Altius Minerals Corporation

Good morning ladies and gentlemen and welcome to the Althea's Minerals Q4 and year-end 2024 conference call and webcast. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press the star 0 for the operator. This call is being recorded on Wednesday, March 12, 2025. I would now like to turn the conference over to Flora Wood, Vice President of Investor Relations and Sustainability. Please go ahead.

Thank you, Ludi. Good morning, everyone, and thanks for adjusting to our new time today. Welcome to our Q424 conference call. Our press release and most of the annual filings came out yesterday after the close and are available on our website. The AIF is not out yet but will be filed before the deadline month ends. This event is being webcast live and you'll be able to access a replay of this call along with the presentation slides that are added to the website on both the homepage and the investor section. Brian Dalton, CEO, and Ben Lewis, CFO, will both speak on the call. The forward-looking statement on slide two applies to everything we say in our formal remarks and during the Q&A session. And with that, I'd like to introduce Ben first. Go ahead, Ben.

Thank you, Flora. Good morning, everyone. Realty revenue for Q4 2024 was $13.5 million compared to $14.7 million in 2023. Full year revenue of $64 million compares to $69.4 million in 2023. Just to leave it out for the three months and year-end of December, 31st was $9.3 million and $44.1 million, compared to $10.3 million and $53.7 million for the prior year periods. Revenue and adjusted EBITDA for the current year reflects higher base metal prices, higher dividends from iron ore, and continued growth of the renewable royalty portfolio, partially offset by lower potash prices. and no coal revenue due to the closure of the Genesee mine in 2023. Q4 adjusted operating cash flow of $2.3 million compares to $7 million in Q4 last year. On an annual basis, adjusted operating cash flow of $24.8 million compares to $34.8 million in 2023. The decrease for the current year periods is largely reflective of lower royalty revenue receipts, marginally higher costs, as well as some working capital changes, particularly related to the timing of corporate tax refunds and payments throughout the year. Net earnings for the fourth quarter of 2024 of $85.5 million, or $1.82 per share, compares to a net loss of $2.2 million, or 5 cents per share, in 2023, Q4 2023. Net earnings for the year of $101.8 million, or $2.16 per share, for 2024, compares to net earnings of $10.1 million, or 20 cents per share, in 2023. The increase primarily reflects a gain on deep consolidation of ARR, as well as lower revenues and lower amortization. On December 5th, the corporation announced that ARR completed a statutory plan of arrangement with an affiliate of North Hampton Capital Partners, which acquired all of ARR's issued and outstanding shares, other than those held by Altius, for cash consideration of $12 per share. As a result of this transaction, the corporation recognized a gain on deconsolidation of ARR of 87.1 million and will account for its 57% interest in ARR as a joint venture for financial reporting purposes. The corporation currently owns 17.9 million common shares in ARR, as well as a little over 3 million share purchase warrants. Q4 adjusted net earnings of $0.06 per share is consistent with fourth quarter of 2023, while annual adjusted earnings of $0.27 per share for 2024 increased relative to the $0.24 per share recognized in 2023, with the main adjustments being the gain on deconsolidation, ARR, and some minor impairments. I'll now turn to capital allocation and liquidity. During the year, we made scheduled debt payments of $8 million, paid total cash dividends of $14.8 million, and issued 59,000 common shares valued at approximately $1.4 million under the corporation's dividend reinvestment plan. The corporation renewed its normal course issuer bid, which commenced August 22, 2024, and will end no later than August 21, 2025. The corporation repurchased and canceled 761,500 shares for a total cost of $16.2 million during the year. The Board of Directors has also approved a $0.09 quarterly dividend that will be paid to shareholders of record on March 19, 2025, with a payment date of April 2, 2025. At the end of 2024, our current liquidity consists of $16 million in cash, as well as $116 million in unused revolver room available. On August 30th, the corporation amended our credit facility to extend the term from August 2025 to August 2028 and replace the combination of our previously outstanding term and revolver debt. And with that, I'll turn it over to Brian.

