Corporate Presentationaltiusminerals.com/storage/presentations/2020-03-12... · 2020-03-11 · Altius’s potash fertilizer royalties relate to a portfolio of top-tier Canadian mines

TSX:ALS | OTCQX:ATUSFMarch 2020

Corporate Presentation

TSX:ALS | OTCQX:ATUSF

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.

Forward Looking Statements


Long-Term, Counter-Cyclical Discipline

ROYALTY REVENUE GROWING FAST ON VOLUME

GROWTH AND IMPROVED PRICES

COMMODITIES SUPERCYCLE COMMODITIES SUPERCYCLE

ENDS

$6M

$28M$33M

$47M

$67M

$78M

IPO & INITIAL YEARS

Royalty Acquisition

Altius Interpretation

of Mining Cycle

Position

Royalty Revenue

2002 – 20111997 – 2001 2012 – 2015 2016 – Present

Cash Build Acquisitions Organic Growth

• Less than $1MM market cap upon IPO in 1997

• Innovator of Project Generator Model for mineral exploration that trades projects for royalties and partner equity – protecting Altius capital structure

• Equity gains of more than $200MM and many early stage royalties created from PG business during super-cycle

• Decision to use profits to expand royalty portfolio with focus on non-precious metal commodities

• Developed a royalty wish list but forced to sit on cash for several years until commodity prices and sentiment declined

• Multiple royalty acquisitions made as balance sheet crisis hit the mining sector and motivated asset sales

• Royalty revenue from long life assets grown to $78M - with very high accompanying EBITDA and Cash Flow margins

• Embedded organic (free) growth coming from mine expansions and extensions while also innovating new renewable royalty business

• 42 million common shares outstanding - no roll backs

3


$0.22$0.88 $0.83

$1.08

$1.56$1.86

$1.79-$1.91

FY 2014 FY 2015 FY 2016 FY 2017 2018 2019 2020Guidance

Growth Track Record

EBITDA Per Share

Royalty Revenue Per Share

$0.71 $0.64$0.80

$1.24$1.49

$1.43-$1.53

FY 2015 FY 2016 FY 2017 2018 2019 2020Guidance

4

$6M$28M $33M

$47M

$67M$78M

$75M -

$80M

FY 2014 FY 2015 FY 2016 FY 2017 2018 2019 2020Guidance

Royalty Revenue

Per share growth focus

80% EBITDA Margin

56% OCF Margin


Royalty Growth Pipeline

5

Strong operating margins and long resource lives (85 years revenue weighted average) motivating multiple new build and expansion investments by operators = free royalty growth

Organic (Free) Mine Royalty Growth

New renewable energy royalty business growing fast as electricity generation transition accelerates and sector begins to recognize benefits of royalty finance offering

Renewable Royalty Business Gaining

Momentum

Discovery

Renewable Development Portfolio

2.5 GW Portfolio

Rocanville

Cory

Allan

Vanscoy

Esterhazy

Completed Potash Expansions

New Mines in Construction

Voisey’s Underground

(Ni-Co-Cu)

Gunnison (Copper)

BuildingRamping UpFinancing

and Development

ChapadaExpansion (Cu)

Resource Stage Expansion Study

Expansion of Existing Assets

New Build Studies168,000 metres of

drilling in 2020

60+ Exploration Stage Royalties

21 GW Development Portfolio

5


Proven Equity/Royalty Investment Strategy Allows Creation of New Pipeline Royalties at Negative Cost and Provides Cash for 3rd Party Royalty Acquisitions

