Growth, Diversity, Longevity€¦ · 2005 2015 2020 IPO Trough 1 Position Trough 2 Position...
Transcript of Growth, Diversity, Longevity€¦ · 2005 2015 2020 IPO Trough 1 Position Trough 2 Position...
TSX:ALS | OTCQX:ATUSF
Annual General MeetingMay 2019
Growth, Diversity, Longevity
TSX: ALS
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This document includes certain statements that constitute “forward‐looking statements” and “forward-looking information” within the meaning of
applicable securities laws (collectively, “forward‐looking statements”). Forward-looking statements include statements regarding Altius Minerals
Corporation’s (“Altius”) intent, or the beliefs or current expectations of Altius’ officers and directors. Such forward-looking statements are typically
identified by words such as “believe”, “anticipate”, “estimate”, “project”, “intend”, “expect”, “may”, “will”, “plan”, “should”, “would”, “contemplate”,
“possible”, “attempts”, “seeks” and similar expressions. Forward‐looking statements may relate to future outlook and anticipated events or results.
By their very nature, forward‐looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and
the risk that predictions and other forward‐looking statements will not prove to be accurate. Do not unduly rely on forward‐looking statements, as a
number of important factors, many of which are beyond Altius’ control, could cause actual results to differ materially from the estimates and
intentions expressed in such forward‐looking statements.
Forward‐looking statements speak only as of the date those statements are made. Except as required by applicable law, Altius does not assume
any obligation to update, or to publicly announce the results of any change to, any forward‐looking statement contained herein to reflect actual
results, future events or developments, changes in assumptions or changes in other factors affecting the forward‐looking statements.
Forward Looking Statements
TSX: ALS
3
Year Highlights
• Additional potash royalties acquired and debt refinanced
• Potash mine expansions ramping up
• Additional LIORC (IOC Royalty) interest acquired
• Bloom Lake successfully restarted
• Coal to renewables initiative launched
• Voisey’s Bay litigation settled
• Curipamba royalty added
• Gunnison construction begins
• Chapada and Cardinal River expansion feasibility studies announced
• Positive Kami, Telkwa, Groto di Cirilo and El Domo economic studies
• Several strategics investing in our PG portfolio companies
• PG companies had 99,000 metres of drilling completed with several discoveries indicated
Cyclical Analysis
TSX: ALSCurrent Cyclical Position
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20102000
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Royalty Acquisition
2005 2015 2020
IPOTrough 1
Position
Trough 2
Position
Down-Cycle / Trough
• Buy long-life, diversified mining royalties
• Accumulate exploration lands and convert to royalties and equities
Up-Cycle
• Achieve royalty purchase paybacks
• Capture value from exploration lands while pre-production stage royalties mature
TSX: ALSCurrent Cyclical Position
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• Miners have regained positive balance sheets on improved prices / margins and are beginning to invest cash flow back into assets (which is
showing up as multiple organic growth indications across our portfolio)
• M&A activity is becoming trendy in the broader mining space
• Better junior explorers and developers attracting strategic investors (including many examples within our portfolio)
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Cycle Bottom Occurred In Early 2016
But Still Below Mid-Cycle Levels
• Supply-demand deficits are occurring or looming for many commodities and stockpiles are being drawn down
• Investments are mainly to replace declines and closures rather than for incremental industry supply growth
• Prices and confidence generally still below levels required to incentivize development of next generation of projects
• Capital market participants are still absent the junior sector
• Capital and operating cost inflation is set to re-pressure margins and increase incentive price requirement levels (oil prices, wages, new tailings
standards, pits converting to underground, etc.) (particularly bullish for royalties – price but not cost sensitive)
• Global economic growth signals are noisy and mixed but major structural shifts towards transportation electrification and renewable energy are
underway and incredibly metals intensive
Potential for Another Strong Up-Cycle?
TSX: ALS
• Decreasing average industry metal grade means increasing cost intensity / incentive price requirement
• “Probable” pipeline project data signaling that the grade decline trend will continue
• Average timeframe from new major discovery to production is now 25-30 years
Dr. Copper: Geologic Cost Inflation
Average Mined Copper Ore Grade Falling Cost Intensity Per Unit of Metal Increasing
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TSX: ALSDr. Copper: “Under-build, build and over-build, under-build….”
