Altius Minerals Corporation (ALS) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Altius Minerals Corp. 2019 (sic) [ 2020 ] Annual and Special Meeting Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, John Baker, Chairman. Please go ahead, sir.

Thank you, operator. And if anyone feels they've gone back in time, it's not the 2019 annual meeting. It's the 2020 annual general and special meeting. And I'd like to call this meeting to order the formal part of the meeting. And welcome, everyone, to our 23rd meeting of shareholders, and thank you for joining our virtual meeting this year, while we adapt to the current world of public health regulations. I'm John Baker, Executive Chairman of the corporation, and in accordance with the Bylaws, I will act as Chairman of the meeting. In light of the ongoing public health concerns related to COVID-19 and to comply with measures imposed by our federal and provincial governments, we ask shareholders and others this year not to attend the meeting in person, and instead implemented the option for shareholders to participate in this meeting in real-time by conference call and webcast. The webcast for viewing Brian Dalton's presentation and is listen only. So if you'd like to ask questions at any time, either during this formal part of the meeting or after Brian's presentation, you should dial into the conference call as all questions will be received by phone and not through the webcast. The dial-in access to the conference call is included in the proxy material where the webcast log in is set out and it's also on our Altius website. And for anyone who's just on this call by webcast now, if they wish to dial in, the number for your reference is (866)521-4909, and the pass code is 7088887, and that information is also on our website. So all shareholders were urged to vote on the matters coming before the meeting today by proxy, either electronically, by mail or by phone, and we thank you all for working cooperatively with us in this rather unique year to allow us to comply with prescribed limits on public gatherings and physical distancing regulations. Before we begin, I'll take the opportunity to introduce the senior management team in physical attendance with me here at our headquarters today, Brian Dalton is with us, President and CEO and Director; Chad Wells, the Vice President, Business Development; and Ben Lewis, our Chief Financial Officer, are all here. Lawrence Winter, our Vice President of Exploration and 4 of our 5 current nonexecutive directors; Fred Mifflin, Anna Stylianides, Jamie Strauss and Roger Lace, are also attending today by conference call, and I note for the record their attendance. Following this formal portion of the meeting, as I've said, our President, Brian Dalton, will provide a presentation highlighting the activities during the past year, along with insight into our current activities, the effects of the COVID pandemic, and our royalty revenue. Chad Wells, the Corporate Secretary, is present, and I appoint him to act as secretary and scrutineer of the meeting. So the notice calling this meeting and all proxy related materials were mailed to the shareholders in accordance with the requirements of the corporation's Bylaws and the Alberta Corporations Act (sic) [ Alberta Business Corporations Act ]. TSX Trust company has provided us with confirmation that the mailing of these materials was completed on April 9, 2020. A copy of their affidavit of mailing is posted on our website for inspection and confirmation by any shareholder. Canadian Securities Regulations require that the corporation publish advance notice of any general meeting in a national newspaper. I confirm that notice of this meeting and of the record date for this meeting was published in the March 9 edition of The Globe and Mail. Now we move to the Scrutineers report. A quorum for any meeting of shareholders is 1 person present, representing 5% of the shares entitled to vote at such meeting. I have the scrutineers written report and attendance and can report as follows: there are 5 voting members present in person at this meeting, 54,370 shares represented by persons present, and 26,427,111 shares represented by proxy held by persons present in the room. So the total shares represented at the meeting is 26,476,481 shares, which represents a healthy 63.3% of our total outstanding shares, which is excellent representation. So this clearly meets the quorum requirement for the meeting. So the notice of the meeting haven't been given and a quorum being present, I declare the meeting to be properly called and constituted for the transaction of business. Our Bylaws permit a shareholder to participate in a meeting by means of telephone or other communication facilities that permit all persons participating in the meeting to hear one another. However, neither the bylaws or other laws permit voting to take place other than in person or by proxy. Accordingly, only those persons present in person may cast a vote. Although as noted, they hold proxies representing an overwhelming percentage of the outstanding shareholders. So unless a ballot is demanded at any motion, I will therefore conduct all votes by a show of hands of those present with me here today. By law, each registered shareholder or a proxy holder may also demand that a ballot be conducted on any motion put before the meeting, either before a show of hands vote or following that vote. But in these circumstances, I have to advise that this would result in the meeting being adjourned in connection with such business and rescheduled at a later date when public health regulations would allow all shareholders to meet physically in order for ballot votes on that particular motion to be delivered and counted. Now the minutes of our last annual meeting of shareholders held May 8 last year are filed in the minute book and are available for inspection. If there are no objections, I will entertain a motion that the reading of the minutes of the last annual meeting be dispensed with and that the minutes be taken as read, approved and adopted. I would note that in order for the meeting to flow efficiently, in these rather unique circumstances. I've asked Ben Lewis and Chad Wells to move and second all resolutions. Both are registered shareholders and present in the room with me.

Mr. Chairman, I move that the reading of the minutes of the last annual meeting be dispensed with and that the minutes be taken as read, approved and adopted as presented.

Mr. Chairman, I second the motion.

