Altius Minerals Corporation (ALS) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Altius Q2 2026 Financial Results Conference Call. [Operator Instructions] This call is being recorded on Tuesday, August 11, 2026. I would now like to turn the conference over to Flora Wood, VP of Investor Relations. Please go ahead.

Thank you, Vincent. Good morning, everyone, and welcome to our Q2 2026 conference call. Our press release and interim filings came out yesterday after the close and are available on our website. This event is being webcast live, and you'll be able to access a replay of the call along with the presentation slides that have been added both to the home page in the Investors section of our website at altiusminerals.com. Brian Dalton, CEO; and Stephanie Hussey, CFO, will speak on the call; and Ernie Ortiz, VP Corp Dev and Head of Lithium is also here as a resource for us in the Q&A. The forward-looking statement on Slide 2 applies to everything we say both in our formal remarks and during the Q&A session. And with that, Stephanie is up first to take us through the numbers.

Thank you, Flora, and good morning, everybody. Yesterday, we reported Q2 net earnings of CAD 8.6 million or CAD 0.16 per share, reflecting higher revenues and higher expenses, including cost of sales, G&A, share-based comp and amortization when compared to Q2 2025. Royalty revenue of CAD 30 million, which was a record and adjusted EBITDA of CAD 23 million for the second quarter reflect higher realized prices, timing of copper stream deliveries, the addition of four operating lithium royalties as well as higher electricity royalty revenue. Operating cash flow of CAD 14 million reflects higher royalty receipts and interest income, offset by higher tax payments and working capital changes. Adjusted net earnings of CAD 0.14 per share for the quarter was higher than Q2 2025 with the main adjusting items being foreign exchange, revaluation of derivatives and nonrecurring costs associated with the LRC acquisition. Some highlights from the quarter include an investment in ARR for our contribution of the Coles Wind acquisition, a 311-megawatt construction stage project for USD 12.4 million. We also acquired CAD 15 million in other investments, including TNR Gold and Blue Moon. We received CAD 42 million from the corporation's original investment in Royalty Capital Funds, funds controlled by Waratah Capital. These investments were made by Altius at the time of the founding and early development of LRC. And as these funds were wound up, proceeds in either cash or Altius shares were distributed to unit investment holders. Subsequent to the quarter, Altius announced three transactions. On July 21, we closed a bought deal public offering of 3 million common shares at a price of CAD 60.50 per share and received net proceeds of CAD 174 million. On July 24, we completed an amendment to our credit facility to upsize to CAD 350 million from CAD 225 million. The previous term and revolving credit facility is now replaced with a single revolver with no principal payments required. The debt balance outstanding of CAD 87 million at the time of the close was transferred to the amended credit facility with maturity being extended from August 2028 to July 2030. The corporation completed a drawdown of CAD 100 million on the revolver at the end of July. And finally, on July 30, the corporation completed a share purchase agreement with Northampton and Apollo in which Altius increased its effective interest in GBR from 29% to 50%, while Northampton increased its interest in GBR from 22% to 50%. The transaction structure involved the acquisition by Northampton of Apollo Funds' 50% interest in GBR for total consideration of USD 390 million while Altius concurrently acquired Northampton's minority interest in ARR for consideration of USD 167 million. The purchase by Altius was funded through cash on hand and debt. And going forward, we will report our 50% ownership of GBR. Following these transactions, current total liquidity available to the corporation is approximately CAD 500 million, and this includes cash on hand, CAD 163 million available under the amended revolver as well as CAD 150 million potentially available as an accordion feature, subject to certain criteria under the terms of our expanded credit facility. During the quarter, we made scheduled debt repayments of CAD 2 million, paid total cash dividends of CAD 5.2 million and issued approximately 7,000 common shares under the dividend reinvestment plan. Yesterday, our Board approved a 10% increase to our dividend or CAD 0.11 per share to be paid to shareholders of record on August 28 with a payment date of September 15. And with that, I'll turn it back to Brian.

