Guest Dazel Posted March 13, 2014 Share Posted March 13, 2014 There is a reason I use those great companies for comparison:Berkshire, Fairfax, Markel, Onex....their long term records are in the top percentile of public companies over a long period of time. Altius' record after 17 years puts them in that group. Link to comment Share on other sites More sharing options...
giofranchi Posted March 13, 2014 Share Posted March 13, 2014 There is a reason I use those great companies for comparison:Berkshire, Fairfax, Markel, Onex....their long term records are in the top percentile of public companies over a long period of time. Altius' record after 17 years puts them in that group. Dazel, you should also add Lancashire to the list. Please, read the latest seekingalpha article on Lancashire (that I posted yesterday on the Lancashire thread). ;) Cheers, Gio Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 13, 2014 Share Posted March 13, 2014 Gio, Lancashire looks interesting...however, they have a short track record and they have not even had a full insurance cycle. I see they have concentrated risk in gulf of Mexico energy (they started at exactly the right time...there has not been any major hurricanes to hit since they got in at the top of the market Pricing in 2008...I owned Fairfax during Katrina and the 5 other major hurricanes that wiped out the capital of a lot insurance companies. Fairfax had to raise money. Here is a lesson: Jack Byrne (warren Buffett's right hand man) who is credited with saving Geico and is an investing legend got wiped out during the 2006 hurricane season along with many many other smart people on Gulf energy claims. Insurance is a leveraged game with little equity involved...I know what hurricane watching sites to watch and sleep is not plentiful during hurricane season if you have seen anything like we saw in those years. http://www.insurancedayjobs.com/recruitment/default.jsp?zone=public_zone&area=news_area&page=newsdetail_page_1&news_id=20001410511 http://www.heatisonline.org/contentserver/objecthandlers/index.cfm?ID=5954&Method=Full&PageCall&Title=2006+Hurricane+Season+Could+Sink+20-40+Insurers&Cache=False Link to comment Share on other sites More sharing options...
giofranchi Posted March 13, 2014 Share Posted March 13, 2014 Insurance is a leveraged game with little equity involved... Ok, this is not the right place… therefore, I will leave it at that! Anyway, Mr. Brindle’s track record is longer than Altius… Just don’t dismiss Lancashire because it is an insurance company… It has very little in common with the insurance companies we know and usually deal with! Beginning with the fact it uses almost no leverage! The Cathedral acquisition has been badly misunderstood… The low special dividend for 2013 has been badly misunderstood… As soon as people realize Lancashire’s true earning power with Cathedral and Kinesis, they will start buying like crazy… If you have not already done so, please read the article I have referred to: it might be a little too optimistic on Cathedral, but does a great job describing the new Lancashire, its earnings potential, and its risk profile. Now I stop. ;) Cheers, Gio Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 13, 2014 Share Posted March 13, 2014 Gio, I am not dismissing it at all.... my point was not to be negative..just a warning on insurance risks as I have owned insurance companies before... thats all. and have studied the industry hard. I will look at it more and join you on the Lancashire board! Thank you for the idea! Dazel Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 13, 2014 Share Posted March 13, 2014 http://www.steelfirst.com/Article/3318989/News/Metal-Bulletin-Iron-Ore-Index-jumps-364.html We are back above $110 ($122cdn)!!!!!!!!! Link to comment Share on other sites More sharing options...
