written by reader Altius tanking

By Anonymous Questions, November 5, 2014

Does anyone there know why ATUSF (Altius Minerals) is tanking lately? I know you and a couple of others I trust like S&Aโ€™s Frank Curzio, the Motley Fool boys, all seemed to think that this was a good, new royalty stock. Thanks in advance.

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SoGiAm
Irregular
November 6, 2014 5:52 am

Iron Ore slumps to 5 yr low per Bloomberg
Gold rallies from lowest since 2010 per Bloomberg

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Travis Johnson, Stock Gumshoe
November 6, 2014 11:50 am
Reply to  SoGiAm

Yes, for Altius it’s almost all iron ore concern — Alderon is a big part of their growth potential, and with iron ore now well below $80 and Alderon unable to find financing for the Kami mine it looks like they’ll be delayed by at least a couple years.

To my mind they should still generate at least $4 million in free cash flow per year, I expect it may even be twice that much (I’m using $22 million in royalties as the base case, their portfolio has averaged $25-30 million for a decade — not sure what taxes will be, they spend $12 million on interest and could continue to spend $6 million on prospecting and overhead each year), for the foreseeable future due to their existing royalties — but the writedowns on Alderon or on their other investments (Virginia Mines and Callinan) could easily be enough to make them continue to report earnings losses (writedowns of the balance sheet assets show up as a cost against earnings, but don’t actually cost any cash). That doesn’t make them cheap if Kami doesn’t happen — Kami would have doubled those royalties — but it’s easily sustainable and they have a huge amount of optionality in undeveloped and unpartnered assets and earlier stage projects that are still being financed by their partners so I continue to think it will be a good long-term holding… but it’s quite contrarian at the moment, now that everyone hates almost all commodities again.

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baygreen
Member
November 10, 2014 12:20 am

Generate is a verb or adverb ore is ore not a supplement in wait, which one will show up in the long run oh no leaps allowed here, time to punt I am on the shoe’s side if one knows what that means cause only time will tell, spring ahead I would think, taxes are taxes they can be calculated ?

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