Altius Minerals Reports Q2 2020 Attributable Royalty Revenue of $13.0M and Adjusted Operating Cash Flow of $13.4M - Junior Mining Network
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Altius Minerals Reports Q2 2020 Attributable Royalty Revenue of $13.0M and Adjusted Operating Cash Flow of $13.4M

Altius Minerals Corporation (TSX: ALS; OTCQX: ATUSF) (“Altius” or the “Corporation”) reports attributable royalty revenue(1) of $13.0 million or $0.31 per share(1) for the second quarter ended June 30, 2020 compared to $19.5 million or $0.46 per share in the comparable quarter last year and $16.3 million or $0.39 per share in Q1 2020.

Adjusted EBITDA of $10.0 million or $0.24 per share compares to $16.3 million or $0.38 per share in Q2 2019 and to $12.7 million or $0.30 per share in Q1 2020. Adjusted operating cash flow(1) of $13.4 million or $0.32 per share is higher than both its year over year comparable period of $11.8 million or $0.28 per share and last quarter’s $13.2 million or $0.32 per share due to lower general & administration expenditures and lower corporate income taxes paid. The Adjusted EBITDA margin in the second quarter was 77%.

Adjusted net earnings of $1.4 million or $0.04 per share compares to $6.5 million or $0.15 per share in Q2 2019 (see table) and to $3.4 million or $0.08 per share in Q1 2020. The decline in adjusted earnings per share follows the trend of lower revenue and is impacted this quarter by non-cash share based compensation charges in Q2 2020 ($2.6 million compared to $0.7 million in Q2 2019 or $0.5 million in Q1 2020). These charges encompassed both annual incentive compensation grants to executive management and grants of options to Altius Renewable Royalties (“ARR”) management that are convertible to equity in ARR.

Portfolio Performance

Base metals (copper, nickel, zinc and cobalt) (37% of total revenue in Q2 2020)

Base metal revenue contributed $4.8 million in the second quarter compared to $6.4 million in the year ago comparable quarter and $6.6 million in the first quarter, with most of the decline attributable to lower average realized prices. Chapada and 777 provided $2.5 million and $2.2 million respectively while Voisey’s Bay contributed approximately $0.1 million, while the mine was on care and maintenance and processing only stockpiled material. In the second quarter, Vale stated that operations at Voisey’s Bay would resume progressively in July and that this resumption would also include critical path items related to the underground expansion.

Potash (31% of total revenue in Q2 2020)

Potash royalty revenue of $4.0 million in the second quarter this year compared to $5.2 million in the comparable quarter last year and $4.4 million in the first quarter of 2020. Volumes remained stable during the quarter while prices remained weak.

Iron ore (10% of total revenue in Q2 2020)

Iron ore revenue related to dividends received from Labrador Iron Ore Royalty Corp. (“LIORC”) was $1.3 million in the quarter compared to $3.5 million a year ago and $1.0 million in Q1 2020. For the second consecutive quarter, Iron Ore Company of Canada opted not to pay a dividend to its shareholders despite strong product pricing and improved production levels. This has in turn translated into significantly lower dividends paid by Labrador Iron Ore Royalty Corporation. Altius continues to hold 2.9 million shares of LIORC.

Thermal coal (17% of total revenue in Q2 2020)

Thermal coal revenue contributed $2.2 million in the quarter compared to $3.1 million a year ago and to $2.5 million in Q1 2020. Declines in revenue and volumes resulted from a combination of lower industrial power usage by the oil and gas sector and broader COVID-19 lockdown related demand reductions. The lower electricity demand has translated into lower than forecast coal production levels at Paintearth and Sheerness in particular, while Genesee has continued to operate at or near capacity. Genesee is a more modern and efficient generating facility that is less impacted by lower prices and carbon tax related cost increases.

Subsequent to quarter end, on July 27, 2020 Altius announced an agreement with Liberty Metals & Mining Holdings, LLC (“LMM”), to acquire its 44.9% interest in the thermal coal royalty based limited partnerships, increasing Altius’s ownership to 97.3% from its prior level of 52.4%. The transaction has since closed, with an adjusted purchase price of approximately $9 million after taking into account working capital adjustments, compared to revenue last year from the LMM interest of $13.5 million, which included $2.7 million for the Cheviot metallurgical coal royalty also held under the same partnership structure.

