Earnings call transcript: Elemental Altus sees record growth in Q4 2024

- Dependence on favorable market conditions for gold and copper.

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Want deeper insights into Elemental Altus’s financial health and growth prospects? InvestingPro subscribers get access to 10+ additional ProTips, comprehensive financial metrics, and expert analysis through our Pro Research Reports, helping you make more informed investment decisions.

Key Takeaways

• Record adjusted revenue of $21.6 million for FY 2024, up 21%.
• Q4 adjusted EBITDA increased by 72% year-over-year.
• Company fully repaid $27 million in debt, ending with $5.4 million in cash.
• Stock price increased by 1.44% following earnings announcement.
• Projected record revenue of $30-34 million in 2025.

Company Performance

Elemental Altus demonstrated robust growth in fiscal year 2024, with a notable increase in revenue and EBITDA. The strategic acquisition of the AlphaStream portfolio and the commencement of production at the Karali Sud (Diva) project contributed to this performance. The company also streamlined its operations, reducing its cost of capital and establishing a $50 million credit facility.

Financial Highlights

• Revenue: $21.6 million, up 21% year-over-year
• Adjusted EBITDA: $4.8 million, up 72% year-over-year
• Operating cash flows: $3.3 million, up 54%
• Net cash position: $5.4 million
• Debt repayment: $27 million

Outlook & Guidance

Elemental Altus projects record revenue of $30-34 million in 2025, with expectations of increased gold production due to the Karawinda expansion project. Analyst consensus supports this optimistic outlook, with price targets ranging from $1.19 to $1.62, suggesting potential upside. The company is exploring potential dividend or share buyback options and continues to seek acquisition opportunities in gold and copper royalties.

Executive Commentary

Fred Bell, CEO, highlighted the company’s competitive position, stating, "We are currently trading on one of the lowest price-to-revenue multiples in the junior space." He also expressed optimism about future revenue and cash flow, saying, "We’re expecting record revenue and also with that leverage, record free cash flow for 2025."

Risks and Challenges

• Fluctuating gold prices could impact revenue projections.
• Geopolitical risks associated with international operations.
• Potential delays in project expansions or new acquisitions.
• Dependence on favorable market conditions for gold and copper.

Q&A

During the earnings call, analysts inquired about the potential for a US listing and the company’s strategies for shareholder returns. Executives also discussed the positive outlook for existing assets such as Laverton and Ballarat, and expressed confidence in managing geographical risks within their portfolio.

Full transcript - Elemental Royalties Corp (ELE) Q4 2024:

Fred Bell, CEO, Elemental Altus: So I think everyone is just signing in at the moment, and thank you for thank you for coming to this. I can see we’ve got people dialing in from Australia, Europe, US, and Canada. So well represented, and and really appreciate you all making the time.

This is Elemental Altus’ q four and full year twenty twenty four results presentation. And with me today, I have myself and CEO, Fred Bell, and our CFO, Dave Baker. And I will do a quick intro to the company and a few of the key key points, and then really hand over to Dave for the meat of the of the presentation. So look over 2024 and and what then what we’re looking forward to in 2025. I think some of the key areas in 2024 was the AlphaStream acquisition, which increased our ownership in three producing royalties in Q4, and that was Bonacro, Banner Aft and SKO as well as a portfolio of exploration and development assets across Australia.

We also have the material news from our cornerstone Karla Winder royalty of the expansion project, the Karla Winder expansion project that is underway and expecting to be permitted this year with construction going into operations in 2026, and that would be for a 50% throughput and approximately 30% increase in gold production at one of our two cornerstone royalties kicking in from mid-twenty twenty six. We announced the acquisition of the MacTongue royalty, which is a tungsten royalty in Yukon. And I think, really, in December, we had the really positive announcement of U. S. And Canadian government funding to fast track that project through feasibility study in 2026 and final investment decision in 2028.

And that came after our acquisition. So pleased to see that project being pushed forward very fast. We had both Raymond James and National Bank initiating coverage on us during the course of 2024. And we also had RBC joining our credit facility and taking that fully committed facility up to US50 million dollars And so we ended the year with a net cash position, which has been the first time for a number of years, having repaid $27,000,000 over the course of the year. And coming into the beginning of this year, we’ve fully repaid that facility.