Is there any discussion? All in favor? Those opposed? I declare the motion carried. I now submit and formally receive the corporation's financial statements for the year ended December 31, 2019, and the auditor's report on those statements as mailed to shareholders on April 9, 2020. This brings us to the next item of business, which is the appointment of an auditor. As you will note from the information circular management is nominating the firm of Deloitte, LLP as auditors to hold office until the next annual meeting or until their successor is appointed and to authorize the directors to fix their remuneration. Deloitte has been the corporation's auditor since 2006. Do I have a motion for this item of business?

Mr. Chairman, I move that Deloitte LLP be appointed the corporation's auditor to hold office until the next annual general meeting and that the corporation's directors be authorized to fix the remuneration to be paid to the auditor.

Mr. Chairman, I second the motion.

Thank you. Is there any discussion? If not, I'll ask for our vote by a show of hands, and I remind you that you cannot vote against this motion, your choice is to vote in favor or withhold your vote. All those in favor? [Voting]

I declare the motion carried. And I make note for the record that -- of the proxies of the 26 million proxies received approximately, we had the vote in favor of this motion was 98.8% of votes cast. The next item of business is the election of directors for the next year. The Board has fixed the number of directors to be elected at the meeting at 8. May I have nominations for directors?

Mr. Chairman, I am pleased to nominate the following people for election as directors for the next year: John Baker, Brian Dalton, Andre Gaumond, Roger Lace, Frederic Mifflin, Jamie Strauss, Anna Stylianides and Donald Warr.

Mr. Chairman, I second the nomination.

Thank you. As we stated in the information circular, these 8 persons are management's nominees for election to the Board. Now the company's advanced notice bylaw requires that any person proposing to nominate a director for election must provide the company with advanced notice and prescribe details concerning any proposed nominee. As there were no advance notices provided in accordance with this bylaw, we may now proceed directly to the election of directors. The Board has adopted a policy stipulating that any nominee proposed for election as a director, who received based on the shares voted at the meeting, in person or by proxy, a greater number of shares withheld than votes -- than shares voted in favor must tender his or her resignation to the Chairman of the Board to take effect on acceptance by the Board. Eight persons have been nominated to fill the 8 directors positions. Do I have a motion for this item of business?

Mr. Chairman, I move that the 8 persons who are nominated for election of directors be elected the corporation's directors for the next year to hold office until the next Annual General Meeting and that the shareholders authorize the election of the 8 nominees by a single resolution.

Mr. Chairman, I second the motion.

Thank you. Is there any discussion? All those in favor? Those opposed? I declare the motion carried. And I might note also for the record here that these votes were cast by individual -- in favor of individual directors. And the -- in favor of the various nominees range between 96% and 99% of all votes cast in favor of these directors. The final item of business is to approve our revised Omnibus long-term incentive plan, the details of which are set forth in the information circular. As noted there, this new plan combines our existing long-term incentive plan and our stock option plan into a single new plan. This combined plan being presented for approval today was approved by the Board on November 7, 2019. The Board unanimously recommends that shareholders approved a new plan, along with all unallocated options, rates and entitlements under the plan by adopting the resolution set forth on Page 19 of the information circular for this meeting. Do I have a motion to approve the resolution?

Mr. Chairman, I move that the adoption of the Omnibus long-term incentive plan with all unallocated options, rights and entitlements under such plan be approved by adopting the full text of the resolution set forth on Page 19 of the information circular for this meeting.

Mr. Chairman, I second the motion.

Thank you. Is there any discussion? All those in favor? Those opposed? I declare the motion carried. I'll now point out here that 97.8% of votes cast were voted and cast in favor of this resolution. And I think speaking on behalf of the Board and the management group, we appreciate the support that shareholders have given of our efforts to craft an LTIP, a long-term incentive plan for the executives. That's fair in all the circumstances. So we're very pleased with the support. This concludes the business of the meeting. I ask if there's any other matter a shareholder wishes to raise now during the formal part of the meeting. And for these purposes, I would ask the conference operator to open the phone lines for a few moments to determine if there is any other matter to be raised during this part of the meeting.

[Operator Instructions] .

Operator, for your information, I don't -- it's not unusual that no questions are raised at this point. It's more likely that questions would be raised after Brian's presentation. So I don't think we need to wait long because it's very unusual for anyone to ask questions during the formal part of the meeting. It's very perfunctory.

Okay. Certainly. I'll turn the call back over to you, then.

Thank you. So we now concluded the business of the meeting. I will entertain a motion that the meeting be terminated.

Mr. Chairman, I move that the meeting be terminated.

Mr. Chairman, I second the motion.

Thank you. All those in favor. Anyone opposed? I declare the motion carried and the meeting concluded. And I'll now pass the call over to Brian to offer his presentation. And as we said before, a question-and-answer period will follow. And so you may see and follow along Brian's presentation yourself by logging into the webcast, using the details shown on the proxy form or on the website. So I'll turn it over to Brian now.