PG Business Growth - Royalty Creation At Negative Cost

57 Projects

$17M

Converted to new royalties and junior equities since 2016 market

bottom

Positive cash generation in 2019

Junior Equity Portfolio Growth

PG Net Monetizations

1stGunnison starting up to mark first

PG created royalty to reach production stage

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$22M$33M

$54M $54M$11M

-$3M -$6M

$17M

April 2016 April 2017 December2018

December2019


Levelized Cost of Energy Comparison

Renewables Transition Momentum Growth

EV Battery $ Cost / kWh

$ Cost Parity with Internal Combustion Engine

Electrification trends (e.g. transportation about to shift to EV) will

cause demand for electricity to grow and gain market share

relative to other sources of consumer energy such as fossil fuels

Lower costs, higher efficiencies and underlying demand growth

coupled with a surge in ESG investment mandates creating a

massive tailwind for renewable energy investments

Megatrends driving increased electricity demand:

ESG Going Mainstream:

7Source: “Electrifying Insights: How Automakers can Drive Electrified Vehicle Sales

and Profitability,” McKinsey – January 2017 , Lazard’s Levelized Cost of

Energy Analysis – Version 13.0 (November 2019), US SIF Foundation

Within the electricity sector, renewable energy has

become the cheapest form of new generation

Past the tipping point:

7


Tri Global Energy Investment – First Year Progress

• Renewable energy royalties are being generated ahead of schedule – project sales in first year represent more than half that

required for full royalty vesting threshold - with remainder expected throughout 2020

• First royalty project, Canyon Wind (360 MW – TX), sold in October 2019 to Silverpeak Strategic Partners with operations

expected to begin in Q2 2021

• Woodford Wind (400 MW – IL) sold to Copenhagen Infrastructure Partners in December 2019 with operations expected to

begin in Q4 2021

• Flatland Solar (180 MW – TX) sold to Silverpeak Strategic Partners in March 2020 with operations expected to begin in Q4

2021

• TGE development pipeline has increased to over 2,300 MW (even after accounting for the 940+ MW in project sales)

Source Company Reports

8


ARR’s Royalty Finance Model Attracts Second Major DeveloperUS$35MM+ Investment in Apex Clean Energy

Apex is one of the largest renewable energy developers in the U.S. and has commercialized over 5 gigawatt (GW) of clean

energy projects since inception in 2009. Its current portfolio includes approximately 21 GW (12.5 GW wind, 8.5 GW solar)

of development projects. Apex typically vends these projects to utilities, infrastructure funds and other institutional investors

prior to construction.

Overview

• On March 10, 2020, Altius announced that ARR has closed a US$35+ million royalty investment transaction with Apex Clean

Energy (“Apex”)

• ARR’s investment is funding Apex’s development efforts for its current portfolio of projects and also facilitating its expansion -

allowing Apex to ultimately bring more projects to market

• As Apex sells its development projects to final project sponsors ARR receives new royalties until a minimum royalty vesting

threshold is met.

• Once vested by ARR, royalties are “perpetual” and uncapped

Royalty Contract Details

• Option mechanism allows for future US$10 million tranches based upon achieved milestones

• Royalty payment is pre-set as a percentage of gross revenues

• Using current assumptions portfolio is estimated to generate US$3-4 million in new annual royalty revenues

99


21 GWDevelopment Portfolio

1.6 GW Projects Transacted

in 2019

+2.0 GW Under Construction

Apex Is One of the Largest Renewable Energy Developers in US

10Source Company Reports

10


Diversified, High Quality Assets

15 Producing Royalties

Investment Grade Operators

Low Jurisdictional RiskCanada, USA and Brazil

Royalty vs. Stream Dominated

Copper 37%

Battery Metals (Ni-Li-Co) 2%Potash 19%

Electricity Generation (Coal) 14%

Premium Iron Ore 20%

Steel Making Coal 4%

Zinc 3%

2019CommodityRevenue

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Coal to RenewablesFossil Fuel to Clean Energy

Conversion

Cu, Co, Ni, Li

Clean Iron Ore Products

Lower Emission Steel Making

Soil Quality/Agricultural Yield Improvements

Transportation Electrification

Potash

Macro-TrendAltius

Royalty Exposure

Subsidiary Altius Renewable Royalties Corp. (“ARR”) reinvesting royalty based capital to advance more than 23 GW of potential new renewable energy projects – as our 5 GW coal generation exposure phases out to zero