So looking forward to 2025, we have our newest producing royalty, Karale Sud, and this is part of Allied Saudi operations that we sold to them approximately eighteen months ago and been very impressed at how they fast track that into production with a very material Q4 last year. And coming into Q1 this year, we’ll start to get our first royalty revenue. We are forecasting record revenue and also with that leverage, record free cash flow for 2025. And that is in addition to what we have on the balance sheet and what we have in available capital we can draw going forward. We also exclude from that revenue guidance about US13 million to US15 million dollars that we expect to get in milestone payments over the course of 2025, with the largest payment due this month, about US10 million dollars And so that is going to further bolster our balance sheet and put us in a very strong position, the strongest position the company has ever been financially to continue to acquire opportunistically individual royalties and and also look at portfolios.

And look forward to the news as well from Karl Winder on that expansion project as it progresses over the course of the year. So just two slides, really, two more slides here before we get into the guts of the financials. This is the Alpha Stream portfolio we acquired in October. I think the key thing here is that this was going to add approximately at the time, I think we said about 6,000,000 in in revenue. Forecast, obviously, with spot gold price where it is every week, every month, the gold is where it is.

We get a material uplift to that revenue from this portfolio. And we’ve also had the updates from Northern Star at their Kalgoorlie ops around the Hercules deposit there, where I think we’re expecting an update from them in H1 of this year to give us what we think should actually be a pretty material resource and project there that they’ll be feeding into their mine plan. And the second slide we’ve got here for the finances is on Karali Sud, and this is our formerly called Diva project renamed by Kurali Sud. Really encouraged to see them kick off production in Q4, and they had a very strong Q4, about 49,000 ounces produced just from our royalty area in that quarter. We have a 3% royalty on it for the first bit over 200,000 ounces of production, and then it steps down to an uncapped 2% royalty.

We also have milestone payments that come following commercial production and then production milestones, and we anticipate some of those to be hit in the course of 2025. So although production was there in Q4, the actual first sales fell into Q1. So this will be our first quarter of revenue coming from Kerali Sud, and we’re going to have the benefit of it going forwards now. So with that, those two updates, I’ll I’ll hand over to Dave to run through the rest of the presentation.

Dave Baker, CFO, Elemental Altus: Thanks, Fred. Yeah. So again, a strong quarter strong quarter and a strong year. We’d already pre released GEOs and and revenue. So that was in line with guidance of just short of 9,000 GEOs.

Revenue of of US Twenty sorry. 16,300,000.0 and adjusted revenue 21.6. I know I say this a lot, but, adjusted revenue allows us to to proportionally consolidate up the, the CasaRonas royalty, so including CasaRonas as revenue. So, yeah, $21,600,000 a year. That’s the eighth consecutive year, of record revenue.

As a result of us streamlining costs, monetization of the exploration business, and obviously an increasing revenue profile, that’s led to adjusted EBITDA for the for the quarter of $4,800,000. That’s a record, and that’s up 72% on this time last year. We’re also seeing that flow into into cash flow from operations. So again, that’s the cash flows from our operating business plus dividends from Casa owners of 3,300,000.0 US dollars, and that’s up 54% on this time last year. So we’re really seeing the benefits of stable cost base and then that full exposure to gold prices on the on the great assets.

And with the future, the future looks bright. So we previously announced GEO guidance for this year of a record 11.6 to 13,200 ounces. That’s a 38% increase in GEOs alone on 2024. Gold prices changed a lot since we put out our guidance. So when we are using a which looks like now a very conservative $2,600 gold price, that was gonna lead to 2025 adjusted revenue of a record 30 to 34,000,000 US dollars.

Obviously, that’s gonna be quite a lot higher now for plugging in plus 3 3 thousand dollar gold or more. So, yes, at least at least that 50% year on year increase in adjusted revenue based on our guidance, potentially more if gold holds up. And then on top of that, as Fred says, to not included in that revenue guidance is these 13 to $15,000,000 expected from portfolio payments. Expect those in weighted to the to the front of the year where imminently expecting that 10,000,000 US from from the Ming settlement that Fred talked to. In terms of where we are, we are debt free.

That’s about $3,000,000 on the facility at the end of the year. We paid that back and paid that down in February, which means we have the full $50,000,000 facility available immediately for drawdown for new transactions. And that with cash generation through the year means, you know, considerable amounts that we can spend without diluting our shareholders even even a little. Completing that Alpha Stream transaction, said, Fred, that’s just gives us that full exposure to to gold prices on producing assets. And I tell you the pipeline has never been as busy as as we are now exploring both the individual acquisitions, portfolios, and as we always say, we’re a firm believer of consolidation in the royalty space.

