Liberty Posted March 31, 2014 Share Posted March 31, 2014 From Glenn: http://glennchan.wordpress.com/2014/03/31/the-not-so-pretty-side-of-altius-minerals/ Link to comment Share on other sites More sharing options...
Otsog Posted March 31, 2014 Share Posted March 31, 2014 From Glenn: http://glennchan.wordpress.com/2014/03/31/the-not-so-pretty-side-of-altius-minerals/ In conjunction w/: http://glennchan.wordpress.com/2014/03/30/unbuilt-mines-with-planned-expansions/ Link to comment Share on other sites More sharing options...
Blue Macaw Posted March 31, 2014 Share Posted March 31, 2014 Would not completely agree with the article. You always have the risk to adress and the capital needed to build the mine. It is better and with less risk to build a mine with lower capacity and if profitable expand it depending on commodity prices. Link to comment Share on other sites More sharing options...
Blue Macaw Posted March 31, 2014 Share Posted March 31, 2014 Follow the Chinese and things will be fine..Kami will be built and I have high hopes on the new CDP. Chinese will need lots of energy, actually the whole of south east asia. To be honest I don´t think people have realised what an impact the Chinese transformation will have on energy resources. 1,3 billion people striving towards the same life standards as the americans. When the USA got going they were about 200 million people and are today roughly 300 million. We will experience something that has never been seen before. Interesting, a little scary but just amazing. Link to comment Share on other sites More sharing options...
Blue Macaw Posted March 31, 2014 Share Posted March 31, 2014 Did I mention that Altius have already realised this? I mean hooking up with the Chinese!! Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted March 31, 2014 Share Posted March 31, 2014 I think Altius is doing deals with Chinese entities because they are more likely to overpay. In my opinion, Chinese companies/enterprises have done a lot of dumb deals. They are the dumb money. - Hebei exercising its option for Kami... arguably they overpaid. They should have renegotiated a lower price. - Yunnan Chihong (publicly listed) and Selwyn Resources... Yunnan's accounting is very questionable. They paid $100M for the first half of a joint venture and then $50M for the second half. Instead of taking a $50M impairment loss, they recognized a $50M gain. I'm very skeptical about the investments that Chinese companies are making. Link to comment Share on other sites More sharing options...
Blue Macaw Posted March 31, 2014 Share Posted March 31, 2014 More info on CDP. (Maybe this has already been posted) Coal - Carbon Development Partnership Carbon Development Partnership is committed to the continued development of coal as a safe and increasingly clean source of energy. Carbon Development Partnership (‘‘CDP'') is an indirect 50-50 partnership between Sherritt and the Ontario Teachers' Pension Plan. CDP is dedicated to the development of approximately 12 billion tonnes of undeveloped coal reserves and resources in western Canada. CDP is currently assessing opportunities to develop its coal reserves by considering projects in conventional power generation, surface coal gasification, in-situ coal gasification and coalbed methane extraction. CDP is currently focusing on the Dodds-Roundhill project to develop Canada's first commercial application of coal gasification technology. Gasification is considered to be a clean coal technology, as the process produces minor amounts of SO x and NO x and has the potential to capture and deliver to underground storage all CO 2 emissions before they are vented into the atmosphere.The project, if approved and completed, is expected to be located approximately 80 kilometres east of the city of Edmonton, Alberta. The project contemplates the development of a surface coal gasification facility to produce coal syngas, which in turn may be used to produce hydrogen, clean diesel or synthetic natural gas. CDP believes Dodds-Roundhill would be well-positioned to provide customers in Alberta with many distinct advantages: Strategic location close to Alberta's Industrial Heartland • Security of supply • Long term price stability • Environmentally friendly alternative Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 31, 2014 Share Posted March 31, 2014 We enjoy skeptism...we are in the worst bear market anyone alive has seen in commodities since The 80's....Altius would not be able to do what they are doing without it. the key to Atlius future is its ability to add royalties at good to great prices. They would be unable to do this in a decent environment because they would have competition. The environment is brutal unless you have infrastructure...brutal..and it is reflected in prices. The three deals in the works now PMRL, Kami, and Julienne Lake....are massive and transformational...however, if the environment remains challenging it is to our advantage as we have the smartest team in the industry to take advantage of it. The chinese are strategic buyers...they need the resources...and they have a $4 trillion piggy bank. Dazel Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 31, 2014 Share Posted March 31, 2014 http://www.smh.com.au/business/china/chinese-planners-want-more-overseas-iron-ore-mine-investment-20140127-31ihs.html These buys are different than normal companies they are done for nationalistic reasons. They of course have to make sense...Altius figured this out many years ago and are simply giving the Chinese what they want...the final iron ore product that is developed in the Labrador trough is "exactly" what the Chinese are looking for...it trades at a premium in world market...because it is "strategic" to Chinese environmental change happening now. As for the ownership of these assets...in good times governments would not allow higher concentration of Chinese ownership. Slow times like now...governments will go for the jobs...we have already seen a hint of this with Wabush closing. Link to comment Share on other sites More sharing options...