Thank you, John, and let me echo John's thank you for the continued strong support. So as I go through the presentation today, I will periodically name the title of the slide, just to make sure that everyone is in the right pace with us. So the presentation opens with a new cover slide. I can -- I guess you're probably imagining by now that there's a little bit of rebranding underway within the business. We'll talk a lot about that within this presentation, talk more particularly about how Altius finds itself supremely aligned with a number of major macro trends that are underway that -- and I'll go right to the punchline of the presentation, that I believe are far bigger than what we're all living through in the short term with respect to COVID-19. So the next slide is our forward-looking statements. Please read carefully, I promise you there will be a great many forward-looking statements in this presentation. The next slide would be the 2019 recap. I won't be reading from the slides for most of this presentation, but in this case, I felt it was good to give a little recap, and I will go down through the list. So on the left-hand side of the slide, I bring your attention to the highlights from the year. In 2019, Altius achieved record revenue and operating cash flow. We provided strong returns of capital to shareholders in the form of our dividend growth and buyback that totaled about $0.40 per share. We made our first major Renewable Royalty development investment and had 2 projects from that investment convert to royalties. We saw strong iron ore prices and further confirmation of the shift that's underway, structural shift that's underway in the market towards the higher adoption and higher valuation for premium high-quality on strong price for iron. Plus, we were gratified to see that Labrador Iron Ore Royalty Corporation through, which we receive our royalties on a pass-through basis, recommitted to a high dividend payout ratio. The Chapada mine, which we originally acquired from Yamana Gold, was acquired by Lundin Mining, obviously, a base metals producer with a very strong balance sheet, and that's been acquired, by all accounts, with a view towards future expansion. The Gunnison project, which we've held for -- held a royalty on for a number of years, received the major remaining permits and completed project financing. This one is a little smaller, but the 777 mine life was extended as incremental tons were added to the mine plan. Voisey's Bay continued with its underground mine development and made strong construction progress. We saw a further relative decline in the percentage of revenue that we received from thermal coal. We acquired a royalty on Adventus' Curipamba project in Ecuador, the polymetallic, copper, zinc gold project. And our PG portfolio, Project Generation Equity portfolio had very strong growth and also provides a significant cash contribution to the business through monetization. We also faced challenges throughout the year. The biggest backdrop, I guess, to the year for those of us that are involved with the more industrial side of the mining commodities world, was the escalation of a trade war between China and the United States and the imposition of tariffs that weighed heavily on industrial commodity prices and probably more importantly, sentiment. Expectations for an extension of investment to extend the mine life of the Cardinal River mine were canceled. It was a tough weather year in parts of the U.S. that weighed heavily on agricultural production and caused a decline in potash demand, which I should point out has been -- seems to have been reversed this year. There was further growth of passive investing in the market, and this had the effect of compressing small-cap valuations even further than they already were due to liquidity and scale bias of that type of investor. There was a very dramatic acceleration of capital migration towards ESG investment mandates. And for us, at least in the short-term or in the recent term, resulted in further negative screen for those types of investors, largely due to the fact that we have residual legacy coal royalty exposure, and we'll talk a lot today about how that's in the process of reversing. So that sort of recaps 2019. I'll show another few slides and that will sort of complete the look back. Then we'll will be on the middle part of the presentation, quite short, that talks about today, essentially details our COVID-19 related impacts and what we expect for the rest of 2020. And then we will move on to looking towards the future. So 3-part presentation, the year that was, the year that is and the hundreds and thousands of years that are coming. The next slide is called financial highlights and this basically takes you through some key metrics. Revenues for the year achieved an all-time record of $1.83 per share and a total of $78 million. Operating cash flow broke $1 per share for the first time at $1.03. Our leverage ratios continue to come steadily down. Those would have been at their highest when we were most active during the previous cyclical bottom, and we're very active acquirers of assets. So those levels have been brought down to quite comfortable levels. And in respect to returns of capital, we invested about $9 million in purchasing shares of Altius, the best investment we know, and we issued dividends to shareholders of about $8 million, which again, totaled about $0.40 per share. The next slide is titled royalty lives. This can be a bit of a painful slide to look at, but it's important so I stick with it. Taking from the bottom up. On the bottom, you see these barriers that basically represent the potential lives of our potash royalty exposures based upon total known resources against current production rates. And if I were actually to represent these in scale, it would extend for many pages. You can read that fine print along the sides, it's getting difficult for me as well these days. You can see that the remaining estimated resource life at current production rates for those assets ranges between 118 years and over 2,000 years. Those are long life mine. But what does that mean? What is the long life by definition? It essentially signals that you've got a low production rate, relative to total resource. In other words, it's a place that's logical for expansion. It's an asset that's logical in that future expansions will occur. We very specifically, when we're selecting royalty assets, select for these types of ultra-long lives. This is ultimately the definition of option value in resource world investing. And it's extremely well pronounced when you think about it from a royalty holders perspective because all of those potential expansions that are signaled by these huge resources would come at absolutely no capital cost to shareholders of Altius. It's all the expenses borne at the operator level. So we get all of the growth with none of the cost. That is very powerful. At the top of the slide, there's the IOC operation, Chapada and Voisey's Bay. Those look like moderate life assets against