EMBRACING CYCLICITY TO GROW THE LEADING DIVERSIFIED MINING ROYALTY COMPANY. ANNUAL and SPECIAL MEETING SEPTEMBER 12, 2016

Transcription

1 EMBRACING CYCLICITY TO GROW THE LEADING DIVERSIFIED MINING ROYALTY COMPANY ANNUAL and SPECIAL MEETING SEPTEMBER 12, 2016

2 FORWARD LOOKING STATEMENTS 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.

3 CAPITAL STRUCTURE Market Facts As of August 31, 2016 Shares Issued 43,425,624 Options 274,933 Warrants 400,000 Fully Diluted 44,100,557 Annual Dividend $0.12 per share Net Debt* ~$46 million Available Liquidity ~$60 million Royalty Growth $40 * Net debt calculated using actual debt less cash and public equities market value $20 Revenue EBITDA $ (f) Management estimates (Please see Forward looking Statements at beginning of this presentation). Revenue figures are royalty based only and do not include project generation business equity or project sales. 3

4 FINANCIAL RESULTS EARNINGS vs. FREE CASH FLOW Our net earnings have been clouded with non-cash writedowns, particularly of our equity holding in Alderon Iron Ore (which was originally obtained in exchange for a mineral property rather than a cash investment) $20 $0 -$20 Reported net earnings Free cash flow -$ (f) Management estimates (Please see Forward looking Statements at beginning of this presentation). Free cash flow is derived from operating cash, minus generative and exploration expenditures plus cash receipts from joint ventures 4

5 FREE CASH FLOW Steady growth in free cash flow from our royalty portfolio, combined with investment proceeds provide us with ample cash to service our debt and other capital requirements $40 Investment proceeds Free cash flow $20 $ (f) Management estimates (Please see Forward looking Statements at beginning of this presentation). Free cash flow is derived from operating cash, generative and exploration expenditures and cash receipts from joint ventures Investment proceeds for 2017 is Q1 only 5

6 FINANCIAL RESULTS CASH FLOW Since April 2014 we ve repaid in excess of $90 million in debt and paid $7 million in dividends using investment proceeds and operating cash flow $100 Debt minus cash EBITDA $40 $30 $20 $50 $10 $ (Sherritt Royalties) (Chapada Stream) 2017 (f) $0 Management estimates (please see forward looking statements at beginning of this presentation). 6

7 ALTIUS EMBRACES THE FULL COMMODITY INVESTMENT CYCLE Bear Market Acquire long-life, diversified mining royalties Accumulate exploration lands Down-Cycle Bull Market Harvest royalty income growth, repay acquisition borrowing Create value from exploration lands while creating new royalties Up-Cycle 7

8 COUNTER-CYCLICAL DISCIPLINE Cycle 1 Cycle 2 ( SuperCycle ) Cycle 3 Royalty / stream acquisition Project spin-outs Altius IPO $0.20 per share Voisey s Bay Sherritt (11) 777 Chapada 8

9 PRODUCTION ROYALTIES

10 Top 5 Royalty / Stream Companies Top 5 Royalty / Stream Companies Top 5 Miners Top 5 Miners WHY DIVERSIFIED MINING ROYALTIES? Precious Metals Market Capitalizations (US$bn) $78 Royalty investment has emerged as a mainstream segment within the precious metals sector over the past decade We believe that this segment is even more fundamentally attractive when applied to the diversified mining sector (base metals, bulk minerals, fertilizers) Diversified Mining Market Capitalizations (US$bn) $229 Generally longer mine lives and greater brownfield expansion potential mean better long-term royalty option value Less competitive royalty environment allows higher real financial returns $30 +24bn since % of Top 5 Miner Value Still unrecognized investment theme with significant headroom for growth of royalty segment capitalizations relative to operating segment <$2bn 0.5% of Top 5 Miner Value 10

11 OUR ROYALTY BUSINESS CURRENT STATUS Altius has become the leading diversified mining royalty company Using a combination of exploration based profits retained during previous up-cycle, debt and new equity to fund several acquisitions, both significant scale and diversity have been achieved 14 current royalties covering 10 commodities generating approximately $40M annually Generally long life portfolio has free option value from inherent potential for mine expansions and extensions Market conditions for additional production stage royalty acquisitions have recently deteriorated owing to more readily available competing capital sources for miners Development stage royalty opportunities, as part of comprehensive project financing packages, are beginning to emerge however Conditions becoming favorable to add several new exploration stage royalties for free as part of project generation vend-outs and spin-outs Advanced stage projects that we hold royalties over can now attract capital and move forward again (e.g. Gunnison, Telkwa, etc.) 11