Altius’s potash fertilizer royalties relate to a portfolio of top-tier Canadian mines that are ramping up into pre-built capacity expansions as sustainable food production needs increase

Copper, which benefits more than any other metal from EV and renewable transitions, is Altius’s largest royalty exposure. Royalty exposure to battery metals - Nickel, Cobalt and Lithium is growing

Royalty from IOC relates to high iron / low impurity concentrates and pellets that require less metallurgical coal usage in steel plants

Aligned with Global Sustainability Macro Trend

Sector leading fundamental business growth from assets that enable the world to meet its sustainability objectives

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Longevity

Mine lives calculated based on current mineral inventory and 2018 throughput. Coal asset lives denote the expected plant closure and not based on

reserves. The 2018 revenue weighted average mine life is based on remaining reserves inclusive of MI resources and throughput capacity.

85+ Year Revenue Weighted Life


Strength of Operator Margin

Notes

• All amounts USD. Spot as at March 9, 2020. Spot Potash is FOB Midwest.• Chapada margin calculated using Lundin’s guidance of 2020 C1 cash costs of copper per pound (NI43-101 report October 10, 2019) after precious metal by-product credits. Chapada cash

costs do not include the effects of copper stream agreements which will be a component of the copper revenue and will impact realized revenue per pound.• Nutrien and Mosaic per tonne margins calculated by taking FOB Midwest Spot over Cost of Product Manufactured. COPM = Potash COGS for the 2019 excluding depreciation and

amortization expense and inventory and other adjustments divided by the production tonnes for the period. For Mosaic, we used the 2019 four quarter average actuals cash costs ofproduction (excluding brine) – MOP ($/tonne)

• Voisey’s Bay margin calculation using SNL Modeled Cost Curve for Total Cash Cost per pound of nickel net of by-product credits.• IOC margin based on Altius modeled $45/t cash costs for concentrate and $65/t cash costs for pellet.• Gunnison is expected to be in commercial production in 2020. Total cash cost pe pound of copper is derived from the Base Case of the Feasibility Study dated January 16, 2017• Manitoba Operations margin calculated using Hudbay’s annual actuals year ended December 31, 2019. Cash cost per pound of copper produced, net of by-product credits.

Operator MineCommodity Benchmark

Spot Price Operating Margin

Lundin Chapada Copper $2.56 112%

Nutrien All Operations Potash $255 211%

Mosaic All Operations Potash $255 245%

Vale Voisey's Bay Nickel $5.96 106%

Rio Tinto IOC Fe Concentrate $91 102%

Rio Tinto IOC Fe Pellet $132 103%

Excelsior Gunnison Copper $2.56 194%

Hudbay Manitoba Operations Copper $2.56 701%

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Historic Royalty Acquisition Returns

AcquisitionAcquisition

DatePurchase

Price

Realized After-Tax Unlevered

Cashflow

Net Asset Value(5%)

Consensus

Realized Cashflow + NAV vs.

Purchase Price

Voisey's Bay 2003 $13.6 million $25.1 million $18.2 million 318%

Chapada Stream 2016 $76.8 million $40.2 million $124.0 million 214%

Potash Portfolio 2014 & 2018 $138.2 million $42.5 million $226.9 million 195%

IOC 2017 & 2019 $69.1 million $48.9 million $106.1 million 224%

Callinan Merger 2015 $70.9 million $23.0 million $71.7 million 133%

Coal Portfolio 2014 $191.7 million $67.9 million $67.1 million 70%

$560.3 million $247.5 million $614.0 million 154%

Note

1. Purchase price is based on cash purchase price in CAD. For the acquisition of Callinan Royalties in 2015, the purchase price excludes cash and consideration allocated to non-royalty related assets. (see Note 9, 2016 Annual Financial Statements), and also includes the cost to exercise the option increasing the Gunnison Gross Sales Royalty (exercisedin 2018).. The main producing royalty in Callinan is 777 with the Gunnison development stage royalty also part of that acquisition.

