nostradamus Posted November 22, 2013 Share Posted November 22, 2013 http://www.theaurora.ca/News/Local/2013-11-21/article-3489491/%26lsquo%3BDragging-their-heels%26rsquo%3B%0D%0A/1 I am trying to work out how big a problem the above news is for Alderon. On closing the HBIS deal the announcement says: "Alderon has agreed that in the event that the environmental assessment and related approvals for the Kami Project are not obtained by March 31, 2014, Alderon will be required to pay to HBIS C$3 million per month for each whole month until such approvals are obtained." I assume "and related approvals" covers the approval to build the power line. Can anyone confirm this? I also assume that the whole article is just Eldem putting public pressure on the goverment to sanction the power line, but it does indicate that while the enviromental assessment seems to be in the bag, there are other potential stubbling blocks that could delay production. Link to comment Share on other sites More sharing options...
FFHWatcher Posted November 22, 2013 Share Posted November 22, 2013 Hohi, I don't understand what value there is in being optimistic and guessing/hoping/praying that the eventual production will be higher than anticipated. That thinking can only lead to making poor decisions, IMO. Heck, even anticipated production estimated by 10 geologists is a guess when they haven't even started the mine yet, let alone receive all the approvals, financing, etc.!! Then add in someone (who is likely not a geologist and who likely doesn't have any specific knowledge of how mines eventually come online aside from reading reports) bumping up those 10 geologists best estimates. Meteorologists have better track records. I just don't see any value (even if you end up being right) in how you are thinking about something that MIGHT happen half a decade in the future but 1,000 other things have to occur first in order for what you are suggesting to occur. It just seems like dreaming Link to comment Share on other sites More sharing options...
hohi Posted November 22, 2013 Share Posted November 22, 2013 Hohi, I don't understand what value there is in being optimistic and guessing/hoping/praying that the eventual production will be higher than anticipated. That thinking can only lead to making poor decisions, IMO. Heck, even anticipated production estimated by 10 geologists is a guess when they haven't even started the mine yet, let alone receive all the approvals, financing, etc.!! Then add in someone (who is likely not a geologist and who likely doesn't have any specific knowledge of how mines eventually come online aside from reading reports) bumping up those 10 geologists best estimates. Meteorologists have better track records. I just don't see any value (even if you end up being right) in how you are thinking about something that MIGHT happen half a decade in the future but 1,000 other things have to occur first in order for what you are suggesting to occur. It just seems like dreaming Well I appreciate your opinion but you really don't get how my DD process is. Basically I calculate a base case scenario, a best case scenario and a worst case scenario. If there is good value and upside in my base case an little to none risk on the downside I think of buying in. That's why I am invested in ALS. I don't need to see Kami @ 16mtpa or JL developed or even CMB developed. If something positive happens, thats a bonus. If my optimistic calculations for my best case scenario annoy you - just put me on ignore. Link to comment Share on other sites More sharing options...
FFHWatcher Posted November 22, 2013 Share Posted November 22, 2013 It doesn't annoy me. Ok, maybe a bit but I do respect the work and the analysis (spreadsheet link) that you put into this. Obviously very thorough!! Why not just use the company's estimate as a 'wildly optimistic best case' ? Wouldn't that be more conservative? There is a long, long list of companies that over-promise and under-deliver...a much, much longer list than of the ones that over-deliver...and most of them involve ongoing operations that have been around for a decade or more and they are just looking ahead 2-3 quarters, let alone years and years ahead with absolutely nothing approved or developed yet. At this point, it is just a bunch of holes in the ground, data, ball park estimates and spreadsheets. Summary : Dreams become losses. Link to comment Share on other sites More sharing options...
hohi Posted November 22, 2013 Share Posted November 22, 2013 If you liked the spreadsheet, maybe you can make something out of this http://ihre-hoheit.de/AltiusPDF.pdf It's one of the files I try to update weekly to remind me of some of the facts. I did a lot of DD on ALS including reading all the technical reports and doing DD on all of their partners. If you wonder why I put 0% risk on ALS on the "risk page" of my pdf: Its because I invest only in resource stocks and they are by nature super high speculative. It's the risk in comparison to the sector I measure there... If you find something wrong please tell me. Link to comment Share on other sites More sharing options...
tengen Posted November 22, 2013 Share Posted November 22, 2013 http://www.theaurora.ca/News/Local/2013-11-21/article-3489491/%26lsquo%3BDragging-their-heels%26rsquo%3B%0D%0A/1 I am trying to work out how big a problem the above news is for Alderon. On closing the HBIS deal the announcement says: "Alderon has agreed that in the event that the environmental assessment and related approvals for the Kami Project are not obtained by March 31, 2014, Alderon will be required to pay to HBIS C$3 million per month for each whole month until such approvals are obtained." I assume "and related approvals" covers the approval to build the power line. Can anyone confirm this? Maybe I'm missing something but I don't see any relationship between the power line and the penalty clause for delays in obtaining the environmental permits. Alderon is not seeking approval to build a power line. They are lobbying the minister in the press to make sure he doesn't drop the ball on getting it built . Link to comment Share on other sites More sharing options...