Thank you, Ben, and thank you, everyone. It was a busy and eventful end to 2024, and it starts 2025. Much of this has had to do with development-stage royalty projects in our portfolio, particularly Kami and Silicon, that have now begun to take on significant weight within our portfolio. A key recent highlight was the announcement from Champion Iron Ore that it brought on Nippon Steel and Sogis as strategic development partners for the Kami project, over which we hold a 3% gross sales royalty. This large deal has done much to cement the fact that key global steel makers recognize the developing structural deficits in the availability of high-purity iron ore and prime scrap inputs and are moving decisively to secure their supply chains. Nippon noted in a recent public statement that their investment decision came after an extensive search that resulted in the recognition of CAMI as the best available undeveloped global opportunity secure a long-term supply of DR-grade ore. I also point out here that in recent months, several other major global iron ore players have begun evaluating high-grade iron ore opportunities in the Labrador Trough, a potential first-time entrance in the region. This dovetails nicely with our recent selection by the province of Newfoundland and Labrador to advance to Stage 2 of its current process concerning the undeveloped Julian Lake deposit. At Silicon, There were two key developments since our last quarterly update. The first was the delivery of a partial award in the arbitration that we initiated to confirm the extent of our royalty entitlements in the new district. While cautioning here that the final award is still pending, Altius interprets the partial award as providing for multiple-fold expansion of its royalty rights in all directions around the base AOI area, including for several kilometers along projected northwest, southeast, and northeast trend extensions of structures that it believes represent important geological controls on mineralization of both silicon and merlin, as well as over extensive areas within the district to the south of the base OI that have seen limited exploration to date. The second development was the very recent publishing of an updated resource for the merlin deposit that has increased inferred gold resources by approximately 3 million ounces to now total 12.1 million ounces. This, combined with the adjacent and likely connected silicon deposits, brings combined resources for the new discoveries to more than 16 million ounces. We further believe that the more broadly identified mineralization footprint extends meaningfully to the west and northwest, beyond the areas for which sufficient drilling information has allowed resource calculations to date. We also note that the operator highlighted in its most recent update that it has encountered visually encouraging drilling results to the southeast of Merlin, but has potentially resulted in the discovery of a fault offset extension of the deposit in that direction. The Silicon area is now clearly confirmed as a new major gold district discovery in Nevada. We are currently evaluating third-party proposals as we consider our strategic options for our 1.5% NSR royalty over Silicon. As previously noted, these include alternatives to sell our interest, swap it for royalties on assets, that are aligned with our traditional commodity focus areas, or to add the royalty to our portfolio, I should say maybe maintain the royalty within our portfolio as a long-term addition. Turning to base metals, we highlight a recent announcement that First Ore has now been delivered from the Eastern Deeps mine within our Boise Bay Nickel Copper District royalty. A Phase II expansion to double production at the Grotto de Cirillo lithium mine has been sanctioned. While late-stage construction continues at the Tres Cabradas and Mariana lithium projects, construction is underway at the Curripampa copper-gold project, the first production anticipated next year, and resource expansion drilling continues at the Cebuva copper-gold discovery within the Chapada District, with a further resource update and a technical study currently in progress. ARR saw the continuing ramp-up of royalties in 2024 and is projected to continue this trend in 2025. with two large royalty projects currently under construction by Enbridge. The ARRgo private transaction with Northampton Capital has been successfully concluded to considerably strengthen the business's access to capital at a time when broader access to capital in the U.S. renewable electricity generation sector continues to be constrained. While it is certainly true that there is a negative tone being conveyed from the new U.S. administration towards renewable energy, We also note a more important backdrop. This is the surge in demand that is occurring for electricity generally in the U.S. In reality, all forms of new power generation that can be brought to grids are required now, if not yesterday. And this is being reflected in the renewables development sector through increases in prices under direct long-term power purchase agreements with industrial customers. These contracts are serving to provide the necessary financial incentives for builders on more traditional funding mechanisms, including the broader private and public equity markets, and environmental and tax credit incentives remain constrained and or are threatened. We continue to believe as well that royalty-based financing has a role to play, and ARR continues to be excited about taking advantage of the increased opportunity set that has been created. Potash prices have begun to firm, and certain surprise production shortfalls in other parts of the world are setting up a potential supply deficit this year. In response to this, our operators continue to highlight their fairly unique ability to continue to incrementally ramp up their production levels over time and to meet continuing steady global demand growth for this essential agricultural input. Against this supply concern backdrop, a key observation can be made in the face of concerns relating to proposed U.S. tariffs. While these may indeed reduce affordability for U.S. farmers, if ever implemented, The simple reality is that all of the production from our royalty mines is required to go somewhere in the world, or famines will result. Think about that. Also note that one secondary consequence of the war in Eastern Europe has been an overall strengthening of the global logistics supply chain for potash, with the fact being that if some Canadian potash is replaced in the U.S. by diverted production from elsewhere, then that in turn simply creates a hole somewhere else that Canadian production will fill. These are obviously not the most efficient solutions for global food production and affordability, but the point again is that all of the world's current potash production is needed and essentially needed somewhere. I'll end by saying that our business is poised for meaningful growth over the next several years with particularly strong impacts expected as assets that we have developed organically and at low cost come to fruition and several others benefit from expansions and life extensions owing generally to their favorable competitive positioning and large resource endowments. And with that, I'll turn it over to questions.

