ALS.TO - Altius Minerals

[TwoCitiesCapital]

Not long ago I debated buying more ALS but bought ADV instead thinking that if I held onto it a few months I could perhaps sell ADV at a profit and roll the proceeds into ALS. This is typical of my timing. This may work out yet but I bought just one or two days before ALS made their announcement.  #&%$”?*!!

 

I sometimes think that when I buy something it’s the kiss of death. At least ADV hasn’t dropped.

 

I am just wondering if anyone else is in the same boat and have you bailed from ADV and gone into ALS or are you going to stay with ADV?

 

I've built a pretty large position in Altius as it is. It's nearly 10% of my portfolio. I've considered increasing it to 12-13% at these prices but I've also been considering initiating a position in Alderon. I've been kicking myself for not buying Alderon when I first started looking into it as levered Kami exposure to add a little kick to my Altius returns. I was thinking something like 5:1 Altius:Alderon in terms of sizing. I've been watching it since it was 0.90-1.00 and never bought and have been kicking myself since for not making up my mind sooner. I think Alderon is more likely to make a big move in the near term and I'm thinking Altius will have to wait until 2015-2016 or for the sale of Alderon to see any massive appreciation.  That might all change with regular cash flows coming in now though...

[ItsAValueTrap]

Alderon spends money on blatant stock promotion such as grandich.com.

 

I think the ex ante returns will be better at Altius.  For example, compare the performance of Altius to Forbes and Manhattan's Aberdeen International (AAB.TO).

 

*I own lots of Altius and a little bit of Aberdeen (I am trading in and out of Aberdeen).  I don't own any shares of Alderon... sold too soon.

[rpadebet]

Not long ago I debated buying more ALS but bought ADV instead thinking that if I held onto it a few months I could perhaps sell ADV at a profit and roll the proceeds into ALS. This is typical of my timing. This may work out yet but I bought just one or two days before ALS made their announcement.  #&%$”?*!!

 

I sometimes think that when I buy something it’s the kiss of death. At least ADV hasn’t dropped.

 

I am just wondering if anyone else is in the same boat and have you bailed from ADV and gone into ALS or are you going to stay with ADV?

 

I've built a pretty large position in Altius as it is. It's nearly 10% of my portfolio. I've considered increasing it to 12-13% at these prices but I've also been considering initiating a position in Alderon. I've been kicking myself for not buying Alderon when I first started looking into it as levered Kami exposure to add a little kick to my Altius returns. I was thinking something like 5:1 Altius:Alderon in terms of sizing. I've been watching it since it was 0.90-1.00 and never bought and have been kicking myself since for not making up my mind sooner. I think Alderon is more likely to make a big move in the near term and I'm thinking Altius will have to wait until 2015-2016 or for the sale of Alderon to see any massive appreciation.  That might all change with regular cash flows coming in now though...

 

I thought about the same thing, but decided against Alderon. That capital is better invested in Altius itself. Alderon investors have one way to win and many ways to get killed , whereas Altius can always survive another day even if Alderon doesn't work out as expected.

[hohi]

 

[...] I think Alderon is more likely to make a big move in the near term and I'm thinking Altius will have to wait until 2015-2016 or for the sale of Alderon to see any massive appreciation.  That might all change with regular cash flows coming in now though...

 

Let us not forget the Julienne Lake decision coming up. That is very near in the future and could be a huge catalyst for ALS. At 21 Mtpa JL is more than double the 8 Mtpa of Kami right off the bat. Two integrated steel makers with 100 Mtpa+ imports p.a. will surely have some serious financing power to push JL forward. I think we have a good chance of getting the deal and that will be in 2014.

 

I added the last days to my already big position but think unfortunately those were my last purchases for the near future. Or maybe I get lucky and ALS corrects to the $10-11 range.

[hohi]

For those unfamiliar with the Julienne Lake deposit, here is a presentation by the government that sums it up quite nicely:

 

http://www.nr.gov.nl.ca/nr/mines/Julienne/JulienneLakePresentation_MRR2012_Clarke.pdf

 

"The Julienne Lake deposit represents a large, undeveloped deposit

of iron ore located in Labrador West. It is situated 32 kilometres by

road from the town and mine site of Wabush and 16 kilometres from

the nearest point on the QNS&L railway.

 

“The Julienne Lake iron deposit represents a very rare and unusual

opportunity to develop a major new mining project in the heart of an

established mining camp in a politically stable country”.