the scaling we're using for this chart. But in reality, against almost any other portfolio you find out there in royalties or operations, these would be considered ultra-long life. It's just, in our case, it's skewed by the extreme long life for the potash assets. But in the middle, you can see that there are some assets within our portfolio that are coming near to the end. And that is why over the past few years, we have been very focused in looking for ways to either replace or extend lives there again. Our focus is to have the longest average life portfolio that's out there have, by definition, then the greatest amount of embedded option value in our portfolio. So the first asset that stands out is 777. This is Hudbay's copper or polymetallic mine in Manitoba. It's got a few years left. We have -- we believe we have solved the eventual issue of the decline of the 777 mine, which has been actually a fantastic asset for us. And that will come in the form of the Gunnison project in Arizona, which is just beginning production. I mentioned earlier that we acquired a royalty on Adventus' Curipamba project and probably most tangibly nearest term of all would be with respect to the tremendous resource growth that has occurred at the Chapada deposit since we acquired it and now the signaling from Lundin mining that they intend to expand it. We do believe that, that challenge has been fully met, if not exceeded. The next part of the slide, the middle part of the slide with the -- that talked about Cheviot, Highvale, Paintearth, Sheerness and Genesee. That relates to our predominantly thermal coal royalty exposures in Alberta. These were acquired originally as part of the portfolio that brought us the potash mines. It was a package deal. I'll be dead honest, we would not have acquired these on their own, on their own merits. That said, when we did acquire them, there was -- they were expected to have much longer remaining lives, particularly with respect to Genesee than we currently show on this slide. And that's because after their acquisition, there were regulatory changes made in both Alberta and Canada that have basically decreed that these mines will be phased out by 2030. So this presented a major challenge for our business. And it's ultimately how the idea to begin and create Altius Renewable Royalties originated. We felt that beyond regulation, economically, in the bigger picture, coal is being replaced as a source of electricity generation by the incredible decline in cost and relative capital advantage presented by renewable energy in the world today. So our strategy was to ultimately, use whatever remaining royalty revenue we expected to collect from those coal assets and to have it reinvested into the development of royalties on renewable energy projects. A concept that had never been attempted by anyone else or at least not successfully attempted by anyone else. Later in the presentation, we'll explain why we believe that we have now met all of our original objective. And have essentially put in place the investments that will be required to convert those short life coal royalties into essentially perpetual renewable energy royalties, and we think this is only the beginning. Next slide, PG business growth. What this details is the value of the portfolio of junior equity positions that the business holds. These were, for the most part, originated through the conversion of mineral projects that our team acquired and then sold on to different junior mining companies for equities and retained royalties. So this business serves 2 purposes. Obviously, the equity portfolio is meant to generate cash for the business. And perhaps more importantly, in the long haul, it provides the development pipeline of royalties that will ultimately cause the business to grow. This works in a way that the cost of generating the projects originally are more than recouped through the equity part of the business. That means that the royalties we retain are essentially free. So free growth in the long haul. That's another very unique differentiator for Altius. In 2019, this business was able to monetize over $17 million, which represented another $0.40 or so a share in cash back to the business on top of the more than $1 a share in operating cash flow that the royalty business generated. Next slide, diversified assets and operators. This is a pie chart we've been showing for a while, which shows the progression of relative contribution by commodity towards our royalty revenue total profile. It's nicely balanced now and we're seeing a continued relative decline of coal within this, which has certainly been a key objective. And looking forward, we certainly look with anticipation to the day when the renewables component becomes a meaningful slice of the pie overall. Next slide royalties on a sustainable natural resource future. So we believe that there's a 4 very significant macro trends that are underway in the world right now that Altius provides its shareholders with strong alignment towards. The first would be the fossil fuel to clean energy conversion, and we've obviously already touched on that. Renewable energy has become the cheapest form of electricity on the grid, practically all over the world, and it is displacing fossil fuel sources. It's starting most heavily to begin with in terms of coal fired generation, but we're also starting to now see the impact with respect to natural gas and other oil-based fuels. Electrification and storage, these are very powerful forces that are happening right now. It's most dramatic and most talked about with respect to transportation. Most of the world's major automobile manufacturers are in the process of winding down the production of internal combustion engine powered vehicles in favor of conversion of their assembly lines and their product offerings into electric fleets. So that is powerful not only in terms of the potential environmental benefits, but it's also intensely powerful in terms of demand for certain metals and commodities. Electric vehicles relative to traditional vehicles use much more copper. The batteries that ultimately power these vehicles are -- will be big consumers of metals, such as nickel, cobalt and lithium, all of which we provide royalty exposure to shareholders through. Third major trend would be with respect to agricultural yield improvements. Right now, Earth is increasing by about 80 million people per year. Yet the amount of available agricultural land that has to feed those people is static, unless you are accounting for continued deforestation and other negative impact. The way that the same amount of arable land can feed an increasing population is through the addition of nutrients to soil, and that's where natural potash fertilizer comes in. Altius controls royalties on what our -- without question the best potash mines and best potash deposits in the world today. They provide fertilizer to about 30% of the world -- for about 30% of the world's needs. You have almost certainly in the past week, essentially eaten potash from an