Altius Minerals Corporation

Good morning, ladies and gentlemen, and welcome to the Altius Minerals Q2 2025 conference call and webcast. At this time, all lines are in the listen-only mode. Following the presentation, we will conduct a question and answer session. And if at any time during this call you require immediate assistance, please press star zero for the operator. Also note that this call is being recorded on Tuesday, August 12, 2025. I would now like to turn the conference over to Flora Wood. Please go ahead.

Thank you, Sylvie. Good morning, everyone, and welcome to our Q2 conference call. Our press release and quarterly filings came out yesterday after the close and are available on our website. This event is being webcast live, and you'll be able to access a replay of the call along with the presentation slides that have been added to our website at altsminrose.com. Brian Dalton, CEO, and Ben Lewis, CFO, are both speakers on the call. The forward-looking statement on slide two applies to everything we say both in our formal remarks and during the Q&A session. And with that, Ben is up first to take us through the numbers.

Thank you, Flora, and good morning, everyone. Royalty revenue for Q2 2025 is $12.7 million compared to $20.4 million in Q2 2024. Adjusted EBITDA for the three months end of June 30th, 2025 is 7.5 million compared to 14.5 million in the prior year quarter. In the current quarter, the decrease in both revenue and adjusted EBITDA reflect lower attributable potash volumes and lower dividends from iron ore, partially offset by higher base metal prices. Potash attributable royalty volumes have now have been low relative to nutrient and mosaic recorded volumes, partially from the split between units at Rokenville, and from maintenance turnarounds that occurred during the first half of the year. Both nutrient and mosaic have increased their production guidance for the year. Revenue in the prior year quarter also included non-recurring investment income of $30.6 million related to the settlement of a loan receivable. Q2 25 adjusted operating cash flow of 4.7 million compares to 8.3 million in Q2 last year. The decrease is largely reflective of lower royalty revenue receipts. Net earnings for the second quarter of 5.5 million or 12 cents per share compares to net earnings of 8.3 million or 18 cents per share in Q2 2024. Net earnings reflects lower revenues, partially offset by lower costs and expenses, amortization and interest. Due to 2025 adjusted net earnings of 3 cents per share is lower than the second quarter of 2024, with the main adjustment items being foreign exchange and a $1.8 million income tax recovery relating to the recognition of certain tax losses. I'll now turn to capital allocation and liquidity. During the quarter, we made scheduled debt repayments of $2.0 million, paid total cash dividends of $3.8 million, and it issued a little over 14,000 common shares valued at approximately $381,000 under the corporation's dividend reinvestment plan. There were no shares repurchased in Q2, as the corporation had imposed an internal trading blackout on its shares, while its sales process involving the Silicon Valley team is ongoing. The board of directors also declared a quarterly dividend of 10 cents per share, which represents an increase of 11% over recent quarterly amounts, and will be paid to shareholders of record on August 29, 2025, with a payment date of September 15th. At June 30th, our current liquidity consisted of $11 million in cash, as well as $116 million in unused revolver grain available. Following the sale of the 1% silicon multi and the closing of the triple flag acquisition of Origin, the corporation has considerably strengthened its balance sheet and liquidity profile. Pass after taxes and fees payable to financial and legal advisors is approximately $360 million, with total liquidity increasing to $540 million. This includes $160 million available under the revolving credit facility noted above, as well as $62.5 million potentially available as an accordion feature on their debt, subject to certain criteria. A renewable realty business also remains well-funded through its partnership with Northampton and also through cash on hand held at both the ARR and GDR levels. At June 30th, ARR had cash of approximately US $32 million, and the GDR joint venture had cash of approximately $35 million. along with available liquidity of approximately U.S. $85 million under its credit facilities. And with that, I'll turn it over to Brian to discuss the quarter's significant highlights.

