cwericb Posted January 9, 2014 Share Posted January 9, 2014 Thanks Dazel. Insightful, convoluted but insightful. Very interesting scenarios though. Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 9, 2014 Share Posted January 9, 2014 Convoluted for sure. When Consolidated Thompson made their rise from $2 to $17... They had the benefit of a weak canadian dollar...Cliffs ultimately likely payed too much...but they used USD based currency to take them over by selling their shares which were also priced in USD. I reiterate the best scenario for Altius is to have a major take over Alderon and Kami....the odds are better with a weak Canadian dollar...a consortium would be perfect. Link to comment Share on other sites More sharing options...
phil_Buffett Posted January 9, 2014 Share Posted January 9, 2014 dazel would it not be difficult to take over alderon because of potential conflicts for the buyer with hebei? Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 9, 2014 Share Posted January 9, 2014 There was no problem for Cliffs to take over bloom lake and it was structured and owned very similar to Kami. Wisco was Consoldidated Thompson's Hebei. Link to comment Share on other sites More sharing options...
phil_Buffett Posted January 9, 2014 Share Posted January 9, 2014 There was no problem for Cliffs to take over bloom lake and it was structured and owned very similar to Kami. Wisco was Consoldidated Thompson's Hebei. ok great dazel thank you. :) i hope we get soon good News from alderon about the power line and so on. Link to comment Share on other sites More sharing options...
giofranchi Posted January 9, 2014 Share Posted January 9, 2014 Do not agree with the fact the Canadian Dollar will depreciate in time against other currencies. Imo Canada has the brightest economic prospects of all the countries I know about (even climate change conjures in its favor!!). Currencies will fluctuate… No doubt about that! But in the long term they will reflect the strength of each country’s economy. And Canada’s will get stronger and stronger. As always I am in for the VERY LONG RUN, therefore I am perfectly happy to have my assets denominated in Canadian Dollars. Gio Link to comment Share on other sites More sharing options...
Liberty Posted January 9, 2014 Share Posted January 9, 2014 Do not agree with the fact the Canadian Dollar will depreciate in time against other currencies. Imo Canada has the brightest economic prospects of all the countries I know about (even climate change conjures in its favor!!). Currencies will fluctuate… No doubt about that! But in the long term they will reflect the strength of each country’s economy. And Canada’s will get stronger and stronger. As always I am in for the VERY LONG RUN, therefore I am perfectly happy to have my assets denominated in Canadian Dollars. Gio The housing bubble certainly doesn't help in the medium-term, though. Link to comment Share on other sites More sharing options...
giofranchi Posted January 9, 2014 Share Posted January 9, 2014 Do not agree with the fact the Canadian Dollar will depreciate in time against other currencies. Imo Canada has the brightest economic prospects of all the countries I know about (even climate change conjures in its favor!!). Currencies will fluctuate… No doubt about that! But in the long term they will reflect the strength of each country’s economy. And Canada’s will get stronger and stronger. As always I am in for the VERY LONG RUN, therefore I am perfectly happy to have my assets denominated in Canadian Dollars. Gio The housing bubble certainly doesn't help in the medium-term, though. What about if in the medium term we get what Dazel suggests, and in the longer term we get a strong Canadian Dollar? That would be the best of both worlds! ;) Gio Link to comment Share on other sites More sharing options...
kirkomi Posted January 9, 2014 Share Posted January 9, 2014 I bought CAD at prices which were lowest in the last two years or so -- to invest in Altius (& Fairfax). The currency tracker CAD/CHF seems to be in a long term decline for at least the last 10 years or so. Fortunately, I will not have to worry about it. The money is with good people and it will provide adequate returns. Link to comment Share on other sites More sharing options...
cwericb Posted January 9, 2014 Share Posted January 9, 2014 What's up with Alderon today? Heavy volume and up around 10% so far today... Link to comment Share on other sites More sharing options...
giofranchi Posted January 9, 2014 Share Posted January 9, 2014 The currency tracker CAD/CHF seems to be in a long term decline for at least the last 10 years or so. Well, on a PPP basis the CHF is among the most expensive currencies in the world… what bothers other paper currencies, doesn’t seem to affect the CHF in the least! ;) Gio Link to comment Share on other sites More sharing options...
nostradamus Posted January 9, 2014 Share Posted January 9, 2014 What's up with Alderon today? Heavy volume and up around 10% so far today... My guess would be that news on the enviromental assessment is on its way.... Link to comment Share on other sites More sharing options...