Altius royalty portfolio asset. Fourth topic, I'll talk about lower emission steel making. The process of steelmaking requires inputs of iron ore and often, metallurgical coal. You add those 2 together and you make steel. The type of iron ore that you use as an input in steel making, very much determines the amount of metallurgical coal that is required to make the product. The purer and cleaner that the iron ore form is, the less metallurgical coal and the more efficient, the overall steel making process becomes. So as the world demands lower emissions, lower pollution from all of its activities, there is increasing demand for high-purity forms of iron ore such that unit production of steel becomes less emissions intensive. So our royalty exposures and other exposures in the iron ore related to the Labrador Trough in Canada, which is, I would argue right now, the region in the world that produces the single very highest quality, lowest impurity iron ore in the world. So again, these are irreversible shifts that are underway, each of which in the grand scheme of things, I believe, is bigger, in fact, than COVID, even if you can believe that. Which is my segue into the next section of the presentation, the current point on this section talks about COVID-19 and the impacts that Altius is seeing right now. So the first point I'll make is that 2020 will mark a setback year for Altius in terms of a multiyear trend that's been underway of increasing revenue and cash flow growth per share and likely as well with respect to valuations for junior equities and those sorts of things. There's not much we can do about that. It is what it is. I can talk, though, about how we've been managing for those impacts and detail what they might look like. Generally speaking, I believe that we have fared very well, and our assets have shown incredible resilience, as has our team and anyway, we'll go through the different points. So collaborating with counterparties. We have been active as a corporate citizen in the great many communities around the world with a diverse portfolio of assets in doing what we can to help those that were part of the communities, though. And those are detailed, I won't go through them individually, but I would certainly point your attention to them. And also make a request that in your own activities in your own life that you consider some of the charities that we've approached as potential candidates for some of your own giving. The next slide, COVID-19 royalty impacts. So this goes through every asset. There's 2 ways as a royalty holder, primarily, that you're going to be impacted. We get paid based on the amount of ore that amine produces, which multiplies then by the price of the commodity. On an operating basis, we've had some impacts. The first was related to the Voisey's Bay mine in our home province of Newfoundland and Labrador. This was closed quite early on a precautionary basis, mainly because it's quite remote and is serviced by some quite remote and vulnerable communities. So this has been shut down while continuing -- while the processing element, which is located off-site, has continued using available stockpiles. And I guess breaking news as of this morning is the fact that Voisey's has commenced a gradual restart process. So that one looks like it's coming back. The Gunnison project, which completed construction early in the new year, elected to shut down operations and shut down its ramp up process. Obviously sensitive work that you need full commitment towards, and they just didn't feel like they could do it justice using limited staff and under the circumstances. So that's been temporarily put on hold, and the ramp-up is expected to begin whenever conditions from a health and safety perspective and general effectiveness can be restored at the site. Iron ore, Labrador Iron Ore Royalty Corporation, the IOC mine continues to run, we think, at relatively normal levels. There has been some impact, however, in that demand for the pellets that they produce has been reduced. So IOC produces a concentrate and then the goes -- it goes on from there and take some of that concentrate and converts it into pellets, which is a value-added product. Demand for pellets has diminished or has been noted by IOC. So they have reduced pellet production in favor of higher more raw concentrate sales and production. So that essentially summarizes the operational impacts we've experienced to date. Most of the other mines have been deemed as essential services. Obviously, these potash mines feed the world and the further now, we've kept eating through this pandemic. Alberta coal providing baseload power for a whole region of the country. We get that idea. The bigger impact that we've experienced so far is with respect to prices. Obviously, global expectation for commodity -- industrial commodity demand has been reduced as industrial activity has shut down in many parts of the world. There are certainly signs that, that's breaking and that things are beginning to open up. But at present, our exposure -- the exposure range from a 16% price decline since mid-January in zinc, 16% in copper, 12% in nickel, almost 30% in met coal, 6% in potash, and in iron ore, in fact, we've had a 12.5% increase since midyear. And that actually seems to be mostly on the basis of supply disruptions that are not related to COVID at all. So there's actually, in that case, there's at least an expectation in the market that the supply side has been impacted even more than the COVID damage to demand side. The other impact I'll point out here is that those commodity price declines are less felt for us as a royalty holder who reports in Canadian dollars. So the U.S. dollar prices have declined by the amounts that I outlined, but this has been largely or not largely, but partially offset by changes in currency on the other hand, on the other side. On our PG portfolio, we reported at the end of the March that the portfolio had slipped from $54 million to $34 million. Then then there's been some rebound, particularly with respect to portfolio holdings that are focused mainly on gold. Generally speaking, the portfolio decline will be in line with the market. In most cases, we feel that this is more of a market, short-term market adjusting that the fundamental value that we feel is represented in these businesses or the speculative value that we feel is represented in this business is -- has largely been preserved. But there are examples where what's gone on in more recent times has been probably more permanent. The most dramatic of those would be with respect to Alderon Iron Ore, which has recently defaulted upon a loan and has lost control of its major assets. So we actually own the royalty on that asset as well. That's been unimpacted by the receivership type events. However, our -- we did take a write-down just recently on the equity position. The other big change that you'll note in this is in our total portfolio value is because we recently returned or used to pay shares that we held in a company called Antler gold. We paid