Thank you, Stephanie. Good morning, everyone. Our second quarter efforts included the integration of the acquisition of Lithium Royalty Corporation, the acquisition of an increased effective interest in Great Bay Renewables and an equity raise plus expansion of our credit facilities to strengthen the balance sheet and replenish liquidity for further accretive capital allocation opportunities that may emerge. We were also busy with replenishing our PG equity portfolio and growing our longer-term royalty growth portfolio. Our royalties performed well in Q2 and revenues were up materially relative to the comparable quarter last year. More importantly, we continue to gain confidence in the further growth potential of the portfolio as a number of preproduction stage royalties achieved important advancement milestones. In lithium, we continue to receive positive signals from the operators of several of our royalty projects concerning expansions, restarts and new builds. These collectively have caused us to revise upwards our revenue estimates for this segment over the next several years. Lithium demand growth continues to exceed expectations, driven by both increased global electricity, grid battery storage adoption and increasing EV sales in certain regions as a consequence of heightened oil-based fuel price volatility. The average quarterly price for most lithium-based projects increased materially versus the first quarter as strong demand growth outstripped supply growth and resulted in inventory depletion. Ernie is with us on the call today and will be available to answer any specific project or general market-based questions you may have for us during the Q&A. In base metals, we heard positive updates from Vale regarding ramp-up progress at Voisey's Bay. Chapada saw strong production levels plus the commencement of investments by Lundin to grow copper production through the integration of the new Sauva deposit discovery. Silvercorp made steady construction progress at Curipamba and positive PEA results were reported for the Gunnison Copper project. Quarterly average copper and nickel prices both increased by approximately 4% over Q1 as fundamental market balance factors, while increasingly volatile, continue to develop constructively on a net basis. Within ARR and our electricity royalties business, there were significant developments during and subsequent to the quarter. A new advanced stage investment was made at Coles Wind that will add meaningful near-term revenue, and we received positive sanctioning and construction updates from several additional projects. The portfolio now includes 16 operating stage projects and 15 others at various stages of construction. These developments are driving an upwards inflection point for overall electricity royalty portfolio revenue and we're certainly supportive of our decision to increase our effective interest in the underlying GBR joint venture, from 29% to 50%, alongside our long-term focused partners, Northampton Capital Partners and its underlying investor, APG, the major Dutch pension fund. The opportunity to increase our interest came as our original funding partner, Apollo, exited their investment upon the approaching scheduled wind up of the fund entity that it made its investments through. We take this opportunity to thank the teams we have worked with at Apollo for their contributions to the growth and development of this business and commend them on their early recognition of its potential. Underlying macro level demand growth expectations for new electricity generation across the U.S. continues to be strong and broad-based, and the GBR team is continuing to identify a heightened number of potentially accretive deployment opportunities, particularly with respect to near-term production stage projects. Turning to potash. We are sensing a subtle change in outlook from the operators and more particularly, those analysts that cover them. The narrative seems to be shifting from the one heard over the past several years, reflecting concern around competing supply coming online to instead a questioning of established production leaders as to how they might invest to bring on additional supply as existing prebuilt capacity is increasingly being recognized as approaching full practical utilization. In any event, potash demand has been very strong again thus far this year across most regions with annual global consumption forecast ranges beginning to tighten towards the higher end of prior forecasts and causing benchmark prices to strengthen; wonderfully boring stuff as usual. In iron ore, we look forward to results from Champion and its Japanese partners, Nippon and Sojitz later this year regarding the feasibility study for Kami. We also heard Rio Tinto reaffirm its commitment to investment and long-term operational improvement at IOC. Iron ore prices were relatively flat quarter-over-quarter, and our revenues continue to be impacted by lower production and higher capital investment amounts at IOC. In project generation, the team was very busy and continue to create royalties through project sales as well as to identify equity level deployment opportunities that generally included royalty business development components. This work is serving to continue to grow our longer-term growth portfolio and builds upon strong progress last year that was highlighted by the rapid advancement of the Arthur Gold project and our underlying royalty interest. At Arthur, AngloGold Ashanti has announced that it is advancing the project into a full feasibility study during the second half. Before I turn over to your questions, I want to publicly acknowledge and thank my fellow team members for their incredible enthusiasm and work effort over the past 12 months. This started with the partial sale of our Arthur Gold project royalty interest late last summer and then progressed immediately and continuously since then into the redeployment of the proceeds and then some. Amazing job, guys. It continues to be a pleasure and a privilege to work with you. And with that, I'll turn it over to questions.

[Operator Instructions] First question comes from Shane Nagle from National Bank.

Congrats on all the transactions over the past quarter. Just one more of a technical question on consolidation of ARR or I guess, the 50% of GBR going forward. Can you give any color on -- I'm assuming you're going to proportionately consolidate your 50%. Just any color on where that balance sheet stands today after some of the transactions that have taken place like Coles Wind and others within GBR.

It sounds like a stat question to me.

Thanks for the question. We haven't kind of cracked open going forward, but we expect the equity account for GBR as a joint venture. So we'll pick up our 50%, but it will be through equity accounting. We don't expect to do proportionate accounting. So we'll be picking up.

Okay. And then maybe just, Brian, just quickly, you kind of provided some color in your prepared commentary. But just within that renewables section, is that kind of where you see the most accretive opportunity set at the present time? Or maybe just talk about kind of the strategy and the landscape here in terms of allocating capital now going forward?

There certainly is a lot of deal flow coming across the desk at the renewable side of things. But I wouldn't say it's exclusively there. I don't know what it is, but maybe somewhat more subdued market conditions over the past couple of months, I guess, led by declining gold prices seems to have shaken a little bit of other stuff out of the [ woodwork ] as well, and we're seeing some packages and some individual royalty assets on the mining side come across our desk as well. So I'd say we're pretty busy really on pretty much all fronts. Again, I can't promise what will result in transactions, but there are some quality assets that are looking to transact royalties around or existing royalties that we're seeing some groups that have other uses of capital that may be willing to transact as well. So I'm going to tell the rest -- I'm going to tell the team what I've been telling them that take it easy for the rest of this month. It has been a big year, but I do expect a busy fall for everyone.

Your next question comes from Gabriel Chu from Bullpen Research.

I wanted to start off with a question on lithium. So there's some reports that were coming up on the battery tech mix. I imagine you've seen some of it. Sodium ion got a bit of attention. So I'm just wondering how are you guys thinking of this? I imagine this is sort of a scenario where the pie is growing so rapidly space for both lithium and sodium tech, love to see how you guys are anticipating the space to shape up?

Your turn, Ernie.