nostradamus Posted November 22, 2013 Share Posted November 22, 2013 Tengen, you say " Alderon is not seeking approval to build a power line", well, they kind of are seeking to get a power line built so they can operate their mine. Maybe I am being a bit paranoid. However, it seems that HBIS is very concerned about government decisions getting in the way of progressing the mine (I wonder why!), hence they negotiated the contract with Alderon to include the penalty clause on the environmental permits. I just thought that maybe this also covers government decisions that could stop the power line being built. I would be very happy if you can confirm that this is not the case? Link to comment Share on other sites More sharing options...
tengen Posted November 23, 2013 Share Posted November 23, 2013 I guess that would be a question for Alderon's IR. Link to comment Share on other sites More sharing options...
Blue Macaw Posted November 23, 2013 Share Posted November 23, 2013 I assume the environmental permit is one thing and the power line another. They do need to have both though in order to build the mine. The environmental permit should be due in january. When that is finalised I assume the government can approve the power line. (There is no need to approve something before the environmental permit. It seems backwards). The clause that Hebei has in the contract regarding a delay in the permit I would also have had if I were to come up with a contract. Nothing wierd about it. I assure you the chinese will start to tighten the nuts (on govenmental level) as this moves forward. The mine has a great chance to be built Link to comment Share on other sites More sharing options...
Guest Dazel Posted November 23, 2013 Share Posted November 23, 2013 As discussed before the environmental permit is paramount. At this point...off take, financing, power and then rail follow the approval in no particular order....it is just the order of things. Link to comment Share on other sites More sharing options...
Guest Dazel Posted November 23, 2013 Share Posted November 23, 2013 Whatever, the sentiment is that is pricing Altius shares....keep it up. Added Friday.... Dazel. Link to comment Share on other sites More sharing options...
nostradamus Posted November 25, 2013 Share Posted November 25, 2013 I assume the environmental permit is one thing and the power line another. They do need to have both though in order to build the mine. The environmental permit should be due in january. When that is finalised I assume the government can approve the power line. (There is no need to approve something before the environmental permit. It seems backwards). As discussed before the environmental permit is paramount. At this point...off take, financing, power and then rail follow the approval in no particular order....it is just the order of things. Maybe. However, if the enviromental permit needs to come before the power agreement, why would Eldem be complaining publically about officials dragging their feet on the power agreement? I assure you the chinese will start to tighten the nuts (on govenmental level) as this moves forward. The mine has a great chance to be built I hope you are right. Link to comment Share on other sites More sharing options...
FFHWatcher Posted November 25, 2013 Share Posted November 25, 2013 Whatever, the sentiment is that is pricing Altius shares....keep it up. Added Friday.... Dazel. I assumed the GS report contributed something to general weakness? http://www.bloomberg.com/news/2013-11-21/goldman-predicts-significant-losses-for-gold-iron-ore-in-2014.html Gold, iron ore, soybeans and copper will probably drop at least 15 percent next year as commodities face increased downside risks even as economic growth in the U.S. accelerates, according to Goldman Sachs Group Inc. Link to comment Share on other sites More sharing options...
Guest Dazel Posted November 25, 2013 Share Posted November 25, 2013 Bold call...$108 from $136-$138 in iron ore prices. Goldman moves markets that's for sure. Iron ore is down across the board.... Wonder what they will say next week... Link to comment Share on other sites More sharing options...
Guest Dazel Posted November 25, 2013 Share Posted November 25, 2013 http://metalexpertresearch.com/research/en/global_iron_ore_price_forecast_(october_2013).html?OpenDocument I have posted metal expert consulting before...they show their past results...they also show the investment banks forecasting results...they seem to be very accurate for what it is worth. Link to comment Share on other sites More sharing options...
nostradamus Posted November 26, 2013 Share Posted November 26, 2013 http://www.chinadaily.com.cn/business/2013-11/26/content_17131971.htm Link to comment Share on other sites More sharing options...
Guest Dazel Posted November 26, 2013 Share Posted November 26, 2013 First of all Hebei is a province....I think the article is lost in translation! It says the province produced 10m tons last year! Flawed article. But it is good for us all for the air quality to het better in China. Most of these furnaces that are being closed have not been running for sometime and they are highly efficient. You will see many iron ore mines shut in China which will off set the modernization of the Chinese industrial complex. Do you think they need nuclear power? Uranium will benefit greatly from the plan to clean the air. Dazel. Link to comment Share on other sites More sharing options...
nostradamus Posted November 26, 2013 Share Posted November 26, 2013 I also thought the article was a little bit confused. But posted because it is important to try to stay balanced and keep in mind the downside risks: "The State Council, China's cabinet, has set a target to cut 80 million tons of steel production within five years." Link to comment Share on other sites More sharing options...
