Guest Dazel Posted January 7, 2014 Share Posted January 7, 2014 Matts, Please try to keep this thread to the facts please. I don't care what Glenn Chan thinks about Grandich or how Alderon tries to gain publicity. I care about what the Alderon assets are worth, I care about who needs them and why. If you don't like them why? People are here to learn and make a decision for themselves on facts...I mean really they are trading in and out of Alderon...so when they buy it they like Grandich and when they don't Alderon are stock promotors...grow up. "Should we be concerned about Dalton being in the board at Alderon"....Don't waste our time with crap....take it somewhere else. Dazel. Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 7, 2014 Share Posted January 7, 2014 Matts, I see from your posts that you are/were an investor in Sandstorm SND...a streaming company. It would be helpful if you could compare what Altius has done with Alderon to what SND has done in buying royalty streams. Compare Nolan Watson to Brian Dalton. Did Hebei over pay more the Nolan Watson did? Or did they both buy at a certain time when the assets were in favor? Is SND a better investment than Altius now? And why? That is what we are looking for here...we want to learn all we can...the other jargon is a fools game. Dazel. Link to comment Share on other sites More sharing options...
Ross812 Posted January 7, 2014 Share Posted January 7, 2014 To be honest, I don't think a company director would get involved in approving/disapproving this sort of thing. It's not like anyone is pretending that Grandich is an independent analyst and the cost is a tiny fraction of their G&A overhead. I understand where the blog writer is coming from but I just don't see it as a concern for Altius. On the other hand, I wouldn't feel comfortable investing directly in Alderon (or any other junior mining stock). Why is promoting the stock a bad thing? Their job is to raise money and build a mine. A high stock price allows them to raise capital via offerings and can increase their profile with lenders. They are doing their job. They are going to spin the story their way just as any company would. This is no distant than a Realtor staging a house to get a better sale price. Link to comment Share on other sites More sharing options...
giofranchi Posted January 7, 2014 Share Posted January 7, 2014 Gio, This is an article which was published pre-PMRL deal. It gives a nice history of the company, along with a lot of direct quotes from Brian Dalton. http://seekingalpha.com/article/1913871-Altius-Minerals-An-Excellent-Business-Trading-At-A-Discount Enjoy ! -Krish Gio, I would also like to refer to the below quote to give you an idea of the capital allocation skills there: From Dalton's letter: Altius has maintained an excellent capital structure throughout its history and this has been bolstered over the past five years by share buybacks totaling ~13.6%. We can now also begin to consider other means of returning capital to our shareholders. Our first task however is to properly analyze the various options available to us to reduce and eliminate the debt incurred in relation to this important acquisition. I like this guy. already looking to get rid of debt. BeerBaron and read this letter: http://www.altiusminerals.com/uploads/Altius-Letter-to-Shareholders-Dec24.pdf Thanks to all of you! It is simply amazing how much information you can get on this board about a business, as soon as you get interested in it!! :) Cheers, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted January 7, 2014 Share Posted January 7, 2014 After spending the morning reading all the material you kindly pointed me to, I have just sold some SPLP, some TPRE, some MKL, and bought some ALS. I clearly like what I see. Dazel, please, let me understand if my reasoning is correct: at the end of October 2013 they had $270 million in total assets and no debt. To me that is like an equity of $270 million, of which $130 million in cash and highly liquid marketable securities (much dry powder left to scoop up bargains should the opportunity arise). Now its market cap is around $380 million. That means they are trading at more or less 1.4xBV. Not bad for a business with a track-record of compounding at 30% annual for 17 years! Is my point of view correct, or, if flawed, why so? Nowadays I tend to be very cautious… And concentrated in industries that usually show much resilience during a market correction (insurance, pharmaceutics, and fast-food franchising). I am not sure mining fits that requirement… Therefore, ALS today still is a small position in my portfolio. But I will keep on reading and maybe I will change my mind. :) Thank you, Gio Link to comment Share on other sites More sharing options...
