Altus is a mining Royalty Generator focused on establishing a diversified portfolio of income generating royalties, royalty rights on pre-production projects and direct project interests. Since being founded in 2007, the Company has grown a portfolio of mining assets, diversified by commodity and jurisdiction. The team’s track record of success and unique business model has attracted La Mancha, one of the world’s largest mining investors, as a strategic shareholder. La Mancha’s involvement is transformational for the Company, accelerating its royalty generation activities and expanding the pipeline of new project opportunities.
Altus’ unique and risk diversified business model, generates short and long-term income whilst also providing investors with exposure to the potential multiple returns that can be generated from the discovery process. Altus is growing its portfolio of royalties, through organic royalty generation and the potential acquisition of royalties from third parties. The Company’s portfolio approach reduces risk exposure, through commodity and geographic diversification by entering joint ventures with third parties on its discoveries, Altus preserves its shareholder’s capital for investing in the next discovery opportunity. The royalties being generated are designed to yield sustainable long-term income for Altus.
The Discovery strategy leverages the Company’s expertise and proven ability to identify and rapidly advance early-stage, high-value potential assets. Altus aims to acquire multiple mining licences in diverse jurisdictions and then undertake exploration on these simultaneously. Once a discovery has been made, project funding is met from joint venture partnerships, reducing risk and preserving capital. Income is generated through JV milestone payments which occur at exploration and development landmarks. Altus typically structures a minority equity position in the project, providing longer term optionality. Finally, Altus retains a royalty which provides long-term cash flow potential once the project enters production.
The Acquisition strategy focuses on accelerating the growth of the portfolio through direct purchase of existing royalties from third parties or by royalty creation through providing strategic capital to select exploration and mining companies. This acquisition strategy aims to enhance the quality of the Company’s royalty portfolio, provide further diversification, and accelerate income to the group from cash-generating assets.
Strengths of the Project & Royalty Generator model
As a Royalty Generator, having completed reconnaissance exploration and defined targets, our business model is to attract joint venture partners to fund what the Company considers to be the highest risk phases of exploration, which include drilling and resource definition. In return, Altus receives an equity interest in the individual projects, milestone-based equity and cash payments and retains a production royalty on each asset. In parallel, Altus accelerates the growth of its royalty portfolio through direct acquisition of existing royalties or through the provision of finance in exchange for a royalty. Having a dual approach to building a royalty portfolio offers diversification, reduces risk, and accelerates growth.
Illustration: Altus provides investors with exposure to a diversified portfolio of discoveries
The benefits of the Royalty Generator model include:
- participation in the value created by making multiple discoveries simultaneously;
- minimising dilution of the Company’s share capital by JV funding at the project level;
- maintaining long-term upside exposure by retaining co-funding and royalty rights;
- diversifying the ubiquitous technical, commodity, country and management risks;
- potential for multiple short and long term income streams from JV payments, asset sales and royalty payments; and
- aligning the interests of the Company’s management with its shareholders.
Targeting superior risk-adjusted returns
We believe the Company’s royalty generation business model delivers superior returns to shareholders, compared to investments in traditional exploration and royalty companies which can expose investors to excessive downside risks and also limit upside opportunities including:
- shareholder interests being overly concentrated in risky projects, commodities or countries;
- being too reliant upon capital markets, resulting in excessive dilution and too reliant on commodity price movements to sustain value;
- management teams not having the latitude or desire to drop poor quality projects; and
- shareholders having only limited exposure to the upside from new discoveries.
With a strategy of financing and diluting at the project level through joint venture partnerships, Altus is able to advance multiple projects from one efficient overhead. This allows more targets to be tested per 'shareholder dollar', thereby increasing the likelihood of exploration success and growing valuable discovery optionality. This strategy diversifies the inherent risks presented by any one project, commodity or jurisdiction and allows Altus to be less reliant on the benevolence of the capital markets for funding, especially during cyclical downturns.
How the Project & Royalty Generator model works
Altus selects prospective geological targets based on the systematic analysis of geological data. The Company then secures mineral exploration licences and undertakes preliminary prospecting. Following this initial phase of work, we prioritise our licences based on their apparent potential to host an economic ore body. Where this is interpreted to be unlikely, a licence is objectively relinquished to protect capital and save time. Licences which are maintained are advanced to the next stage of exploration. JV partners are then sought to fund the next phases of exploration with Altus providing technical and management support, where appropriate, whilst retaining a royalty and building the portfolio organically.
Illustration: A disruptive business model designed to accumulate assets while mitigating risk
Royalty acquisitions are identified using industry intelligence which includes the management team, board, shareholders, brokers, and other members of the Company’s industry network. Certain criteria are required to be met on each acquisition opportunity before significant internal due diligence is conducted. This involves leveraging the skillset of the Altus technical team and generating a valuation based on discounted cashflows, market comparables and EBITDA multiples. Altus looks to engage external consultants as and when required to generate an investment proposal. All transactions are reviewed by the Altus board and are required to clear minimum return hurdles and be wholly accretive. The Company may also look to syndicate a third-party royalty acquisition with one or more industry royalty groups to access the specific expertise or provide additional financial leverage.
