Altius Minerals Corporation (ALS) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Altius Minerals Annual General Meeting. The Annual General Meeting 2022 is being held live in Newfoundland. And the purpose of this webcast and conference call is to allow remote participation for attendees, including Q&A. All voting is done in advance as explained in the circular. I would now like to hand over the call and introduce the Altius Minerals Executive Chairman, Mr. John Baker. Thank you. You may begin.

Thank you, and I'd like to welcome everybody to the meeting. Those present here in the geo center in St. John's and anybody on the web call, webcast and conference call today as well. I welcome everyone to our 25th Annual Meeting of Shareholders. And it's such a pleasure to be here because it's our first face-to-face, not only our 25th anniversary, but it's our first face-to-face meeting in 3 years, and it's such a pleasure to see so many smiling faces here today after talking to a telephone the last 2 years. My name is John Baker, as I've been introduced, Executive Chairman of Altius. And in accordance with our bylaws, I will act as Chairman of the meeting. In light of the ongoing public health concerns relating to COVID-19, we gave shareholders and others the option not to attend this meeting in person, but instead to participate in real time by conference call and webcast. The webcast allows participants to hear the meeting and, ultimately, when Brian makes his presentation, to view that presentation, and to participate in the meeting. It is listen-only by webcast. So if anybody listening in wishes to ask questions when the time comes for that, either during the formal part of the meeting or after Brian's presentation, they should dial into the conference call as all questions will be received by phone only. The webcast link is shown on the home page of our website. So if somebody who wants to -- is just on the conference call, but wants to view the presentation, they should go on for the website to the webcast link. All shareholders were urged to vote on the matters before the meeting by proxy electronically, by mail or by phone, and we thank everybody for working cooperatively with us again this year to allow us to limit the size of this gathering. Before we begin, for those present, I'd like to take the opportunity to introduce the senior management team of Altius in attendance here today. Brian Dalton, our President and CEO and Director; Chad Wells, Vice President, Business Development, over here to my right. Ben Lewis, the Chief Financial Officer. And unfortunately, Lawrence Winter, our VP Exploration, who is always dependably with us, is not able to be today because he has COVID and has suffered a bit this week, but he's -- he'll be back on deck next week, couldn't be here today. We also have 7 current nonexecutive management -- or nonmanagement, I should say, directors in attendance today, and I would ask each of them to rise as I call their name. Two were new directors last year, but since we weren't able to be in person, these directors haven't been -- aren't known to most of you yet. Nicole Adshead-Bell was a new Director last year; and Teresa Conway. And, of course, reelected from past elections Anna El Erian, André Gaumond, Jamie Strauss, Roger Lace, and Fred Mifflin. Welcome to all of our -- and the rest of our staff who are here today, and you'll be able to meet those at the -- during the informal part of the meeting once we've adjourned. And our President, Brian Dalton, will, as is customary, present the presentation following the formal part of the meeting. Flora Wood has been met the door acting as our scrutineer and Chad Wells, our Corporate Secretary, is present, and I appoint him to act as Secretary of the meeting. The notice calling this meeting and all proxy-related materials were mailed to the shareholders in accordance with the requirements of our bylaws and the Alberta Corporations Act. TSX Trust Company has provided us with confirmation that the mailing of these materials was completed on April 8, 2022. A copy of their affidavit of mailing is posted on our website for inspection and confirmation by any shareholder. Canadian securities regulations require that we publish advanced notice of any general meeting in a national newspaper, and I confirm that notice of this meeting and the record date was published in the March 7, 2022, edition of the Globe and Mail. Now a quorum for any meeting of shareholders is one person present, representing at least 5% of the shares entitled to vote at such meeting. And I have the scrutineers' preliminary report on attendance, and it shows that we have 5 voting members present in person, and we have proxy appointees present and they represent, in total, 26,812,720 shares, being over 65%, 65.113% of all outstanding shares. This meets the quorum requirement for the meeting, and I think may be a record for attendance at any of the Altius meetings at over 65%. So the notice having been given and a quorum being present, I declare this meeting to be properly called and constituted for the transaction of business. Our bylaws permit a shareholder to participate in the meeting by means of telephone or other communication facilities, but 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 a large percentage of the outstanding shareholders, so unless a ballot is demanded on any motion, I will conduct all votes by a show of hands of those present in person. Each registered shareholder or proxy holder may demand that a ballot be conducted on any motion put before the meeting, either before a show of hands vote or following that vote. Now the minutes of our last annual meeting held May 12, 2021, 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'll note for you as is our custom that in order for the meeting to flow efficiently have asked various Altius officers to move and second all resolutions, all our registered shareholders and present in the room with us today.

