ALS.TO - Altius Minerals

[Guest Dazel]

Gio,

 

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/6/4_Where_Sprott_Is_Deploying_Capital_%26_A_Hong_Kong_Surprise.html

 

 

Rick rule is better at explaining it...Altius PG business will benefit greatly from the change in the cycle...it looks like we may have bottomed out with all of the negativity around. Kami will get built...JL will get built...the infrastructure is there.

 

CDP will turn out to be very valuable....Potash is rebounding and we have no choice but to use coal.

Altius stole these assets...at maximum pessimism in a the same liquidation scenario Rick Rule

explains. The other projects are not in vogue as the world is not paying attention to food, energy and infrastructure at the moment....that will change in the thoughts of north America... And Altius will do very well...

Asia is not getting the same news we are...they are "very" concerned about inflation and prices..they are looking to secure future natural resource assets. We are seeing India start to wake up and we

may have bidding wars for real things in the not to distant future. These prices rise and fall quickly we have seen the fall. The rise is quicker...

 

The good thing is we get the PG business for free at Altius...if the world liked "stuff" right now we

would have to pay for that cheery consensus. That is the backbone of value investing...the difference

at Altius is we get the best business in the world "their royalty portfolio at a market discount as well...that is very rare indeed.

 

 

Others watching and listening you can wait for the tide to turn but you will have to pay for it. Templeton used to say that he wanted to buy "at maximum" pessimism. The PG part of Altius is at

this point right now...however, our margin of safety is in the Buffett business..the royalty portfolio.

The PG business if you include Kami and JL may turn out to be worth an absolute fortune as we

know.

 

 

 

Dazel.

 

 

 

 

[giofranchi]

The good thing is we get the PG business for free at Altius...if the world liked "stuff" right now we

would have to pay for that cheery consensus. That is the backbone of value investing...the difference

at Altius is we get the best business in the world "their royalty portfolio at a market discount as well...that is very rare indeed.

 

Thank you very much, Dazel! You already know I agree. ;)

But you also know how much relevance I attach to an owner/manager who should be both very skilled and very reliable… Therefore, as the most knowledgeable person about ALS that I know of, I’d really appreciate if you'd share with us your view on ADV’s management. Specifically:

 

does ALS deal with ethical people? If your answer is yes, why does ADV's management insist on saying Kami's cost of production will be around $43 per ton? Why do they insist on saying Kami’s iron ore concentrate is among the best in the world, if it is not so?

 

Cheers,

 

Gio

[giofranchi]

Dazel,

I know there might not be an easy answer to my question… so many shades of grey!… just curious to know your view about it anyhow! ;)

 

Gio

 

[SharperDingaan]

But why should ALS initiate a dividend other than to short term boost their stock price? There should be plenty of opportunities in the resource sector to spend money on.

 

ALS has repeatedly said they will dividend asap; the excitement over the prairie royalties was because the royalty flow allowed the FCF to occur much sooner than it otherwise might. ALS also needs to trade as a royalty coy or it will be acquired, & the clock is ticking on them - cant trade as a royalty coy if there is no dividend.

 

As soon as a dividend appears, valuation methodology should reflect the 2 stage dividend model; something the non institutional shareholder base refuses to recognize, baring 'show me'. When 'show me' occurs in a few weeks it will be 'I wish I had hung on, or bought more'. Contrary indicator.

 

We may also keep in mind that ALS doesn't just develop & collect royalties, it also trades them; & does it very well.

Their debt level may well drop a lot faster than many would think.

 

SD

 

 

 

 

 

 

[Andy Dufresne]

SD et al.

 

Your comment makes me scratch my head even more about management - while they are not in the driver's seat, so to speak, with respect to the Kami financing, they have complete control over the dividend initiation ... so why is there no dividend? Why is there no dividend if the significance of the lack of a dividend is that the company gets bought up - shouldn't this be a sufficient motivator?

 

The Board apparently decided to initiate a dividend in 2013 - see the final slide of the 2013 AGM ... its nearly July 1st so where is it? Worse, the word "royalty" is found 66 times in the 2014 Prospectus .. the word "dividend" - ZERO.

 

So I ask - WHEN will there be a dividend ? WHEN will management communicate properly with owners? WHEN will Kami get financed or spun-off?

 

Any inputs as to a concrete WHEN are highly appreciated!!

[Guest Dazel]

Gio,

 

 

I have met and discussed Altius with management recently. I cannot comment on that...other than to say I was impressed with their Candor and their thinking. Brian Dalton is all that you think he is...and he is just getting started so your thesis is in intact.  All of us want Altius share price to sky rocket "today" including him but he is running a business and has to look down the road. He is doing that I can assure you.  He is the kind of old school partner that we all want. If someone is questioning his integrity or trustworthiness they are "way" off....and quite frankly that is an opportunity not unlike the fortune we made when Prem Watsa's character was being questioned...however, Altius has a much better business than Fairfax did at that time.

 

Dazel

[giofranchi]

All of us want Altius share price to sky rocket "today"

 

No, no, no!!!! I just needed such a great answer as yours, and the share price to stay depressed for a very long time! ;)

Thank you so much!

