Eric50 Posted May 3, 2011 Share Posted May 3, 2011 Dazel - Thanks for the kind answer. I agree with you that this is incredibly cheap - I just wanted to see how strong your conviction was. I've also increased significantly my position recently. I see many green lights: - quality of management: Dalton has an incredible track record for his age; - the business model is - as you've said - almost perfect: the company is exposed to mining without any capex; - it's a way to benefit from the secular bull market in commodities with some diversification; - from a US perspective, it's way to invest in a stronger currency: - it is very cheap, worth at least twice the current market within a year or two. Re the uranium perception that's weighting on the price, the price of uranium has started to increase. Hopefully that will change the perception! Eric Link to comment Share on other sites More sharing options...
Liberty Posted May 3, 2011 Share Posted May 3, 2011 It could also be the correction in Alderon shares which was kind of expected. Anyone care to elaborate on that? Why was it expected, and what's going on there? I haven't been following Alderon too closely lately.. Link to comment Share on other sites More sharing options...
Myth465 Posted May 3, 2011 Share Posted May 3, 2011 Q: Do you think businesses like See’s candy, or hard assets such as railroads are superior in a inflationary world? The first group is superior. You have the price power. The worst business is one that has a lot of receivables. Normally we were not enthusiastic with utilities and railroad. The ideal business, See’s candy, was doing $25 million when we bought it. We are doing $300 million now. We only had to plough back $30 million in the business. We don’t have receivables and much fixed assets. See’s Candy is far better. The ideal asset is the royalty on someone else’s sale. That kind of asset is inflation protected. We deployed in utilities and railroads because we cannot find enough business like See’s. ---- This company will be a beast if they can get the assets into the right hands. LUK is minting money with that royalty. Its tough you need a buyer, but one with big pockets who can push through regardless of the commodity cycle. Link to comment Share on other sites More sharing options...
Guest Dazel Posted May 3, 2011 Share Posted May 3, 2011 today we were the bid at $12.20..no takers...we got small amounts at $12.21...I don"t know how much more disclosure I can give! Ya pay up I know! a couple of things... we are alone... there is 0 coverage of Altius...plenty of coverage of Alderon...5 to 6 houses with targets all the way to $6. If it were at $5 or $6 we would not be talking about it...It is the "new find" in Canda iron ore with that comes volatility... Myth is right...They have two agendas....with regards to Alderon...continue forward with the successful drill program expanding the resourse and with that putting together a world class development team...this will bring up the value of Alderon. The second and more important to us the Altius shareholders, is to find the right partner. When they sold out of the Uranium project in 2007 they used forward stock agreements to essentially give them a hedged sale price of a $200m gain in the market. The 2% NSR there maybe worth a great deal in the future but the property has changed hands now to Paladin (a stronger player) this takes time....I am sure they are now thinking why did we not go to Paladin and Cameco in the first place...The NSR may have been paid out much quicker. We think this time they are looking to sell directly to the right partner rather than in the market. Preferably the same partner from China who made a killing for their 19% stake in Thompson Consolidated. This does two things: ensures them that the project moves ahead quickly and brings up the value of the 3% NSR on the properties. Remember that Brian Dalton has told us the NPV of the their NSR is worth $100m at half the iron ore price of today. We assume that the value then is $200m today...that is double what the value of their Alderon stake is...see what we mean. The negotiation that Dalton is undertaking in China right now would likely have priced that NSR in....why else would they know it? We have no access to their negotiation nor have we spoken to Altius...other than the email we disclosed. Common sense tells us this is what is going on. Why not copy Thompson Consolidated completely? The other options are sell the NSR with the stake and take the money now. Speculating...You have one announcement that changes the perception of Altius' value. That would be the successful negotiation of good terms in an Alderon deal. The market will not count the $300 million in value until it is done..the market is not counting the value the Alderon shares alone! We are willing to wait for for this type of scenario..and after it happens we will likely wait for the next one or two after that! Dazel. Link to comment Share on other sites More sharing options...
Guest Dazel Posted May 3, 2011 Share Posted May 3, 2011 http://www.consolidatedthompson.com/i/pdf/news/july_20_09.pdf Wisco's 19.9% stake for $240m and their guarantee of purchase of 4m tonnes of iron ore concentrate made them about $750m profit in a little over a year! plus they have secured supply. www.wisco.com.cn/wisco_en/brief/aboutus.shtml - They are the number 3 producer of steel in China....Dalton has lot's of options. China producer's have been smart..they are monetizing assets while securing supply. By investing in projects they are driving up the value of those projects making a profit for themselves. But the increase in value they bring to projects by ensuring demand is being financed by other investor's. Thompson rasied debt after they took their stake and put in future secured sales. smart all the way around Dazel. Link to comment Share on other sites More sharing options...
goldfinger Posted May 4, 2011 Share Posted May 4, 2011 Anyone care to elaborate on that? Why was it expected, and what's going on there? I haven't been following Alderon too closely lately.. You know Alderon just went up a lot on resource announcements but now it has to find financing to go to production. If you look at similar past cases like Thomson, the stock tends to bob up and down for a while until this is finalized. Dazel gave very good points on finding chinese partners and selling to them instead of on the market. I had silent similar thoughts in the last few weeks. Cheers! Link to comment Share on other sites More sharing options...