Mr. Chairman, I note that the reading of the minutes of the last annual meeting [indiscernible] statement read, approved and adopted.

Mr. Chairman, I second the motion.

Any discussion? All in favor, please raise your hand. Thank you. Those opposed, the motion is carried. I now submit and formally receive the corporation's financial statements for the year ended December 31, 2021, and the auditor's report on those statements as mailed to shareholders on April 8, 2022. The next item of business is the appointment of our auditors for the coming year. As you will have seen from the information circular, management is nominating the firm of Deloitte LLP, St. John's as auditors to hold office until the next annual meeting or until their successor is appointed and to authorize the directors to fix the 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? Now that I'll ask for a vote on the motion by a show of hands, and I remind you, you cannot vote against the motion, your choice is to vote in favor of the motion or to withhold your vote. All those in favor? Thank you. I declare the motion carried. The next item of business is the election of directors for the upcoming year. The Board has fixed the number of directors to be elected at the meeting at 9. May I have nominations for directors?

Mr. Ken I'm pleased to John Baker, call set Bill, Theresa Conway; Ryan Dalton, [indiscernible]

Mr. Chairman, I am pleased to nominate the following people for election as directors for the next year. John Baker, Nicole Adshead-Bell, Teresa Conway, Brian Dalton, Anna El-Erian, Andre Gaumond, Roger Lace, Frederick Mifflin and Jamie Strauss.

Mr. Chairman, I second the nomination.

Thank you. Now as we stated in the information circular, these 9 persons are management's nominees for election to the Board and our 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 that bylaw, we may proceed directly to the election of directors. The Board has adopted a policy stipulating that any nominee proposed for election as a director, who receives based on the votes received at the meeting, in person or by proxy, a greater number of shares withheld and shares voted in favor must tender his or her resignation to take effect on acceptance by the Board. So 9 persons have been nominated to fill the directors' positions. Do I have a motion for this item of business?

Mr. Chairman, I move that the 9 persons who are nominated for election as directors be elected to 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 9 nominees by a single resolution.

Mr. Chairman, I second the motion.

Thank you. Any discussion? If not, all those in favor, Anyone opposed? I declare the motion carried. The next item of business is to consider and if not advisable, pass an advisory resolution on the corporation's approach to executive compensation. This is known commonly as a say-on-pay resolution, the details of which are set forth in the information circular for this meeting. As we noted in the circular, the corporation believes that its compensation objectives and approach to executive compensation appropriately align the interest of management with the long-term interest of shareholders. The corporation initially adopted our say-on-pay policy March 10 last year, providing shareholders the opportunity to cast an advisory vote on our approach to executive compensation at each annual meeting. This policy reflects our ongoing efforts to meet the highest governance standards and to ensure a high level of shareholder engagement. The Board, with myself and Brian Dalton abstaining, unanimously recommended that shareholders vote in favor of the advisory resolution, which as stated in the information circular was resolved that on an advisory basis, and not to diminish the role and responsibilities of the Board, that the shareholders accept the approach to executive compensation disclosed in the 2022 circular. Do I have a motion to approve the resolution?

Mr. Chairman, I move on an advisory basis and not to diminish the role and responsibilities of the Board that the shareholders accept the approach to executive compensation disclosed in the 2022 circular.

Mr. Chairman, I second motion.