Thank you, Ben and Flora, and thanks, everyone, for being with us here today. The most significant highlight since we came together last was certainly our announced sale of two-thirds or 1% portion of our original 1.5% NSR royalty related to the Silicon, or as it is now known, the Arthur Gold Project, Franco, Nevada. With this transaction, we believe that we struck an appropriate balance between crystallizing material value for our shareholders from this exciting discovery, while retaining long-term exposure to its continuing upside potential. The decision to retain part of the royalty also marks the addition of a component of gold exposure to our diversified portfolio. Combined with the slightly earlier sale of our major shareholding and origin royalties, who own a 1% royalty over Silicon, we now have a radically transformed balance sheet as well as a confirmed new top-tier royalty within our long-term portfolio. In Basin Battery Metals, we continue to see organic growth developments across several assets. Boise Bay continues to ramp up nickel, copper, and cobalt production following the recent completion of construction at the Reedbrook and Eastern Deeps deposits. In Lithium, Grotto de Cirillo Stage 2 expansion is underway, Mariana has begun to ramp up, and Tre Cabrada is scheduled for construction completion later this year. The Curripampa Gold-Silver Zinc Mine under construction with first production expected late next year. On that front, it is worth noting that around half, and perhaps more than half at current prices, of the NSR value for this mine is expected to stem from precious metals. Finally, in base metals, we were very pleased this quarter to learn of the preliminary plans that have been outlined for the expansion of production at Chapada. Undine Mining has noted that a PFS in permitting is underway to incorporate higher-grade ores. from the recently discovered and nearby Ceuba deposit into the broader Chapada District mining plan, with the potential to result in an overall increase in copper production by approximately 50%. In potash, we heard quite bullish second quarter reporting from both of our royalty mine operators. Each of these have indicated very strong market fundamentals and expectations for a new record in global potash demand this year. This is occurring against the backdrop of supply constraints in several competing production regions. This combination has led to firmer pricing through the first half of the year. While volumes from our royalty mines were impacted by scheduled maintenance downtime in the second quarter, boat operators continue to expect to meet or exceed production and sales guidance on a full year basis, while also completing incremental capacity additions. We'll also remind here that we typically experience an embedded approximately one-quarter lag in pricing realization across these royalties. We also noted an announcement related to BHP's Janssen project this quarter, which reported upon a delay in first production and higher capital costs for its Phase 1 mine, together with indications of further expected delays and cost increases for its Phase 2 expansion plans. This has potential material implications for near- to medium-term supply-demand balances and also provides longer-term benchmarking support for incentive pricing calculations. A steadily compounding market growth drives an approaching need for major global production capacity additions, particularly from the end of this decade onwards. Turning to ARR, the increase in royalty revenue this quarter reflects organic growth in the portfolios. A certain development state royalties ramped up operations over the last year, with these including Canyon Wind, Jayhawk, El Suaz, and Young Wings. Angelo Solar Royalty has also begun contributing revenue now as well. Existing development partners, including Enbridge, Hexagon, Nova, and Nokomis, continue to advance multiple projects in their portfolios, and these should allow us to remain on track along our expected growth trajectories. The GBR portfolio now represents total potential electricity generating capacity in excess of 18,500 megawatts, including 13 operational royalties totaling approximately 2,900 megawatts and five additional projects under construction totaling 1,500 megawatts that are currently projected to reach commercial operations by the end of next year. Looking to deployment to new royalties in ARR, during the first half of 2025, the renewable industry was in a state of great uncertainty as a result of pending policy changes, specifically as it relates to the phase-out of tax incentives regarding renewable energy development. As a result, most operators and renewable investors took a wait-and-see approach with very few transactions of any type closing in the industry during the first six months of 2025. In early July, the new legislation in the U.S. did provide clarity around timelines for the phase-out of tax incentives, such that market participants can now better make investment decisions. Despite the accelerated phase-out of tax credits built into the new bill, there remains a robust demand for renewable power in the U.S. The demand for energy sources will continue to drive demand for renewable energy in the near term, and power pricing is quickly adjusting to fill the gap left from the tax credit phase-out. The renewable industry has already seen strong PPA price escalation, largely due to increased demand