Altius in ChinaFrom an investor's email exchange with management: Brian Dalton, CEO of Altius, is currently meeting with investors in China. By my count this is his third trip in the last calendar year to China. BD indicates Altius is looking to sell its stake in Alderon before the company goes into production. I expect a Chinese off-take deal very soon, probably after the next resource estimate pushes ALD over 800 to 900 million tonnes.
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How about a Chinese investment of $300 million (and a promise to secure financing for the mine) in exchange for 1/3 of the company? Altius takes a couple hundred million off the table, and Alderon is fully funded for the near future. With more capital and a strategic investor Alderon can ambitiously expand its production plans from 8MT to 16MT a year. More overall production capacity reduces production costs per tonne, and the economics of the project get even better.
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Random thoughts after reading Alderon's new presentation: Forbes and Manhattan, Stan Bharti's merchant bank, is a very positive relationship for the company. These guys are very experienced and professional (a lot of legal, financial, and geological expertise on call for Alderon). Stan Bharti knows what he's doing, some of the people running Alderon's competitors do not. Bet on the jockey, not the property.
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Also building rail has become shockingly expensive. It cost Consolidated Thompson $177 million to build 31 km of rail, that's $5.7 million per km. Alderon has roughly 5km of rail to build, so that's only $28.5 million. Some of these other iron ore projects near Schefferville are understating their capital costs when it comes to rail, port, and electricity lines.