Thank you. Is there any discussion? All those in favor. Those opposed? I declare the motion carried. So that concludes the formal business of the meeting. Is there any other matter a shareholder wishes to raise before we move into Brian's presentation. Hearing none, I'll 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. No one opposed? Thank you. The motions carried in the meeting. The formal part of the meeting is terminated and that meeting concluded. I'll now ask Brian to come forward to give his presentations or anything I missed, floor. A question-and-answer period will follow both from the floor and from the phone, if there are questions from the phone. And you can see and follow along Brian's presentation by logging into the webcast, as I said at the beginning. Brian?

Thank you, Mr. Chairman. Good to see everybody again. Presentation today will -- I toyed with the idea of a 25-year recap, but quite frankly, I can't remember very much past the last few years. So what we will do, though, is I'm going to start out to give me a quick look back, say, from what we think the bottom of the most -- this current cycle that we're in [indiscernible] 2016. A quick recap of how that's gone for us so far. And then the bulk of the presentation that will deal with items that we're really excited about that represents growth and exciting new developments within our business, a lot of which have happened in the past year. Our forward-looking statements, please read very carefully. So what's Altius to come? It obviously started out it's like 25 years ago as a project generation, exploration business. Then eventually evolved into becoming project generator plus a mining royalty house. But more recently, I guess, the way we look at our business is as a more broader natural resources royalty business that has the common linkage through various macro scale sustainability thematics. So part of this obviously reflects the addition over the past few years of a business, started within Altius and still start to control by Altius that acquires royalties on renewable energy projects. And then more traditionally, we have focus areas in potash, which basically deals with food sustainability. Basin battery metals, so a whole host of commodities from copper and now lithium, nickel that all deal with basically energy decarbonization, so electric vehicle trends, renewable energy trends, big scale -- big scale changes around the way in the world, and we feel like we've positioned ourselves very well to be beneficiaries from the growth received for these areas. And another one that's less commonly seen in a sustainability thematic would be in iron ore. But the reason that we feel that our exposures in iron ore are so appropriate to the broader thematic is that our royalty exposures deal with mines in the Labrador Trough, which produce some of the highest purity iron ore in the world. And when these iron ores are used in the steelmaking process, there is significantly less carbon that results from the overall steel making process. So there's a broader theme of a clean steel that's under way in the world, and we think the Labrador Trough is ideally positioned, and that's why we're focused there. So those would be the key thematics, and what we think -- how you best frame what Altius is today, it's the royalty business focused on natural resources that are commonly linked to broader sustainability macro trends. A cycle, very important, obviously, to Altius. We've been around for, I guess, 1.5 right now is how I would describe it, started in a terrible bear market in the 1997 when every mining company out there was trying to become a dot-com company. We went through the entire super cycle as it came to be known, which is largely driven by a big surge in demand coming out of the -- I guess, the urbanization of China was a big driver back in that market, followed by a period when the industry did the usual and got a little over exuberant and overbuilt and oversupplied the market in the big crash period, which actually is where really I'll focus from today because that was a really important period for us when the world was fearful and things look very gloomy. And in fact, I think, in 2016, it's fair to say that most investors and commentators in the world would have put the whole mining industry on credit watch and everyone is heading for bankruptcy, which, of course, made no sense, and we got really busy and we made a lot of acquisitions. So those acquisitions are highlighted on the chart by the various starts, and you can see that through that period, cash that we had accumulated in the big upmarket previously, we've put the work. We were borrowing money. We were doing everything we can -- we could to grow our portfolio of assets. And that's how we've built what we have today. So a common question we often get, obviously, because we're known to be cognizant of cycles or at least try to be cognizant of cycles and act appropriately, which for us means countercyclically. The big question, of course, is where are we to now? That's always a big one we get from investors. And it will be an easy argument. And I think maybe it prevails a little bit right now in the market that copper, at the last peak market, went into the mid-4s. It was just recently in the mid-4s. Now it's coming off a little bit. And so there's this view out there, it must be all over again. We hit the peak and now we're done. And we just don't think so. The reason cycles are all over it because you get strong markets and mining industry responds to whatever demand conditions are out there and they invest and they build up lots of new production. But in this case, that's what's different. That's why we're not at the peak. It hasn't started. There is no sign of big-scale investment coming from the mining companies that will ultimately lead to, normally anyway, oversupply conditions and then the turnover. So this is not it. This is still -- this feels like '05, '06, and they're just