• Previous cyclically strong incentive conditions resulted in over-supply and a price decline
• Current price has come off 2016 bottom but is still below new build incentive requirement
• Few greenfields project sanctions in this environment
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$1.00
$2.00
$3.00
$4.00
$5.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Incentive Price
Copper Price
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TSX: ALSGlobal Structural Demand Driver
• 6 of 32 objectives outlined in China’s 13th 5 year plan (2016-2020) relate to environmental quality improvements
• India now has an estimated attributable 500,000 pollution related premature deaths per year
• Air pollution and de-carbonization objectives are a major global driver towards cleaner transportation, power generation and steel making alternatives
• Royalty portfolio is well aligned with resulting structural trends
Source: Washington Post, February 22, 2016 edition
Relative Relative Concentration of Air Pollution (PM 2.5)
Portfolio Well Aligned With Major Global Growth Trends
Soil Quality/Agricultural Yield
Improvements
High Quality (Lower Emission) Iron Ore
Fossil Fuel to Clean Energy Conversion
Transportation Electrification Cu, Co, Ni, Li
Coal to Renewables
Labrador Trough
Premium Products
Potash
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TSX: ALS
$4M $5M $4M $2M $3M $4M $3M $5M
$28M$33M
$47M
$67M
$77- $81M
Adapting With the Cycle
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IPO
Royalty Acquisition
Royalty Revenue
20202015201020052000
• We have been engaged in intense M&A activity for 5 years to build a diversified, long-life royalty portfolio
• Revenues have been sustainably grown by more than 15 times and the portfolio is well positioned to capture further benefits at no cost
• Organic royalty revenue growth is now emerging as a key driver with many assets signaling potential new builds, expansions and extensions as
better prices improve margins (potash ramp up, Gunnison and Voisey’s Bay new mines, Chapada and Cardinal River expansion feasibility
studies, Telkwa, Kami and Curipamba positive economic studies, renewable energy projects advancing, PG equity portfolio growth)
• We anticipate the transition from M&A to organic (existing portfolio) based growth drivers to continue, motivating more aggressive
debt reduction and balance sheet strengthening as a capital allocation priority
TSX: ALSCapital Structure and Balance Sheet
Research Coverage
Craig Hutchison
Brian MacArthur
Orest Wowkodaw
Carey MacRury
11† All dollar figures are in Canadian dollars with market capitalization as of May 2, 2019. Altius converted its financial reporting period to
calendar year-end in 2017 from its previous fiscal year-end of April 30. Cash and public equity holdings as of March 31, 2019 includes $21
million cash + $61 million junior equities portfolio position + $119 million LIORC position. Subsequent to quarter-end, as of May 3 2019, $11
million was repaid on revolver reducing outstanding debt to $124 million and increasing revolver availability to $86 million.
TSX: ALS | OTCQX: ATUSF
Issued Common Shares 42.9 million
Fairfax Preferred Securities 10.0 million
Basic Market Capitalization $549 million
Annual Dividend $0.20 per share
Outstanding Debt $119 million
Cash and Public Equity Holdings† $201 million
Available Under Credit Revolver† $86 million
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$M
$50M
$100M
$150M
$200M
$250M
F 2015 F 2016 F 2017 2017 2018 Q1-2019
Debt Investments Cash
F 2015 F 2016 F 2017 2017 2018 Q1-2019
Net Debt $41M $11M -$19M -$126M -$52M -$65M
Positioned for Organic Growth
TSX: ALSGrowth Record
$0.88 $0.83
$1.08
$1.56
$1.80 - $1.89
FY 2015 FY 2016 FY 2017 2018 2019 Guidance
Revenue Per-Share
† Altius converted its financial reporting period to calendar year-end in 2017 from its previous fiscal year-end of April 30. FY
2017 refers to an 8-month stub period. 13
80% EBITDA Margin
Strong Per Share Revenue Growth Record
5-year: +20% CAGR
15% Unlevered Revenue Yield Against
Combined Portfolio Purchase Price (2019E)
TSX: ALSDiversity and Demand Alignment
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Portfolio Well Aligned With Major Global Growth Trends
Soil Quality/Agricultural Yield Improvements
High Quality (Lower Emission) Iron Ore
Fossil Fuel to Clean Energy Conversion
Transportation Electrification