As as you know, our portfolio is really underpinned by by two very high quality assets operated by high quality operators. So Karowinda, operated by Capricorn Metals, the Aussie listed company. Had a had a good quarter, nearly 28,000 ounces of production. Looks like they’re on track for that junior end guidance of a 10 to a 20,000 ounces. I think critically, and we’ve announced this before, that major expansion has been announced.

So getting to a 50,000 ounces of production. We have ZC as a royalty company. I don’t have to pay for any of that. So we’re we’ve got that full full exposure to to increasing throughput and increasing ounces. Obviously, at record as US and Australian dollar gold prices.

I think most encouragingly, even post expansion, mine life is is still more than ten years with with with significant potential to increase beyond that. It’s a very homogenous ore body. Casarones, little bit lighter than we thought in in the period. Some so hydrogeological issues there in the in the phase five pushback impacted grades and recoveries. But we’re gonna expect those those tons to come through later later this year.

And also there was a there was a small delay in concentrate, 20,000 tons of concentrate sales. Obviously, we get paid on sales, not production. So we expect to see that picking up in q one. Encouragingly, strong production guidance from the from the Lundin’s in 2025 of a hundred and fifteen to a 25,000 tons of copper. So and then so where really, where does the growth come from?

The key the key growth asset in in in 2025, as Fred said, is is Kurali Sur, which we which we each call Diva. Allied has dissolved the the differences with the Malian government. They have sold those for nearly 40,000 ounces that were produced in q four last year. So that will be reflected in q one sales plus, of course, all the all the q one production as well. So we’re expecting a significantly large bump in q one from from Kerali Sud, and then obviously ongoing production.

And then the other real kicker is obviously the Alpha Stream acquisition. So we then double our exposure to that four and a half percent royalty over Bonacro. And, you know, we get full full exposure to to both production, 90,000 ounces plus of production from Bonacro at at, obviously, increasing gold prices. I think encouragingly, what we’ve seen from Allied is they said that they’re expecting high grade materials over twenty twenty twenty five and 2026 because of the high quality stripping work they’ve been doing. Likewise, Wahgnion has been an excellent performer.

And again, looking forward to to seeing record numbers out of of Wahgnion at the gold prices that we’re seeing now. Spoken to Bonacro and and Karali Sud in terms of the other assets. Again, Ballarat, we also we also doubled our exposure to as part of the Alpha Streaming transaction. I’ve been really happy with the new management team there, really focused on getting cost down, increasing production, looking at some capital expenditure there to increase throughput. So I think there’s a real potential to grow there.

And then, yeah, I just would highlight that we’re expecting that 30% production at at Karowind to really land in 2026. So that’s a that’s a real near term catalyst for the for the company. So I guess how does that how does that translate into financials? So revenue for the quarter and revenue for the year, adjusted revenue for the year up 21%, and that’s that’s really just a strong performance in in gold. Gold GEOs are flat for the year, but, yeah, really expecting an uptick on that immediately and really weighted towards the first half of the year.

You know, the leverage of this flat cost base that we have with an increasing revenue profile is you really do see that that incredible margin expansion. So looking at 72% increase on EBITDA quarter on quarter, over 50% increase even EBITDA. And then we’re seeing that reflected in in operating cash flows there as well. Some some pretty remarkable growth of over 50%, on the quarter, 42% on the year on adjusted operating cash flows, and really would really would expect that trend to continue. In terms of how, how that cash flow, that $3,000,000 free cash flow build up over the quarter, as you say, we we reflect the revenue, tax rate and its dividends.

G and a, again, we had some one offs in in in q four relating to to the AGM, and timing of of some costs. Expect that to be lower quarter on quarter. I have to pay a little bit of tax. In a growing revenue business, we will have some working capital build up, because again, we get, we report revenue on an accrual basis, but get paid in the following quarter. And so that’s that’s the bridge there to, $3,000,000 of of free cash flow for the quarter.

I would also note that now that we’re fully repaid on the on the credit facility is that that interest period will be being near zero in the in in the following quarters, and, you know, we actually will have a net positive interest as well, you know, earning cash in the bank. So through through the cash build up through the through the quarter itself, as you say, started the started the quarter with with $6,000,000, in cash. Lamancha, followed their, followed their right, anti dilution rights as part of the ounce of same transaction for 12.7 $12,800,000 private placement, 12.7 after costs. And and then what that allowed us to do was repay $17,000,000 of of debt in the in the quarter. That left us with $3,000,000 on the facility at the end of the year, as I said.