12 ROYALTY PORTFOLIO GROWTH AND DIVERSITY WORLD S MAJOR MINED COMMODITIES (NON-PRECIOUS METAL) Estimated Relative Market Value (2015) 30% 7% 2% 26% 26% 5% 4% copper zinc iron ore uranium nickel coal potash Royalty revenue by commodity profile beginning to emulate the operating portfolios of the major diversified mining companies Fe 3% Ni 70% Cu 30% potash 28% met coal 8% Other 5% Cu 3% Ni 6% Electrical coal 50% potash 17% met coal 5% Other 6% Electrical coal 38% Cu 18% Ni 5% Au-Ag 6% Zn 5% Base metals 44% Potash 11% Electrical Coal 36% Met Coal 4% YE April 2014 $3M YE April 2015 $28M YE April 2016 $33M YE April 2017 (f) ~$40M 12

13 DIVERSIFIED + LONG PORTFOLIO LIFE + INVESTMENT GRADE COUNTERPARTIES Voisey s Bay Ni-Cu-Co Mine Labrador, Canada (20+ year resource life 1 ) Chapada Cu-Au Mine Brazil (30+ year resource life 1 ) 777 Cu-Zn-Au-Ag Mine Manitoba, Canada (4-6 year resource life 1 ) 1 All category resources divided by recent average production rates (non measure) 13

14 DIVERSIFIED + LONG PORTFOLIO LIFE + INVESTMENT GRADE COUNTERPARTIES Paintearth Thermal Coal Mine Supplying Battle River Power Plant Alberta, Canada (5 year resource life 1 ) Sheerness Thermal Coal Mine Supplying Sheerness Power Plant Alberta, Canada (7 year resource life 1 ) Genesee Thermal Coal Mine Supplying Genesee Power Plant Alberta, Canada (38 year resource life 1,2 ) BULK COMMODITIES 1 Mine lives based on the lesser of federal regulation or current mine plans Highvale Thermal Coal Mine Supplying Sundance Power Plant Alberta, Canada (12 year resource life 1 ) Cardinal River Metallurgical Coal Mine Alberta, Canada (13 year resource life 1 ) 2 Mine life may be further reduced by a recently announced goal of the Alberta gov t to close all coal plants by

15 DIVERSIFIED + LONG PORTFOLIO LIFE + INVESTMENT GRADE COUNTERPARTIES Allan Potash Mine Saskatchewan, Canada (987 year resource life 1 ) Cory Potash Mine Saskatchewan, Canada (1,453 year resource life 1 ) Esterhazy Potash Mine Saskatchewan, Canada (320 year resource life 1 ) Patience Lake Potash Mine Saskatchewan, Canada (resource life unknown) FERTILIZERS Rocanville Potash Mine Saskatchewan, Canada (529 year resource life 1 ) Vanscoy Potash Mine Saskatchewan, Canada (60 year resource life 1 ) 1 All category resources divided by recent average production rates (non measure) 15

