ALS.TO - Altius Minerals

[Ross812]

We are sorry, but $14.00/share does not cut it.

 

Reduce the size to raise the outstanding to +/- 30M (institutional investable minimum), elevate the price in a 2nd discovery round, & simply temporarily increase the credit line (incremental 50/50 debt/equity mix). ALS is CF positive, & there is nothing to prevent them from coming back to the market after the Kami financing is announced, & JL is spun out. If the UW marketing support is any good, there should not be no problem with doing a bought deal at a higher price

 

Graceful exit, UW discipline enforced, & they come back as a senior - not a junior.

A 65M best efforts raise with 5% UW fee, & 15% UW over allotment is Howe Street, & bad Howe Street at that. World class, senior royalty firms, don't do their primary financing in Vancouver.

 

SD

 

I'm beginning to think Kami financing is going to be very delayed or may not come through. Why go to the market now with a secondary offer if you felt you were close on the Kami financing? Right now they can sell shares by showing the PMRL royalty and dangling Kami as a carrot. If their carrot i pushed out or cancelled...

[doc75]

Instead of assuming management screwed this up, shouldn't serious consideration be given to the possibility that they and the UW aren't as certain about Kami and JL as most on this forum?  I'm long ALS but frankly this seems like the most likely explanation of current developments, much as Trap suggested earlier.

 

Maybe (likely) I'm just daft.... but if the UW thought they were getting a low risk $20 bill for $14, why wouldn't they exercise the over-allotment?

 

 

[matts]

Altius' assets, both existing & the new ones that are being acquired look really promising. I don't think many, if any, shareholders are questioning Altius' resource acquisition expertise. The quality/value of any of those which are obvious and others which may be not as easily discerned are not the problem. The financing terms are the type you might expect to see in a "liar standing over a hole in the ground" type finance deal. They're really bush league. Non price fixed secondaries are a license to let the underwriters abuse existing shareholders. It doesn't matter if we make money from this investment in the medium/long term or not. Why would Altius agree to a deal structured like this?

 

You might be right, the deal is weird and I don´t like it either. Not knowing th price is confusing and should be punished. However does it matter at this stage? It is already done, over with. Now we have to wait to 12th of may for the deal to close. Either you still like the company or you don´t. Everything that management does cannot be to perfection. I would say ALL other companies in this world make some mistakes. That is how it is.

 

It matters if the quality and integrity of management is a core part of the investment thesis.

 

[Blue Macaw]

Just a few weeks ago I bought more shares for 13,37. A few days before that I went in too early and bought at 14,67. Suddenly 14 is completely crappy and Kami deal is not going through etc etc.???? The over allotment option will not be exercised which is good. I can agree that 14 is in the lower end of the deal but it is not completly horrendous.

[ItsAValueTrap]

Instead of assuming management screwed this up, shouldn't serious consideration be given to the possibility that they and the UW aren't as certain about Kami and JL as most on this forum?  I'm long ALS but frankly this seems like the most likely explanation of current developments, much as Trap suggested earlier.

 

Maybe (likely) I'm just daft.... but if the UW thought they were getting a low risk $20 bill for $14, why wouldn't they exercise the over-allotment?

 

Yes I've been saying all along... Dalton is a really smart guy!  Unfortunately for Dalton and Lawrence Winters, Altius can't say that it has ever discovered a deposit that has turned into a profitable mine.  Not yet at least.  So their prospect generation skills have yet to be proven.  Nonetheless, Altius made a lot of money from wheeling and dealing its prospects.  Dalton is very good at flipping assets.  He understands buying low and selling high.

 

2- It looks like the over-allotment option got cancelled.

 

3- The reason you hire underwriters in the first place is:

a- They can move a large block of stock.  If you want to sell big you gotta pay 'em.  Making the offering smaller goes against the point of having a secondary in the first place.

b- They will promote your stock... if you want to raise more capital in the future.  (Sometimes this does not apply.)

[matts]

Just a few weeks ago I bought more shares for 13,37. A few days before that I went in too early and bought at 14,67. Suddenly 14 is completely crappy and Kami deal is not going through etc etc.???? The over allotment option will not be exercised which is good. I can agree that 14 is in the lower end of the deal but it is not completly horrendous.

 

Few weeks ago you also owned a bigger portion of Altius than you do now. Just keep that in mind.

 

[alertmeipp]

Als is just a small and new royalty company with zero dividend and some iron ore projects that might not be economical to many ppls eyes.

No one is going to pay 20x for it. Be patience. Cash will keep coming in now.

[alertmeipp]

Just a few weeks ago I bought more shares for 13,37. A few days before that I went in too early and bought at 14,67. Suddenly 14 is completely crappy and Kami deal is not going through etc etc.???? The over allotment option will not be exercised which is good. I can agree that 14 is in the lower end of the deal but it is not completly horrendous.

 

Few weeks ago you also owned a bigger portion of Altius than you do now. Just keep that in mind.

 

You can buy more if u are concerned about ownership. We are like one percent above the offerimg price.

[biaggio]

maybe they had to do this deal in order to line up financing for Kami, etc...