those back to Antler Gold in exchange for the return of the project that we originally sold to them for those shares. But that will ultimately show the reduction in the value of the portfolio holding. But meanwhile, we do now again control the project and have plans to basically band that project onto another junior, so it will be a replacement equity position for that, hopefully, in short order. Another key slide, I think, that we should point out here is titled underlying operating margins. In a worst-case scenario, one in which global demand, it takes a long time to recover and commodity prices stay low for longer, it's certainly possible that operations and mines around the world that have high cash costs could suffer and be curtailed and put on hold merely because they have negative operating margins. That is not something that you have to worry about when you look at Altius and its portfolio of underlying mine operators. Even after adjusting for those significant price declines that I described in the last slide, our operators have operating margins today that are still very strong in most cases, at 100% or higher. So we do see limited risk of economics driven shutdowns within our portfolio. And that takes us to the next -- the last section of the presentation, long-term organic growth. So this is the future. Slide short to medium-term royalty growth profile. Some of you have heard me speak recently about how I see the growth drivers within Altius shifting from what would have largely been M&A focused in the period between 2014 and 2018, during a deep structural cyclical trough. Those drivers are now shifting towards more of an organic platform. And this goes back completely to the earlier slides detailing the tremendous resource lives and the strong margin positions of our operators. So we believe we're at the point where we can start to really look forward to growth within -- from the existing portfolio. So investments being made by operators full capital obligation of the operators while we continue to receive our full share of benefits going forward. So not much has changed in that regard. We often get questioned as to whether the price sell off that the company -- the COVID pandemic will create another set of opportunities like we saw in 2015, 2016, particularly to acquire assets from distressed owners and distressed operators. And to be fully honest with you, we're not really seeing that. And the reason for that is most likely because the reason for this price sell off is dramatically different. Back in 2015 and 2016, there had been a preceding period of massive investment in new capacity growth. It obviously came to markets. It came to market more or less all at the same time and resulted in an oversupply situation and price declines. It was also accompanied by very stretched balance sheets by the operators who had committed all of that new capital and new investment and those forces combine to create a bit of a perfect situation in which a big balance sheet for stressed margins were gone and the market was very scared. And in fact, in essence, we were one of the very few buyers in the market, and that's why we were able to acquire so much. This time around, there has not been a preceding period of big investment and new supply growth. It's been, I think, about 9 years really since there's been any meaningful investment in supply. The balance sheet to the major mining companies and mid-tier have not only been repaired, but they seem to be operating with an extreme level of prudence these days. So there's no signs of, at least broadly speaking, a stressed balance sheet. And no to stress type situations, at least not for the types of assets that we'd be willing to buy, these ultra-long life, high-quality, strong cost curve position assets. There's always availability of projects and opportunities for marginal assets, but we tend to steer clear. The one exception to that circumstance in which we don't see a lot of opportunity to grow through acquisitions is related to our initiative in Renewable Royalties. And we'll talk about that in a little while. I won't go through all of the bottom part of the slide. I'll just go through a couple of the top highlights. The most important part of this would be on the far left, and that's with respect to potash. Nutrien and Mosaic, the operators of those mines in Saskatchewan, invested over $9 billion in the mid part of the last decade to grow out their expansion -- grow out their ultimate production capacities. And they very purposely overbuilt relative to the amount of immediate demand that they saw in the market with a view towards continuously increasing their production rates as market demand grew. That process has been underway for a few years right now, basically, during the whole period of time that we've owned these royalties. Between -- if you consider the production rates of these mines on average in 2019 relative to the total nameplate capacity, there's about room for about 65% further production growth before that pre-built capacity is completed fully. I touched earlier on how Vale has been expanding the Voisey's Bay mine and building a new underground development that set the commission, I believe, late next year. And I would also highlight, again, Lundin Mining's indications, at least, that they plan to expand production rates at Chapada based on the great success that we had in the last few years of rolling out resources. Next slide. So that slide -- the last slide dealt with how we see a lot of room for the amount of production volume within our portfolio to grow. There's also lots of room for prices to improve, at least on a cyclical basis. We believe that most of the price exposures, probably with the exception of iron ore that we're exposed to right now would sit well below what we'd consider to be mid-cycle prices, which broad definition terms means mid-cycle would mean the price essentially that's required to incentivize sufficient new supply to come to the market to meet demand growth. So that's what you typically see in the long-term in the commodity markets is that the price will oscillate around that point that is that perfectly matches the incentivization of the bringing on new supply against whatever demand factors are at play at the time. So the dark blue line shows the copper price since about 2000. So a couple of years after we -- Altius was formed. And the light blue line gives an estimate of the price that's required to keep markets roughly in balance. And what you see here is that between 2000 and 2003, that balance was essentially there. By 2003, 2004, the market got hit with a surprise shock in terms of demand, and that came from China. China suddenly took on a big growth surge and demand took off, and that resulted in prices having to move up considerably to incentivize new supply. Ultimately, though, all of that investment in new supply consumes the lower cost, easier operations to bring on and bring on that supply so the industry move towards lower and lower grade deposits. Plus there is intense