16 PRE-PRODUCTION STAGE ROYALTY PORTFOLIO PRE-FEASIBILTY/FEASIBILITY Property Primary Commodity Gunnison (Arizona) Copper Excelsior Mining Corp Kami - iron ore (Western Labrador) Telkwa CDP (British Columbia) Central Mineral Belt - uranium (Central Labrador) ADVANCED EXPLORATION Property Explorer/Developer Royalty Basis Status 1.0% GRR; options to acquire additional 1.5% Feasibility Iron Alderon Iron Ore Corp 3% GSR Feasibility (on hold) Met Coal Telkwa Coal Limited (TCL) Up to 1.5% price based sliding scale GSR Pre-feasibility Iron Paladin Energy Limited 2% GSR Feasibility (on hold) Primary Commodity War Baby (Manitoba) Copper HudBay Minerals Viking - gold (Western Newfoundland) EXPLORATION Property Golden Shears (Nevada) Gold Primary Commodity Gold Explorer/Developer Royalty Basis Status Anaconda Mining Inc. Possible to earn up to 3% NSR 2% NSR, plus 1-1.5% royalties on surrounding lands Explorer/Developer Royalty Basis Status Renaissance Gold Inc (JV with Walmer Capital Corp.) Advanced exploration Scoping level 1.5% NSR Early-stage exploration Silicon (Nevada) Gold Renaissance Gold Inc 1.5% NSR Early-stage exploration Alvito (Portugal) Copper Avrupa Minerals Ltd 1.5% NSR Early-stage exploration Ely Springs/Jupiter (Nevada) Gold Kinetic Gold Corp 1.0% NSR Early-stage exploration Llano del Nogal (Mexico) Copper Evrim Resources Corp Wallbridge Projects (Ontario) Nickel Wallbridge Mining Company Ltd Pine Bay (Manitoba) Copper Callinex Mines Ltd 1.5% NSR on PM; 1.0% NSR on BM Option to acquire up to 2% NSR Option to acquire 1% NSR Early-stage exploration Early-stage exploration Early-stage exploration; active EXPLORATION Property Primary Commodity Explorer/Developer Royalty Basis Status Voyageur Lands (Michigan) Nickel Bitterroot Resources Ltd. 2% NSR Early-stage exploration; active Loro en el Hombro, Morsas, and Culebra projects Copper Revelo Resources Corp. Fox River (Manitoba) Copper Callinex Mines Ltd Herblet Lake (Manitoba) Copper Callinex Mines Ltd Island Lake (Manitoba) Copper Callinex Mines Ltd Pine Lake (Manitoba) Copper Callinex Mines Ltd Copper Range (Michigan) Copper Bitterroot Resources Ltd. Storm Claim Group (Quebec) Nickel Northern Shield Resources Inc Coles Creek (Manitoba) Copper Callinex Mines Ltd Moak and Norris Lake (Manitoba) Gurney Gold Claims (Manitoba) Gurney Gold Claims (Manitoba) Shrule Block, Kingscourt Block, West Cork Block (Republic of Ireland) Various Copper-goldmolybdenum targets (Alaska) Sheerness West - CDP (Alberta) Labrador West - iron ore (Western Labrador) Astray - iron ore (Western Labrador) Iron Horse (Western Labrador) Copper Copper Gold Zinc Callinex Mines Ltd Callinex Mines Ltd Callinex Mines Ltd Adventus Exploration Ltd. (Kingscourt JV'd with Teck Ireland Ltd.) Copper Millrockand various partners Thermal Coal Westmoreland Coal Company 0.98% NSR on gold, 0.49% NSR on base metals Option to acquire 1% NSR Option to acquire 1.25% NSR Option to acquire 1% NSR Early-stage exploration; active Early-stage exploration; inactive Early-stage exploration; inactive Early-stage exploration; inactive Option to acquire 1% Early-stage exploration; inactive NSR Option to acquire 1% NSR held by a third Early-stage exploration; active party Options to acquire 1% royalty on any one Early-stage exploration; inactive project in claim group Option to acquire 2.5% Early-Stage Exploration; inactive NSR Option to acquire 1% Early-stage exploration; inactive NSR Option to acquire 1% Early-stage exploration; inactive NSR Option to acquire 1% Early-stage exploration; inactive NSR 2% NSR on each Block Exploration 2% NSR on gold; 1% NSR on base metals Tonnes x indexed multiplier Exploration Exploration phase Iron Rio Tinto Exploration Inc. 3% GSR Exploration; inactive Iron Iron Northern Star Minerals Sokoman Iron Corp 1% to 4% sliding scale Exploration; inactive GSR 1% GSR; option to acquire additional 1.1% Exploration; inactive GSR 16

17 PROJECT GENERATION (EXPLORATION) BUSINESS

18 OUR EXPLORATION PORTFOLIO BUILD-UP Altius greatly increased its land holdings during the down-cycle, emerging as a major global project generator million hectares held - Copper-gold in Chile - Base and precious metals and bulk commodities in Canada - Nickel-copper in Michigan and NL - Zinc in Ireland and NL - Base metals in Finland - Further royalty and equity exposure to Alaska, Nevada, Arizona, Mexico, Portugal exploration projects copper gold nickel zinc uranium iron coal potash PROJECT LOCATIONS 18

19 PROJECT GENERATION (EXPLORATION) STRATEGY Altius assembles and generates high-quality exploration projects (most aggressively in down-cycles) We then convert projects to equities and royalties through spin-outs and vend-outs (most aggressively in up cycles) Several such initiatives currently underway including for zinc, gold, and metallurgical coal Down-cycle Up-cycle 19

20 PROJECT GENERATION IS SELF FUNDED AND A PROFIT SOURCE Self-funding (non-royalty revenue based) mechanism established using historical junior equities portfolio, which is currently valued at approximately $15 million after more than $10 million in recent equity sales New project spin-out and/or share based vend-outs allow equity portfolio build and replenishment In addition to funding itself and creating new royalties, the business generates excess profits that can be used for debt reduction, shareholder capital returns and new royalty acquisitions Previous* Cycle Performance Cumulative Altius Investments: $16 million Cash Realizations: Retained Equities: Cumulative Pre-tax Returns: $223 million $13 million $236 million * Profits: $220 million 20

21 INVESTMENT SUMMARY Diversified Royalty Portfolio 14 producing royalties spanning 10 commodities Royalty revenue grown nearly 15x to ~$40m/a during down-cycle Low jurisdictional risk All investment grade counterparties Reserve life (revenue-weighted) of 30+ years Expanding and expandable underlying assets providing strong inherent optionality Project Generation Low-cost global portfolio build up executed during down-cycle Exploration portfolio is self-funded independent of royalty revenue Focus shifting to project spin-outs and vendouts as junior equity markets improve Significant pre-production royalty portfolio offers free option value Poised to create new royalties and generate capital gains as per previous up-cycle track record Altius offers investors commodity and asset diversification from long life, world class royalty assets as well as a proven record of profitability and growth through exploration project generation 21