at that point when prices are probably getting to where they need to be to get people thinking about investing. But then, of course, they have to approve those investments and get the permits and build the mines, so none of that part of the whole cycle started. So it's still pretty early days. Obviously, prices are better than they were, but we're not done by a long stretch through years to come yet before -- the mining industry, it actually faces right now that from a supply perspective, we're facing big looming declines in supply. Mines get old and they shut down, and that's what we're doing right now. We're a couple of years out from huge declines in supply for an awful lot of metals. And not only that, we've got this broader decarbonization trend, which looks to be incredibly metals intensive. So we need a lot more than we're at right now, but at the current investment levels, we're actually facing supply declines. So it's easy for us to be quite bullish about where we're to overall in the cycle, and I'm excited about where our business is positioned right now. Looking further out, we're excited as well because we're confident that, that investment will come, and it will be too much, and the industry will blow itself up again, and then we'll get busy buying up everything, but we're not there yet. That's not what we're doing now. A quick look back to 2016. These are the major acquisitions that we completed that built our portfolio over that period of time. And in the column here, so there's the purchase prices that we paid, and this is realized net revenue. So you can see that, in most cases, we're in striking distance on the Chapada transaction of having simple payback. Close on Potash, [indiscernible] it with the IOC investments we passed it with the Calinan Merger, which was HudBay and Ganesan and Silicon and those types of things. With coal, we're not going to get there just because, obviously, there have been regulatory or legislative changes in Canada and Alberta that will terminate these mines earlier than we expected. But don't forget that when we knew that was coming, we got busy and we decided to refocus our efforts. And we took whatever remaining monies that were meant to come from those coal royalties, and that's what we use to invest in the building of Altius Renewable Royalties. And I firmly believe that, that business will -- and its potential to far eclipse what we were ever hoping for on the coal acquisitions to begin with. So it's obviously worked really well. And this call in here said what we received in revenue so far, and what the current estimated value of those assets are, and you see in just about every case, coal being the exception, that it represents several multiples of what we invested just a few years ago or what feels like a few short years ago. So it's gone really well. This is how it plays out. So this will be quarterly royalty revenue since we started making these acquisitions, 4 or 5-fold really. Nice balance, really need to be diversified across a number of mines around the world and on a broad mix of commodities. So what we tend to find is that some years maybe something is not running as hot as something else, but then the next 1 that kicks in. And overall, what we've achieved, I think, is a really nice steady buildup of revenues, particularly so on a per share basis, which is all that really matters. It's allowed us to return a fair bit of capital to shareholders, and this has come 2 ways. Our dividend has been steadily increased over this whole period of time. And opportunistically, we've been able to acquire large numbers of shares back at different points. So a nice trend here of -- I think, of seeing those investments that we may come through, and we've been able to deliver and return significant amounts of cash to shareholders. And this is something that's a big priority for us and whole this trend continues, and we believe it will continue. And then balance sheet. So buying all these assets meant, in many cases, borrowing and we issued [ pref ] shares at one point. So for the early years, early on, you can see that we were carrying a debt balance that would be the light blue. And we had cash, certain amounts of cash to offset that and also various investments, public market investments that you can count. And really, in the past couple of years, you can see that everything is -- whatever debt balance we were carrying has now been overwhelmed by cash buildups and the market value of investments. So we're in a very significant negative debt situation right now. Our cash and investments far exceed what we've borrowed. So this is nice to see. I mean when you make those kinds of investments, it can be scary. But when you get to these points, you're out of the woods a little bit. So it's nice. The big change, obviously, in the past couple of years is on the investment side and the next couple of slides, we'll talk about that. One is, of course, our holding in Altius Renewable Royalty, but there's also our Project Generation business, which has been ticking on really, really well. So this will be over and above what shows up as the royalty revenue growth. This is another part of the business that's in addition, quite frankly, to how well I think the core royalty businesses have performed. So all these renewable royalties, it's just a few years old. There's a new idea to bring a royalty model to a sector that had never -- it had been really deployed in before and in a very short period of time, the team that runs this business called Great Bay Renewables is a joint venture between Altius Renewables and Apollo, have done remarkable things. They now have royalties on what amounts to over 3,500 megawatts of power generation, renewable power generation. The more local in the audience is to give you some context there, that [indiscernible] or something has all been done in a couple of years. And I can tell you why we do those costs should. Maybe I shouldn't go here, but -- and then