growing a diversified mining royalties company
TRANSCRIPT
GROWING A DIVERSIFIED MINING ROYALTY COMPANY
INVESTOR PRESENTATION
December 2015
FORWARD LOOKING STATEMENTS
This document includes certain statements that constitute “forward-‐looking statements” and “forward-‐lookinginformation” within the meaning of applicable securities laws (collectively, “forward-‐looking statements”).Forward-‐looking statements include statements regarding Altius Minerals Corporation’s (“Altius”) intent, or thebeliefs or current expectations of Altius’ officers and directors. Such forward-‐looking statements are typicallyidentified by words such as “believe”, “anticipate”, “estimate”, “project”, “intend”, “expect”, “may”, “will”, “plan”,“should”, “would”, “contemplate”, “possible”, “attempts”, “seeks” and similar expressions. Forward-‐lookingstatements 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 beaccurate. Do not unduly rely on forward-‐looking statements, as a number of important factors, many of which arebeyond Altius’ control, could cause actual results to differ materially from the estimates and intentions expressedin such forward-‐looking statements. These factors include, but are not limited to the inability to obtain approvalof the proposed plan of arrangement by the court and the other regulatory approvals and the occurrence of anyother event, change or other circumstance that could give rise to the termination of the Arrangement Agreement,or the delay of consummation of the transaction or failure to complete the arrangement for any other reason.
Forward-‐looking statements speak only as of the date those statements are made. Except as required byapplicable law, Altius does not assume any obligation to update, or to publicly announce the results of any changeto, 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.
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Diversified Mining Royalties – A Market Opening
Ø The top 5 precious metals royalty companies have a combined market cap that has grown from $6Bn to $23Bn in past 8 years and that is now 1/3 of the market cap of the top 5 precious metals mining companies
Our ObjectiveTo Grow Altius to Become the First Significant Diversified Mining Royalty Company
From a Platform of Exploration Project Generation / Royalty Creation
Ø Diversified mining is a 4 times larger segment of the mining sector than is precious metal mining
Ø Diversified mining royalty company market capitalizations are less than 1% of that of diversified mining companies
A Full-‐Cycle Contrarian Growth Strategy
• Buy royalties during down cycles
• Accumulate prime exploration lands on down-cycles and monetize on up-cycles
Our Competitive AdvantageProven contrarian ability to capture value from sector cyclicity
Global Diversified MinersNow Down 80% From Peak
CYCLICAL PERSPECTIVE
Cycle 17 years
Cycle 28 years
Cycle 315 years
(the “super-cycle”19
86
1987
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1989
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1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
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2010
2011
2012
2013
2014
2015
NewfoundlandExplorationSpending
$50 MM
$200 MM
30-‐Year Cyclical Perspective
• Mining is a “zero-sum” investment sector
• Cyclical volatility is extreme – meaning that only the contrarians really profit
Mining Cycles Are Rational and Predictable
Prices Oscillate Around Incentive Requirement
1. In response to oversupply, metal prices fall below the incentive level required to build supply –Producer margins and valuations plummet
2. This in turn leads to undersupply and price response to levels higher than required to incentivize new supply –Producer margins and valuations soar
$-‐
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2020
Copper Price
Incentive Price
Disincentive
Incentive
Disincentive
Incentive Price Requirement vs Mined Head Grades
0.50
0.55
0.60
0.65
0.70
0.75
0.80
$-‐$0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2020
Grade Declines Driving Higher Incentive Price Requirement
Average Mined Copper Grade Incentive Price (22% SIRR)
$-‐
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
2000 2005 2010 2015 2020
Avg. Capex / Pound of New Capacity
+342%2000 to 2015
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
2000 2005 2010 2015 2020
Avg. Opex / Pound of Production
+382% 2000 to 2015
Contrarian Track Record
Altius Embraces Cyclical Valuation Swings and has an 18-Year Proven Track Record as a Sector Contrarian
25.3% Compound Annual Share Price Growth Rate Over 18 Years
Royalty PurchaseSpin-Out / Monetization
Market Cap$0.9MM
Market Cap$425 MM
Voisey’s Bay Callinan
Sherritt
IPO
ROYALTY PORTFOLIO GROWTH
BUILDING A DIVERSE & LONG-‐LIFE PORTFOLIO
MINE COMMODITY POTENTIAL RESOURCE
LIFE
Voisey’s Bay Ni-‐Cu-‐Co 21
777 Cu-‐Zn-‐Au-‐Ag 8
Genesee Coal/Electricity 43
Paintearth Coal/Electricity 11
Sheerness Coal/Electricity 24
Highvale Coal/Electricity 19
Cardinal River Steelmaking Coal 16
Rocanville Potash 531
Cory Potash 1454
Allan Potash 988
Patience Lake Potash n.a.
Esterhazy Potash 321
Vanscoy Potash 61
CDP Potash/Coal various
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Acquired during current cyclical downturn
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ALTIUS REVENUE GROWTH AND DIVERSITY BY COMMODITY
Altius1
Ni6%
Cu3%
Electrical Coal50%Met Coal
8%
Potash28%
Other5%
2014
$28M
Ni70%
Cu30%2013
$3M
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Ni5% Cu
13%
Electrical Coal37%
Met Coal6%
Potash21%
Other4%
Zinc8%
Au-‐Ag6%
~$40MM
2015
• 12 mine royalties acquired during current down cycle covering potash, copper-‐zinc and coal mines
• Royalty revenue increased by ~13 times
• Royalty revenue per share increased 1000%
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Balance Sheet Strength Allows Further Contrarian Moves
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CAPITAL STRUCTUREShares O/S 39.9mm
Market Cap ~C$425mm
Per Annum Royalty Revenue ~C$40mm
Cash & Market Investments C$50mm
Quarterly Dividend C$0.03
$-‐
$0.50
$1.00
$1.50
2013 2014 2015
Royalty Revenue Per Share
$-‐
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
Q4-‐2013 Q4-‐2014 Q4-‐2015
Debt Per ShareBalance Sheet (Liquidity) Improving
Long-Term, Per Share Growth Focus
EXPLORATION / ROYALTY CREATION
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5 projects have attracted partners in past year -‐despite the poor market conditions
Cumulative Altius Investments: $16 million
Cash Realizations: $223 millionRetained Equities: $13 million
Cumulative Pre-‐tax Returns: $236 million
Profits: $220 million
Previous Full-‐Cycle Performance
EXPLORATION / ROYALTY CREATION
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coppergoldnickelzincuraniumironcoal
PROJECT LOCATIONS
potash
Prospective mineral lands have become incredibly cheap
Accordingly, we have increased direct land holdings by more than tenfold over past two years -‐ Copper-‐gold focus in Chile-‐ Base and precious metals and bulk commodities in Canada-‐ Nickel-‐Copper in Michigan-‐ Zinc in Ireland-‐ Further royalty exposure to Alaska, Nevada, Arizona, Mexico, Portugal.
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2016 OUTLOOK
ü Metal commodity prices now well below incentive will cause supply destruction – setting the stage for next up cycle
ü Royalty buying opportunity window remains open as cash sought throughout sector in order to shore up balance sheets – we are evaluating several acquisitions
ü Major companies forced to begin to increase exploration budgets to address several years of high grading and diminishing portfolio mine lives – they will need projects
ü Altius’ further emergence as a leading diversified mining royalty company
Thank You