Copper
35%
Steel Making Coal 5%
Zinc
7%Premium
Iron Ore
9%
Potash
21%
Electricity
Generation
(coal)
20%
Battery Metals
(Ni-Li-Co) 1%
Other 2%
2018 Revenue
by Commodity
Cu, Co, Ni, Li
Coal to Renewables
Labrador Trough
Premium Products
Potash
15 Paying Mine Royalties
TSX: ALS
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34
51
67
97
8
14
29
12
24
18
11
18
3
7
20
Vanscoy
Rocanville
Allan
Esterhazy
Cory
Thermal Coal(Various Mines)
777
Voisey's Bay
Chapada
Metallurgical Coal(Cheviot)
IOCReserve Mine Life (Years)
M&I Resource Life (Years)
Inferred Resource Life (Years)
3-4
Unrivalled Portfolio Expandability
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Ele
ctr
icity
Ge
ne
ration
Base M
eta
ls
Ste
el
Pota
sh
M&I: 113 Years
Inferred: 130 Years
M&I: 1,263 Years
Inferred: 1,032 YearsTotal: 2,392 Years
Total: 272 Years
M&I: 52 Years
Inferred: N/ATotal: 120 Years
M&I: 476 Years
Inferred: 788 YearsTotal: 1,315 Years
M&I: 194 Years
Inferred: 86 YearsTotal: 315 Years
+
+
+
+
+
Replacement: Gunnison, Voisey’s Underground, Chapada
Growth Potential, Curipamba Development Potential
Electrical
Higher Prices / Lower Cut-off Grade Creates Significant
Additional Resources, Further Exploration Potential
† Mine lives calculated based on current mineral inventory and 2018 throughput. Thermal coal asset lives denote the 2018 weighted average
revenue and expected plant closure and not based on reserves. The 2018 revenue weighted average mine life is based on remaining reserves
inclusive of MI resources and throughput capacity.
Replacement: Conversion to Renewable Royalties Underway
86+ year revenue weighted potential average resource life
TSX: ALS
Cory
Rocanville Esterhazy
Organic Royalty Growth Pipeline
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Vanscoy
New Mines in Construction
Extension / Expansion Feasibility Renewable Development Portfolio
New Mine Studies
Royalty Growth Pipeline Requires No Additional Capital Investment - Facilitating Continuation of Sector Leading Per-Share Royalty Growth
Built Developing Advancing
Kami (Iron Ore)
Telkwa (Met. Coal)
Voisey’s Underground
(Nickel-Cobalt-Copper)
Gunnison
(Copper)
Cardinal River Extension
(Met. Coal)
Chapada
Expansion (Cu) 1500MW+ Portfolio
Curipmba (Copper +)
Groto do Cirilo (Lithium)
Completed Potash Expansions Ramping Up
Allan
TSX: ALSRenewable Energy Royalties
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o Altius Renewable Royalties Corp. (“ARR”) is a newly created subsidiary of Altius Minerals Corporation.
o Strategic objective of converting a legacy portfolio of relatively short-life Alberta electrical coal generation royalties into long-life, renewable
electricity generation royalties now being executed.
o ARR has completed a first transaction with Tri Global Energy (“TGE”) to gain royalties related to a portfolio of more than 1,500 MW of
development stage wind energy projects located in Texas, Nebraska and Illinois for a total investment up to US$30 mm.
o At full uptake, initial cash flow projections range from US$3 - 4 mm annually to Altius for an average project life of 25 years.
o Once created, the royalties are for the ultimate life of the project and capture life extensions and/or expansions - providing excellent further
option value potential.
TSX: ALS
• Potash is increasingly critical to global food security as it
increases the amount of crops that each farm unit can
produce
• Potash royalty portfolio mines have recently undergone
$9B in expansions to create volume ramp-up growth
potential
• The global potash market has grown at more than a 3%
CAGR over the past 5 years
Potash Production and Demand Growth
0MT KCI
10MT KCI
20MT KCI
30MT KCI
40MT KCI
50MT KCI
60MT KCI
70MT KCI
80MT KCI
2002 2004 2006 2008 2010 2012 2014 2016 2018
Global Potash Demand
Mine
Production (Mt)Nameplate
Capacity
2017 2018 (Mtpa)
Esterhazy (K1-K2-K3) 4.3 4.6 6.2
Rocanville 4.9 5.2 6.5
Allan 1.8 2.4 4.0
Cory 1.0 0.8 2.7
Vanscoy 2.4 2.2 3.0
Global Arable Land Per Person
Reduced by ~50% Since 1960
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TSX: ALSChapada
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Altius acquisition in 2016 heavily motivated by identification of resource and production growth potential
Exploration
Success
Productivity
Growth
Expansion
Growth
Potential
Chapada has a strong exploration track
record with reserves and resources (M&I)
increasing by 46%, since 2016.
