Sunday, November 16, 2014

Altius Minerals: Low cost capital compounder

I have followed Altius Minerals (ATUSF) for over ten years and have owned it at various times. I am buying it again as it has a couple things going for it I like. It recently bought a stream of royalties and it did it at a low cost. It was able to do this because of the lack of interest in natural resource assets which means lower prices. These are long life coal and potash assets in Canada. I am a contrarian so when everyone was talking about coal going away I knew there would be an opportunity to buy coal assets cheap at some point. That time has come. In addition these coal assets are mine mouth assets which means the power plant sits right at the coal mine and consumes the coal mined. These plants are in Alberta and coal provides over 50% of their electric generation and it is not going away anytime soon. The potash assets are long life and are being mined by the big companies such as Potash, Agrium, and Mosaic. People need to eat so potash demand is not going away.

Here is a link to a full analysis of Altius by Two Cities Capital. They did a better job analyzing the stock than I could do.

Presentation By Altius management describing the royalty portfolio.

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