from technology companies accelerating the bill of data centers for AI. GBR also continues to leverage the grid interconnection bottlenecks within certain regions of the U.S. by financing refundable interconnection deposits on late-stage development projects. For this, it is using a dedicated GBR-level debt facility that allows it to generate a positive margin and develop further relationships within the sector that it believes will result in additional royalty investment opportunities as projects advance through interconnection approval processes. It is currently in the process of deploying meaningful amounts of capital into this initiative, and we will expect to be in a position to report further on this next quarter. In iron ore, we have seen some production improvement begin to take hold at IOC. as its capital reinvestment initiatives over the past few years begin to deliver results. Dividends remain somewhat subdued as this increased capital investment program continues. However, we are encouraged by the longer-term benefit potential. Champion and its new Japanese partners, Nippon Steel and Sojet, announced the completion of their partnership agreement concerning the development of the Kami project in July. The partners also continued to advance the project along several lines, including detailed engineering in support of the ongoing feasibility study, environmental permitting, Aboriginal and other stakeholder agreements, and discussions around potential government supports related to the designation of Canada's expected high-priority product under critical minerals frameworks. We believe it is also noteworthy that NIFA announced in late May the sanctioning of a US $6 billion investment to convert more of its traditional blast furnace steelmaking units in Japan to electric arc furnace-based plants. These will require high-curity iron ore inputs of the type that CAMI is being designed to produce. In June, all the SSPG teams submitted a detailed proposal as part of the Julian Lake Mineral Land bid process being undertaken by the province of Newfoundland and Labrador. The Julian Lake deposit is a large, undeveloped high-grade iron ore deposit located approximately 25 kilometres northeast of the town of Labrador City. Altius holds planes that are contiguous with DML and that cover extensions of the deposit. Moreover, Altius recently completed preliminary metallurgical test work in order to test the ability of the deposit to yield direct reduction-grade iron ore concentrate, which yielded positive results. Elsewhere in PG, several new initiatives across select jurisdictions continue to advance as we seek to add new projects both directly and through partnerships. More on these efforts and quarters to come as the team looks to continue to execute on its long-term strategies and replicate the recent successes that is demonstrated at Silicon and Cami. Lastly, a few pre-emptory words on capital allocation before we turn to your questions. This was an important and fun discussion topic at our board meeting yesterday. The growth cash consideration of $375 million from our partial sale of the Silicon Royalty, combined with proceeds of $67 million from the sale of our interest in Origin Royalties, the triple flag, has increased our total net cash position to more than $360 million and our total available liquidity to more than half a billion dollars. This provides us with considerable capital allocation flexibility and opportunity. and the team is now happily tasked with evaluating and ranking our various options, ranging across the spectrum of dividends, debt repayment, share count reduction, and external acquisition opportunities. Among these, we are currently primarily focused on comparing the merits of share repurchases, or as we like to call it, internal M&A, as well as external M&A possibilities. In evaluating the latter, we will continue to exercise discipline and will remind, or perhaps caution, Shareholders are the fact that we have within our history a track record of patiently sitting on large cash positions for extended periods until the right opportunities emerge. It is worth noting, however, that our ability to now compete cash-based acquisitions without requiring new share issuances provides us with a somewhat broader purview of possibilities than we have had in quite some time. This is a function of the ability to avoid the factoring in of delusion to embedded portfolio option values as part of our analysis process. Our corporate development team is obviously happy about gaining this broader lens and are expecting a very busy autumn and beyond in completing evaluation and analysis of potential opportunities. We can also guide that at this time there is little current emphasis or consideration being placed on issuing a special dividend or on becoming more aggressive with debt repayments. That said, as Ben noted, we did increase our regular dividend last night, and we will likely eliminate the modest amount outstanding under our revolving component for credit facilities. I'll end by saying that this was certainly one of the most momentous quarters in our now almost 29-year history as a public company. I'm very proud to work within our team, and I'm very much looking forward to the times ahead as we continue to work hard to build on this momentum and special base of assets on behalf of our shareholders. Thank you. And with that, I will open up to questions, please.