another big milestone that we expect [indiscernible] will be cash flow positive. So a lot of the royalties have bought were projects that were in development. Those are starting to happen. And you can see on this table, it now holds royalties on 16 different projects across different regions in the U.S., so well diversified by region and by wind and solar. Six of them have now reached operational stage, more will hit there this year, and that should be a steady build from there. And we're really excited actually about the growth prospects it has for further investments. The royalty model was new when we brought it to the sector, but it's starting to be recognized and it's catching on. And so we're seeing a great, great uptake when we make calls now to developers about have we considered royalty financing? Everyone knows what it is all of a sudden and are very anxious to get our term sheet. So really nice pipeline of new opportunities there as well. And then Project Generation, I mean this is where we started. And I know it probably gets overshadowed a lot in our business these days or all other royalties, but we never forget how important this is. This is really the engine. Most of the monies that were used to buy the royalties originally were profits that came from this business. So what it does, though, it generates projects for the most part and sells them on, retain equity position, which is very easy to measure. You can just look at the dollar value of the shareholdings that we've acquired in exchange for these projects, and it's done really well. We had a starting portfolio in 2016 at the bottom of the cycle, it was $22 million. It's grown now to $67 million, and that's after having taken about $44 million off the table. So that's just in hard measurable amounts, it's 5x growth in a relatively short period of time. But that's actually the smallest part of I think what the business does. So since 2016, the business has also created 67 royalties on new projects. Now most of those won't get to production. And even those that do, it takes a long time from start to finish. But it is our deeper and longer-term pipeline. And this business has been running since we started. So there are royalties that were created through our project generation business that this cycle will reach production and will be very meaningful contributors overall to our business. And what's crazy about it is that they generally have, not just the low cost, in most cases, it's negative, like we've made money while we've created the royalties. So return on investment for those compared to the more straightforward market-based acquisitions will be essentially infinite. And I think it's a big differentiator for Altius that we have this to our business. I mean, our rate of return overall, and the building of our portfolio in the fullness of time, will be multiples of any of the more standard M&A focus type of competitors. So something we're really proud of and the team has been doing a really excellent job. Another thing here, too, it might surprise people, but we do an awful lot in precious metals. We always talk about ourselves as a nonprecious metals royalty company. And I think we're feeling like we're going to have to change our tune a little bit as a lot of the projects that we've sold and generated and creative royalties on our impact in precious metals. And now, later in the presentation, we'll talk about a royalty in gold that looks like it's probably on 1 of the most significant gold discoveries that the world has seen in a long time. So we need to change our tune a little bit. Now what I want to talk about is just where we see growth from here. What's coming? That's what's happened. It's all running well. Those were the royalties that we got that are paying right now, they're obviously doing really well, and it's a good market and everything is ticking along well. But what's more important, really, when we're buying those royalties, and our PG business through its work, it's not just about what the cycle will bring in terms of revenue. It's also we're selecting when we do this for which projects and which mines that we're buying royalties on, mines for the most part, have real potential to be invested in by the owners and operators and the key mine operators and that will ultimately grow their production volumes over time. And it happened in up cycles when markets are strong, companies are making more cash flow. They tend to invest in their assets. But we've been trying to pick those royalties and mines that, because of their technical economic features, will be invested in and that will result, longer term, for us and just increased production volumes, increased royalties over time. So it's a really key criteria. It was a big criteria for us back in that down cycle period when we were betting and investing. And it's no more true really than in the case of the potash royalties that we acquired, enormous resource lives, in some cases, thousands of years at the time of our acquisitions. And they just also -- at the time, just come through a wave of investment that enabled them to ramp up production levels over time. And that's -- I think that's the real story now for us. Everyone knows what's happened with potash prices and the reason for, obviously, geopolitical in some cases. And that's great, wonderful, big prices, big royalty revenues. But what's exciting is just how these mines, they're important becoming -- the relevance to the world is just taking on a whole new meaning. We've always felt that it was true, but I think the rest of the world sees it now and showing up from the operators. So if you look down here, we've got 2 main operators, 1 is Mosaic, who runs the Esterhazy mine, and then Nutrien, which owns a whole portfolio of projects in Saskatchewan. From last year's level based on communications we've had even in the last couple of days, are looking at 30% to 40% increases in the near term in production volumes from here. So