That left us, obviously, then with a net cash position at the end of the quarter with five point $4,500,000 in the bank. And then as q one sorry. As q four revenue started to come in, we were paid that last $3,000,000 to leave us debt to leave us debt free. Just there’s a bit of a I won’t spend too much time on this, but just this just sort of reflects where how we how we how we account for Casaronis and then back that out for EBITDA. So I would just note there that number number three is where we pick up the the equity contribution from Casaronis rather than treating it in in total revenue.

That’s just accounting treatment, equity accounting that we have to do for Casaronis. Obviously, the cash comes in the bank the same way. This is just this is just accounting standards. And then we back out the depletion and tax that we pay down there in in Chile to get to an adjusted EBITDA number. As Fred has said, you know, material expecting material one off payments in the quarter.

Key one there is is the million dollars on ninety days after commercial production at Karali Sud. That has occurred, so we’re expecting that imminently. The key one also there being nearly $10,000,000 expected from that final settlement on on Ming, which will have our total total claim at at the circa third 13,000,000 US dollars. We’re also expecting that planned $1,900,000 buyback of the of the cactus royalty. We’re also expecting Karolyso to hit a hundred thousand ounces of production this year.

So when that happens, if that happens, whether it happens this year or next, it’d be two million dollars in the bank. And then we’ve obviously got that 1 and a half million dollars deferred to Cornish Metals for the tungsten portfolio. So, yeah, 13.2 net proceeds on on buybacks expected for the year. Growth has been excellent in in the portfolio, so absolute record record revenue for the for the quarter, I’d say on broadly flat GEOs. But again, expecting both GEO growth and then revenue growth into into 2025.

Yeah. I think this this slide will look very, interesting over the next couple of quarters where we’ll see both the the benefits of increasing GEOs and significant increases in gold price reflecting outsized revenue growth. Likewise, we do we do get that EBITDA boost with this flat profile. As I said, there were a couple of one off costs in the quarter. I saw that we’re reaching EBITDA margin, but I’d expect that EBITDA margin to track higher, which is the way the trend’s going into the 80% or higher EBITDA margin.

As you say, we have reasonably flat costs and and and higher revenue. So expect this chart to improve over time as well. And as we say, the operating cash flow plus our cash or earnings dividend is trending in the right direction there, so $3,300,000 of operating cash flow plus the d b’s over over the, over the quarter. Expect that to trend, higher as well. Yeah.

So in terms of the capital structure, I say we’re we’re we’re backed by by supporting shareholders, most notably, Lamancha and and AlphaStream, but but notably, there’s some shareholders in there that that have been there since our private days and extremely strong, extremely supportive. Share price recently performance has been strong. So I think yesterday, we closed at $1.31 39. So that’s market cap of nearly 250,000,000 US dollars. As of yesterday, we had $5,000,000 in the bank.

No debt. So, yeah, EV there of of just just shy of about $240,000,000. 4 analysts covering us now, and, yeah, they’re very, very supportive very thankful and supportive of our analysts. And on that note, Fred, I might I hand back to you just before we have any questions.

Fred Bell, CEO, Elemental Altus: Sure. Thank you for that, Dave. And if you do have a question, feel free to type it into the q and a or, alternatively, we can we can ask some questions on on the call. But look, to round it off where the company is today, I think we’ve got peer leading revenue growth in our space. Every year, the company has had a record year in terms of revenue.

And this year is is going to be, I think, a standout year both based on geos and where we are before we even get to the current gold price and where that is. We have two really high quality cornerstone assets, Karawinda and Casarones, with a major 50% throughput expansion underway at Karawinda and with the first drilling at Casa Rona since that mine was built, that is undertaken last year and again, a bigger program this year on the Lundin mining. So we’re expecting to continue to see resource growth there. And we have growth both going through 2025, but also looking at 2026 based on operator outlook, we’re looking at revenue growth continued over the next twenty four months going forwards. And we always make this point, but if you look at the history of the company, there has not been a year in which we have not added to the portfolio and we have not made acquisitions.