competition for resources to build, and we saw a great escalation in capital costs as well as operating costs to have the world meet its demand needs with supply. But for 9 years, we had -- generally, with the exception of the financial crisis, we had prices that were significantly above that which was required to incentivize investments and bring on new supply and bring it on we did to the point that we basically set ourselves up for -- world set get set up for an oversupply situation. And that began with around '11, '12, prices started to tumble, as we know. And since that time, carbon prices have been well below the incentive level and we've had absolutely no investment. So a period of prices well above incentive brings on supply. The supply comes, crushes prices, and now we've been going through a long period with prices below what's required for supply. So while in 2020, we're probably going to have some shrinkage in global demand for copper. We will also have this continued depletion of existing mines. We will also have a continued progression towards lower grade and deeper ore bodies, and we will also have another year when disincentive conditions exist. And in the letter that we published today, we described it as a perfect storm that had its landfall slowed, but it's been intensifying proportionately, and we very much believe that to be true. Altius Renewable Royalties. This is a busy slide. I apologize for that, but the messages are relatively straightforward and simple. The middle graph shows the relative cost of producing power from all of the different types of sources that are in play today from wind and solar, but including coal, nuclear, et cetera. And what you see here is over a relatively short period of time, renewable energy has gone from very high cost relative to other forms to what is now the lowest cost form of energy available to put on an electrical grid. It's been a remarkable shift largely technology and research and development driven as well as scaling impact. Nevertheless, here we are in renewable power, which I know many people, and I'll admit to being one of them, 15 or 20 years ago, if you told me that this was what would be the cheapest form of power on a grade in 20 years' time, I would not have guessed that it was renewables, but here we are. Top right is a slide that shows a similar pattern. This relates to the cost of lithium-ion batteries. So this is what's ultimately driving down the cost of electric vehicles. As battery costs fall essentially told us the cost of an electric vehicle to the point now that we are very close to having electric vehicles on a front-end purchase basis, match up with your average internal combustion engine vehicles. So that cost parity is very close. And let me remind the fact that after you make the acquisition, your fuel costs are considerably lower as well as your maintenance costs. So again, all these things tend to happen much faster than people expect. There's another element to this story, too, as battery costs go down, they -- potential to radically transform what we expect to be the market share of renewable energy changes. Renewable energy is not has always been its intermittency. In other words, it can't occupy a large percentage of the overall power supply because it doesn't provide power on a continuous enough basis. As soon as you start to add storage en masse to renewable energy projects, that problem becomes solved. And limitations in terms of market share within an overall supply system shift completely. So again, it's amazing to me how all of these trends are converging in so many ways. And then finally, I think we all know that there's an amazing migration of capital underway in the world. Money, grassroot money is not going to its traditional homes for deployment and investment for retirement income. It's being directed towards investment pools that have very specific mandates aligned with environmental, social and governance conditions. So that's where all the money is going, and it's going -- and those funds essentially have mandates to invest in sustainability and the transition towards sustainability. So I guess, the easiest way to say it is follow the money. If you don't think this is unstoppable, just look at this chart that tells you everything you need to know. Next slide here, our development progress accelerating. So this is the time line of the development of ARR. The first half, you didn't hear a whole lot about, maybe a few nervous mumblings from us about this idea that we had. The second half of the chart shows you the things that you have been hearing about. So in early 2019, Altius Renewable Royalties made its first investment in a U.S.-based renewable energy developer called TRI Global Energy, with a USD 30 million investment. And earlier this year, we made our second such investment with a company called Apex Clean Energy. Collectively, these investments amount to roundabout CAD 100 million and what that means is that we've met our objective of investing sufficiently to replace the coal royalty portfolio. On the bottom, what you see are what's coming out of those investments. So we're putting money with developers, but these developers won't be our ultimate royalty counterparties. They sell their project on. We invest in their full pipeline of projects and these projects that they're originating and advancing, but they didn't sell them on to ultimate operators who find -- who will become the final counterparties. So again, to date, from the TGE transaction, which has been running for just over a year, we've been able to generate 3 new royalties, 2 related to solar projects and 1 related to -- sorry, 2 wind and 1 related to solar, with a total combined megawatt trading of somewhere in the 800 to 900 megawatts, well diversified throughout the United States. And again, also diversity starting to develop with respect to technologies, wind and solar. So that TRI Global investment, it's been really important from a proof-of-concept point of view. When we invested in these developers, the question mark becomes, well, what are your risks? What are the probabilities that the projects that they're originating, even though you're investing in the entire portfolio, what's the probability that enough projects will go through their pipelines to create sufficient royalties for you to basically create a business? So with 3 projects already -- or 3 royalties already created in the first year, we're almost 75% of the way to what we expect we need to be fully vested on this investment. And probably even more importantly, with only about 25% to go we can point to the fact that TRI Global's portfolio, when we invested originally was around 1,800 megawatts of potential development. What they used our investment for was to further grow that. So it now stands at about 2,400 megawatts even after having 900 megawatts converted to or sold on to operators and subject to royalty. So tremendous proof of concept, and I certainly commend the team at Altius Renewable Royalties for their work in this regard. Again, the more