2024 Rule Symposium Preview - Altius Minerals Corp.

this is Rick rule for Rural investment media sponsors of the 2024 Boer Ron natural in natural resources investment Symposium uh July 7 through 11 this interview is in support uh of that conference because we're going to give you 50 hours of programming over four days and because nobody uh will be able to absorb all the information that we're going to give you in 50 hours what we'd like to do is introduce you both to the ex iors and to the speakers before your conference so that you can allocate your time and frame your questions uh more intelligently uh to better effect for you and everyone else today I have the uh Good Fortune of introducing a friend of very longstanding uh Brian Dalton uh of alus minerals Brian despite his relatively young appearance uh has run Altus for three decades and I'm proud to say uh I was one of the very very very earliest shareholders of uh of alts and I and my former clients benefited for 30 years by his stewardship uh as everybody listening to this interview knows every exhibitor every public company exhibitor at this conference is owned in my own accounts which I guess is a disclosure of conflicts of interest but Brian as that is true thank you first of all for almost three decades of stewardship of Altius on behalf of shareholders myself included and thank you too for your ongoing support and sponsorship of the natural resources investment symposium welcome thank you that was a pretty crazy endorsement but I'll have to thrl one back because I don't think without that early involvement and endorsement from Rick Rule and we were a bunch of little kids in our 20s still in University trying to start a company we would have gotten anywhere near where we've gone gone to today so thank you well I'm I'm delighted to have played a small role in the success of alus so I'm going to suggest to the viewers uh that the value proposition here is both a sum of the parts uh I'm saying this not you but I hope you can support it which is to say that the company would break up for more than selling for and you get the track record for free and the track record is in fact exemplary uh from a nickel pool to a double digit share price uh while paying dividends is an extraordinary uh track record let's talk uh Brian uh something about both of some of the parts the track record and where you're going from here and let's do it in three different circumstances tell me first of all about starting off uh as a prospect generator generating using intellectual Capital to attract other people's physical capital and then using that to reduce the amount of delution at the equity level that we've had to suffer yeah so we started the company literally in the backdrop of the Brix Scandal unfolding so obviously not uh Rosy Market times and maybe our IDE aidea when we originally launched was to do what everyone was doing raise money drill some holes hopefully make a big Discovery Well the little problem of finding Capital to do that suddenly popped up almost from the day we went public my parents were the only people to buy shares on the opening day of trading by the way so just to put that in context so that quickly brought us to our our own rots as Prospectors we funded ourselves for University by prospecting and and farming out projects and keeping little royalties and some option payments and we knew that we would have to basically do the same thing within alus and so I guess we were driven to it out of desperation but um we learned a lesson in cyclicity there we really liked the model I think we found that we were pretty good at generating projects that big companies would be happily happy to spend money on um and you know really you know partly with some of your coaching I would say and mentoring back then just the the the rational nature of the uh of having your projects explored that way retaining interests uh and protecting your capital structure so protecting that Share account um practically at all costs has became very important to us and so today 30 years in we have uh still less than 50 million shares outstanding and as you say that's over almost um over over almost 30 years now so it's um it's it's a model sorry go ahead no do you have any any memory of how much third party expenditure has occurred over 30 years for the benefit of ala shareholders must be an astonishing number it'd be a fun one to calculate I can't say that I have but I can tell you that in the past three or four years we've average more than 300 kilometers of drilling by Partners a year you can do some quick mat on that and I I'd be surprised if the number if I were to Total it up if the number didn't start with a B so you have uh both generated royalties uh from carries on Prospect generation and bottom uh perhaps the next thing that we should do in terms of the some of the parts discussion is talk about uh your royalty assets uh how much cash they generate what sort of return on Capital employed uh you generate and what your suspicion or somebody else's suspicion of the net asset value of the mineral royalty portfolio is we actually did a fair bit of work last year around investor day on that some of it for our own purposes but um we kind of break things into four different buckets maybe there's a fifth now as well uh but the big part of uh like I would say the weight of our portfolio is in our poach royalties these are assets that run for you know hundreds of thousands of years from now no discounting model will ever do them Justice and I and I almost go as far as they argue that the entire market cap of the company could be supported on those because I don't think I'd sell them for Less so that's one piece piece of the puzzle and then on the base metal side uh there's our original boes Bay royalty stream on the shapat mine which is a lundine project in Brazil that generates round about 15 to20 million a year at at current prices um there's some other development stage projects there's a new discovery on that lundine project that we think uh is likely to get built this cycle uh and then uh iron ore has been a big part of what we do but a very particular part we're we're very keyed in on the growth of electric Arc furnaces in the steel making Market this is at the expensive blast furnaces it's it's it's happening as we speak and those steel plants are very particular about the type of iron or that they can take in so we've been focused in on that for quite some time we have an exposure through riotinto ioc mine in Canada royalty exposure uh as well as a development stage project a champion iron ore is uh just published feasibility results around uh and then the final