 

Gio

 

PS

I am buying more today :)

[SharperDingaan]

SD et al. Your comment makes me scratch my head even more about management - while they are not in the driver's seat, so to speak, with respect to the Kami financing, they have complete control over the dividend initiation ... so why is there no dividend?

 

The FCF did not appear until AFTER they completed the recent royalty purchase; ie: <2-3 months ago.

The July meeting will be the boards first since completion of the purchase; ie: it is the boards first opportunity to initiate.

They have repeatedly stated intent to dividend asap.

 

No concrete date, but one has to think the odds around the July meeting are very high.

 

SD

 

 

 

[cwericb]

I may be naive, but I’m not sure what all the panic is about here. For a board that is supposed to be “value investor” orientated everyone sure seems to be looking for things to happen right here and right now.

 

The financing for Kami was always a big question mark. So what’s new there? Sure Morabito is probably making some excuses for not securing financing yet, but what do you expect him to say? I can’t get financing right now - all is lost! One would assume he is still working on financing or perhaps a sale of Alderon’s interests to someone who can get financing.

 

It is not news that the price of ore is low and trending lower. Nobody knows if it has reached its low point, it could go substantially lower yet, but prices swing too far and tend to rebound back above the lows, it is just that we do not know where the low is. Right now there is a lot of supply and surplus that may have to be dissipated before Kami is seen as viable.

 

There are many good reasons to believe that Kami/Julian Lake will be built, but it may be a while and don’t underestimate the political will to get this done.

 

Some here seem to have gotten a carried away with their own wild predictions and now others are blaming ALS because ALS is not going to meet the predictions of posters on this board. Let’s get a grip. If we are looking several years down the road, all will probably work out to our benefit and I am glad to see that things are settling down on the board now that reason seems to be prevailing after the weekend.. But those who believe that this is a sure thing are forgetting that we are still playing in the big casino. I can get you sure things, but they will pay you about 1% per year.

eb

 

 

 

[Guest Dazel]

 

As Sanjeev did awhile ago...it is time for me to also step aside from discussing investments directly. I cannot thank you all enough for your time and effort you have put into this thread in particular. I sincerely, wish you all the best!

For those that went on the Clarke Inc ride over the last 6 months I will make one last investment thesis post there.

 

It has been a very informative and extremely successful 11 years with a lot of you. My energies will be spent elsewhere. The board is in good hands with all of you...keep up the great work!

 

Dazel

[Andy Dufresne]

SD - many thanks for the timeline! Let's hope they initiate !

 

Dazel - many many thanks and I am saddened to see you go ... Best of luck!

 

[phil_Buffett]

 

As Sanjeev did awhile ago...it is time for me to also step aside from discussing investments directly. I cannot thank you all enough for your time and effort you have put into this thread in particular. I sincerely, wish you all the best!

For those that went on the Clarke Inc ride over the last 6 months I will make one last investment thesis post there.

 

It has been a very informative and extremely successful 11 years with a lot of you. My energies will be spent elsewhere. The board is in good hands with all of you...keep up the great work!

 

Dazel

 

dazel iam very very sad that you no longer will comment. but it is okay. i want to thank you for everything. for your tips and explanations. for you hard work, for your great disscussions. for everything. thanks!!!!  :)

 

as the board Status from you say, you are a hero member

 

cheers

[Liberty]

Dazel will be back, he's too fond of this place to stay away for long ;)

[Green King]

 

As Sanjeev did awhile ago...it is time for me to also step aside from discussing investments directly. I cannot thank you all enough for your time and effort you have put into this thread in particular. I sincerely, wish you all the best!

For those that went on the Clarke Inc ride over the last 6 months I will make one last investment thesis post there.

 

It has been a very informative and extremely successful 11 years with a lot of you. My energies will be spent elsewhere. The board is in good hands with all of you...keep up the great work!

 

Dazel

 

said to see you leaving daily discussion. But it seems to be the best way for action.given how volatile Views are getting in this thread. congrats and best wishes. Your post are some of the most interesting.

[giofranchi]

 

As Sanjeev did awhile ago...it is time for me to also step aside from discussing investments directly. I cannot thank you all enough for your time and effort you have put into this thread in particular. I sincerely, wish you all the best!

For those that went on the Clarke Inc ride over the last 6 months I will make one last investment thesis post there.

 

It has been a very informative and extremely successful 11 years with a lot of you. My energies will be spent elsewhere. The board is in good hands with all of you...keep up the great work!

 

Dazel

 

It’s a true pity… As far as I am concerned, the effort I put in trying to contribute to this board is an integral part of the whole process I follow while investing my firm’s fcf. If I can write down clearly why I am making an investment, chances are my ideas are sound enough. And consequently the risks I run are small enough.

Furthermore, if I get thoughtful feedback from other sophisticated investors… well, that’s just great! ;)

 

But I simply guess Dazel in the money management business has many other means to achieve the same results, people to talk to, and partners to exchange views with, than me… a simple wannabe or "pretend to be" entrepreneur, who works daily with and is surrounded by people who don’t know something like ALS even exists…! ;D

 

All the best my friend! It has been a real pleasure and a great honor to make your acquaintance! And to learn from you! I take a bow.