 

or

 

maybe ALS, Kami mine etc are not what we thought they were.

 

I found it very unusual that they just did not just borrow the money to buy those royalties especially with low interest rates and institutions reaching for yield. I know there's not much interest in financing a junior mining stock, but I thought the royalties were very valuable especially at 9.4x earning. Maybe they're not what we thought they were either

 

Disappointed.

 

ALS my largest position due to price appreciation--I hate selling though. Will be patient

[doc75]

Just a few weeks ago I bought more shares for 13,37. A few days before that I went in too early and bought at 14,67. Suddenly 14 is completely crappy and Kami deal is not going through etc etc.???? The over allotment option will not be exercised which is good. I can agree that 14 is in the lower end of the deal but it is not completly horrendous.

 

In my view it isn't so much that "suddenly 14 is completely crappy", but rather that the pricing provides an important data point regarding the market (and management's) valuation of the shares.  We have more information today than we had a couple weeks ago.

 

I find it incredibly hard to believe that a guy as shrewd as Dalton would go forward with an arrangement like this if his own risk-weighted valuation of Altius shares was considerably higher than $14.  As others have said, it's really hard to explain the rationale for doing this if Kami financing was expected around the corner. 

 

So how can one not infer something about Kami financing from this deal?  Not necessarily that it's dead, but certainly a shift in probabilities...

 

 

 

[alertmeipp]

I think management thought the pps will be much higher after the deal is closed. it was actually bidding over 17. The agents wanted to get best deal for their clients. Their fee is set already. So why not slap the price down. I bet many selling here will get their shares back from thenoffering. I dont have access so I just buy in market. Unless u are already top up. This is great.

.

[Blue Macaw]

Just a few weeks ago I bought more shares for 13,37. A few days before that I went in too early and bought at 14,67. Suddenly 14 is completely crappy and Kami deal is not going through etc etc.???? The over allotment option will not be exercised which is good. I can agree that 14 is in the lower end of the deal but it is not completly horrendous.

 

Few weeks ago you also owned a bigger portion of Altius than you do now. Just keep that in mind.

 

Yes you are right, we are more now to share the cake but the cake has a much bigger probablity of getting bigger, lots bigger.

[Guest Dazel]

 

 

the original convertible was supposed to be $12.50 at 7% interest....this although disappointing after prelim JL win and Kami getting closer...there are a lot of what ifs...they are done....we are in the worst bear market that anyone in the commodity sector has seen...$14 is a win even though we don't like it. business is about protecting your worst case scenario and Altius can now buy something else if it comes along....

 

I like Dalton with cash in his hands....he will now have the world watching the kami, JL and CDP wins....that will take us where we want to go...

 

$12.50 to $14 and the interest cost savings could be paid out as a dividend now that we have cash-flow for 70 years....buyers now will be very pleased...right Gio!

 

Dazel

[Guest Dazel]

 

 

My thesis is unchanged....if the shares drop Altius will be reducing them but I think you can count a dividend soon....they will be printing cash for a long long time...The stock will forget this soon as Altius exposure will now increase 10 fold with coverage and a dividend.

 

Dazel

[Williams406]

Dazel, I didn't like the convertible debt at $12.50, but it did feature a six-month payback period after deal close (April 28 plus six months) that would have allowed time for Altius to exercise other options. Had Altius been able to pay that back before conversion ($50 million if memory serves), via equity raise post Kami or JL news, there is some appeal there relative to this equity financing.

 

Absent information to the contrary, it's tough to argue against negative news with Kami. Seems the best explanation for an equity raise on these terms. The basic thesis here remains positive, but I just picked up a 12-year Demerara rum instead of the 15-year. Still very good, but $10 cheaper.

 

 

[sarganaga]

I bought more today. Obviously the financing terms weren't great, but I'm willing to cut them some slack & give them some time to make magic with the assets.

[giofranchi]

As I have already said, too much speculation for my tastes…

 

I like to keep it simple:

 

1) Do I want to partner with management? My answer, even after the equity offering, is YES.

2) Do I like a royalty business? My answer, obviously, is YES.

3) Am I paying a fair price? My answer, even without Kami, is YES.

 

Today I have bought more. :)

 

Gio

 

[Blue Macaw]

As I have already said, too much speculation for my tastes…

 

I like to keep it simple:

 

1) Do I want to partner with management? My answer, even after the equity offering, is YES.

2) Do I like a royalty business? My answer, obviously, is YES.

3) Am I paying a fair price? My answer, even without Kami, is YES.

 

Today I have bought more. :)

 

Gio

 

You will not regret it. I am beginning to feel that 14 is the value without Kami....I would´ve bought more if I had the money. Will get them end of month. Too bad

[phil_Buffett]

As I have already said, too much speculation for my tastes

 

I like to keep it simple:

 

1) Do I want to partner with management? My answer, even after the equity offering, is YES.

2) Do I like a royalty business? My answer, obviously, is YES.

3) Am I paying a fair price? My answer, even without Kami, is YES.