naboo Posted January 9, 2014 Share Posted January 9, 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. Thank you Dazel. I agree with you. The commodity price is in USD, so the cheaper Canadian dollar will bring the cost down(labor cost, expense etc.) and also make 12/24 deal look better. I will try to convert all numbers into USD Link to comment Share on other sites More sharing options...
kirkomi Posted January 9, 2014 Share Posted January 9, 2014 The currency tracker CAD/CHF seems to be in a long term decline for at least the last 10 years or so. Well, on a PPP basis the CHF is among the most expensive currencies in the world… what bothers other paper currencies, doesn’t seem to affect the CHF in the least! ;) Gio I am not complaining. I have been diversifying away to UK, Australia and Canada. Every currency, it seems, is down with respect to CHF. Most amazingly, the bench mark rate for CHF is negative. https://www.interactivebrokers.com/en/index.php?f=interest&p=schedule Link to comment Share on other sites More sharing options...
craigatk Posted January 9, 2014 Share Posted January 9, 2014 Nothing new but an overall positive report on progress that they are making. http://www.lapresse.ca/le-soleil/affaires/les-regions/201401/08/01-4726880-projet-kami-alderon-passe-a-laction.php Link to comment Share on other sites More sharing options...
One Idea Posted January 9, 2014 Share Posted January 9, 2014 Is there cause for concern that Altius is purchasing coal development rights from Sherritt? I thought coal was dead because of all the oil shale coming on-line in the US. Is this an attempt to buy while coal is low? What if coal doesn’t come back? How might this impact royalties, if at all? The exploration business is outside my circle of competence. So, please bear with me. I'm attracted to this opportunity because of Brian Dalton’s track record and Altius's focus on royalty acquisition. Thanks! Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 10, 2014 Share Posted January 10, 2014 One idea, The majority of the coal royalties that Altius is buying have major electricity customers with generating plants close by the mines...the contracts are fixed cost plus inflation adjustments...so they do not have a large upside but they do not have downside either. CDP is a speculative buy of 12 billion tonnes of coal assets...to partner with Ontario Pension fund ($139b in assets)... The price is $21 million....this is the first such time I have seen them buy an asset like this...my bet is they have something up their sleeve...at a low point in the coal cycle. Their deal making expertise along with their geological prowess make me look at the buy as a big opportunity that others cannot exploit. Coal is not dead...but the price you pay for it matters. Dazel Link to comment Share on other sites More sharing options...
One Idea Posted January 10, 2014 Share Posted January 10, 2014 One idea, The majority of the coal royalties that Altius is buying have major electricity customers with generating plants close by the mines...the contracts are fixed cost plus inflation adjustments...so they do not have a large upside but they do not have downside either. CDP is a speculative buy of 12 billion tonnes of coal assets...to partner with Ontario Pension fund ($139b in assets)... The price is $21 million....this is the first such time I have seen them buy an asset like this...my bet is they have something up their sleeve...at a low point in the coal cycle. Their deal making expertise along with their geological prowess make me look at the buy as a big opportunity that others cannot exploit. Coal is not dead...but the price you pay for it matters. Dazel Thanks for explaining. I think this is a "trust in Brian Dalton investment" as much as anything. Of course, the best time to buy into a coal operation is when high uncertainty is fully reflected in the price of the assets. Link to comment Share on other sites More sharing options...
tengen Posted January 10, 2014 Share Posted January 10, 2014 4 of the 5 coal royalties are tied to electric utilities (the 5th is a metallurgical coal royalty with Teck Resources). The key factor for the electrical coal royalties is the regulatory lifespan of the power generating plants. If you check out the Altius presentation (http://altiusminerals.com/uploads/Altius-Investor-Presentation-2014-01-07.pdf), you can see the estimated closure dates as well as the related coal reserves on page 20. As long as the plants are using coal from those mines, they will be paying a royalty to Altius. I don't see much chance of Alberta shutting down the power plants prior to their current closure dates. In fact, I can see the closure dates being extended or the plants being replaced with ones using "clean coal" technology as opposed to being displaced by NG, oil, or alternative power sources. The situation will start to become clear in the next few years as one of the plants is scheduled to close in 2019. The value of metallurgical coal depends on the demand for its use in manufacturing steel, so it's a completely different kettle of fish from the other royalties. As for the Coal Development Properties, the value will rise dramatically if "clean coal" becomes economically viable. Link to comment Share on other sites More sharing options...