Williams406 Posted January 7, 2014 Share Posted January 7, 2014 Gio, Bear in mind that the Dec. 24 announced acquisition of Sherritt's Coal/Potash royalty portfolio will change Altius' balance sheet a lot upon closing (estimated 3-4 months from now) from the October figures you cited. Per the press release on the home page, Altius stated it intends to use $124 million of cash, an $80 million senior loan, and a $50 million subordinated convertible to finance it's part of the deal. There are some moving parts here in that there are a couple rights of first refusal and tag along rights involved that could change the purchase price a bit depending on what those parties opt to do. Also, Altius has around $100 million of equity investments--including Alderon equity--some of which could be sold to reduce the above borrowing amounts or eliminate the need to tap debt at all. Altius' first quarter should prove interesting with Alderon awaiting environmental assessment results and financing, as well as Sherritt deal terms finalizing. A thousand humble pardons if you're already well aware of the Sherritt deal and it's balance sheet ramifications, but I wasn't sure based on your post. 406 Link to comment Share on other sites More sharing options...
giofranchi Posted January 7, 2014 Share Posted January 7, 2014 Gio, Bear in mind that the Dec. 24 announced acquisition of Sherritt's Coal/Potash royalty portfolio will change Altius' balance sheet a lot upon closing (estimated 3-4 months from now) from the October figures you cited. Per the press release on the home page, Altius stated it intends to use $124 million of cash, an $80 million senior loan, and a $50 million subordinated convertible to finance it's part of the deal. There are some moving parts here in that there are a couple rights of first refusal and tag along rights involved that could change the purchase price a bit depending on what those parties opt to do. Also, Altius has around $100 million of equity investments--including Alderon equity--some of which could be sold to reduce the above borrowing amounts or eliminate the need to tap debt at all. Altius' first quarter should prove interesting with Alderon awaiting environmental assessment results and financing, as well as Sherritt deal terms finalizing. A thousand humble pardons if you're already well aware of the Sherritt deal and it's balance sheet ramifications, but I wasn't sure based on your post. 406 Well, of course I was aware of it, but you are right I didn’t take that into consideration… My reasoning goes something like this: everybody seem to love the Sherritt’s Coal/Potash royalty portfolio deal, don’t they? I think Dazel referred to it as a “game changing” deal… Am I right? If so, I asked myself: would I pay $380 million to buy Altius as it was before that great deal? If the answer is yes, I would be even more willing to buy it now, because a great deal by definition creates much more value! Is my reasoning right? Or am I missing something? Thank you very much! :) Gio Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 7, 2014 Share Posted January 7, 2014 Gio, You are correct. I have been forecasting an Altius move for sometime. The cash equivalents have remained constant for about 7 years with a couple of investments then sales. The cash equivalents are earning next to nothing....with Sherritt deal they remain liquid with $100m of marketable securities but they bring around $20m a year in cashflow from the investment. So I look at it as high yield bond...keep in mind the Potash assets have a 70 year mine life and the coal assets around 30 years...try to buy a 30 year inflation adjusted bond at 10% plus....The equity that was not earning now becomes a cash cow. Altius is free to have lumpy earnings in the project generation business and when Kami comes on stream they will be cash flowing at $40m to $50m...from negative today. Book value discrepancy Voisey Bay on the books at approx $8m it is worth between 4 to 10 times tha if they sold it today. Alderon royalty- on that books at 0 Julienne Lake-I would guess at $1m There are lots of other promising projects including the Aurora royalty....but even if you leave them out and the total book value of all of these projects is around $10m. So book value could easily at least double by the end of 2014..but the key to valuation is not the understated book value it is that Altius will become a cashflow machine...they will have the lowest cost royalty portfolio on the planet. All royalties will have a mine life of 25 years or better and some up to 70 years. Gio...of course there are risks...but their downside is pretty much protected...the upside is huge. Dazel. Link to comment Share on other sites More sharing options...
matts Posted January 7, 2014 Share Posted January 7, 2014 Matts, Please try to keep this thread to the facts please. I don't care what Glenn Chan thinks about Grandich or how Alderon tries to gain publicity. I care about what the Alderon assets are worth, I care about who needs them and why. If you don't like them why? People are here to learn and make a decision for themselves on facts...I mean really they are trading in and out of Alderon...so when they buy it they like Grandich and when they don't Alderon are stock promotors...grow up. "Should we be concerned about Dalton being in the board at Alderon"....Don't waste our time with crap....take it somewhere else. Dazel. Your response is a bit out of line Dazel. How is what I raised not a fact? Grandich is a stock promoter. I'm not glenn, and I don't know him. I'm long altius and have been for a while. Did I say Dalton/altius is a fraud? of course not, because they are not. Just wanted to link to an article about the company in the relevant thread and start a discussion about it. I'm just trying to kill my own thesis here, as a good value investor should. You seem to be very very emotionally attached to this stock. I hope you could give me your thoughts on this last point. Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 7, 2014 Share Posted January 7, 2014 Matts, I think I was clear...we are not here to discuss petty things...how much do you think every company in the world spends on stock promotion through the investment banks? Billions and billions are spent...they are called analyst reports...the companies pay for them through fees. Mr. Buffett calls them the funny papers. Can we get back to the value of the companies. Dazel. Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 7, 2014 Share Posted January 7, 2014 Matts, I am serious about Sandstorm it would be very helpful for the board if you could break down the company and compare it to Altius. We are all here to test our thesis. Dazel. Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 7, 2014 Share Posted January 7, 2014 If we look at it this way....In a perfect world had Altius been able to buy the Sherritt royalty 10 years ago and all of the numbers never changed...they would have been able to pay off all the debt and recouped $70 million cash of their own investment back...yet they would still have a 30 to 70 year royalty....that will pay out half a billion plus over it's lifetime.... Keep in mind they have to do nothing but collect payments during this time...they are free to use their time to create other royalties and other deals...Altius structure fits perfectly for this royalty....right time right place for Altius. Link to comment Share on other sites More sharing options...