piece came about in a little bit of an unusual way it was originally a series of coal royalties in Alberta which were um basically expropriated from us by the Canadian and Alberta governments when they um when they uh phased out Coal Fired electricity and that drove us to you know what are we going to do these were meant to be you know 30 40 50 year royalties you know what are we want to do for shareholders to replace that business that was basically just vanished overnight and that's when we began to form a company called alus renewable royalties which is now a a public spin out and it does uh royalty financing on renewable energy projects primarily in the US you know one of the Hallmarks of alus in royalties one of the things I think that really distinguishes it is that we're really focused on long life assets so the longer the life the more optionality we believe is embedded the higher the ultimate returns and so in renewable space what really attracted us was the uh fact that the resources the natural resource that we're taking royalty on is in in those cases Perpetual um but overall the business right now generates in the order of 80 to100 million um across most of our exposures were long past uh payback the weight of our acquired royalty portfolio really happened around 2014 to 2016 when the mining industry balance sheet got beat up we stepped in pretty pretty big so you know that's we're going back almost 10 years but yeah we've had simple payback in in most all of those cases and we're generating for the most part um certainly double digigit yields against purchase price across the whole portfolio uh your suggestion that the pot as royalty uh is worth the market capitalization is interesting when one considers that uh if every other ass said is redundant uh the market value of those redundant assets is over $400 million versus the 9900 million dollar market cap that would suggest if you're correct I'm speaking in Canadian dollar terms uh that uh the sum of the parts is400 or $450 million larger than the price of the whole that's a very interesting proposition well again on our on our at our investor day we go through some of the methodologies and the I guess the hypotheticals that allow us to get to draw those conclusions but with the poach it's the long lives the like say the current analyst net asset value calculation for the poach royalties 95% of the potes that we own is discounted to Oblivion and and that's where I take some exception because I don't believe that uh that potach is is is from years 15 on is not is not valuable but the other thing I'll say I'm not going to get into trying to speculate around a nav number or anyone anyone can do that math and come to their own conclusions I will say this though um we are very aggressive buyers of our own shares here so let's just let that speak for itself Robert fredland has also pointed out that for very large highquality assets that uh uh discounted uh cash flow is an illusory methodology because at the end of the discounted period you start the clock over with the same starting valuation which means that the terminal assets the terminal value of the assets is almost always understated but let's talk about returning Capital to shareholders you're generating enough cash now that it would appear to be Surplus to the needs of the companies relative to the uh opportunities available to you so you have both a share buyback program and a dividend talk something about returning Capital to shareholders and talk to me too about a discussion that you and I had five or six years ago that you may or may not recall where we discussed the fact that you have to balance every acquisition uh against reducing Capital which is to say that a that a new expenditure has to generate more net benefit to shareholders than buying in your own shares if you could talk about that because I think it's an interesting acquisition uh and capital allocation metric yeah it's it's absolutely true I don't even put buyback in the category of shareholder Capital returns Main to me it's it's m&a it's competing with an external acquisition so if we're thinking about allocating Capital to buy something new and adding it to the portfolio it absolutely has to look like a better um either strategic or or straight up Financial there has to be accretion in quality and financial metrics otherwise we're really happy to just continue to buy more of the assets we already own um on a perser basis and you know it's actually pretty simple really I mean it's that's what we do we buy passive interests in high quality mining assets and we try to buy them for less than they're worth um and that can be somebody else's asset over here or could be the ones we've already assembled it's just per share um but yeah I mean we do have a dividend we've had that running for several years we actually kind of found it kind of neat last year we didn't even know um we were being considered for but we somehow made the dividend aristocrats in Canada so uh that was I don't know if that was in the original list of goals 30 years ago but here we are so it's um you know it's it's important I think preserving our capital structure is first and foremost uh I think how we benefit shareholders and let for the most part letting these big long life assets follow their course through Cycles get invested in grow have their prices increase without us having a share of the costs you know eroding our margins like it's this is not rocket science this is not a hard business to run may not be just don't do dumb not many people have been able to not do dumb things congratulations for working three decades Brian to become an overnight success uh should should my attendees uh wish to contact you and they should uh who at your company should they contact and how should they contact that person yeah so Flora wood is uh the person who handles Frontline investor relations and she is fantastic she is one of the most straight shooting honest people you'll ever meet so Flora can be reached at Flora f l r a alus minerals. and I'm sure you'll really enjoy the conversation and she'll let me know all about it and tell me that I have to call you back I'm sure Brian uh thank you for 30 years of efforts on behalf of shareholders especially 30 years of efforts on behalf of myself and thank you too for your ongoing support of the natural resources investment Symposium we look forward to welcoming uh Altus and hosting alus in boa Ron Florida July 7 through 11 can't wait see you there

Channel: Rule Investment Media

Views: 2,443

Keywords: Rick Rule, Gold, Silver, albert lu

Id: kj7Ca1MvsUY

Length: 14min 17sec (857 seconds)

Published: Sun May 12 2024