dweiss60 Posted March 31, 2014 Share Posted March 31, 2014 Sorry - how does is Wabush closing consistent with you prior comment (slow times/fast times)? (I'm an interested observer of Wabush) Link to comment Share on other sites More sharing options...
gary17 Posted March 31, 2014 Share Posted March 31, 2014 I don't know anything about mining or this particular type of business model. Clearly this is outside of my circle of competence. However, if I want to understand this and perhaps even attempt to value this, does anyone know if there is a good "primer" that I can read to get up to speed! Thanks Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 31, 2014 Share Posted March 31, 2014 Wabush is loss of 400 workers which is devastating to a small community.... If you were following the events with Kami you would know that the day of the closing of Wabush... The government announced they would be building out powerlines to Labrador west. All government works this way...they need an excuse to do something....A build out of The Labrador trough is being counted on by the government...they just built a state of the art Port for $100m and they are connecting the $7.7 billion Muskrat falls to the grid in Labrador West. In other words the infrastructure has been built out now they need mines built and expanded. They did not count on the loss of Wabush mines...so they will pushing for Kami and Julienne Lake....massive tax dollars at stake. Link to comment Share on other sites More sharing options...
Guest Dazel Posted March 31, 2014 Share Posted March 31, 2014 GaryChen, This is good educational piece that explains Altius...we are "not" miners. http://stansberryresearch.com/investor-education/royalty-companies-safe-returns/ "One of the best-known royalty companies is Royal Gold. It's a great example of a royalty company that started small and steadily grew to a multibillion-dollar business. Royal Gold had the original idea of exploring to grow its own properties, and then finding majors to develop them, while retaining a royalty interest in them. The company had explored and found gold on a property in Nevada called Cortez. It got a miner called Placer Dome to develop it, and Royal Gold kept a royalty on it. It was a much smaller property when Placer first got involved, and it turned into a million-ounce-a-year mine. That huge royalty basically funded Royal Gold's growth in the acquisition of more properties, and it snowballed from there." Altius' "cortez" has been Newfoundland Labrador....Altius has had huge wins outside royalties in the area including a sale of IRC (voisey bay was IRC's largest royalty at the time...Altius knew it well) to Royal Gold for $30m after tax profit and $200m from Aurora....The royalties from PMRL, Voisey Bay, Kami etc will fund Altius further growth into a multi billion dollar company the same way Royal Gold did it... Except Altius is commodity agnostic...more opportunity....Altius will retain the premiums that are associated with great royalty companies. They are moving from a small royalty company to a large one. "Ideally, you want to buy the big ones when they're trading around 15 times royalty income, and sell them when they're trading over 25 times income. And you want to buy the small ones when they're trading around five times royalty income, and sell them when they're trading over 10 times income. But, rather than trading in and out based on the multiple, it can be better to just buy and hold based on their pipeline of growth." Link to comment Share on other sites More sharing options...