that, again, price is nice, but what we look at longer term is are we going to see volume growth across the portfolio? Is that -- that's [indiscernible]. Iron ore, 2 real areas, I guess, that we look at. One, our core holdings is our interest in the IOC mine in Rio Tinto. They've turned from a seller of the asset it seemed like a few years ago. And this year, we heard from for the first time in many years that really getting focused on it and have committed loads of capital, and they're focusing on content growth initiatives. We do see long-term growth from that asset. And then probably maybe the most relevant or material of the growth initiatives within ideas, I don't know what I put it. It's not our initiative, but what could be the most meaningful development through this cycle would be with respect to the CAMI deposits. Many of you have heard about this for a very long time. We've been working on this project. I scratched Altius on that [indiscernible] from CAMI 15 years ago. So it takes a long time some time. But we think it's hitting its time right now. It's in great hands. It sounds way to Champion Iron Ore, which is really wonderful operator and developer of the Bloom Lake mine immediately next door. They've just finished doubling the Bloom Lake mine from 8 million to 16 million tonnes. And there's a little screen capture from the website. I noticed in the last couple of days, CAMI has moved up to their flagship project page. So that's hopefully a very good sign because they're completing a scoping study that they will publish results on later this year and certainly been messaging that they see CAMI as a big partner of the grow post the completion of the expansion of the Bloom Lake Mine. What's really neat again, and I mentioned is at the outset about Labrador Trough is that they're just -- the products they produce are just of such purity that again, the relative amount of carbon that you -- that produce when you make steel using these iron ores is so much less. So they have a cost benefit because right now, everyone who does anything has to factor in how much carbon they're producing, and what extra cost that brings to their overall production costs. And these ores have a big advantage. So I would say that, despite these mines being -- the Labrador Trough in production now for, I don't know, probably 70 years, I don't think they've ever been more relevant. I feel this is their time. Nobody -- we look at the steel industry, nobody in the steel industry today is proposing to build a new blast furnace, which is the type of furnace that you put iron ore in and you mix it with coal and outcome steel. Every new development that's being proposed globally is for electric arc furnaces, which require a very high purity form of iron ore, and it's not that common. But Labrador Trough is one of the real unique places in the world that can deliver that. So we're extremely bullish about the future of the [indiscernible]. Curipamba is a project that we invested in several years ago. It's a Ecuador copper gold project, a big milestone. Just a few months ago when they announced that they had received full project financing. So well over $200 million worth of capital raise. They've still got some hurdles before this goes to a construction decision, the biggest one being permitting and government agreements. We're very busy at that. We'd expect lots of good news out of -- we're hoping for good news out of the year as the year goes on. But this looks to be potentially our newest -- will be our new royalty. Chapada, going into the year, what we were hoping for was signals out of Lundin that they've come to some conclusion on what production rate they should run this mine at. When we bought it, it was running at around 24 million tonnes per year of operations. But over the time since we bought it, every year, the resources on the project have gone up. So even though they're mining and depleting, they're finding more than they're mining every year. So they've been making noise recently about this thing can support a higher and expanded production rate. So that happened, and they've come out and said that they're getting close to a decision, we think kind of an expansion from 24 million to 32 million tonnes per day. But that didn't turn out to be the real exciting news. The real exciting news with part of this year was a new discovery called Saúva. I don't know if I pronounced that right, but I know it translates into [indiscernible] whatever might be an easier way to remember things. But what's exciting about that discovery, so here's the main ore bodies at Chapada, this purple and blue. This discovery is up in this area. Chapada today runs at about a copper grade of around 0.27%, 0.28% copper. So if they run 24 million tons per year, what happens is they end up with about 110 million, 120 million pounds a year of copper. Obviously, if they expand that to 32 million tonnes, that will go up by 25%. But what's exciting about this is the grades. It's the average copper grade that we're seeing here looks to be somewhere in the order of place that of the current mining area. So just notionally, if you start to run that ore through that same production rate, pre-expansion, you would double your copper output. I don't know if that's how this plays. They use it to up their overall grade at the current operation or if, in fact, if it turns out to be significant enough we could actually see the current mining operation continuing as it is, and this is becoming a whole new mining opportunity on the project. Other way, it looks to be something that could be very material for us in terms of future copper stream revenues from this project. And I'll point out that when we visited this property, and we came back when we were looking at the acquisition originally, that was what really struck us. And that's what we really beat table around when we were talking to the Board is that this is the tip of the iceberg on this one. This property has