But there have never been a year that we have been in a stronger financial position as we are today with a balance sheet that is, I think, for the first time in probably four or five years in a net cash position, but also with the largest credit facility we have undrawn, and we’re going to be generating record revenue. So in a really strong position to deploy non dilutive capital, that is, you know, adding to the portfolio but not diluting our existing shareholders. And a lot of those shareholders have been with us a number of years and incredibly supportive both through when we’re a private company and through public company on both the elemental and the outer side. And so very grateful for them and looking really to try and add as much value as we can over the course of this year. And as we look at ourselves today, I think we’re currently trading on one of the lowest price to revenue multiples in the junior space.

With probably about half what the mid tiers trade at and close to a third of what the majors trade at. So I think that from where we are, we’re very attractively valued, and we’ve also got a really good platform for growth going forward. So with that, we might move on to the q and a. And and Dave, I’ll let you take the lead here.

Dave Baker, CFO, Elemental Altus: Yeah. Absolutely. So first question there, Fred, is there any any plans to increase trading volumes? And then also, when was the last time management bought shares in the open market? So I think I think to that point, both Fred and I bought shares in the market in in December.

I and this is all public filings on on SETI. It is would know that it’s increasingly challenging to to buy shares. We are often blacked out whether that’s due to financials or or material transactions. But, no, Fred and I have been active actively purchasing shares in the market. In terms of increasing trading volumes, look, I mean, we’ve been had real retail focus recently.

I think Fred and I are nearly having a, you know, a retail a retail call every day. Really put focusing on on on marginal buyers of shares and and really trying to get attention on on the stock. I would say that’s that’s really picked up certainly in the current gold price environment. We’re getting a lot more attention on on on the stock and and certainly our leverage to to these rising gold prices. So I’d expect that to to trend higher.

Fred Bell, CEO, Elemental Altus: I might might also add just on that trading volume, Dave. I I think one of the topics we have had internally is talking about a US listing at at some stage, and and Dave and our GC, David Gossen, have both been doing some work recently looking at the looking at The US listing opportunities and and diligencing the work and and the costs and the ongoing requirements of that. So I think that that is another that is another angle that I think we’ll be looking at this year in terms of what we can do on that front.

Dave Baker, CFO, Elemental Altus: Yep. Fred, maybe a question that you could take the lead on. Is there any update on the Egypt assets? Assets?

Fred Bell, CEO, Elemental Altus: So, yes, it’s a good question. We for for background for everyone, Intu Metals is our partner in Egypt, and they are spending $10,000,000 to earn into 80% of the company, and we will have a 20% equity stake that will dilute after that point. We also have uncapped 1.5 royalty on all of those projects, and we have milestone payments. Since that transaction was announced in the second half of twenty twenty three, Intu Metals have completed two drill programs, and I believe that they’re committing now to their third. They have also told us that they expect to hit the $10,000,000 expenditure milestone this year.

So we are somewhat limited in what we can say publicly on that until they give us the green light. But what I would say is they’re on to their third drilling program. They expect to hit $10,000,000 expenditure, which is all being financed privately on the projects this year. And to do that in that time frame, it suggests that they’re getting results that are encouraging, and they want to continue to push ahead. So when we’re able to put some updates out on that publicly with our partners in too, we we will.

But at the moment, we just have to hold fire in the very immediate term until we can get something from from them.

Dave Baker, CFO, Elemental Altus: Thanks, Fred. First question here from from Carrie. Hi, Carrie. Hope you hope you’re well. Just question on firstly, on on how the pipeline looks.

I think certainly from from from my side, I don’t think I’ve seen us looking looking at more at more assets. I’d say they’re they’re across the space as well. So some smaller things, to $4,000,000. Also, something as large as a $50.50 or $60,000,000. Generally, gold generally near near producing.

But, yeah, that certainly has been the focus and has always been the focus on the company is gold and copper. And with, you know, good operators as as near to production as possible. So I think definitely looking to use the the powder that we have now to deploy non non dilutive non dilutive capital. And and then we’ve had a couple of questions on on dividends. So so from Carrie, Paul, and and Jacob there on now that we’ve got no debt and cash flow, are we thinking of of dividends or or more more growth?

I think specifically around the the PDAC, we we had a strategy session with the board and we we looked at various ways to improve liquidity and and start to return or contemplate returning cash to shareholders. One of which is Fred has said is is looking at a at a New York listing, so we’re investigating that heavily. And then obviously returning cash to shareholders would be would be a key target for us. As a result of that, we put in the the NCIB, the normal course issuer bid. We have been in blackout through our annual financials and that will sadly roll pretty quickly into q one as well.