original mungerville Posted April 1, 2014 Share Posted April 1, 2014 So based on that article, is Altius a "big one" or "small one" in terms of its company size in the royalty business? The article states big royalty companies trade at 20x and small ones trade at 10x. Or is Altius somewhere in between and will trade at 15x as has been suggested on this thread. Further, I would suspect (I am guessing) that a metals / energy / potash royalty company may trade at a discount to the multiple of a pure play gold royalty company (which is the focus of the article). So are we looking at 10x (small) or 15x (medium size / quality royalties); or something less than 15x to account for a discount relative to gold royalties? ie would 13x be the trading multiple? Link to comment Share on other sites More sharing options...
Guest Dazel Posted April 1, 2014 Share Posted April 1, 2014 Original Mungerville, I plan on exploring this in great details once PMRL is done...I will wait until then. Dazel. Link to comment Share on other sites More sharing options...
Guest Dazel Posted April 1, 2014 Share Posted April 1, 2014 http://www.mining.com/iron-ore-price-end-first-quarter-with-a-bang-99713/ This is very good news... Dazel. Link to comment Share on other sites More sharing options...
Blue Macaw Posted April 1, 2014 Share Posted April 1, 2014 CDP link http://environment.alberta.ca/documents/sherritt_dodds-roundhill_pdd.pdf Link to comment Share on other sites More sharing options...
craigatk Posted April 1, 2014 Share Posted April 1, 2014 CDP link http://environment.alberta.ca/documents/sherritt_dodds-roundhill_pdd.pdf Yeah I read that before when CDP was announced. $1.5B investment required is a scary large number in order to build a "proof of concept" style coal gasification plant. Now that the Teachers have pulled out of CDP, Altius must be mothballing this project, considering they don't have $1.5B to sink into something like this? Or would they be able to try and offload the funding/project to somebody else who has expertise and interest? Link to comment Share on other sites More sharing options...
SharperDingaan Posted April 1, 2014 Share Posted April 1, 2014 Original Mungerville, Most would expect a mining related multiple to be a function of the royalty stream commodity diversification (high for ALS), the individual mines cost structure/off-take price-volume (good for ALS), individual royalty lives (long lived mines), dividend payout ratio (unknown for now), & the sexiness of the underlying commodity (low for ALS). Everyone loves gold, & a high payout ratio - because it can hide a lot of sh1te. ALS does not have much in the way of direct comparison; so as with the lead house on your street during the annual spring & fall real estate season - they have to lead. Harder to do, but if you can achieve break-out, the price will usually run & run hard. The term 'transformational' is a reference to this well known phenomena. It is very much in Newfoundland's interest to see a royalties driven mining boom in Labrador, & hence highly likely that the tax regime will receive favourable re-jigging; on pain of seeing more Wabush type closures. It is also very much in the industry's interests, & gold miners in particular, to see ALS achieve break-out. A 17.5x diversified multiple today for ALS, followed by a 20x gold mine multiple on a Goldcorp or a Barrick, to restore the BS of those miners. Income Trusts were phased out by the former finance minister. The space is now clear for a replacement, mining royalties are very much in line with the original premise of income trusts, & there is a very strong employment (& votes) incentive to assist new mines into production. Given that income trusts boosted stock valuations by roughly 15%, todays 20x multiple would become 23x. Of course you cannot sell 'maybe', only 'show me'. You also cannot sell long term (>1yr) to a mutual fund, until you can evidence momentum in multiple expansion. But do it ... & suddenly the world is your friend, allowing you to use HFT to push prices higher on a sea of liquidity. And when your financing has been based on knowing how to promote, & you are sophisticated ... you have multiple added strengths in this area. So what is it worth today? Impossible to say until they roll out the completed transactions, but it is very clearly worth a lot more than it is trading for today ;) SD Link to comment Share on other sites More sharing options...