2. After tax unlevered cash flow is the cumulative (since acquisition) reported revenue up to December 31, 2019 after accounting for 27% corporate income tax. For LIORC, theeffective tax rate is adjusted to zero to reflect the actual tax rate on inter-corporate dividends. For the Chapada copper stream, reported revenue is net of a 30% deduction toreflect the cost of purchasing copper, as per the contract. The effective tax rate on Chapada is 0% until the initial deposit of US$60 million is fully recovered. Voisey’s Bayroyalty revenues are shown net of the 20% Newfoundland & Labrador royalty tax.

3. Consensus NAV by asset based on analysts reports from July - September 2019. The Callinan NAV consensus is based on NAV ascribed to 777 and to Gunnison.

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Dividends

$3M

Dividends

$5M

Dividends

$7MDividends

$7M

Dividends

$8M

Share buy back

$2M

Share buy back

$2M

Share buy

back…

Share buy back

$9M

2015 2016 2017 2018 2019

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TSX: ALS | OTCQX: ATUSF

Issued Common Shares 41.8 million

Fairfax Preferred Securities 10.0 million ($100 mm)

Basic Market Capitalization $353 million

Annual Dividend $0.20 per share

Outstanding Debt $109 million

Cash and Public Equity Holdings† $169 million

Available Under Credit Revolver† $85 million

4.9x

1.3x

x

1x

2x

3x

4x

5x

6x

2014 2015 2016 2017 2018 2019

Net Debt to EBITDA

4.9x

1.3x

x

1x

2x

3x

4x

5x

6x

2014 2015 2016 2017 2018 2019

Net Debt to EBITDA

Leverage Ratio Returns of Capital

Research Coverage

Richard Gray

Craig Hutchison

Brian MacArthur

Carey MacRury

Jacques Wortman

Orest Wowkodaw

Capital Structure

Capital table values, return of capital and net debt to EBITDA numbers as of Dec 31 2019 except for market cap as of Mar 10, 2020. Cash and public equity holdings includes $22 million cash + $93 million LIORC equity value + $54.1 million project generation equity values

TSX:ALS | OTCQX:ATUSF17

0.69x 0.84x 1.12x

1.64x 1.76x 2.19x

ALS OR SSL WPM RGLD FNV

8.7x

14.9x 15.2x 17.0x 18.9x

25.4x

ALS SSL OR RGLD WPM FNV

9.2x 14.4x 15.8x

19.4x 19.4x

27.5x

ALS OR SSL WPM RGLD FNV

EV/EBITDA (2020E) P/CF (2020E)P/NAV

Source S&P Capital IQ, Company Reports. March 11, 2020

Potential Re-rate Catalysts

• Increased recognition of sector leading per share business growth metrics, longest duration assets, decreasing

leverage and increasing returns of capital

• New renewables royalty investment announcements

• Coal to renewables strategy execution eliminates current negative impact on investment suitability perception

• Broader portfolio sustainability attributes become recognized by ESG focused investors

• Announcements by mine operators of resource growth and mine expansion (e.g. Chapada)

Valuation

17


Thank You

18

PRODUCING

ROYALTIES

DEVELOPMENT

ROYALTIES

PROJECT GENERATION

PROJECT

RENEWABLE ENERGY

PORTFOLIO

CONTACT

INFORMATION

Flora Wood

Director, Investor Relations

Phone: (416)346-9020

Email: [email protected]

Documents

Corporate Presentationaltiusminerals.com/storage/presentations/2020-03-12... · 2020-03-11 · Altius’s potash fertilizer royalties relate to a portfolio of top-tier Canadian mines