Thank you. Go ahead, Ms. Wood.

Thank you, Sylvia. I know you opened my line. We're having problems with people trying to dial in, and I know they've been unable to. So if we can just delay for a minute. And in the meantime, Brian, I do have a question that got emailed to us from Tyler, a shareholder. So I'll just start with that, which is around the time remaining until the NCIB expires August 21st. He's wondering, given the daily purchase limits under the TSX rules based on daily trading volume, Would the company ever consider a substantial issuer bid as a way to deploy more capital into buybacks more quickly?

Would we ever consider a substantial issuer bid? The answer is most certainly yes. In the time remaining before our next NCIB renewal, which is this month, no.

Hey, I got one more. Sorry, we're just trying to resolve our line problem here. So Tyler's also noticing that GBR had drawn and deployed a significant amount from the interconnection credit facility subsequent to the quarter. And he's wondering if that connected to the OBVB and the developers trying to secure favorable positions in the queue? And also, is there a royalty angle with these loans?

Yes, thanks for the question. I believe I largely addressed that in the prepared remarks, but I would say no, not particularly related to new legislation. This would be interconnection deposits. schedules that would have certainly predated that the new legislation, so these would be just skewed positions that have to be funded in order to hold against a lot of these discussions have been ongoing for some time. And so what was the second part of the question?

He was just asking if there was a royalty angle. Oh, right. I don't know.

In some cases, generally speaking, I think one of the things that we're excited about with this new interconnection funding process is that it is working very well in terms of building new relationships. So, obviously, as a project, if somebody is willing to proceed and to fund interconnection deposits, you know, there's future steps which include obviously construction and building of the project so we do have these relationships i think the team's doing a really good job of demonstrating uh their innovation and ability to support the industry more broadly so it's not that So we're not trying to make it that direct, at least not at this point, but we do believe a lot of goodwill is being built up and we are seeing a lot more opportunity just because, yeah, the team is building relationships and earning a place in the industry as a trusted partner. So I'd say that's certainly one of the goals of the whole initiative.

Thank you. Ladies and gentlemen, for those on the phone, if you would like to ask a question, please press star followed by one on your touch-tone phone. And your next question will be from Craig Hutchison at TD. Please go ahead, Craig.

Hi. Good morning, guys. Hey, Craig. Just in terms of the use of proceeds, are you guys seeing opportunities to acquire producing assets in the base metal world, or are you seeing more opportunity in terms of development stage assets?

All of the above, and I'm probably not going to get much more specific than that, Craig. Sorry. It's a limited landscape out there, so we're not going to be tipping our hands on anything we might be doing or not doing. But I guarantee you this much, we won't be rash. We're going to be our typical patient, boring, frustrating self.

Okay. In terms of potash volumes, it was a bit lower this quarter because some maintenance work, but are you seeing a pickup in terms of volumes here heading into Q3 based on what you know from the existing royalty county parties? Thanks.

Our reporting is typically more after the fact with those groups. Really, we've been only at this point being on the public statements, but both of the operators were really bullish sounding in their own quarterly reporting. Nutrien upped its guidance. Order books are full, beyond full. There's commentary around the market actually probably going to have unmet demand this year. So it seems like they're certainly doing everything they possibly can to build up production, mosaic, talked a fair bit about a new project that they have up on the, on top size at the mine around processing. They think that that can give them an extra 400,000 tons incrementally. But look, I can only read what everyone else can read and listen to what everyone else can listen to. But it feels like these guys are sensing an opportunity, probably sensing it even greater now that BHP seems to be falling out of bed a little bit with Jansen and, uh, I would be very surprised if they're not in the near term and probably more broadly in the medium term, if they're not going to flex their muscles and do what they've always done. And that's like earn market share when the opportunity presents because they've got the best assets in the business.

Okay. Thanks. Maybe just one last one for me, just in terms of the renewables business. I mean, are you able to provide sort of any kind of – goalposts in terms of the growth rate we should expect here and then sort of back out this year and heading into next year?