But, yeah, we certainly look to use that NCIB if we felt like our shares were were materially undervalued versus market and and internal valuations. I think we’d also note that, you know, royalty company distributions are typically typically modest. But I think, yeah, certainly to have that in the arsenal. And I guess in CRE versus dividends, they are typically a more tax efficient way to to return cash to shareholders. So I think that’s gonna be the focus in the near term.

I would say as well so the question that from Paul is, will the board wait till after, I guess, next year’s full year results to make a dividend decision? I I mean, can’t speak for our board, but I’d say no. Certainly, we’ve already contemplated returning cash to shareholders and implement implemented the the NCIB. And I guess the question would be, is you do that on its own or or a hybrid solution? But, no, that’s a very live discussion at the moment.

I don’t know, Fred, if you had anything else to add to that?

Fred Bell, CEO, Elemental Altus: No. Look, I think it’s it’s just worth reiterating for everyone that as a private company from day one, we did actually pay a dividend, and we put that on hold when we listed the company and went public. And I think the feedback we received then from shareholders was the priority should be gaining that critical mass and also lowering that cost of capital. And and we have now been through three real iterations of of dropping our cost of capital. And to give you an example, when we started, we had a a seed shareholder who lent us $4,000,000.

I think it was at 12%. We then listed, and we had a specialty mining lender that lent us funds for another acquisition at approximate 10% cost of capital plus. And we now have a credit facility with three of the banks, National RBC and CIBC, that is giving us a credit facility at SOFR plus 2.5% to 4.5%. So, we have, over time, grown that revenue base. We have lowered the cost of capital.

And over the last year, having repaid all of that debt, I think if we are going to be looking at a dividend, it’s certainly the time to be having those sorts of conversations alongside buybacks and deploying that capital into new opportunities. Yeah.

Dave Baker, CFO, Elemental Altus: Yeah. Completely agree. Thanks, Fred. Another question for Paul. Again, hi, Paul.

Hope hope you’re doing well. Which existing royalties are likely to consider expanded production investment in 2025 by their mine operators? I mean, I think I think there’s a few off the top of my head. Clearly, our our large gold royalty in Kalawinda has already announced that that 30% production that, you know, they’re putting the putting the work into permitting and and the CapEx into now. So we’ll see the benefits of that in 2026.

Ballarat would be another key one that are are looking for material capital investment there that would both improve throughput and then and then production. So also note that we’ve seen at Western Queen in in WA, one of the royalties that we acquired from South thirty two, that they’re contemplating some toll milling there of of the gold resource there. And so that’s pretty live. Again, we we will we’ll we’ll guide to that when we get a bit more information from the operator. But those those three assets there, Sokalo in the Ballarat and Western Crane, I think definitely would have would would have near term production increases built in.

So then question would be then for Jacob. Do you have any do have any comment on the expected use of free cash flow in 2025? Do you see opportunities in gold royalties or opportunities in other metals, e d tungsten, like, Mactong are more attractive? And comment on the NCEV. So we have covered off the NCEV.

Although, the key is definitely to deploy free cash flow in in in 2025 and and use the the credit facility for non dilutive acquisitions. Certainly, the the opportunities we see are mostly gold. We definitely copper and gold focused, but we will look at we will look at everything. You know, first company royalty was was a mineral sands royalty that Fred Fred and and Richard acquired in in 2017. And that’s gonna be very returns based.

So if we do see a royalty that we think we can buy for $3,000,000 upfront that when it comes into production, pay us $3,000,000 every year for 20 more more than twenty years, then that’s an absolute that’s a no brainer for us. But definitely, the focus on the company is is gold and copper royalties with with a focus on gold as near to near to production as possible. Questions on the deal flow and if the high gold price is making it hard to close deals? No. I’ve not I’ve not seen that.

I think consensus is still is still definitely lagging. It’s still definitely lagging spot gold, and I think you can have a sensible conversation about what assumptions we use for gold pricing. So, no, I’ve not I’ve not we’ve not experienced any any gold price difficulties closing closing deals. And then next question is, is the company more focused on gold and copper? And more gold royalty companies have been expanding into copper investments.

That’s a very good point. And why do you believe we haven’t seen more junior royalty companies merge or acquired? So no. No. Definitely gold focused.

So about 70% of our revenue, possibly more 75% of our revenue is gold. We have some more excellent copper development projects in in the hopper. So our royalty on Arizona, Sonoran’s cactus is, you know, material copper development royalty. So we do target gold and copper as as a priority. But but, yeah, we do we do look across the board there.