Metallurgical coal (4% of total revenue in Q2 2020)

Metallurgical coal provided $0.5 million, which compares to $1.0 million in the comparable quarter last year and $0.6 million in Q1 2020. Royalty revenue from Cardinal River will decrease as inventory stockpiles are depleted, consistent with disclosure from Teck Resources Limited that the mine is currently in decommissioning after a 51 year operating life. None of the closure or remediation costs will be borne by Altius as a royalty holder.

The following tables summarize the financial results for the quarter ended June 30, 2020 and comparable quarters ended March 31, 2020 and June 30, 2019:

IN THOUSANDS OF CANADIAN DOLLARS (except per share amounts)

    Three months ended
    June 30, 2020   March 31, 2020   June 30, 2019
Revenue            
Attributable royalty  

$

13,035

 

 

$

16,279

 

 

$

19,533

 

Project generation  

 

-

 

 

 

-

 

 

 

5

 

Attributable revenue (1)  

 

13,035

 

 

 

16,279

 

 

 

19,538

 

Adjust: joint venture revenue  

 

(2,765

)

 

 

(3,230

)

 

 

(4,353

)

IFRS revenue per consolidated financial statements  

 

10,270

 

 

 

13,049

 

 

 

15,185

 

             
Total assets  

$

598,873

 

 

$

566,567

 

 

$

613,937

 

Total liabilities  

 

208,932

 

 

 

209,328

 

 

 

182,841

 

Cash dividends declared & paid to shareholders  

 

1,945

 

 

 

2,090

 

 

 

2,143

 

             
Adjusted EBITDA (1)  

 

10,048

 

 

 

12,723

 

 

 

16,344

 

Adjusted operating cash flow (1)  

 

13,378

 

 

 

13,228

 

 

 

11,849

 

Net earnings  

 

4,105

 

 

 

(3,167

)

 

 

(1,868

)

             
Attributable revenue per share (1)  

$

0.31

 

 

$

0.39

 

 

$

0.46

 

Adjusted EBITDA per share (1)  

 

0.24

 

 

 

0.30

 

 

 

0.38

 

Adjusted operating cash flow per share (1)  

 

0.32

 

 

 

0.32

 

 

 

0.28

 

Net earnings per share, basic and diluted  

 

0.10

 

 

 

(0.08

)

 

 

(0.05

)

(1) See non-IFRS measures section for definition and reconciliation

IN THOUSANDS OF CANADIAN DOLLARS

           
    Three months ended
Summary of attributable royalty revenue   June 30, 2020   March 31, 2020   June 30, 2019
Revenue            
Base metals            
777 Mine  

 

2,224

 

$

2,299

 

$

3,246

Chapada  

 

2,518

 

 

4,133

 

 

2,905

Voisey's Bay  

 

93

 

 

127

 

 

252

Metallurgical Coal            
Cheviot  

 

466

 

 

590

 

 

982

Thermal (Electrical) Coal            
Genesee  

 

1,494

 

 

1,326

 

 

1,270

Paintearth  

 

-

 

 

75

 

 

98

Sheerness  

 

565

 

 

1,030

 

 

1,535

Highvale  

 

147

 

 

82

 

 

216

Potash            
Cory  

 

271

 

 

223

 

 

335

Rocanville  

 

2,318

 

 

2,976

 

 

3,323

Allan  

 

188

 

 

196

 

 

158

Patience Lake  

 

100

 

 

139

 

 

-

Esterhazy  

 

1,127

 

 

861

 

 

1,304

Vanscoy  

 

-

 

 

9

 

 

44

Lanigan  

 

8

 

 

2

 

 

6

Iron ore (1)  

 

1,293

 

 

1,006

 

 

3,494

Other            
Renewables  

 

112

 

 

907

 

 

111

Coal bed methane  

 

72

 

 

134

 

 

100

Interest and investment  

 

39

 

 

164

 

 

155

Attributable royalty revenue  

$

13,035

 

$

16,279

 

$

19,533

See non-IFRS measures section of this MD&A for definition and reconciliation of attributable revenue
(1)LIORC dividends received

Notes

  1. Attributable revenue, adjusted EBITDA and adjusted operating cash flow (and respective per share amounts) are intended to provide additional information only and do not have any standardized meaning prescribed under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate these measures differently. The attributable revenue, adjusted EBITDA and adjusted operating cash flow per share metrics divide the respective values by the basic weighted average number of shares outstanding during the period. For a reconciliation of these measures to various IFRS measures, please see the Corporation’s MD&A which is available at http:/altiusminerals.com/financial-statements.
  2. Adjusted earnings and respective per share amounts are intended to provide additional information only and do not have any standardized meaning prescribed under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate these measures differently. The calculations used for the adjusted earnings per share are as follows:
    Three months ended
Adjusted Earnings per Share   June 30, 2020   March 31, 2020   June 30, 2019
             