[crackspread]

For those unfamiliar with the Julienne Lake deposit, here is a presentation by the government that sums it up quite nicely:

 

http://www.nr.gov.nl.ca/nr/mines/Julienne/JulienneLakePresentation_MRR2012_Clarke.pdf

 

"The Julienne Lake deposit represents a large, undeveloped deposit

of iron ore located in Labrador West. It is situated 32 kilometres by

road from the town and mine site of Wabush and 16 kilometres from

the nearest point on the QNS&L railway.

 

“The Julienne Lake iron deposit represents a very rare and unusual

opportunity to develop a major new mining project in the heart of an

established mining camp in a politically stable country”.[/quote]

 

Key phrase being: "in the heart of an established mining camp in a politically stable country." Praise the lord they aren't doing business in Congo.

 

 

[Guest Dazel]

http://www.steelfirst.com/Scrap-and-Raw-Materials-Iron-Ore.html

 

Iron ore prices remain strong above $135.

[Guest Dazel]

For those that have been on this thread for awhile...I feel obligated to share my thoughts because of the time and effort you have put into the thread. Make no mistake from the beginning I have had a extremely positive biased on my theory of value at Altius and that continues more so than in the past because of their game changing deal for PMRL royalty.

 

The human nature aspect of investing is to look at past prices...we see this everywhere with Wall Street being enamored with charts, all time highs, all time lows (no one ever got rich using a chart-Jim Rogers). Many on this thread have gone through some ups and downs with Altius...it is also human nature to "fear" the downside more than be "greedy" towards the upside. Mr. Buffett explains this with an example of how quickly a market or price can drop but it only rises gradually. Fear trumps greed always.

 

In Altius share price case I am starting to see the chatter of shares were cheap but that time has run

out etc....that is human nature...I have been guilty of it before and made huge mistakes!

Ie I bought Starbucks at 8, EBay at 11, Google at $275, under Armour at $22 split adjusted $11, Visa at $60, GGP at $2.50.....these were big positions and I did very well....However, These are my biggest mistakes!

 

My perception of cheap was obviously right...but my perception should have changed as the

businesses and the cycle changed. As a value investor the price to book value sky rocketed in all these companies..and I "stupidly" sold them instead of adding or holding. I looked at historic stock prices after book values multiples expanded and moved on to other cheap book values..including happily Altius. I should have moved more towards Mr. Buffett and looked towards FCF.

 

My point is that those companies I owned went up 10 fold in many cases...you can say yes but 2009 things were different...I would argue 2009 and 2010 were better times for Altius' sector. Altius industry has been in a depression for the most part that most industry participants have never seen. I would also argue that a royalty company deserves a premium like the above companies mentioned there is no better business. I would also argue that Altius opportunity is as great or greater than the above companies because the depressed sector will allow management to pickoff discounted opportunities like they just did

 

So is Altius cheap at $10,$11,$12,$13,$14,$15,$16,$17,$18,$19........when it certainly could reach $60 or higher in the future and still underperform  the above stocks that I owned. That decision

belongs to the investor that buys it.

 

"I don't care where a stock has been...I care where it is going"

 

Warren Buffett

 

[rpadebet]

Dazel,

Any idea why the massive jump in price this morning?

[original mungerville]

Big jump this morning? Some analyst out with a buy recommendation?

[hohi]

Volume is relatively low still. Could be the Julienne Lake news? Or just no sellers at these prices left... I know I am not selling for the next 20 years or so ;)

[Guest Dazel]

 

 

No idea....

 

But value is realized in strange ways...in order to get a good chunk of Altius stock you will have to buy up as there are few sellers...an institutional position would take us above $16 or $17. Of course very choppy..as there will be profit taking.

SD has likely made his money and is gone...congrats.

 

We are here for the long haul as explained in my last post.

 

 

[giofranchi]

For those that have been on this thread for awhile...I feel obligated to share my thoughts because of the time and effort you have put into the thread. Make no mistake from the beginning I have had a extremely positive biased on my theory of value at Altius and that continues more so than in the past because of their game changing deal for PMRL royalty.

 

The human nature aspect of investing is to look at past prices...we see this everywhere with Wall Street being enamored with charts, all time highs, all time lows (no one ever got rich using a chart-Jim Rogers). Many on this thread have gone through some ups and downs with Altius...it is also human nature to "fear" the downside more than be "greedy" towards the upside. Mr. Buffett explains this with an example of how quickly a market or price can drop but it only rises gradually. Fear trumps greed always.