And yet have definitely noted that, you know, that the copper royalties have been targeted across the space from the royalty companies. Fred, do wanna talk to the why we haven’t seen more combinations in the junior royalty space?

Fred Bell, CEO, Elemental Altus: Yes. And it’s it’s it’s a tricky one because I think, like, a lot of people can can see the the merits in in consolidation in the royalty business model. And I think that we appreciate that where where we are and and to use the example that we that we did and we talked a little bit about today on the AlphaStream portfolio that we effectively consolidated in q four, and that was a portfolio that we owned fifty fifty, and and we put it together. And, actually, that had, I think, synergies and and value for us in doing that, and that is probably an analogy in some ways for the the wider junior royalty space where I think we we see that there is merit, and I think it’s probably widely acknowledged across that space. But also more generally in the royalty space, the business model is such that scale and and critical mass clearly has benefits.

And I think that over the course of and and we said this in September, but I think we said in September, if we roll forward to September 2025 and we haven’t seen deals and consolidation in the royalty space, I think that would probably be that would be a missed opportunity. So I think that from our perspective, we continue to think that it will it will happen. The timing, obviously, a lot of variables into that. But for the moment, what we do is we focus on what we we really can control and and what we we do ourselves. And anything on on the side, on the m and a side, you know, that comes on top of it.

So really focus on what we can control. We we we see the logic and the sense in it, and at the right time, you know, hopefully, those opportunities are there.

Dave Baker, CFO, Elemental Altus: And then, Fred, back to our portfolio. Do you see and another question from Carrie. Thank you. Are there a $3 a 3,000 plus gold? Fred, do you see any assets that were out of the money that now look more interesting that could move the dial?

Fred Bell, CEO, Elemental Altus: Yeah. Look. It’s it’s a it’s a good question. I think we have a number of brownfields, former gold wines in our portfolio in the development stage. And if you took three, you would probably say Laverton in Western Australia.

And that’s a project that has been effectively warehoused for probably the best part of twenty years. And the majority owner is Shandong, the Chinese parastatal. And look, that royalty, we have a 2% uncapped royalty on it. In Western Australia, it covers just under 2,000,000 ounces, has the potential to be a cornerstone royalty for us.

Dave Baker, CFO, Elemental Altus: The

Fred Bell, CEO, Elemental Altus: Lancefield Mine that it covers used to be one of the top 10 underground gold mines in West Australia in the 1990s and hasn’t been in production since 1997. So I think and that region, just in the sort of 30 kilometer radius around that, you’ve got Goldfields, you’ve got Genesis Minerals, Mount Morgans into the South, you’ve got Sunrise Dam with AngloGold Ashanti. So it is a it is an area that is, I think, you know, overlooked, and it’s really ripe for one of for development progression. And then we have two also Brownfields gold assets that we have royalties over in Canada, which are Picklecrow and also Hopebrook. And again, I think it’s a it is a it’s a really similar story there.

And then if the economics looked good at $2,000 gold, I think it looks materially better when we are today where we are today. So definitely a few assets that I would expect over the course of the coming three to six months in that development portfolio for us. I think we’re gonna be looking to get updates across those.

Dave Baker, CFO, Elemental Altus: Thanks, Fred. Next question is, can you confirm that the payment from Allied on Corraleship production will be received this quarter in in q two? Yes. Yes. That’s that’s that is the plan.

So generally, our royalties we get paid on our royalties and they provide the information within thirty days after the end of the quarter. So that’s coming up in the next in the next two weeks and then payment thereafter. So, yeah, we’ve been in contact with the with the allied team pretty regularly both both in person and and and on the phone. So I don’t see any don’t see any changes to that plan. Question is, do we do we have any royalty income hedging policy?

Is it attractive to capture some income at $3,300 gold in case there’s a short correction in price? We don’t. And I I don’t think I’ve not really seen that in in in the royalty in the royalty space. Certainly, we’re all strong believers in gold here, and I think we’ve all been proven exceptionally right in in the last few years and and longer. Certainly, personal preference is that full full exposure to to gold price, and I don’t think I don’t think we’re necessarily quite quite done yet.

I think we certainly did have that come that question maybe even a year ago or eighteen months ago when gold was touching new highs at $2,200 gold. Is it will we consider hedging some? Yeah, that’s certainly not that’s certainly not our preference. And, I mean, unless we were required to buy buy a, you know, a debt facility, but that’s never come up with us. No.