numerous deposits that will run for far longer and at higher production rates than it currently is at, and we just need to buy it. And so one of our better ones, I would say, for sure. Closer to home, Voisey's Bay. Right now, Voisey's Bay is projected to close, I think, in 2032. That's the known reserves and resources at the mine. The current production rate, that's when things are supposed to end. We don't buy it for [indiscernible]. I fully believe with these days in operation 20 years beyond that, if not longer. And that's just because there's -- what's defined as reserves right now defined that mine life is really just a fraction of the known mineralization that sits in that deposit. When they calculate that mine life, they look at the price at the time and what's economic and that informs the decision. But there's huge exploration upside here. Now that they've gone underground and opened up the [indiscernible] mine, and the Eastern Deeps mine will open up later this year, what that does is it creates a platform for exploration into further depth. And the other thing I'll point out is that these mining depths that we are currently being targeted, if this -- if you're talking about Sudbury, that depth will be below all of this. And this is not even included in any of the estimates of resources. So I think there's a very long and very bright future ahead for the Voisey's Bay mine and for our royalty interest. And just a little side note, Voisey's Bay actually produces nickel with probably the lowest carbon footprint of any nickel mine in the world right now. The amount of CO2 that's involved with the production of that is extremely low. And that is a large part of the reason why you've seen [indiscernible] announced agreement this year to be a direct supplier of nickel from its Canadian operations, which obviously includes Voisey's Bay to Northvolt, a big electric vehicle battery maker in Scandinavia and more recently to Tesla. And this is a big part of it. They are tracking their overall supply chain and how much carbon is associated with it and know where can you find a more attractive source than B, in particular. That has value. That shows up with the premium and in demand. So it's -- again, similar to the iron ore, really, it's unique when you think about it, that's the major deposits at Newfoundland and Labrador has right now have -- that's one of the things they really share. It's incredibly -- they're incredible beneficiaries and will be incredible contributors relating to the overall energy transition that's underway. Oh, there it is. Sudbury Lithium Royalty Corporation. So this is an indirect holding for us. We were cofounders of this company a few years ago. And it's run by a [ Ernie Ortiz ]. And they've done a remarkable job. So in those few years, they've acquired royalties now, I think on 19 different projects, 4 or 5 of which are in production or very near to production. As far as the catalyst goes for Altius in the current year, we expect that LRC will either IPO, or will pursue some kind of a corporate type transaction. But if what we're hearing is correct from those that are looking at this from an investment banking perspective, we think it has the potential to crystallize a pretty big amount of value for us over relative to what we would have paid for. So this is definitely something to watch for in the near term. But the other thing I'll point out that, in some cases, we bought royalties directly at the Altius level other than just through the LRC level, and 2 of those will be new producing mines, albeit small interest, but there will be new producing mines that are on our pie chart before too long. Silicon. So this is the gold project that I was alluding to earlier. This is a project that actually came into us from our acquisition of Callinan. And kudos to Roland Butler, one of the co-founders. He was running Callinan at the time this project was selected by Callinan. And we then acquired Callinan and the royalty moved to our hand. So he got the royalty interest. Basically, we were backing a junior company called Renaissance, who just very early stage and early stage work to explore for gold in Nevada. They found some interesting stuff, but not much sign of gold, but it was a good-looking system that needed to be tested. And they were able to attract [indiscernible] to the project who came in and said, well, we'll do that early stage work. Well, fast forward a few years and turning into what looks to be one of the most significant gold discovery the world has seen in a great many years. And not only that, it's been probably the best jurisdiction in the world you could hope for to make a big new world-class gold discovery. So we ended up with a 1.5% royalty here. We're also close to 20% share over of another company called Oregon that has a similar or a 1% royalty on it. So I'm not quite sure how it happens still, but our -- the space metal and diversified mining focused company suddenly finds itself is probably one of the most exciting gold royalties that exists in the world today. So we've got lots of options strategically around this one. I mean it could perform a really nice part of our future revenue and cash flow profile, but it also has lots of other strategic potential implications here. There is a very hungry precious metals royalty sector out there, looking for assets, and they tend to be higher valued than nonprecious metals companies. So we'll look at everything here in the next little while in terms to see how we can surface the most value for Altius shareholders here. But again, since no cost and what I think is a very underappreciated asset within Altius today, pretty exciting [indiscernible]. I don't have much more, just some pictures on the drilling. So angle has gone on this thing. They're talking about production within 3 years here. So again, this is not one of those way out or kind of things. I'm pretty sure that everything, I'll open it up to questions. Thank you, everyone.

