market folly

We've posted up notes from the Value Investing Congress in Las Vegas and next up in the series is Daniel Ferris of Extreme Value who pitched Altius Minerals as a long.


Daniel Ferris' Value Investing Congress Presentation

•    Pitching ALS.TO Altius Minerals.
•    $5.3 per share in cash no debt.
•    Owns and creates royalties on mining assets.
•    10 – 12x chances to make 50x to 100x returns.
•    Just multiplied its royalty income 10x in a single transaction.
•    Narrow the field by buying prospect generator – i.e. trades intellectual capital for physical capital.
•    Two complementary businesses – mineral exploration, project generation and royalty creation. Also purchases royalties.
•    Have repeated this process multiple times – grown NAV.
•    Exit through the sale of a mine and retain a CapEx lite 2% royalty stream.
•    Capital structure - 27.9MM shares – zero debt.
•    Upside through the Kami Project – discovered a 1B tone iron ore deposit in Western Labrador. Four producing mines, skilled labor, mining friendly jurisdiction and the infrastructure in place.
•    Created Alderon Iron Ore – Altius owns 25% which in turn owns 75% of the Kami LP mine – iron ore mine. Hebei Iron & Steel owns the other 20%.
•    Feels good about the downside – hard to value these projects which are not producing- but high upside potential.
•    Could be valued off dividend if initiated.
•    NAV $15 per share currently.
•    Announced two major transaction buy 52% in 11 royalties from Sherritt. Coal and potash royalties.
•    Will pay $42MM for Carbon Development Partnership from Sherritt as well.
•    Excellent royalty portfolio – no exposure to thermal coal market prices.
•    Purchase price of $283MM –  financed with124MM cash, 40MM in an equity securities portfolio, 80MM TL and a 50MM convert – fluid situation. PF NAV, could be worth $20 versus current price of $14 – if they pay a dividend, expected price of $30 or more

Be sure to check out the rest of the Value Investing Congress presentations.