Liberty Posted May 4, 2011 Share Posted May 4, 2011 Thanks Goldfinger, and thanks Dazel, your updates are always very insightful. Cheers! update: Wow, really going down today. -6.13% right now Link to comment Share on other sites More sharing options...
newbee Posted May 4, 2011 Share Posted May 4, 2011 New comer to this Great board. Is there a reason why there is a 5% price difference between between atusf.pk and als.to 12.42 Vs 11.92. Thanks Link to comment Share on other sites More sharing options...
bathtime Posted May 4, 2011 Share Posted May 4, 2011 New comer to this Great board. Is there a reason why there is a 5% price difference between between atusf.pk and als.to 12.42 Vs 11.92. Thanks It's the USD/CAD exchange rate. Link to comment Share on other sites More sharing options...
Guest Dazel Posted May 4, 2011 Share Posted May 4, 2011 No sugar coating boys Altius has been hit very hard. tough to watch. we feel your pain! picking some up here. Dazel. Link to comment Share on other sites More sharing options...
Myth465 Posted May 4, 2011 Share Posted May 4, 2011 No sugar coating boys Altius has been hit very hard. tough to watch. we feel your pain! picking some up here. Dazel. I plan on holding. This seems like a set and forget kinda deal. A little pain is healthy, keeps everyone honest and filters out the rift raft. Though it still hurts. Thanks again for the updates. Link to comment Share on other sites More sharing options...
jjsto Posted May 4, 2011 Share Posted May 4, 2011 The recent volatility doesnt bother me too much for two reasons: 1) I havent seen anything that would lead me to believe any of their projects are fundamentally different today than they were 3 weeks ago. So, as long as there is no bad news from their projects (alderon in particular) this might be an opportunity for the people that bought recently to average down. 2) This is still an exploration/development type commodities company (with low cash flow relative to market cap), and a certain amount of volatility should be expected in spite of their strong balance sheet. I plan on holding till Alderon starts producing, gets taken out, or development is for some reason delayed/halted. Link to comment Share on other sites More sharing options...
goldfinger Posted May 4, 2011 Share Posted May 4, 2011 No sugar coating boys Altius has been hit very hard. tough to watch. we feel your pain! I must be masochistic I picked up some more! Link to comment Share on other sites More sharing options...
Mark Jr. Posted May 5, 2011 Share Posted May 5, 2011 Thanks again Dazel. I am very jittery about resources and the state of the markets / economy in general, but I think this is an amazing find which will compound overtime. I plan to hold, learn, and Buy the Dip. Thanks again. Me too. This was exacerbated by somebody sending me a communications (somebody from this board, in fact) which included this (the "we are here" was added by me) http://img88.imageshack.us/img88/9339/picture114u.png I have picked some up, I am considering adding more if this gets much cheaper. Right now I'm also holding SCP (Sprott Resource Corp) for a couple years now and these two are a sizable chunk of my exposure to resources (not counting my gold and silver). Link to comment Share on other sites More sharing options...
goldfinger Posted May 5, 2011 Share Posted May 5, 2011 I have picked some up, I am considering adding more if this gets much cheaper. Right now I'm also holding SCP (Sprott Resource Corp) for a couple years now and these two are a sizable chunk of my exposure to resources (not counting my gold and silver). As an anecdote: Paul Van Eeden has been very bearish for more than 3 years now and has sold most of his investments. However he has kept his position in Altius. Now I am not saying it won't get much cheaper in a commodity crash. It will. But from where? What I mean by that is: what happens if the Alderon stake gets sold soon for a good price: the amount of cash on the balance sheet will exceed current market cap by far. In a crash they can buy royalties like nobody else... Link to comment Share on other sites More sharing options...