Guest Dazel Posted November 26, 2013 Share Posted November 26, 2013 80 million tons is about 10% of capacity....the steel complex ran at about 72% of capacity in 2012..so you would still have 28% over capacity to ramp up "more" production than has occurred...not saying they will do this however, they did in 2013 when the world thought they would not...there is obvious over capacity if you are operating at 72% of production. It makes sense to cut all old plants and you hit two birds with one stone so to speak....government happy to theoretically cut emissions ( you don't because these plants are not running)...and you do not have excess capacity...companies become more efficient. as you can see these headline are bit misleading..but I would like to see more if you find them. It is great to illustrate what is actually happening compared to the perception. We would also welcome the production cuts of the iron ore mines that are operating at losses which will happen in tandem with the modernization of China's steel complex. Dazel. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted November 26, 2013 Share Posted November 26, 2013 I also thought the article was a little bit confused. But posted because it is important to try to stay balanced and keep in mind the downside risks: "The State Council, China's cabinet, has set a target to cut 80 million tons of steel production within five years." I had difficulty making sense of the article, but how is this a downside risk? China cuts production which means cuts to supplies which should be supportive of iron ore prices and potentially more imports. Is this not bullish for iron ore and dry shipping co's? Also, does anyone have a timeline for when we can expect to here about the final regulatory hurdle for mine construction? I want to buy more at these prices, but promised myself I wouldn't until there had been further positive developments. Trying to maintain some semblance of self control and risk management. Link to comment Share on other sites More sharing options...
nostradamus Posted November 26, 2013 Share Posted November 26, 2013 I also thought the article was a little bit confused. But posted because it is important to try to stay balanced and keep in mind the downside risks: "The State Council, China's cabinet, has set a target to cut 80 million tons of steel production within five years." I had difficulty making sense of the article, but how is this a downside risk? China cuts production which means cuts to supplies which should be supportive of iron ore prices and potentially more imports. Is this not bullish for iron ore and dry shipping co's? Also, does anyone have a timeline for when we can expect to here about the final regulatory hurdle for mine construction? I want to buy more at these prices, but promised myself I wouldn't until there had been further positive developments. Trying to maintain some semblance of self control and risk management. China cuts production of steel. So they will need less iron ore to make the lower amount of steel. Regarding news on the environmental approval the Alderon press release on 23 October gives the answer: http://www.alderonironore.com/_resources/news/ADVNR20131023.pdf "The Federal government environmental assessment process has advanced to the final stages. Under the terms of the Federal Project Agreement timelines for the Kami Project, the Federal government will release the Federal Comprehensive Study Report for a thirty day public review period prior to the end of October. The Federal Minister of the Environment is required to post the final Federal environmental assessment decision for the Kami Project no later than 12 weeks from the end of the thirty day review period." So I guess this means that we may not get an answer until February, but it could come before that depending on what they received as part of the public review. Link to comment Share on other sites More sharing options...
Guest Dazel Posted November 26, 2013 Share Posted November 26, 2013 The iron ore mines in China have very low quality iron...15%... it does not make sense to have these mines running in a lot of situations...you will see many shut down as China shuts down older high cost steel plants. If China cuts 10% of steel making capacity by 2017...using 2012 numbers they would have approx 150 million in spare capacity 230 million without the cuts. So there is room for another 300 million to 460 million tonnes of iron ore just to reach capacity in China...this does not take into account spare capacity in the rest of the world..it's a non event. I would expect the approval for Kami in December or early January as per Alderon's timeline....sooner the better! Link to comment Share on other sites More sharing options...
Guest Dazel Posted November 28, 2013 Share Posted November 28, 2013 http://finance.yahoo.com/news/chinas-gold-imports-jump-second-102556726.html The fed keeps printing new money and China continues to buy hard assets. Someday someone is going to say wow the west owns the majority of hard assets in the world and the east has a lot of paper...what is the paper worth? treasuries, muni's, bitcoin's etc....We hold a lot of Bank of America as we have since the crash to $5... And that is our only concern...what are their assets worth when the world changes it's mind on paper assets. We sleep knowing that the majority of our assets are backed by real things American houses and real estate...however, a run on treasuries could be downright scary. There is no talk of this anywhere in this bull market but we think in these terms. Dazel. Link to comment Share on other sites More sharing options...
Guest Dazel Posted November 28, 2013 Share Posted November 28, 2013 http://www.theglobeandmail.com/news/politics/ottawa-spending-40-million-to-pitch-canadas-natural-resources/article15641360/#dashboard/follows/ Like to see Alderon used as an example... Link to comment Share on other sites More sharing options...
Guest Dazel Posted December 3, 2013 Share Posted December 3, 2013 http://www.mbironoreindex.com/Article/3285481/MBIO-Index-3-December-2013-Index-rises-to-highest-level-since-start-of-September-.html Link to comment Share on other sites More sharing options...
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