 

In Altius share price case I am starting to see the chatter of shares were cheap but that time has run

out etc....that is human nature...I have been guilty of it before and made huge mistakes!

Ie I bought Starbucks at 8, EBay at 11, Google at $275, under Armour at $22 split adjusted $11, Visa at $60, GGP at $2.50.....these were big positions and I did very well....However, These are my biggest mistakes!

 

My perception of cheap was obviously right...but my perception should have changed as the

businesses and the cycle changed. As a value investor the price to book value sky rocketed in all these companies..and I "stupidly" sold them instead of adding or holding. I looked at historic stock prices after book values multiples expanded and moved on to other cheap book values..including happily Altius. I should have moved more towards Mr. Buffett and looked towards FCF.

 

My point is that those companies I owned went up 10 fold in many cases...you can say yes but 2009 things were different...I would argue 2009 and 2010 were better times for Altius' sector. Altius industry has been in a depression for the most part that most industry participants have never seen. I would also argue that a royalty company deserves a premium like the above companies mentioned there is no better business. I would also argue that Altius opportunity is as great or greater than the above companies because the depressed sector will allow management to pickoff discounted opportunities like they just did

 

So is Altius cheap at $10,$11,$12,$13,$14,$15,$16,$17,$18,$19........when it certainly could reach $60 or higher in the future and still underperform  the above stocks that I owned. That decision

belongs to the investor that buys it.

 

"I don't care where a stock has been...I care where it is going"

 

Warren Buffett

 

Dazel,

this is a great post! :)

And that's precisely one of the reasons I always want to partner with great capital allocators: because I know they will find a way to double again a stock that has already doubled! ;)

Now, sorry but I don’t have the time to read all the 165 pages of posts on Altius… So could you please shed briefly some light on the qualities of management?

Thank you very much,

 

Gio

 

[abyli]

Dazel:

Thank you very much for your analysis. I have followed you into ALS for three years and it is a very large position. Please share your next Als or visa or google or starbucks...

 

Bing

[craigatk]

Now, sorry but I don’t have the time to read all the 165 pages of posts on Altius… So could you please shed briefly some light on the qualities of management?

 

I know you didn't ask me, but I believe the evidence shows they have very proven and capable team. The know rocks, geology and land in their area very well. They found opportunity when people were not interested and acquired an extensive land position. They've proven they are in it for the long-haul and with Brian Dalton you have a young guy who has many years ahead of him. He's been patient with his cash and has been waiting on it for the right timing. I believe the Prairie Royalties were struck at a very fair price (not dirt cheap) but will really help unlock the value that was already hidden in the company to the market. It was a good deal that can be studied to see how he operates.

 

I found it hard to get more details about the Prairie Royalties in Sherrit's filings, but some might want to look at the prospectus for the Royal Utilities Income Fund on sedar which goes into depth, beyond Altius' presentation.

[giofranchi]

I know you didn't ask me, but I believe the evidence shows they have very proven and capable team. The know rocks, geology and land in their area very well. They found opportunity when people were not interested and acquired an extensive land position. They've proven they are in it for the long-haul and with Brian Dalton you have a young guy who has many years ahead of him. He's been patient with his cash and has been waiting on it for the right timing. I believe the Prairie Royalties were struck at a very fair price (not dirt cheap) but will really help unlock the value that was already hidden in the company to the market. It was a good deal that can be studied to see how he operates.

 

I found it hard to get more details about the Prairie Royalties in Sherrit's filings, but some might want to look at the prospectus for the Royal Utilities Income Fund on sedar which goes into depth, beyond Altius' presentation.

 

Thank you! :)

I ask because the only reason one should really expect a stock to go from 1 to 10 is the quality of management. Everything else changes. In my experience a business is subject to too many external influences, and you may never truly know what will happen tomorrow. Therefore, you want to partner with someone who has already proven he/she possesses the ability to adapt and stir the boat wherever the next opportunity lies. The fact Mr. Brian Dalton is still young is a big plus. But I usually look for an established track-record, which is good enough to impress me! Though I am sure the Prairie Royalties was a very good deal and will contribute to create a lot of value, one deal imo does not make a track-record…

 

Gio

 

[Guest Dazel]

Gio,

 

Nice to see you here.