We will now begin the question and answer session. If you do wish to ask an audio question, please press the star 1 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing star 2 to cancel. Your first question comes from the line of Craig Hutchison with TD Cowan. Please go ahead.

Hi, good morning, guys. Thanks for taking my questions. Hi, Craig. And just on the renewables piece, I mean, now that it's private, you know, can you guys offer any kind of guidance in terms of what you're looking for with respect to revenue growth to Altius? I mean, you cited a couple of projects there by Enbridge that are under construction, but just kind of give a sense of what we should expect growth-wise this year and kind of maybe leading into next.

Thanks. Yeah, so revenue growth last year would have been in the range of 60%. I think it will be a little lighter than that next year and possibly more than that the year following. So the kind of trajectory it's been on, you know, when I just look at, you know, our internal projections, it feels like that's got several years of runway along those kinds of, you know, it won't be linear. It's going to be a little bit more lumpy than that. But we do have plans somewhere towards maybe end of the second half to do a little bit of a teach-in. a more detailed sort of update specifically on ARR. We do recognize that, you know, there was greater visibility for shareholders through the public reporting that ARR was doing specifically prior to its privatization. So we will, at the minerals level, you know, try to do our best to help shareholders and you and the analyst community get, you know, caught up more specifically on the business from an obvious standpoint. Minerals perspective now that it's back and private. So we'll address that as we get into mid-year and have some of the direct management team involved with helping with that kind of teaching and overview session. And we'll let you know on the timing of that once we sum it up.

I appreciate that. I guess the growth rate this year, one could assume it's probably more back-end weighted versus more evenly distributed throughout the year.

I won't go there on that yet. We don't provide guidance beyond the ARR, but I appreciate the effort there, Craig. But we'll get you a lot more color as we get into mid-year, and it will give you sort of a multi-year outlook on how we see things shaping up.

Okay, great. It's a tough question as well. Just on potash, any sense in what you expect in terms of volume growth this year, if anything? Thanks.

I'll probably just divert again to the long-term trajectory. So what we've been seeing in the 10 or 11 years since we've owned the royalties is that they've kept pace. In fact, they've done better. They've earned market share against the global backdrop, and that sort of long-term growth trend line is about 2.5% with some earning of market share. I do feel like and we haven't got guidance from our operators on this ship, but I do feel like that this is the year where they could possibly step things up a little bit as far as their market share development, just because some of the problems that some of their competitors have begun to flag. And, you know, they've got the ability to, even over fairly short-term timeframes – adjust production levels, but for more structural stuff, there's more lag time. But yeah, they've got ready capacity here to try to help markets. I feel like this year is, if everything holds as it stands right now with the global supply-demand balance, that they've got an opportunity here for a pretty meaningful production year. Great. Thanks, Ben. Beyond that, I should have said in my remarks on the in the prepared remarks that we have been seeing affirming of potash prices, but I just wanted to point out to everybody that typically we have about a one-quarter lag in realization of those. It's just something to bear in mind and something we haven't touched on in our recording in a while here. Potash seems to have been less topical for the last couple of years or so, but maybe becoming more topical again now.

Appreciate the call. Thank you.

And your next question comes from the line of Kerry McCrory with Canaccord Genuity. Please go ahead.

Hey, good morning, Brian. Just wondering if you could give us some more color on how you're thinking about Silicon. I know you're still looking at potential alternatives there, but sort of where do you think you are in that process?