Reported earnings (loss) per share  

$

0.10

 

 

$

(0.08

)

 

$

(0.05

)

Adjusted for:            
Equity accounted for losses/impairments  

 

0.01

 

 

 

0.08

 

 

 

(0.01

)

Impairment charges  

 

-

 

 

 

-

 

 

 

0.25

 

(Gain) loss on adjustment of derivatives  

 

(0.04

)

 

 

0.02

 

 

 

(0.02

)

(Gain) loss on foreign exchange  

 

(0.03

)

 

 

0.02

 

 

 

0.01

 

Tax expense (recovery) on adjustments  

 

-

 

 

 

0.04

 

 

 

(0.03

)

Adjusted earnings per share  

$

0.04

 

 

$

0.08

 

 

$

0.15

 

Additional information on the Corporation’s results of operations and developments in its project generation division are included in the Corporation’s MD&A and Financial Statements which were filed on SEDAR today and are also available on the Corporation’s website at www.altiusminerals.com.

Liquidity and Dividend Declaration

Cash at June 30, 2020 was $30.6 million, with debt of $147 million after repayment of $5 million principal on the term debt facility. The value of the LIORC equity position and junior project generation portfolio was $69.7 million and $48.4 million respectively at quarter end.

The Corporation advises that its board of directors has declared a cash dividend of five cents per common share payable to all shareholders of record at the close of business on August 31, 2020. The dividend is expected to be paid on or about September 15, 2020. This dividend is eligible for payment in common shares under the Dividend Reinvestment Plan (DRIP) announced by press release May 20, 2020, and available to shareholders who are Canadian residents or residents of countries outside the United States. In order to be eligible to participate in respect of the September 15, 2020 dividend, non-registered shareholders must provide instruction to their brokerage and registered shareholders must provide completed enrollment forms to the transfer agent by August 24, five business days prior to record date. Stock market purchases made under the DRIP for the September 15, 2020 payment will be satisfied by issuance from treasury at a 5% discount to the 5 day volume weighted average price ending at the close of trading the day before payment date. Shareholders who have already provided instruction to be enrolled earlier this year will continue to be enrolled unless they direct otherwise. For more information, please see http://www.altiusminerals.com/dividend-reinvestment-plan. Participation in the DRIP is optional and will not impact any cash dividends payable to shareholders who do not elect to participate in the DRIP. The declaration, timing and payment of future dividends will largely depend on the Corporation’s financial results as well as other factors. Dividends paid by Altius on its common shares are eligible dividends for Canadian income tax purposes unless otherwise stated.

Q2 2020 Financial Results Conference Call and Webcast Information:

A conference call and webcast to discuss additional details relating to individual royalty performances and asset level developments will be held tomorrow, August 7 2020:

Time:

 

9:00 a.m. EST on Friday, August 7, 2020

Dial-In Numbers:

 

+1-(866) 521-4909 toll free (US/ Canada) or +1-(647) 427-2311

Conference Call Title and ID:

 

9361679, Altius Q2 2020 Financial Results

Webcast URL:

 

Altius Q2 2020 Financial Results

The call will be webcast and archived on the Corporation’s website for a limited time.

Forward Looking Statements

This press release contains forward-looking statements that are introduced with language such as “we believe”, or which refer to opinions and expectations of management. By their nature, these statements involve risks and uncertainties, many of which are beyond the Corporation’s control, which could cause actual results to differ materially from those expressed in such forward-looking statements. Readers are cautioned not to place undue reliance on these statements. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Altius

Altius’s strategy is to create per share growth through a diversified portfolio of royalty assets that relate to long life, high margin operations. This strategy further provides shareholders with exposures that are well aligned with sustainability-related global growth trends including the electricity generation transition from fossil fuel to renewables, transportation electrification, reduced emissions from steelmaking and increasing agricultural yield requirements. These each hold the potential to cause increased demand for many of Altius’s commodity exposures including copper, renewable based electricity, several key battery metals (lithium, nickel and cobalt), clean iron ore, and potash. Altius has 41,477,026 common shares issued and outstanding that are listed on Canada’s Toronto Stock Exchange. It is a member of both the S&P/TSX Small Cap and S&P/TSX Global Mining Indices.

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