had an impact, but is it possible that Altius has been dumping some of its shares in Alderon and that is why the price has kept the price down? And what's with someone dumping shares at the end of the trading day depressing the price? Coincidence?

 

I doubt it. They are likely prevented from selling at this point because they probably have a lot of non-public info about upcoming announcements and deals, but even if they weren't, unless they knew bad stuff was on the horizon, it's much better to wait because lifting the uncertainty about the mine should provide them with a better price down the road.

 

I also wouldn't be surprised if when they sold, they dumped the shares as a block to a strategic buyer, and not trickle them out in the public market (volumes are way too low).

[Guest Dazel]

 

 

Altius would have to report sales of Alderon...they have not sold any. I would imagine that Alderon is very busy with different offers and financing options. Labrador is just thawing out so they are not in hurry to start the build out. Wabush assets are also being looked at as well....

The SD scenario of combining JL, Wabush, and Kami is a long shot but they will be looking at all their options....Altius will be focused on the PMRL closing....exciting times.

 

Dazel.

 

 

[Guest Dazel]

http://www.cnbc.com/id/101582309

 

David Einhorn's short on Fortescue was closed at a 22% loss...his U.S steel short  is also a big loser right now. He is a very very smart guy...why would he cover at loss if iron ore was supposed to plummet like the whole world is saying? I suspect because he sees what happens when the price drops...chinese iron ore production stops...which is likely happening now.

[Blue Macaw]

The new presentation that was on their webpage has been removed. The old one is in again?

[hohi]

The new presentation that was on their webpage has been removed. The old one is in again?

 

I noticed that too some days ago. Strange. Maybe they put out some info that was still not for the public eye? ;)

[giofranchi]

http://www.cnbc.com/id/101582309

 

David Einhorn's short on Fortescue was closed at a 22% loss...his U.S steel short  is also a big loser right now. He is a very very smart guy...why would he cover at loss if iron ore was supposed to plummet like the whole world is saying? I suspect because he sees what happens when the price drops...chinese iron ore production stops...which is likely happening now.

 

This is very interesting! And I tend to agree. :)

Thank you,

 

Gio

[SharperDingaan]

The new presentation that was on their webpage has been removed. The old one is in again?

 

should tell you

.... they are about to make some announcements

.... they are emphasizing they already have VB & Kami royalties

.... there is a very high probability they have the additional CDP royalty (would have known Monday/Tuesday this week)

.... they have to wait on posting until after the announcements ... implies material change

.... they have to announce soon, as the Q1 lock-up is rapidly approaching

 

Add it up & it looks like an announcement by end of day today.

May we all do well!

 

SD

 

 

 

[Williams406]

http://altiusminerals.com/press-releases/view/284

 

Still waiting on PMRL/CDP closing, but Genesee ROFR waived. Also interesting that 50% CDP closing with Ontario Teachers... deferred up to 30 days after main deal closing. That's $21 million Altius has a bit more time on, which is close to the "gap" between cash+debt vs. total Altius purchase amount. I haven't been sweating that gap, just very curious how Altius chooses to fill it.

[zippy1]

Altius (TSX: ALS) Confirms Waiver of Right of First Refusal Over Genesee Royalty

http://finance.yahoo.com/news/altius-tsx-als-confirms-waiver-113000424.html

[/sT. JOHN'S, NEWFOUNDLAND--(Marketwired - Apr 25, 2014) -  Altius Minerals Corporation (ALS.TO) ("Altius") is pleased to announce that a third party has agreed to waive its right of first refusal over the Genesee coal royalty forming part of the coal and potash royalty portfolio of Prairie Mines & Royalty Ltd. in which Altius will indirectly own a 52.369% interest (the "Prairie Royalties Acquisition"). In addition, a final order has been granted by the Court of Queen's Bench of Alberta approving the plan of arrangement under which Altius will complete the Prairie Royalties Acquisition and the acquisition of Sherritt International Corporation's 50% interest in Carbon Development Partnership ("CDP") (collectively, the "Acquisition"). It is currently expected that the Acquisition will close by April 30, 2014, subject to the fulfillment of all other closing conditions.

Altius has also entered into a definitive agreement with OTPPB SCP Inc. ("OTPPB"), a subsidiary of Ontario Teachers' Pension Plan Board, pursuant to which Altius will indirectly acquire OTPPB's 50% interest in CDP (the "OTPPB CDP Acquisition"). The OTPPB CDP Acquisition is expected to close within 30 days of the closing of the Acquisition. Following the OTPPB CDP Acquisition, Altius will own 100% of CDP.

quote]

[SharperDingaan]

Nice to see .... but It might also be a very good idea to publish a high level summary of the anticipated PMRL/CDP transaction, & associated financing, after trading at end-of-day today. Could be an updated presentation, press release, etc.

 

It is possible this thing could close > Apr-30, with management unable to address the delay - as they are in Q1 lock-up. Publishing an outline at end-of-day today removes that risk, & gives the market/analysts 2 days to process the information content of this anticipated, & very material, transaction. Pass the publication by the TSX sometime today (as a courtesy) ... & all the bases are covered.

 

SD