We've been taking in – I mean, we've obviously been flagging that we're going to look at this thing strategically and consider all of our options, but we have been taking in – fairly recently here that kind of cover the gamut that I talked about in the prepared remarks. So, yeah, we do have some proposals in front of us now that we're basically in the early stages of evaluating and that kind of follows a lot of work that we've done the first part of this year in terms of getting our own heads around what the ultimate potential at Silicon might look like and to try to get our own sense of It's a serious step before we consider any kind of transactions, particularly if it involves any type of disposition. So it's quite active as we speak. We are looking at proposals that have come in. And it won't be any more color than that.

Fair enough, fair enough. But would any transaction be contingent on finalizing the final arbitration award, or now that you've got the partial award, that's kind of good enough, potentially?

Yeah, so I guess where things are, too, with the arbitration, I mean, that to some degree will be up to... There's enough information right now, I believe, for... at least initial proposals to come in and, you know, to be based upon a pretty decent handle on what the ultimate royalty area will be. And to be honest, the areas that I think still need to be resolved would be less material in terms of current valuation just because they would glide much further outwards from the current areas of activity. So I won't say that from a legal perspective if we're pursuing a transaction that we're that were there yet and that a deal could close until the final award is submitted. That's probably the case. But in terms of people putting to paper what they think the royalties were, and certainly for us internally in putting an internal evaluation on not only the published resources but what we believe is still to come, we're definitely in a position where we can do that now.

Okay, and then maybe just one last one. I mean, ARR obviously is in full growth mode. Is there a sense down the road of when ARR will start to contribute cash back to, you know, LTS Minerals? Or is it too soon to go there?

It's probably a little soon to go there. I'm actually going to leave this call and go into a quarterly meeting for GBR, the underlying company. holding, and so there's a bit of a longer-term strategic outlook that's going to be discussed at that meeting. So maybe I'll have more calling for you on that next quarter.

All right, great. That's it for me. Thanks, Brian.

Thank you. And once again, if you would like to ask a question, simply press restore, followed by the number one on your cell phone keypad. And your next question comes from the line of Brian McArthur with Raymond James. Please go ahead.

Good morning, and thank you for taking my questions. But can I just go back to Silicon on the partial award? Has anything changed? I thought it was a 60-day discussion period, which I thought it was March 10th, but I don't know how they kept the 60 days versus the announcement before. Has anything changed there? I get it. You don't sound too concerned one way or the other in the valuation, but I'm just curious. Has it been delayed, or is there anything different going on right now? Okay.

No. In fact, yesterday, we, each of ourselves and Anglo Gold, made our submissions that were requested in the partial award, which is to say, you know, to identify, and we've worked with Anglo Gold, and there's considerable agreement about what is included and what is not included. But there's also areas of disagreement, and again, I point out those would be more So each of us have made our respective submissions as well as our responses to each other's submissions. And at least to the best of my knowledge, that is the end of our role in the process. So everything has now been handed over to the arbitrators to make final determinations, particularly with respect to those areas that Anglo and Altius currently don't agree on. constitute either included or excluded land. So it's moving along. It's on track. Great.

Thanks very much. I appreciate it. Thank you.

And I'm showing no further questions over the phone lines. I will turn it back to Flora Wood for further questions.

Thank you, Ludi. We do actually have a question from an investor online. And Ryan, you talked about the U.S. sentiment toward renewables, so questions around geothermal and whether ARR would consider geothermal as an alternative to wind and solar.

As an alternative, no. As an addition, certainly, we'd look at, we'd definitely consider geothermal to fall within the broader mandate of the business and, in fact, one of the early assets of GBR at the time that we got involved was a small-scale geothermal asset. So I'm not trying to foreshadow that we're about to jump whole hog into the geothermal game, but attractive opportunities in geothermal show up. It's absolutely on the permissive list, if you will.

Thanks, Brian, for answering that. And any investors who want to submit questions in advance, we absolutely welcome that. Ludi, do you have any other questions?

We currently have no questions at this time. Flora, you may continue.

Okay. Thanks again to everyone for joining us. I know it's March break this week, and we'll look forward to speaking to you for Q1.

Thank you, everyone.

And ladies and gentlemen, this concludes today's presentation. Thank you all for attending. You may now disconnect.