Or you might want to help me with that in terms of what we've got published. We do have, we have in the past, I know, put out sort of projected, you know, revenue growth and that's based on really just a development pipeline. So these are already funded investments and information we've gotten from operators around construction timelines and whatnot. I don't know what the growth rate would be before. Maybe you can help me out with that either here or in subsequent follow-up. But, yeah, everything seems largely on track. The key here is that if you're actually at the point where you've got interconnection, and obviously the project's that we're talking about over the next one or two years. I mean, construction do have that. There's literally insatiable demand for the power on the other end, and you can pretty much name your price in terms of contracted prices and durations right now. The interconnection problem in the U.S. is not just in getting tied to the grid. I think an even bigger problem is emerging from large load customers who are trying to tie onto the grids. Now they're getting refused because there just isn't enough power. So it's both sides. There's a backlog of projects trying to link to the grid and an even backlog, a bigger backlog of customers trying to get access to power. So it's pretty wild and crazy. If you look at the broader renewable landscape, particularly equity valuations in public markets, you'd think the sky was falling. But at its fundamental hearse, These are power producers. Nobody who's operating in the industry has seen anything like the current environment in terms of demand for what they produce. The challenge is what sits in the middle, just making it all connect and happen. So I don't know if I've ever seen anything disconnected in terms of market apathy and, in fact, seeing downright hostility towards a sector that fear amongst investors and political backlash of being invested in the sector. I mean, these are the kinds of backdrop situations that you're out there. And, yes, name your price if you can bring the power to the market. It's pretty wild and crazy. It's hard to call it contrarian when the supply-demand situation is so robust. But as far as sentiment goes, like, wow, like polar opposites, it's really fun. Sorry, I might have got off on a tangent there, did I?

No, it's all right. Thanks. Thanks for the call. Cheers.

Thank you. Once again, ladies and gentlemen, if you do have any questions on the phone, please press star followed by one. And at this time, we have no more on the phone.

Sylvie, can you hear me? I'll read a couple more that we've got. Please go ahead. Craig, I'll also give you a call just on both deployment and your question around ballpark expectations. So there's a question from Carrie McGrory of Canaccord. This is sort of a follow-on to what Craig asked. And knowing you don't want to get into detail on development stage versus operating, what about preferred commodities for new deployment?

I'm going to pass on that one too.

Okay. Luckily for you, there's more. So Adrian Day at Adrian Day Asset Management has a couple of questions around Silicon. So first one, any expectations on when to expect the final award on the arbitration?

I hesitate to guess. Any guess I've ever made up to this point is usually pretty wrong, although I think it may be close. We have been asked to submit payments to the arbitrators quite recently, and I think the quote from the arbitration center was final payments, so I assume that means that the award is... is very close here. It presumes, I guess, that they've wrapped up their work and their billings anyway, or at least they've predicted the remaining amounts. Who knows, but some signals anyway that it may be close.

Excellent. The comment that you made around retaining the 0.5% NSR on silicon You noted the addition of precious metals as a component to the portfolio. Adrian asks, are you implying you might decide to keep precious metal royalties from your future discoveries, or might you even seek out new precious metal royalties?

I think all of the above, in that we used to look at ourselves as sort of having four different pillars or verticals or whatever, and the term people like is precious metals with the addition of silicon. And quite frankly, as Corey Pompa comes on right now, that's basically a gold minus a copper credit versus what we thought we were buying, which was a copper minus a gold credit. So we're going to continue to explore in our PG business for gold as well as everything else. That's always been the case because, you know, the competitive dynamics of buying precious metals royalties don't exist there, and in fact, they tend to be really attractive targets for the PG, just because there's a wide customer base available for them. Yes, open-minded to acquiring. I think something would have to be, you know, we'd have to probably find something that we feel like we have some kind of a technical edge on to be successful if it came down to acquiring more precious metals royalties, because we're not going to compete on tops of capitals relative to the more precious metals focused peers. But look, it's a new pillar. So, you know, for sure, we're more open-minded to it than we would have been. Again, we've never been anti-precious metals. We've always just said that it can't really be a serious focus for us because we're not going to be competitive. on a cost of capital basis that's that's really you know what it's been about it's not like we don't want to be gold to have gold in our system and we don't have the same issue that say a precious metals royalty company has in worrying about losing their multiple because they've got too much non-precious metals components like the inverse isn't true where you know yeah it's just So, yes, but, you know, let's be realistic as well would be my answer.

Thank you, sir. And at this time, Ms. Wood, we have no other questions from the phone lines. Please proceed.

Thank you, Sylvie, and thank you to everybody on the call and for your questions. And we'll look forward to talking to you for Q3.

Thank you, everyone.

Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.