I think we would definitely want that full exposure to all of the production from from our operators at at spot gold prices and rising spot gold prices. And then a question from Joe Bazumdar. Again, hi, Joe. Hope hope you’re doing well. Question is, do do we have any concerns about royalties on assets in the sale region such as Marlin Burkina?

Is there a geographical focus on on future acquisitions? So I’d say no no real concerns, I guess, currently with our assets. So Wahgnion performance has been has been excellent. And again, we’ve a strong operator in Mali with with Allied Gold. So I think that really does give us give us some some comfort there.

I guess in terms of the geographical focus, yeah, I’d say the majority of assets that we’re looking at at the moment are are in Australia or North America, South America. I mean, we do look at we do look at West African assets, of course. But we do know that there’s probably an investor preference for for tier one jurisdictions. So certainly, in terms of the the opportunities we’re looking at at the moment, I’d say there probably is a preference to to The Americas and and Australia. But now we do look at we do look at everything globally.

Fred, would you have there anything to

Fred Bell, CEO, Elemental Altus: Maybe yeah. Maybe just adding to the the point from Joe there in in terms of in terms of Karoly said using that as an example. And I think the consensus value for Karoly said that we have from from analysts in the market, I think we’re we’re probably in the next three, three and a half months going to recover, you know, maybe as much as 50% of that value in actual royalty revenue and and milestone payments from that asset. So I think that in, you know, in that case, because it is so front loaded, I think in three months’ time, it’s actually going to be materially derisked even the value that we have today. And for us, look, there’s there’s obvious geographic and and and sovereign risk in in in a number of these jurisdictions, but I think Sadiola has been operating there for an excess of in excess of twelve years.

And for us, I think so far Allied have actually done a very good job bringing that into production in in really record time since we sold them the asset, and that notwithstanding all the government negotiations going on in Mali around licenses and permitting. So I think we’re we’re cautious as to our overall weighting in jurisdictions. Australia remains our largest single jurisdiction. And then in terms of a focus going forward, I think we just we try and be careful, thoughtful not to overweight ourselves too much to any one region or or jurisdiction and when we look at new opportunities.

Dave Baker, CFO, Elemental Altus: And then I so last question is, thoughts on on buying gold or silver with excess cash? I’d say, yeah. Not not not not at this point, Fred, unless you had anything else to add on

Fred Bell, CEO, Elemental Altus: Yeah. Well, it’s an interesting question. We’ve had a we’ve actually had one or two shareholders who have have reached out to us in the past and suggested that it as we have a a cash build across the business, if we’re not actively using it, Holding physical gold or gold credits on on the balance sheet is a way to give ourselves even more exposure to to gold and and commodity prices. So I think, look, clearly, as as we have over the next, call it, three three or four weeks, as we get some of these one off payments in in the q one revenues, we’re gonna have increasing cash on balance sheets, and and then we can make a decision on what we do with it, whether that is putting it in, you know, high interest accounts or if we have acquisitions that are ready to go or or even looking at holding some some physical as part of that, but not something we have we have done yet.

Dave Baker, CFO, Elemental Altus: Yep. And then yeah. The last question here, and just touching back on the one off payments expected in in 2025. Yeah. So so to be clear, the it’s a $1,000,000 from from Allied on that first production at at Karali Sud.

The key one there is as well as the nearly $10,000,000 from the Ming settlement, the Rambler settlement, which is landing imminently. And then on top of that, we have the $1,900,000 from Arizona Sonoran for that partial buyback that’s due by the middle of the year, and then a potential $2,000,000 of payment if Corale sort of hits a hundred thousand ounces of production this year. It doesn’t happen this year. Most likely, it’ll happen early next year. The one off cash outflows is that 1 and a half million dollar miles deferred payment on our Macron tungsten royalty.

So that’s due that’s due in q three as well. And, Fred, that’s that’s it. So I might leave it to you to to wrap up.

Fred Bell, CEO, Elemental Altus: Yeah. Well, thank you very much, Dave, for for running this through, and thank you to finance team as as well on on our side, Janae, Kate, Bev, Sandra all for contributing to this. And thank you, lastly, for everyone for attending, giving us your time. As always, please feel free to reach out to us by e mail, directly or by calling us. And always happy to speak to shareholders, prospective shareholders, and less investors.

So thank you once again, and and everyone have a good Easter weekend coming up.

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