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Few youd ever want to touch Narrow the field: buy prospect generators
Kami 3% royalty ($100mm+ NPV) 10-12 chances at 50x-100x returns (no kidding) Organically created royalties Just multiplied its royalty income 10x in a single transaction
When it works
Mineral & project location Partner ALS cost $650,000 ALS proceeds Royalty
Aurora Energy
$210 million
2% GSR
Rambler Metals
$6 million
n/a
$50+ million
3% GSR
Cumulative revenues ~$30 mm Est. mine life ~2036 Royalty covers all future expansion/development at zero extra cost Cash flow covers Altius G&A
Capital structure
27.9mm shares
NCIB 1,406,207
Started 4/2/2013 Expires 4/1/2014
Zero debt (for now) Not your typical geologists paycheck scheme
Milestones achieved
Major investment/offtake w/Hebei Provincial/Federal environmental clearance Electric power is secured $1 billion debt financing underway Long-lead time equipment ordered Next milestone: project finance
Alderon/Kami is one of 20
20 projects 10 w/partners
Project Kami Western Labrador Labrador West iron ore Revelation Alaska Cristo Cu/Au Alaska Topsails Cu/Moly central NL Viking gold west NL CMB uranium central Labrador Humble Cu/Au Central Labrador Saglek - iron ore North Labrador Partner Alderon Iron Ore Rio Tinto Millrock Millrock/Brixton JNR Resources Northern Abitibi Paladin Energy Millrock/Kinross Cliffs Natural Resources Royalty 3% GSR 3% GSR 2% NSR gold; 1% NSR base metals 2% NSR gold; 1% NSR base metals 2% GSR uranium/ 2% NSR other 2-4% sliding scale NSR 3% GSR 2% NSR gold; 1% NSR base metals 1% NSR
A transformative deal
Tuesday, Dec. 24, 2013: Altius announces two major transactions 1. Altius will buy 52.36% stake in 11 royalties for $241 million (seller: Sherritt Intl, S.TO) 2. Altius will buy the Carbon Development Partnership (CDP) for $42mm
CDP owns 7.2 billion tonnes coal, 2 billion tonnes potash in Alberta and Saskatchewan, plus royalties on production in the region
No single royalty asset contributes more than 22% of royalty revenue (incl. Voiseys Bay) Low political risk: all mines in Canada
Financing
Total purchase price: $283 million $124 million cash $40 million equity securities
Stakes in VGQ.TO, CAA.V and FER.TO
Income potential
Mgmt has stated its intention to pay dividends
A Wayne Gretzky income stock
Q&A