Mark Jr. Posted May 5, 2011 Share Posted May 5, 2011 I have picked some up, I am considering adding more if this gets much cheaper. Right now I'm also holding SCP (Sprott Resource Corp) for a couple years now and these two are a sizable chunk of my exposure to resources (not counting my gold and silver). As an anecdote: Paul Van Eeden has been very bearish for more than 3 years now and has sold most of his investments. However he has kept his position in Altius. Now I am not saying it won't get much cheaper in a commodity crash. It will. But from where? What I mean by that is: what happens if the Alderon stake gets sold soon for a good price: the amount of cash on the balance sheet will exceed current market cap by far. In a crash they can buy royalties like nobody else... Indeed, in fact that's kind of what SCP did, they had just sold PBS Coals for a 240M profit right before the meltdown hit and they were sitting on it in cash. Their stock took a massive hit too, but they just took advantage and started putting it work. Link to comment Share on other sites More sharing options...
Liberty Posted May 5, 2011 Share Posted May 5, 2011 That's partly why I like Altius and bought a good amount; if things go well, they have lots of projects that get more valuable. If things go to hell, they can buy lots of undervalued assets and/or repurchase stock. Heads they win, tail they win... Link to comment Share on other sites More sharing options...
Guest Dazel Posted May 5, 2011 Share Posted May 5, 2011 SCP has an interesting longer term look with their farming assets and oil company but they like ALS did not get a big return on the cash... ALS has a greater upside because of the assets they hold...Alderon is the one they will cash in on first but you have to believe they are negotiating on the other assets as well...Their cost on the balance sheet for all projects is $4m...and Voisey NSR is $10m! That is all they have allocated to the cost of these projects....they have a huge upside..beyond Alderon. It would be a tremendous take out target for someone to walk in take a controlling position in Alderon get the all the royalties for free..and pay yourself back with their cash... Really if we were Leucadia and we had the cash we would be buying out the whole company...it's free...if you control it. an aside. Those that have not read Jeremy Grantham's new piece I suggest you do...explaining peak everything...myth posted it. CNBC may deal in bubbles and 3 days is a long term trade! But places like China are thinking 10 and 20 years ahead. Gold, silver...peaked??I do not know. I do know that demand for iron ore will continue and at half the iron ore price today the alderon NSR is $100m...they would call that a crash if the price was half! I would take the $100m happily! just a matter of time for Altius...The cash that has been a drag on earnings looked real good today! Dazel. Link to comment Share on other sites More sharing options...
goldfinger Posted May 5, 2011 Share Posted May 5, 2011 Those that have not read Jeremy Grantham's new piece I suggest you do...explaining peak everything...myth posted it. In addition you do not have a China (1.5 B inhabitants) + a Brazil + a Russia + an India + etc... building/rebuilding themselves every 30 years (even though this can be (temporarily) interrupted by severe crisis at some point in time). Link to comment Share on other sites More sharing options...
MrB Posted May 5, 2011 Share Posted May 5, 2011 Wisco's 19.9% stake for $240m and their guarantee of purchase of 4m tonnes of iron ore concentrate made them about $750m profit in a little over a year! plus they have secured supply. Dazel, Can you break this down a bit? Is this just talk (from the co) or has cash actually been exchanged? Thanks in advance. Link to comment Share on other sites More sharing options...
Guest Dazel Posted May 5, 2011 Share Posted May 5, 2011 If you read the posted link you will see that the 19.9% was bought for $240m...that would give you a market cap of $1.25b...on their purchase price. They were sold for $4.9 billion (below)...it is is the final stage of closing. I have never seen a company from china reveal how much they make in these types of deals in north America. They are too smart...they obviously trust the principals that have gone to Alderon..why would they not do it again when they know they have the demand in china? Alderon is literally next door but closer to rail and other services. dazel. http://www.bloomberg.com/news/2011-01-11/consolidated-thompson-potash-corp-canada-equity-preview.html Link to comment Share on other sites More sharing options...
MrB Posted May 5, 2011 Share Posted May 5, 2011 Read it, but it makes no mention of the $240m. What am I missing? Link to comment Share on other sites More sharing options...
JAllen Posted May 5, 2011 Share Posted May 5, 2011 Read it, but it makes no mention of the $240m. What am I missing? http://www.consolidatedthompson.com/s/NewsReleases.asp?ReportID=382300&_Type=News-Releases&_Title=Consolidated-Thompson-and-WISCO-Announce-Closing-of-240-Million-Strategic-I... Link to comment Share on other sites More sharing options...
MrB Posted May 5, 2011 Share Posted May 5, 2011 Ok, thanks. So to circle back to my original question and let's just focus on the $240m. How much cash has exchanged hands? This was a July 2009 deal, so presumably all of it, if one is to count it as profit...No? Link to comment Share on other sites More sharing options...
Liberty Posted May 6, 2011 Share Posted May 6, 2011 I just increased my ALS position by 50%. This drop is a nice opportunity. I probably timed it terribly because that's what I do, and it might drop by 20% soon, but oh well, still a bargain. Link to comment Share on other sites More sharing options...
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