EliG Posted January 10, 2014 Share Posted January 10, 2014 I'm a long time lurker, first time poster. I own a few Altius shares. I don't see much chance of Alberta shutting down the power plants prior to their current closure dates. In fact, I can see the closure dates being extended or the plants being replaced with ones using "clean coal" technology as opposed to being displaced by NG, oil, or alternative power sources. Are you not concerned about this? Doctors urge Alberta to phase out coal plants, citing respiratory illnesses Link to comment Share on other sites More sharing options...
EliG Posted January 10, 2014 Share Posted January 10, 2014 G&M article says: The health groups aren’t backing down, Forman said. Coal plants need to close. “We can have a debate on how quickly that happens, but we think coal has to be phased out – and not along the 50-year timeline the federal government requires. We think Ontario’s timeline of about 10 years is reasonable.” Alberta Energy Minister Ken Hughes said the province’s reliance on coal has dropped to 41 per cent from 65 per cent over the last 15 years. He said another 17 coal plants, representing almost a quarter of Alberta’s generating capacity, are to be shuttered in the next 17 years. Looking at the presentation slide 20: http://altiusminerals.com/uploads/Altius-Investor-Presentation-2014-01-07.pdf Mine life (years): Genesee: 61 Paintearth: 9.2 Sheerness: 12.8 Highvale: nmf (not sure what this means) The health groups want 10 years phase out. Assuming they get what they want (just for arguments sake), Genesee mine is the one we have to worry about. But we don't know yet if Altius gets it or not. It's subject to first refusal. Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 10, 2014 Share Posted January 10, 2014 http://en.wikipedia.org/wiki/List_of_electrical_generating_stations_in_Alberta Coal is a massive % of electricity in Alberta see the mw produced from coal above...to switch would be very difficult and very expensive...and to shut down coal completely is next to impossible. Dazel. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted January 10, 2014 Share Posted January 10, 2014 As coal is generally phased out you'd expect demand to fall lowering prices. This would mean anyone still using coal has an incentive to continue because their fixed costs keep getting cheaper while the alternatives don't necessarily. I think it will be more than 10 years before we will all say goodbye to coal. People and society just don't change that fast. Link to comment Share on other sites More sharing options...
Blue Macaw Posted January 10, 2014 Share Posted January 10, 2014 Lots of activity on the board lately which is also happening among institutions/finincial analysists now due to the purchase of the royalities. This is exactly what I suspected. Some like the deal others don´t. However there are some concerns from my side after reviewing the royalties and the Sheritt web page 1. Highvale royalty seem to be non existing. The operator gave up on it it seems like? So the question is if that will be a factor or if there will only be 11 royalties instead of 12? 2. Revenue only about 20 million and not 27 million for 2013. Coal is down as is potash 3. Cost of loans should be 7-9 million a year which leaves us with cost of about 11-13 million + additional cost of other investments. Payback of loan in the range of 5 million a year which leaves us with 5 million/28 million shares or 0,18 CAD/share. The big one is still Alderon. That is the way it is. 4. Geneese subject to first right refusal. This is the one we want isn´t it? Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 10, 2014 Share Posted January 10, 2014 Blue, As you know....we are not going to get screwd in the deal....if Genesee is refused etc...the terms change...If it is $20m vs. $27m there will be adjustments...it does not close until Late march...in my mind if it becomes a smaller deal they will be able to make another one... I think they may just have got the attention of not only the investing public but the institutions in enough of way to possibly become the consolidator of the royalty industry. They have waited long enough to pick up the carnage...in an industry that has been decimated. The royalty sector needs someone like Altius...and the investment banks have shown they are willing to back them. Brian Dalton and his team are finally going to get their respect...Leucadia could not have done what they did with out the monetary support of the financial community. Who would not want to partner with Altius in this environment...I would like to see them partner with Leucadia, Fairfax, Long Leaf, Cundill etc...I think all involved could be extremely successful. Fairfax has $6 billion in cash earning next to nothing. The short term upside resides in Alderon-Kami and hopefully Julienne Lake...if they were to have short term success in both we would see $20 in a hurry. At that point we could use the share price as currency to buy up a lot more distressed assets and royalties. Link to comment Share on other sites More sharing options...
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