We will take any questions from the floor. And also, Flora, we need to ask the operator, I guess if there are any questions.

There are no questions on the line.

Probably well explained it.

I wonder if you could speak to the effect of the Fairfax or transition to the common shares. And the short medium and long-term effect of that is be offset pretty quickly by revenue.

Well, it has been really like when we did that deal that was 2018, I think, Roger, maybe, yes early 2018. And we sell a lot of opportunity at the time. We were tapped out, quite frankly. We bought so much already at that point. So with that -- with the investment that came in from Fairfax started as a pref share, but it was always intended ultimately to roll into an equity position. With that investment, we were able to buy a big chunk of our position in IOC and the LRC royalty. We use it as the equity part of the acquisition of the other half of our potash royalties and with some of the seed funding that went into ARR. So if you think about that $100 million investment and go back to that earlier table and what those things have translated into, we probably turned at $100 million into $300 million or $400 million. So to me, it's bought and paid for now, Fairfax has become a big shareholders -- become our biggest shareholder and have been clear that their intention is to be a long-term continuing support of shareholder. But that investment, when I go back to it and that endorsement that we got at that time, we'll go back to that as one of the most important events in our history, I think. And again, it was a huge vote of confidence from an incredibly respected investor at the time. And I feel like it's obviously worked out well for Fairfax, but also, from our perspective -- from an Altius shareholders' perspective, that was probably the best financing we've ever done.

Thanks, I guess, a positive free cash flow. [indiscernible] now.

Oh, yes, big time. Yes. I mean potash NAV cash flows, everything, IOC generates, yes. I don't know what percentage of our overall revenue those investments represent, but a lot of it. Okay. Maybe we'll have more talk of crowd in the social part of our social part of the meeting.

If something else we'll end that part of the meeting then and you're welcome to stay with us. Altius staff and Board border here. So we look forward to meeting any shareholders that are here and socializing with thank you very much for attending.

And that concludes today's conference call. Thank you, everyone. You may now disconnect.