giofranchi Posted January 8, 2014 Share Posted January 8, 2014 Book value discrepancy Voisey Bay on the books at approx $8m it is worth between 4 to 10 times tha if they sold it today. Alderon royalty- on that books at 0 Julienne Lake-I would guess at $1m There are lots of other promising projects including the Aurora royalty....but even if you leave them out and the total book value of all of these projects is around $10m. So book value could easily at least double by the end of 2014..but the key to valuation is not the understated book value it is that Altius will become a cashflow machine...they will have the lowest cost royalty portfolio on the planet. All royalties will have a mine life of 25 years or better and some up to 70 years. Even better! My valuation was wrong, but more conservative than I thought! The price I pay I know very well, the value I get is higher than I believed. That’s the kind of mistake I love! :) The best business is a royalty on the growth of others - requiring little capital itself --Warren Buffett Gio...of course there are risks...but their downside is pretty much protected...the upside is huge. Dazel. THE RELIGION OF A SAILOR A sea captain when he stands upon the bridge, or looks out from his deck-house, thinks much about God and about the world. Away in the valley yonder among the corn and the poppies men may well forget all things except the warmth of the sun upon the face, and the kind shadow under the hedge; but he who journeys through storm and darkness must needs think and think. One July a couple of years ago I took my supper with a Captain Moran on board the S.S. Margaret, that had put into a western river from I know not where. I found him a man of many notions all flavored with his personality, as is the way with sailors. He talked in his queer sea manner of God and the world, and up through all his words broke the hard energy of his calling. "Sur," said he, "did you ever hear tell of the sea captain's prayer?" "No," said I; "what is it?" "It is," he replied, "'O Lord, give me a stiff upper lip.'" "And what does that mean?" "It means," he said, "that when they come to me some night and wake me up, and say, 'Captain, we're going down,' that I won't make a fool o' myself. Why, sur, we were in mid Atlantic, and I standin' on the bridge, when the third mate comes up to me looking mortally bad. Says he, 'Captain, all's up with us.' Says I, 'Didn't you know when you joined that a certain percentage go down every year?' 'Yes, sur,' says he; and says I, 'Aren’t you paid to go down?' 'Yes, sur,' says he; and says I, 'Then go down like a man, and be damned to you!'" --The Celtic Twilight, W. B. Yeats (1902) Gio Link to comment Share on other sites More sharing options...
giofranchi Posted January 8, 2014 Share Posted January 8, 2014 ALS today still is a small position in my portfolio. But I will keep on reading and maybe I will change my mind. :) Well, I have kept on reading, and I have just doubled my investment in ALS. That is the kind of people I really like to partner with. Today ALS is my fourth largest investment, after FFH, LRE, and BH. If the price should trend down in the coming weeks, I will keep buying, averaging down aggressively, just like Dazel is doing. :) Gio Link to comment Share on other sites More sharing options...
kmukul Posted January 8, 2014 Share Posted January 8, 2014 Gio, Now i know why the stock price is jumping, Thanks Dazel for the excellent and constant update on this thread, Really Appreciate it and I hope the stock turns out to be a big winner Link to comment Share on other sites More sharing options...
giofranchi Posted January 8, 2014 Share Posted January 8, 2014 Gio, Now i know why the stock price is jumping ;D ;D ;D Cheers, Gio Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 8, 2014 Share Posted January 8, 2014 Gio, Welcome aboard partner. And thanks for the Yeats. The Yeats has more meaning than you know...if you look into the history of NewFoundland Labrador ...it is a magical place. Like no where I have ever been in the world. Dazel. Link to comment Share on other sites More sharing options...