 

Gio

 

[yader]

Thanks Dazel.  Been on this thread nearly from the beginning.  Will hope to see you post every now and then!

[cwericb]

Dazel, it’s board members like you that help educate the rest of us and while I thank you for your contributions to the board and in particular for this thread, I would urge you to stick around.

 

For all of us to have a place to bounce around ideas can only be positive and sometimes just putting down our ideas down in writing helps us get a better grasp of our own thoughts. I’m sure that you too must find the positive and negative comments of other posters is beneficial in forming views on investments.

eb

[wachtwoord]

 

As Sanjeev did awhile ago...it is time for me to also step aside from discussing investments directly. I cannot thank you all enough for your time and effort you have put into this thread in particular. I sincerely, wish you all the best!

For those that went on the Clarke Inc ride over the last 6 months I will make one last investment thesis post there.

 

It has been a very informative and extremely successful 11 years with a lot of you. My energies will be spent elsewhere. The board is in good hands with all of you...keep up the great work!

 

Dazel

 

It’s a true pity… As far as I am concerned, the effort I put in trying to contribute to this board is an integral part of the whole process I follow while investing my firm’s fcf. If I can write down clearly why I am making an investment, chances are my ideas are sound enough. And consequently the risks I run are small enough.

Furthermore, if I get thoughtful feedback from other sophisticated investors… well, that’s just great! ;)

 

But I simply guess Dazel in the money management business has many other means to achieve the same results, people to talk to, and partners to exchange views with, than me… a simple wannabe or "pretend to be" entrepreneur, who works daily with and is surrounded by people who don’t know something like ALS even exists…! ;D

 

All the best my friend! It has been a real pleasure and a great honor to make your acquaintance! And to learn from you! I take a bow.

 

Gio

 

Don't forget a source for ideas. For example, I don't think I would have come across ALS without this forum.

[giofranchi]

Don't forget a source for ideas. For example, I don't think I would have come across ALS without this forum.

 

Yes! Of course! Though a source of ideas this board will always be, even for someone who stops actively posting his/her views. ;)

 

Gio

[Green King]

you should look at this more a like when you look at a good company that is great but the people that are part of it. As i recall the source of the idea is came from Dazel and he will be reallocating his time. Therefore a good part of this forum is lost.

[Otsog]

Cheers Dazel  :)

[Eric50]

Thanks Dazel for the Royal Gold and Millrock answers and sorry to see you go. I hope you'll reconsider.

 

For those who are worried about the recent slide in price, remember that it's always darker right before dawn.

 

Eric

 

 

 

 

[ItsAValueTrap]

You are saying that ALS PG business model is to discover UNPROFITABLE mines, and to book a big gain thanks to the fact it does joint ventures with SHADY people, who then publish presentations through which they make the public believe those mines, if built, might be very profitable instead?!

And you are saying I shouldn’t be concerned about that?!

 

1- Obviously not!  Of course they are trying to find profitable mines.  Everybody wants to find the next Voisey's Bay or similar mega-deposit.

 

2- Whenver Altius has booked big gains, it is because it legitimately made money.

 

Altius does not book book questionable accounting gains.  Most of their royalties are valued at 0, even though they are clearly worth more than zero.  Dalton could easily increase EPS by selling a sliver of each royalty.  Or, he could apply some BS IFRS accounting and mark the royalties to fair value (which is what Michael Smith did at TTT/Terra Nova).

 

3- Alderon is shady.  It is reasonable to be concerned about that.  I was just saying that Dalton isn't necessarily shady by association.

 

4- Ummmm.... in general... most technical reports are inflated.  It took me a long time before I figured this out.  Personally, I think it's disgusting.

[wachtwoord]

Thanks Dazel for the Royal Gold and Millrock answers and sorry to see you go. I hope you'll reconsider.

 

For those who are worried about the recent slide in price, remember that it's always darker right before dawn.

 

Eric

 

And if you average down your MoS increases :)

[giofranchi]

1- Obviously not!  Of course they are trying to find profitable mines.  Everybody wants to find the next Voisey's Bay or similar mega-deposit.

 

2- Whenver Altius has booked big gains, it is because it legitimately made money.

 

Altius does not book book questionable accounting gains.  Most of their royalties are valued at 0, even though they are clearly worth more than zero.  Dalton could easily increase EPS by selling a sliver of each royalty.  Or, he could apply some BS IFRS accounting and mark the royalties to fair value (which is what Michael Smith did at TTT/Terra Nova).

 

3- Alderon is shady.  It is reasonable to be concerned about that.  I was just saying that Dalton isn't necessarily shady by association.

 

4- Ummmm.... in general... most technical reports are inflated.  It took me a long time before I figured this out.  Personally, I think it's disgusting.

 

Thank you, ItsAValueTrap! Always good to know your views! :)

 

Cheers,

 

Gio