Yamana 2019 guidance signals further
increased copper recovery rates resulting
from recent concentrator plant
investments.
Sale pending to Lundin Mining who have
emphasized that evaluation of copper
focused growth opportunities will be
prioritized as a means to leverage its
technical and financial strength.
116Mlbs 127Mlbs129Mlbs
3,248Mlbs
3,471Mlbs
3,707Mlbs
660Mlbs
1,313Mlbs
2,025Mlbs
514Mlbs252Mlbs
781Mlbs
2016 2017 2018
Production Reserves
Measured & Indicated Resources Inferred Resources
TSX: ALSLabrador Trough and Iron Ore Growth
Iron Ore Company of Canada
Operator: Rio Tinto
Interest: Altius is a major shareholder of LIORC,
which is mandated to be a passive flow-through
vehicle for royalty and equity entitlements related to
the operations of the Iron Ore Company of Canada.
Bloom Lake
Operator: Champion Iron Ore
Interest: Altius invested $10M as a royalty and
equity convertible debenture in 2017 (since
converted to equity at $1 per share).
Kami Project
Operator: Alderon Iron Ore Corp.
Interest: Interest: Altius is a co-founder / major
shareholder of Alderon and has a 3% gross sales
royalty relating to its project development financing
stage Kami project.
Altius Exposure to Labrador Trough Iron Ore
The Labrador Trough Advantage
o High iron, ultra-low impurity product commands premium
pricing due to lower emissions and higher productivity during
steel making process
o Stable jurisdiction unique in terms of large resources
combined with surplus, existing transport and handling
infrastructure
o Amongst highest margin iron ore operations in the world
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Iron Ore Exposure also includes several other wholly owned exploration and resource stage projects
Iron Ore Pricing Since Market Bottom
TSX: ALSRoyalty Portfolio Growth: Gunnison on Stream in 2019
• Fully financed and under construction with
first production expected in Q4-2019 as per
guidance provided by the operator.
• The first phase of operations are being
scaled to ramp up production to 25 million
pounds of copper per year, during the first 3
years, and eventually increasing thereafter to
75 and 125 million pounds per year.
• Altius currently has a 1.625% gross revenue
royalty (GRR) over the Gunnison Project (the
GRR reduces to 1.5% with Phase 2 plant
capacity level reaching 75 million pounds of
copper per annum or higher).
EXCELSIOR’S GUNNISON PROJECT (COPPER ISL)
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TSX: ALSBattery Metal Exposure Set For Growth
Project: Tres Quebradas (3Q) Lithium Project
Operator: NeoLithium
December 2019 PFS Highlights: $490.2mm Capex, NPV(8%) of
$1.2Bn, After-tax IRR 27.9%, LOM: 20 y.
Royalty Interest: 1% Gross Overriding Revenue
Project: Grota do Cirilo Lithium Project
Operator: Sigma Lithium Resources
Highlights: Measured and Indicated 37,899,000 tonnes @
1.48%LiO2 (Xuxa and Barreiro Deposits)
Royalty Interest: 1% Gross Overriding Revenue
Mine: Voisey’s Bay
Operator: Vale Commodity: Ni-Co-Cu
Highlights: In H2 2018, Vale announced plans to proceed with the Voisey's
Bay underground mine expansion project, which is expected to extend the
life of the mine by approximately 15 years. Significant scale, additional
adjacent mineralized zones offer further mine life upside potential should
mineable cut-off grades decrease in the future based upon higher metal
prices.
Lithium Royalty CorporationBattery Metal Exposure
(Ni-Li-Co)
o Nickel and copper royalty revenue set to increase with Voisey’s
Bay Underground expansion.
o Indirect lithium royalty revenue added through shareholding in
Lithium Royalty Corporation, which also includes direct royalty
participation right.
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o Lithium Royalty Corporation (“LRC”) was formed to pursue investment
opportunities in the battery materials sector.
o Altius is a founding shareholder (~12%) of LRC and holds the right to
participate directly in any royalty acquisition on a 10% direct interest basis.
TSX: ALSRoyalty Growth Pipeline (PG)
$61
Million
† Does not include $10M equity convertible debenture in Champion Iron, or indirect holdings and in-the-money share
purchase warrants.