Blue Macaw Posted March 13, 2014 Share Posted March 13, 2014 Jitters, jitters....sounding the way it did 6 months to a year ago but at that time we were trading between 9-11 CAD. So what has changed in these 6 months? Are we over valued or is there still some upside? Is it worth spending 30 % more now to buy shares? i argued then that Kami phase 1 was worth 10 CAD. Then we had: Kami ongoing (Jitters about No Environmental approval, power line etc) Money in the bnk or other securities Julienne lake looking for partners etc etc We now have: Royalties that problably is worth the price they paid for it. However the big upside is that we now have a cashflow positive company and that will easier show the value on other things. It comes with debt and this is something that could be reduced by selling stocks. I also see some interesting opportunities with the coal and potash reserve they bought. There will be some increase in revenue as time goes by. Highvale will come on stream in 2016 and the potash will see an increase in production quite soon. That is however reduced by lower price. Currently potash will bring in 5,5 million a year and coal 20 million. Shares of Virginina mines and callinan that have increased in value. We also have 2 million more shares in Century iron. Kami is still there and things that caused the jitters then are now cleared and the whole project is massively de-risked. Iron ore prices will fluctuate and they also did 6-12 months ago causing large sell offs. But like it or not, Kami is on track. Nothing will be smooth but the situation is better now and we are closer to production. It might come out that whatever deal will leave Altius with less than expected. (Maybe receiving 2 dollars per share instead of 3). It will still reduce the debt and bring the project closer to production. Altius currently have partners investing around 13 million a year which is about 0,5 CAD per share and year. They have partners for Julliene lake, a project that the region would like to see in production. Altius has the ace of spades and unless there is a complete collapse (iron ore price, Chinese recession, environmental problems) the probablity lies in our favour. There might be "only" a royalty and no equity but with this project I buy it. 21 million tons!!! Worth at least 20 CAD a share. Anyway some thoughts. Will write more on the topic later. Need to work now. But do I think we have advanced and that the company ought to be higher valued than 6-12 months ago? YES Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 13, 2014 Share Posted March 13, 2014 Headline on earnings will look good....as the equity portfolio rose in the range of $13m to $15m at Jan 31. We should have the release next week. The stock got hammered on the iron ore drop monday as did Alderon. Iron ore prices are back within a hair of where they were Friday. It could be a hell of a spring! Disclosure: We have added to both all week including today Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 13, 2014 Share Posted March 13, 2014 http://www.ft.com/intl/cms/s/0/97763fac-aada-11e3-be01-00144feab7de.html#axzz2vs8Kdp8G Iron ore Still rising $111.50... Link to comment Share on other sites More sharing options...
original mungerville Posted March 14, 2014 Share Posted March 14, 2014 http://www.ft.com/intl/cms/s/0/97763fac-aada-11e3-be01-00144feab7de.html#axzz2vs8Kdp8G Iron ore Still rising $111.50... Amen. Link to comment Share on other sites More sharing options...
hohi Posted March 14, 2014 Share Posted March 14, 2014 Q2 press release... - seems ALS is now buying 52,36% of the royalties for $240,8M - Ontario Teachers’ Pension exercised an option to sell their 50% in CDP - ALS now buys 100% of CDP for $42M - deal is closing before the end of april Somewhere they have to come up with some extra cash now. I feel they will sell some of their equity positions (Virginia, Callinan) and maybe sell some of the CDP properties instantly. Link to comment Share on other sites More sharing options...
ap1234 Posted March 14, 2014 Share Posted March 14, 2014 There is also no mention of convertible bonds in the MD&A: "The corporation intends to finance the purchase of Prairie Royalties and CDP using a number of sources that may include current cash, a senior debt facility of up to $80 million, asset and available for sale equity dispositions and new corporate equity." Based upon the new $283 million purchase price (assuming the deal is intact) and $203 million in cash/senior debt, there is an $80 million funding gap. Given the difficulty in selling the Alderon stake, a Virginia sale would not be sufficient to cover the shortfall. They left the door open for an equity raise unless they can find another financing solution. Also, it looks like the current run rate for Voisey Bay is now $2.5 million. Any thoughts on the recent change? Link to comment Share on other sites More sharing options...
hohi Posted March 14, 2014 Share Posted March 14, 2014 Also, it looks like the current run rate for Voisey Bay is now $2.5 million. Any thoughts on the recent change? Lower prices and a little lower production... Doesn't matter in the end as we'll get our share of the pie later. Link to comment Share on other sites More sharing options...
ap1234 Posted March 14, 2014 Share Posted March 14, 2014 The convertible bonds are mentioned under the liquidity section of the report. Strange that it was excluded earlier in the MD&A. "Given that the current cash level is significantly more than that required for the continuing mineral exploration operations of the Corporation, management will use a portion of this cash as well as a senior debt facility of $80 million and a subordinate debenture of $50 million to finance the proposed acquisition of a 52.36% interest in Prairie Royalties and a 100% interest in CDP as discussed in the Operational and Business Overview and Outlook sections of this MD&A." Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 14, 2014 Share Posted March 14, 2014 Thanks for the information guys. Couple of other things... $12m before tax unrealized gain in investments in the quarter... They would get an equity position in the JL partnership plus the royalty if their deal is excepted. CDP has royalty producing potash assets...and partnership ventures are already being looked at for the coal assets. Link to comment Share on other sites More sharing options...