gary17 Posted April 1, 2014 Share Posted April 1, 2014 Thanks So this is more like a bank than a miner! Okay now I can start digging into this :) GaryChen, This is good educational piece that explains Altius...we are "not" miners. http://stansberryresearch.com/investor-education/royalty-companies-safe-returns/ "One of the best-known royalty companies is Royal Gold. It's a great example of a royalty company that started small and steadily grew to a multibillion-dollar business. Royal Gold had the original idea of exploring to grow its own properties, and then finding majors to develop them, while retaining a royalty interest in them. The company had explored and found gold on a property in Nevada called Cortez. It got a miner called Placer Dome to develop it, and Royal Gold kept a royalty on it. It was a much smaller property when Placer first got involved, and it turned into a million-ounce-a-year mine. That huge royalty basically funded Royal Gold's growth in the acquisition of more properties, and it snowballed from there." Altius' "cortez" has been Newfoundland Labrador....Altius has had huge wins outside royalties in the area including a sale of IRC (voisey bay was IRC's largest royalty at the time...Altius knew it well) to Royal Gold for $30m after tax profit and $200m from Aurora....The royalties from PMRL, Voisey Bay, Kami etc will fund Altius further growth into a multi billion dollar company the same way Royal Gold did it... Except Altius is commodity agnostic...more opportunity....Altius will retain the premiums that are associated with great royalty companies. They are moving from a small royalty company to a large one. "Ideally, you want to buy the big ones when they're trading around 15 times royalty income, and sell them when they're trading over 25 times income. And you want to buy the small ones when they're trading around five times royalty income, and sell them when they're trading over 10 times income. But, rather than trading in and out based on the multiple, it can be better to just buy and hold based on their pipeline of growth." Link to comment Share on other sites More sharing options...
original mungerville Posted April 1, 2014 Share Posted April 1, 2014 Thanks Sharper. It looks like Dazel wants to let us wait in anticipation! Unless Iron Ore prices fall out of bed, my guess is its going to be hard not to make money here in the short, medium and long-term. Link to comment Share on other sites More sharing options...
SharperDingaan Posted April 1, 2014 Share Posted April 1, 2014 I'm just the pupil :D ... Dazel is the expert SD Link to comment Share on other sites More sharing options...
Guest Dazel Posted April 2, 2014 Share Posted April 2, 2014 "Every significant price move of any individual common stock in relation to stocks as whole is because of a changed appraisal of that stock by the financial community" "Fortunate holders-those that do not sell out as such a stock starts to rise-then benefit from a phenomenon that provides the greatest reward in relation to the risk involved the stock market can produce. This is the dramatic improvement in price that results from the combined effect of both the steady improvement in per share earnings and a sharp, simultaneous increase in the price-earnings ratio. As the financial community quite correctly discovers that the fundamentals of the company (now its new image) have much more investment worth than had been recognized when the old image was in effect, the resulting increase in the price-earnings ratio is frequently an even more important factor in the increased price of the stock then the actual increase in per share earnings that accompanies it. Phillip A. Fisher "Common Stocks and Uncommon Profits" Warren Buffett learned a great deal from Fisher's writings in his transformation from Benjamin Graham. Altius is about to transform from a Graham stock to a Fisher stock....although it always contained all of the greatness of Fishers favorite points...most importantly the "people factors"-great management with financial skill and an ability to retain employees who like working there and create innovative products (joint ventures). But most importantly to the "new image" of great business characteristics. Dazel. Link to comment Share on other sites More sharing options...
FFHWatcher Posted April 2, 2014 Share Posted April 2, 2014 Unless Iron Ore prices fall out of bed, my guess is its going to be hard not to make money here in the short, medium and long-term. Do me a favour, never ever, ever, ever... say this again for a stock I own... :-) I will likely sell tomorrow after your post... Link to comment Share on other sites More sharing options...
gary17 Posted April 2, 2014 Share Posted April 2, 2014 sorry if this question has been asked & answered - how much of Altius do senior managers of the company & BOD own? it'd be great if someone has access to bloomberg terminal could share a screenshot..... thx.... Gary :D Link to comment Share on other sites More sharing options...
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