 

Today I have bought more. :)

 

Gio

 

You will not regret it. I am beginning to feel that 14 is the value without Kami....I would´ve bought more if I had the money. Will get them end of month. Too bad

 

me too blue macaw  ::). exactly the same Situation. begin of may i have new Money for altius

[Blue Macaw]

 

 

the original convertible was supposed to be $12.50 at 7% interest....this although disappointing after prelim JL win and Kami getting closer...there are a lot of what ifs...they are done....we are in the worst bear market that anyone in the commodity sector has seen...$14 is a win even though we don't like it. business is about protecting your worst case scenario and Altius can now buy something else if it comes along....

 

I like Dalton with cash in his hands....he will now have the world watching the kami, JL and CDP wins....that will take us where we want to go...

 

$12.50 to $14 and the interest cost savings could be paid out as a dividend now that we have cash-flow for 70 years....buyers now will be very pleased...right Gio!

 

Dazel

 

I think Dalton is very good at finding cheap deals and selling them expensive. I am actually very happy that we bought CDP. Nobody wants coal yet it is the most abundant and cheapest of all fuels. Also located in many countries which means that you are not relying on anyone else when it comes to energy. (Oil and gas more than 54 % are located in middle east and russia). Potash has never before been under my radar but I like the fact that the price is low at the moment (still heading south) and that the Chinese are interested in buying up resources. It seems we got a good deal (low coal price and low ptash price)

[giofranchi]

I am beginning to feel that 14 is the value without Kami....

 

A business keeps evolving: without Kami, management will find other ways to keep growing. Therefore, I don’t think the right question is: what is ALS worth without Kami? Instead, I ask myself: how fast can ALS grow without Kami?

My answer is: if ALS without Kami grows half as fast as it grew in the past, today we are paying a fair price (no, sorry!, we are paying a great price! ;)).

 

Ok, I know… I am boring… because I keep saying the same things over and over again from page 190 (more or less) of this thread… ::)

 

Gio

 

[Guest Dazel]

Their business is incredible...what has been lost with the financing pull back is the incredible cash machine it is now but more importantly what it will become...

 

Pro forma carved out cash-flows for 2012 $39m and 2013 $36m in the prospectus....these totals will grow exponentially over Altius life time...which will include asset sales, royalty cash flow, additions of internal royalty cash flow and more acquisitions which may happen sooner than you think.

 

The new Altius is going to turn some heads.

[alertmeipp]

Encana is doing ipo for its royalty, 18x fcf. Seems rich compare to herem

[BRK7]

Their business is incredible...what has been lost with the financing pull back is the incredible cash machine it is now but more importantly what it will become...

 

Pro forma carved out cash-flows for 2012 $39m and 2013 $36m in the prospectus....these totals will grow exponentially over Altius life time...which will include asset sales, royalty cash flow, additions of internal royalty cash flow and more acquisitions which may happen sooner than you think.

 

The new Altius is going to turn some heads.

 

Dazel,

 

Thanks for the many insights you've shared on Altius over time.  I am a big fan of Altius and the acquired royalty portfolio, but…

 

Unless I am mistaken (please correct me if so), the pro-forma “carved out” cash flows to which you are referring are for the entire acquired PMRL royalties.  I see the $36M and $39M figures on page F-17 of the prospectus. 

 

However, Altius acquired 52.4% of the PMRL royalty, not the entire royalty.  Adjusted for Altius’ ownership percentage, the “cash provided by operating activities” figures would be $18.9M and $20.4M, respectively.

 

Also, you state that those figures will grow exponentially over time.  While I certainly hope that the growth of Altius’ aggregate cash flow will be “exponential” over time, I don’t follow why you would expect exponential growth from the “carved out” (PMRL) royalty steam itself.  Maybe I’m missing something here?

 

Thanks.

 

[Blue Macaw]

The new Atius will turn some heads....

 

Just looking at the fact sheet on their webpage and you will notice many nice things. It has taken a long time to build what they have built. That is how it is in this business. Incredible work.

 

Now we have the royalty business which at current moment will have a revenue of 20 (coal) 5,5 (potash) 3,0 (Voisbay) 0,2 (777 mine) = 28,7 Million

G and A cost of about -4 Million

Finance -9,2 Million

Amortization -10 million

Exploration costs -2 Mililion

Dividends 0,03*32,2 = - 1 Million

Etc etc

 

This business was bought at a very low price due to the fact that coal and potash have low prices now. This will change but might take some time as things do in this field. These royalties will follow infaltion which to me is very important. Dividends will increase over time but the the main focus is to bring down debts to more resonable levels. Debt/equity is still around 0,3 which means a healthy company.

 

The rest is just very promising and something they have been working on for a long time. Take Paladin and CMB for example. Drilling is ongoing with 4500 m last year, new drilling program start in august to define resources. The french state owns about 60 % of the resources (loan for 200 M and as safety 60 % of resources). Paladin will get this one built as soon as prices are ok. They are struggling as it is now with Uranium prices at a low level. Chinese have however bought a part of mine. CMB will give Altius at least 8 M when it gets going. Likely start at 2018-2020.