I decided to double my investment in Altius Minerals (TSX: ALS, Pink Sheets: ATUSF) after the company’s stock price plummeted by more than 40%. I originally analysed the company here. The reason for the collapse was that Altius was notified by Newfoundland and Labrador Refining Corporation (NLRC) that it was seeking creditor protection after SNC-Lavalin, an engineering firm which provided services for NLRC, served NRLC with a notice of proceedings that it was seeking to have NLRC declared bankrupt.

Altius Minerals is the largest holding in my portfolio because I was very optimistic that its investment in NLRC could be worth several billion dollars in a few years. Indeed if the refinery was up and running today it would be enjoying gross margins well above the $26 I used to value the company last December. And no other refinery project in North America has succeeded in obtaining all the environmental permits as NLRC has.

My take on the dispute between SNC-Lavalin and NLRC is that SNC-Lavalin has not been paid for its services and is trying to leverage that into an equity stake. I could be wrong, but I cannot see how SNC-Lavalin will gain by seeing NLRC bankrupt. Even if SNC-Lavalin were awarded all of the assets of NLRC, which would not be worth the $20 million they are owed or millions more they stand to make in future services, it would be difficult for it to go ahead and complete the refinery without the support of Altius’ management who are Newfoundlanders with immense support from the provincial government and the local community.

I would be surprised if SNC-Lavalin and NLRC do not come to an out of court settlement within the next few months. Altius and the other investors of NLRC may need to concede equity to SNC-Lavalin to resolve the issue, but it would be best for all parties involved to not see NLRC bankrupt.

But even if we assume that the refinery project is dead then Altius’ loss should be limited to the $52 million invested in NLRC. Altius still has around $8 of net asset value per share and at Friday’s closing price of around $7, this would constitute an attractive value investment. Management has a track record of steadily growing net asset value over the long run and with Altius’ large holdings of resource rich land in Newfoundland, I have no doubt that shareholder value will be created over time. I bought a lot more stock on Friday at an average price of $7.10.