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Projects
2019
$22M
$33M
$54M$61M
April 2016 April 2017 December 2018 March 2019
Project generation portfolio value as
at March 31, 2019
(~$1.42/share)
Converted to new royalties and junior
equities since 2016 market bottom
140,000 meters of drilling estimated
across pre-production stage royalty
portfolio
Junior Equity Portfolio Growth
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Leveraging Equity Exposure into New Pipeline Royalties and Equity Gains
TSX: ALSPG Portfolio: Attracting Other Strategic Investors
Kinross completed a private placement of 12.5M shares in Wolfden Resources in
March 2019 and currently holds approximately 9.7% of the issued and outstanding
shares of the Company.
Altius is a significant shareholder of Wolfden and holds a 1.35% GSR on Pickett Mountain project.
AngloGold Ashanti has an option agreement in place with Renaissance, whereby it
has the option to acquire 100% interest in the project by paying US$3M by 2020
and is actively exploring the project.
Altius is a shareholder of Renaissance Gold and owns
a 1.5% NSR covering the Silicon project.
Adventus recently announced an investment by Consorcio Nobis, one of Equador’s
largest private business conglomerates resulting in a 9.9% interest.
Altius is a significant shareholder of Adventus and holds a 2.0% NSR on the Curipamba project.
Newmont completed a a strategic investment in Evrim in August 2018 with the
proceeds funding exploration of the Cuale project.
Altius is a significant shareholder of Evrim and holds a 1.5% NSR for precious metals on the Cuale Project.
Resource focused Sprott funds own ~19% of Sokoman with the company receiving
endorsement by Eric Sprott with his participation in the $3M financing in 2018.
Altius is a significant shareholder of Sokoman and holds a 1.5% NSR on Moosehead property.
De Beers is a significant shareholder in Adia Resources. In addition, De Beers is
providing In-kind services for shares and access to world class facilities for
processing and analysis of samples
Altius is a significant shareholder of Adia Resources and holds a 2.5% royalty on the Lynx project.
BHP made a strategic investment in Midland to take a 5% stake in the company.
The proceeds are slated to advance exploration at the company’s Mytril project.
Altius is a shareholder of Midland and jointly holds a 1.00% NSR on Mythril in an alliance with Midland.
Mega commodity trader, Itochu entered into an investment and joint venture
agreement with Allegiance for the development of the Telkwa project.
Altius is a shareholder of Allegiance and holds a 1.5 -3% gross sliding-scale royalty on the Telkwa project.
TSX: ALSPG Portfolio Highlights
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• Wolfden Resources released a resource estimate on its Pickett Mountain project. The high grade zinc-lead-copper-silver massive
sulphide deposit in Maine, USA has an Indicated Mineral Resource of 2.05 million tonnes at 19.32% Zinc Equivalent and an
Inferred Mineral Resource of 2.03 million tonnes at 20.61% Zinc Equivalent.
• Wolfden also announced the completion of a $2.5 million private placement financing with Kinross Gold Corporation making
Kinross a 9.7% holder of Wolfden. Altius is a significant shareholder of Wolfden and holds a 1.35% Gross Sales Royalty on Pickett
Mountain project.
• Adventus released a positive Preliminary Economic Assessment (PEA) for the Curipamba copper-gold-zinc project.
• The PEA showed robust economics with after-tax NPV of $288MM and IRR of 40%. Capital expenditure for the project came in at
$185MM with payback of less than two years and a 14 year mine life from an open pit processing ore at 1,750 tpd.
• Allegiance Coal released the Definitive Feasibility Study on the Tenas project, which is one of three open pits comprising the
Telkwa Metallurgical Coal project.
• The DFS studies a production profile of 750,000 tonnes per annum of saleable coal over a 22 year mine life with the DFS
highlighting that the Tenas Project is likely to be one of the lowest cost producers of metallurgical coal on the global seaborne
market. Altius is a substantial shareholder of Allegiance and holds a 1.5-3% gross sliding-scale gross royalty on the Telkwa
project.
• Renaissance’s Silicon project received mention by the CEO of AngloGold Ashanti, who described the Renaissance Gold Silicon
project in Nevada as a “very interesting deposit” and “the base of Anglo’s increasing presence in North America.”
• Altius is a shareholder of Renaissance Gold and owns a 1.5% NSR covering the Silicon project.
TSX: ALSThank You
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PRODUCING
ROYALTIES
DEVELOPMENT
ROYALTIES
PROJECT GENERATION
PROJECT
RENEWABLE ENERGY
PORTFOLIO
CONTACT
INFORMATION
Flora Wood
Director, Investor Relations
Phone: (416)346-9020
Email: [email protected]