Embracing the cyclical nature of the mining sector
The mining sector is exemplified by cyclical swings, from irrational exuberance to short sighted despair. The cyclical extremes lead assets to be severely mispriced and Altus embraces this opportunity. The most recent bear market which ran for most of the last decade caused many traditional juniors to go out of business, or their shareholders suffered from deeply discounted and dilutionary share placements. During downturns, the mid-cap and major companies tend to focus on maintaining profitability or minimising losses rather than investing in exploration. As these cuts filter down and affect project pipelines, commodity markets become cyclically undersupplied meaning the demand and value of new discoveries rises as the mid-caps and majors compete to replenish their resources.
Illustration: Altus embraces the highly cyclical nature of the mining sector
Africa - where deposits can still be discovered cropping out at surface
Altus is focused on the continent of Africa where, due to the relative lack of exploration using modern techniques compared to many other parts of the world, economic mineral deposits can still be discovered cropping out at surface. It is reported that 24% of all discoveries in the last decade were found on the continent, despite receiving only 14% of the global exploration budget (source: MinEx Consulting). According to the same survey, deposits in Africa (excluding South Africa) are being discovered at average depths of just 9m, which is much shallower than average global depths of 78m; in Canada and the USA the average discovery depths are even greater, at 125m and 198m respectively.
This opportunity to make discoveries across Africa without recourse to expensive subsurface exploration technologies or extensive drilling programmes, means that our shareholder capital can potentially generate more value and at greater speed if applied to exploration in Africa than it might in many other parts of the world, thus increasing the discovery potential per Altus share. Given the collective geographical, geological and operational expertise of our management and advisor team, we believe Altus is well positioned to exploit this opportunity.
Illustration: Discoveries in Africa are made much closer to the surface than the rest of the world
Our diversified portfolio
Altus has established a portfolio of over twenty precious and base metals exploration projects and multiple royalties, across more than seven countries in Africa.
- The 100% owned Diba gold project in Mali where the Company is targeting a 1 Moz resource
- Two gold projects and royalties in key Birimian gold belts of western and southern Mali, being advanced under joint venture by ASX listed Marvel Gold.
- A gold project and royalty being advanced by ASX & LSE listed Resolute in southern Mali.
- Gold royalties on two former Altus projects in western Mali sold to TSXV listed Desert Gold.
- Equity and royalty interests in ASX listed Canyon resources, the Company’s former JV partner on an Altus bauxite discovery in central Cameroon.
- Two copper and copper-gold projects in northern Ethiopia.
- A number of copper, tin, tungsten, gold, silver and zinc projects in Morocco.
- A major shear zone hosted gold project with mineralisation mapped over at least 15km of strike in northern Cameroon.
- A high grade colluvial iron ore project located close to a maintained road and a proposed rail line for access to a newly constructed deep seaport in southern Cameroon.
- Gold royalties on two former Altus projects in Ivory Coast sold to TSXV listed Stellar Africa.
- Gold projects in Egypt.
Altus’ exploration teams are actively generating new opportunities to feed into the Company’s project pipeline.
Altus is a mining Royalty Generator growing a diversified and precious metal focused portfolio of assets with a focus on Africa. The Company creates shareholder value by applying a dual approach to generate and acquire royalties. In the first strategy, Altus identifies and acquires geologically prospective exploration licences through its local African subsidiaries, makes new, or advances existing discoveries and seeks joint ventures with third parties to take the projects toward production. Altus seeks to receive short term income via project transactions as well as performance milestones from the projects whilst retaining long term royalty interests on each. In the second strategy, Altus seeks to acquire royalties from third parties seeking to monetise their assets or provides capital to mining companies in order to create new royalties on their projects. Risk diversification is at the heart of the Company’s philosophy, and this is enacted by holding project and royalty interests across multiple commodities and jurisdictions.
The unique business model is designed to create significant, low-risk exposure for Altus’ shareholders to the high values which can be created from a potential economic discovery, as well as its future cash flows from royalties. In the short term the model reduces the Company’s general and administrative costs, while also generating cash and equity income from project level transactions. The royalties generated on the Company’s assets, or those acquired from third parties, are designed to yield sustainable long-term income for Altus shareholders, without them having to assume the technical or financial risks associated with owning equity in a producing mine. As such, the model is designed to create a virtuous circle, where Altus’ portfolio and income streams continually grow. The model has attracted a number of other notable resource investors, including La Mancha and Sprott.
Altus is focused on Africa where, due to the relative lack of exploration using modern techniques, economic mineral deposits can still be discovered cropping out at surface. This opportunity to make discoveries across Africa, without recourse to expensive subsurface exploration, geophysical technologies, or extensive drilling programmes, means that the Company can potentially generate more value, at greater speed and with lower risk in Africa, than in almost any other part of the world.
The collective geographical, geological, and operational expertise of the Altus board, management and shareholders, combined with a growing quality portfolio of assets, positions the Company to become the leading African mining royalty company.