First of all Altius is "not" a miner....there capex is around $2 to $3 million a year on a Company of around a $400m market cap...they have a world class geologist team but they are a royalty company...very unique...they have made $200 m cap gain and still hold a royalty on a world class asset in the past on a $600k investment and they are repeating this process. They have used these cumulative gains which they held in cash equivalents as a merchant bank model. They have recently purchased a world class asset  PMRL (prarie mine &royalty limited) which changes the company. They have used the treasury as an merchant bank in the past when they purchased IRC royalty and made 80% in less than a year. For the most part their patience has put them in the driver seat as the other royalty companies blew their brains out on paying too much in the last 7 years. They may become the

industry consolidator in my view.

 

Management

Brian Dalton may be the smartest guy in the sector. Altius was built from 0 on his back with the help of a great management team. What they have done over the years has been truly remarkable. From

what I see his entire net worth is in the company...If Mr. Buffett could hand pick a management team he could not do any better. We are partners with Altius for the sole reason of Brian Dalton and his team. The assets speak for themselves but it is what Altius has done with them that makes this company stand out from it's peers.

 

I have compared them here to Leucadia...but I have also stated that Altius business model is better than Leucadia's and Altius' 17 year record is better than Leucadia's (they have compounded returns in 30% range). Their asset base projects outside the royalty portfolio that will be monetized over the

next few years is over a decade old purchased before the commodity boom. To have an asset base and deal maker like Brian Dalton and his team as partners is truly rare.

 

http://www.altiusminerals.com/uploads/Altius-Investor-Presentation.pdf

 

Disclosure: I am biased...and we continue to accumulate Altius shares including everyday last week!

 

Dazel.

 

 

 

 

 

[giofranchi]

Gio,

 

Nice to see you here.

First of all Altius is "not" a miner....there capex is around $2 to $3 million a year on a Company of around a $400m market cap...they have a world class geologist team but they are a royalty company...very unique...they have made $200 m cap gain and still hold a royalty on a world class asset in the past on a $600k investment and they are repeating this process. They have used these cumulative gains which they held in cash equivalents as a merchant bank model. They have recently purchased a world class asset  PMRL (prarie mine &royalty limited) which changes the company. They have used the treasury as an merchant bank in the past when they purchased IRC royalty and made 80% in less than a year. For the most part their patience has put them in the driver seat as the other royalty companies blew their brains out on paying too much in the last 7 years. They may become the

industry consolidator in my view.

 

Management

Brian Dalton may be the smartest guy in the sector. Altius was built from 0 on his back with the help of a great management team. What they have done over the years has been truly remarkable. From

what I see his entire net worth is in the company...If Mr. Buffett could hand pick a management team he could not do any better. We are partners with Altius for the sole reason of Brian Dalton and his team. The assets speak for themselves but it is what Altius has done with them that makes this company stand out from it's peers.

 

I have compared them here to Leucadia...but I have also stated that Altius business model is better than Leucadia's and Altius' 17 year record is better than Leucadia's (they have compounded returns in 30% range). Their asset base projects outside the royalty portfolio that will be monetized over the

next few years is over a decade old purchased before the commodity boom. To have an asset base and deal maker like Brian Dalton and his team as partners is truly rare.

 

http://www.altiusminerals.com/uploads/Altius-Investor-Presentation.pdf

 

Disclosure: I am biased...and we continue to accumulate Altius shares including everyday last week!

 

Dazel.

 

Now, this truly intrigues me…

Sorry, craigatk, I had misinterpreted your post! ;)

Perhaps nothing has intrigued me so much since twacowfca started talking to me (and others) about LRE!

Now I have 165 pages of posts to read!

 

Thank you very much, Dazel! :)

 

Gio

 

[original mungerville]

Hi Gio,

 

I think my style is somewhere between yours (owner-operators) and Uccmal/Ericopoly (big bets on a few companies, often involving options). I hate miners and mining in general (with the exception of precious metals) but am certainly in on Altius. Participating via royalties with Dalton making capital allocation decisions, at a reasonable to cheap price for the stock, just seems to good to pass up from my perspective. Thanks again to Dazel for bringing this to the board.

 

 

[giofranchi]

Hi Gio,

 

I think my style is somewhere between yours (owner-operators) and Uccmal/Ericopoly (big bets on a few companies, often involving options). I hate miners and mining in general (with the exception of precious metals) but am certainly in on Altius. Participating via royalties with Dalton making capital allocation decisions, at a reasonable to cheap price for the stock, just seems to good to pass up from my perspective. Thanks again to Dazel for bringing this to the board.