ap1234 Posted March 14, 2014 Share Posted March 14, 2014 Thanks Dazel. If JL gets approved, I assume Altius can't simply sell an equity position in JL to raise funds for the royalty deal (i.e. the equity stake is nice but doesn't provide ST liquidity to finance a deal). For a similar reason they haven't sold Alderon earlier. Their goal is to maximize the value from the royalty. While they probably wouldn't go out of their way to own equity stakes in pre-production junior mining stocks, they hold on to the equity stakes to help the mine get developed and ultimately benefit from the ongoing royalty (which is where the real value for Altius lies). I suspect it's not that easy to find a strategic buyer to acquire Altius' equity stakes (otherwise Alderon would presumably have been sold at this point). In terms of CDP, the royalty cash flows are already included in the $28 million total royalty revenue number that was disclosed in the MD&A. Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 14, 2014 Share Posted March 14, 2014 They are not sure on the final price because of the Genesee royalty with the right of first refusal. This would cause some uncertainty on how much cash they need for the deal...as the price would drop substantially if this royalty was not included. They have stated they will go ahead with the deal without it... They would have buyers for Virginia mines (Goldcorp) and Callinan(they would buy the shares back themselves) that could be done quickly in mind. If Alderon were bought out completely you would also have your answer. The media has destroyed iron ore companies this week with crazy headlines when in reality the price has barely moved on the week...so a little patience is needed. Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 14, 2014 Share Posted March 14, 2014 We all can likely consider the "Taper" on QE over for awhile....Gold is screaming this... http://www.usatoday.com/story/money/business/2014/03/14/university-michigan-consumer-sentiment-march/6411685/ Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 16, 2014 Share Posted March 16, 2014 http://www.bloomberg.com/news/2014-03-16/china-plans-over-163-billion-shantytown-investment-cctv-says.html Link to comment Share on other sites More sharing options...
yader Posted March 16, 2014 Share Posted March 16, 2014 I'm no rocket scientist but Dazel's link looks like a lot of steel to me! Link to comment Share on other sites More sharing options...
original mungerville Posted March 16, 2014 Share Posted March 16, 2014 This is why shorting IWM is dangerous relative to shorting IWM and being long precious metals... China, US, Europe and Japan can just keep printing and printing, its crazy... ...but certainly spending on construction in China is good for steel! The financial foundations are crumbling underneath as we continue to delay the inevitable. Link to comment Share on other sites More sharing options...
SharperDingaan Posted March 16, 2014 Share Posted March 16, 2014 It's also not just China .... http://www.telegraph.co.uk/finance/10701359/Dubai-reaches-agreement-on-20bn-debt-deal.html The agreement, which was revealed in The Daily Telegraph last month, will enable Dubai to continue spending heavily on infrastructure as it prepares to host the World Expo in 2020. SD Link to comment Share on other sites More sharing options...
SharperDingaan Posted March 16, 2014 Share Posted March 16, 2014 Interesting that they aren't phased with the additional cash requirement for the rest of CDP. Keep in mind that the additional CDP consideration (to a PP) does not have to be cash, partners cannot invest in JL unless it is spun out, & that you do not need 25% of a spin off to protect a royalty. It would appear that between these 3 options, the required cash raise is clearly not a problem. Elegant. SD Link to comment Share on other sites More sharing options...
investor-man Posted March 16, 2014 Share Posted March 16, 2014 http://www.bloomberg.com/news/2014-03-16/china-plans-over-163-billion-shantytown-investment-cctv-says.html hmm.... Well I'm not one to sing the praises of communist rule, but one definite upside is they can wield fiscal policy at will without (as much) political infighting. I'd say at least once a session during the crisis, Bernanke would allude to the need for more fiscal policy and seemed frustrated to be in a position where monetary policy was the only practical way out. It will be interesting to see how this plays out in China. Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 16, 2014 Share Posted March 16, 2014 This why I do not pay too much attention to China...they are building out their infrastructure and they have the money to do it obviously printed money but not QE. The fiscal consequences are very very stimulative where as QE is good for the bankers that's it. The forecast is that China will topout at 1.1 billion tonnes of steel production in 2025. They control spending So when things slow down they pump up infrastructure spending....thesis remains intact. Railways, expressways and airports...are earmarked...steel, steel and more steel. Link to comment Share on other sites More sharing options...
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