recent deal, Apex Clean Energy. Apex is one of the biggest, if not one of the top 2 or 3 renewable energy developers in the U.S. their total portfolio represents about 21 gigawatts. So for those of you from Newfoundland, that will be about 25 or 30 Lower Churchill, just to give you some scale here. It won't cost quite as much to build the entire portfolio, probably less. This transaction has had a big impact in the broader renewables market for all these Renewable Royalties. This brought tremendous credibility to the financial structure -- the royalty financing structure that Altius renewable provides. And as a result of this transaction and the attention that it's garnered, I know the team has been very pleasantly surprised with the number of now inbound calls that are coming in seeking proposals for investment. After about 2 years of a lot of work, knocking on doors, getting anyone to answer the phone, it seems now that the phone calls are coming the other way. Tremendous stuff, tremendous sense that adoption for this new concept and structure is happening very, very quickly. Next slide just shows where Apex's portfolio of projects exist throughout the U.S., again, talking about just the amazing amount of diversity and amazing number of counterparties that we can attract technology diversity. With this deal, we estimate that the net present value of our renewable energy royalties has now eclipsed the net present value of the remaining royalties to come from coal. So a very, very big milestone in the development of all Altius Renewable Royalties. And more broadly, in terms of Altius' overall shift from being a company with a significant coal component, having proven itself to be a company that is using coal revenues to effectively drive the transition from coal-fired generation into a renewable powered power grid overall. When we set out with this strategy, so the next slide is ARR market value potential. Again, we set out with an objective simply to replace our coal-fired generation or thermal coal royalty portfolio with Renewable Royalties, and we assume that, that would take about $100 million investment. But we've now reached that target. And so is that it? Have we done the job? Well, the answer is no. We think that the opportunity that we've uncovered here is, in fact, much larger. Not only that, this is a sector that is very much attracting capital and attracting capital at very, I would say, much cheaper prices than we could probably attract within Altius at the parent level. This chart shows that -- the chart on the top left shows just how renewable energy essentially has been unimpacted by the COVID. You can see a spike just preceding COVID and a dip, but things have recovered to be right on track. So the renewables march continues in spite of COVID. The chart on the right basically just demonstrates the relatively higher valuation that natural resource companies attract relative to their operating counterparties. It shows the relative valuations of oil and gas operators, oil and gas royalty companies and gold operating companies and gold royalty companies where the gap is extreme. What's encouraging for us is that when you look just at the operator level, renewable companies actually traded at higher multiples even than gold mining companies. So it is intriguing to think about what kind of valuation, a Renewable Royalty company might attract once sufficient scale is created. And it goes to something we've been talking about for a few quarters now, and that is our likely plan to ultimately take Altius Renewable Royalties and to launch it as a pure-play spin out company that we think could attract a much more favorable cost of capital, which would then, in turn, further drive its growth. In addition to that now, we have also begun discussions with several, not several, but a select few strategic investment partners to potentially come in with all these Renewable Royalties at the private prepublic stage and that would be to help with the initial scaling. The breadth of the opportunity that we're seeing, quite frankly, is beyond what Altius Minerals Corporation is going to be able to fund from its cash flows. If we simply wait for cash flows to be reinvested here, I believe we'll be missing tremendous opportunity. So we want to see this business scale up relatively quickly, and that's why we're thinking about these other procreative ways, bringing sufficient capital to the business to see it scale up quickly and effectively. And the last slide, as I'm sure many of you are saying, finally. It's just something that leave you thinking. You haven't heard much about climate change in the last couple of months. It's another topic that's been dominating everything obviously. But the point is that after COVID, these issues that all -- that would seem to be all we've heard about for at least a couple of years, will still be there. And there's been something surprising happened. When you shut down the whole world from an industrial point of view, it turns out that there's perhaps a glimpse of the future that comes. And I just bring your attention to some pictures of what some skylines and some skies look like before and after industrial shutdown. Now I think we all know that once the world reopens, we're going to shift back to where these things were, at least for a while. We also know there's a way to -- we know how fast the world can recover, how quickly we can have what you see on the right and bottom part of each of these slides. I think there's a lasting impression that comes from this, and I believe that the forces -- social forces towards the sustainability shifts are being very powerfully reinforced by this. I believe that in some ways, we will mark COVID as having been a point of great acceleration in a lot of these trends and shifts. And when you look at these pictures, and everybody who lives in these places looks out their windows and thinks about sustainability and shifts to renewable and electric vehicles, all of a sudden, they recognize what the prize is, that your company is ready. Thank you very much.

Thank you, Brian. Good note to finish on the future may hold for us and our company and our small piece of it, but we will continue to move in that direction as a society. I'd open the floor now if the operator is there because they could open the phone lines for any questions or comments from shareholders.

[Operator Instructions] There are no questions at this time. I'll turn the call back over to the presenters.

Well, thank you. I think Brian answered all the questions.

And he's around corners.

That's right. As we always say, he's around corners. So thank you all for your attendance. That concludes today's session, the formal part of the meeting and the presentation, and we all look forward to seeing you in the future. And hopefully, by next year, we will be back to the Geo Centre with a face-to-face meeting, and we'll be able to socialize and hug and drink wine again. Thank you all very much.

Thank you, everyone.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.