 

Thank you original mungerville!

Your endorsement is another reason I will surely enjoy the reading of all those 165 pages! ;)

 

Gio

 

[craigatk]

Now, this truly intrigues me…

Sorry, craigatk, I had misinterpreted your post! ;)

Perhaps nothing has intrigued me so much since twacowfca started talking to me (and others) about LRE!

Now I have 165 pages of posts to read!

 

Thank you very much, Dazel! :)

 

Gio

 

Not a problem. Dazel is really the guy that knows this story the best. I'm just glad he jumped in with his post. Said it much better than I could! We all owe him a big thanks for bringing this stock up and continuing to post. I'm a big believer in what they are doing now.

[giofranchi]

Not a problem. Dazel is really the guy that knows this story the best. I'm just glad he jumped in with his post. Said it much better than I could! We all owe him a big thanks for bringing this stock up and continuing to post. I'm a big believer in what they are doing now.

 

Thank you! :)

 

Gio

[Guest Dazel]

Gio,

 

As for capital allocation from Altius:

 

-They have bought back over 13% of the float in the last 5 years..at an average price of likely about half of where we are today

 

- until now they have remained debt free (taking on debt to buy PMRL)

 

-the treasury-merchant bank has been funded by internally generated funds (capital gains and income) unlike other royalties that have diluted shareholders to raise capital.

 

- we will likely see the first dividends from Altius in 2014....

 

-The uranium equity they sold for a $200m profit was at the top of the market in 2007.

 

-IRC (international royalty Corp) and PMRL were both purchased in distressed times...we are here now!

 

-They have over 10 current projects ongoing with some very notable ones that may do very well this year....they do not spend any capex on them their partners fund the projects. In 2013, their partners will spend an estimated $10m to develop these projects

 

-they purchased the Voisey Bay Royalty in 2003 when Altius was much smaller this was before the mine was producing....it payed back its cost in 2008 and is on the books at about $8m..25 year mine life left pays between $3m and $4m a year (book value is way understated in my opinion)

 

-they have other marketable securities in the Treasury which they could use to fund the PMRL transaction which include distressed buys into 8% position in Virgina Mines (Elonore royalty comes on stream this year) which is hitting 52 week highs daily and a 6% position in Callinan royalty which has  a royalty the 777 mine operated by hudbay minerals..

 

 

 

 

 

 

 

 

[giofranchi]

Gio,

 

As for capital allocation from Altius:

 

-They have bought back over 13% of the float in the last 5 years..at an average price of likely about half of where we are today

 

- until now they have remained debt free (taking on debt to buy PMRL)

 

-the treasury-merchant bank has been funded by internally generated funds (capital gains and income) unlike other royalties that have diluted shareholders to raise capital.

 

- we will likely see the first dividends from Altius in 2014....

 

-The uranium equity they sold for a $200m profit was at the top of the market in 2007.

 

-IRC (international royalty Corp) and PMRL were both purchased in distressed times...we are here now!

 

-They have over 10 current projects ongoing with some very notable ones that may do very well this year....they do not spend any capex on them their partners fund the projects. In 2013, their partners will spend an estimated $10m to develop these projects

 

-they purchased the Voisey Bay Royalty in 2003 when Altius was much smaller this was before the mine was producing....it payed back its cost in 2008 and is on the books at about $8m..25 year mine life left pays between $3m and $4m a year (book value is way understated in my opinion)

 

-they have other marketable securities in the Treasury which they could use to fund the PMRL transaction which include distressed buys into 8% position in Virgina Mines (Elonore royalty comes on stream this year) which is hitting 52 week highs daily and a 6% position in Callinan royalty which has  a royalty the 777 mine operated by hudbay minerals..

 

Ok! No need to read the remaining 165 pages!! ;D ;D ;D

 

Very kind of you! ;)

 

Gio

 

[Guest Dazel]

 

Gio,

 

To save you time go to the Altius website...read their annuals...look at their presentations...this thread got out of hand for many pages on grades of iron ore, china, iron ore prices etc....

The new Altius deal for PMRL changes the game for Altius...it combines steady cashflow with the lumpy earnings of the past at Altius and diversified cash-flow. There is valuable discussion on the thread but realistically Altius is now a different company than it was a month ago with the PMRL deal. Management hit a home run.

 

Dazel.