giofranchi Posted January 8, 2014 Share Posted January 8, 2014 Gio, Welcome aboard partner. And thanks for the Yeats. The Yeats has more meaning than you know...if you look into the history of NewFoundland Labrador ...it is a magical place. Like no where I have ever been in the world. Dazel. Well, we are equity investors, entrepreneurs, we “think and think”, but, should trouble come, "we won't make fools of ourselves", will we? ;) Thank you for the outstanding job you have done on this great business! Cheers, Gio Link to comment Share on other sites More sharing options...
naboo Posted January 8, 2014 Share Posted January 8, 2014 This thread has been very active since 12/24/2013 and we shouldn't let it go down. CAD/USD is on the way to 0.90 as I predicted a couple of months ago. When you guys talking about the numbers, there is a gap by using CAD vs USD, which cause a lot of confusion. I think all ALS' holdings (royalty/equity) should be measured by USD instead of CAD. When CAD reaches 0.80, there will be really a big difference. Link to comment Share on other sites More sharing options...
cwericb Posted January 8, 2014 Share Posted January 8, 2014 Don’t know why. It is a Canadian company and many on the board are in Canada. But it would greatly help if everyone on the board would name their country in their profile as that sometimes has an effect on how one reads other’s posts. What country are you from? Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 8, 2014 Share Posted January 8, 2014 Naboo, I agree with your thoughts...and I have not mentioned the natural hedge which is more important to Altius than the currency move in investments.... As the cdn dollar moves down all Canadian production costs come down....It makes all of Altius projects more viable as iron ore etc are prices is USD. For European and American investors who want to come in and buy Canadian assets they are getting a discount and a lower production cost asset. Labour is a big cost in the Labrador Trough and it just dropped 8%. If we were to go to 80 cents cdn then Kami and Julienne Lake's margins would improve substantially. Link to comment Share on other sites More sharing options...
cwericb Posted January 8, 2014 Share Posted January 8, 2014 I stand corrected. Wasn't considering the impact on margins. However, am I not right in thinking that as general commodity prices rise and fall it tends to take the Canadian dollar with it? Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 8, 2014 Share Posted January 8, 2014 It depends....If we start up the normal cycle now...the U.S strength should drive up the price of commodities because they are the largest economy in the world and when they have more pricing power they will consume more foreign goods at cheaper prices ie China will produce them and vise versa....all " things " become consumed more and move up in price because of lack of supply...more cars, houses, washing machines etc...the emerging markets including Canada have had a drop in currency...this is what they want...because they want to sell to the U.S and china..the Yuan is pegged to the U.S dollar so it is strengthening as well...makes it cheaper for Hebei to finance Kami etc... Virginia mines a Altius holding is at new 52 week highs daily....Elonore will produce Gold soon...why?Gold Corp going to spend more money in a hurry to develop to take advantage of the discount they are getting by producing in Canada...and more importantly Foreign buyers may take a shot shot at buying the royalty that have their treasury funds in euros or U.S dollars because of the discount...ie Goldcorp, Royal Gold, Anglo American... So yes there is a valuation difference in the U.S to CdN currency but it brings about interesting consequences....Altius takes care of this effectively by the U.S stock price against the cdn stock price. They move in tandem with currency moves. A low Canadian dollar helps Altius project generation greatly for the above reasons....and there are many that think the U.S debt pile is a house of cards and would like to buy Canadian assets as A hedge against the USD dropping in the future especially when USD is strong. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted January 8, 2014 Share Posted January 8, 2014 Naboo, I agree with your thoughts...and I have not mentioned the natural hedge which is more important to Altius than the currency move in investments.... As the cdn dollar moves down all Canadian production costs come down....It makes all of Altius projects more viable as iron ore etc are prices is USD. For European and American investors who want to come in and buy Canadian assets they are getting a discount and a lower production cost asset. Labour is a big cost in the Labrador Trough and it just dropped 8%. If we were to go to 80 cents cdn then Kami and Julienne Lake's margins would improve substantially. And those European investors that bought the majority of their stake at the end of 2012 :( ? Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 8, 2014 Share Posted January 8, 2014 All currency players will happy....because the currency depreciation takes the odds of Altius creating loads more money!!!!! Scenario 1 IE if we are in a mining boom and the cdn currency is at $1.10 U.S and the Euro is low...Kami and Julienne Lake costs are 20% higher and it is tougher decision to green light them...not to mention the other other projects that Altius has going...Higher cost exploration etc.. Altius investments are worth approx $40m higher... Scenario 2 Cdn dollar at $.90...greater margin of 20% and cheaper capital injection from partners bring the probability of green lighting more projects... Altius royalty in Kami dwarfs the currency change...not to mention any of the other projects get the green light!!! A few percent in currency depreciation could make us all rich! Dazel. Link to comment Share on other sites More sharing options...
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