Altius Reports Q3 2018 Royalty Revenue of $17.1M and Adjusted EBITDA of $13.9M
Altius Minerals Corporation (“Altius” or the “Corporation”) reports attributable royalty revenue(Note 1) of $17.1 million ($0.40 per share) for the quarter ended September 30, 2018 compared to $16.5 million ($0.38 per share) in the previous quarter and $17.9 million ($0.42 per share) in the comparable prior year quarter ended October 31, 2017. Total Q3 2018 revenue of $17.6 million includes project generation based revenue of approximately $0.5 million.
Adjusted EBITDA(Note 1) of $13.9 million ($0.32 per share) for the three months compares to $13.0 million ($0.30 per share) in Q2 2018 and $14.6 million ($0.34 per share) for the three months ended October 31, 2017. Q3 2018 net earnings per share were $0.14 compared to $0.12 in Q2 2018 and $0.16 in the comparable quarter last year. Q3 2018 earnings include a non-cash $2.0 million dilution gain (approximately 4.7 cents per share) related to the Adventus Zinc Corporation private placement financing and another issuance of shares for an exploration alliance.
Royalty revenue highlights are as follows:
- Potash royalty revenue is up 148% compared to the prior year quarter, and up 9% over Q2 this year, as prices continued to rise and the Rocanville and Esterhazy mines continued to increase capacity utilization.
- Base metal royalty revenue was down 10% from Q2 2018 and down 17% from the comparable quarter in 2017, reflecting lower 777 production compounded by lower copper and zinc prices. Base metal royalty revenue accounted for 40% of royalty revenue this quarter and includes a $0.35 million revenue contribution from Voisey’s Bay.
- Thermal coal royalty revenue was down 31% from its year-ago comparable quarter, and down 19% from Q2 2018, mainly due to mine sequencing changes at Sheerness that have impacted the last two quarters.
- Indirect iron ore revenue related to dividends received from Labrador Iron Ore Royalty Corp. (“LIORC”), in which Altius now holds approximately 5.46% of the issued and outstanding shares, was down 36% from the comparable quarter last year, but up 144% from Q2 2018. Iron Ore Company of Canada continued to ramp up operations following a labour related work stoppage during Q2 and iron ore quality premiums remained very strong; however, this was offset by the decision by LIORC to withhold a significant amount of its cash flow that it would more typically have paid out as shareholder dividends.
The following table summarizes the financial results for the quarter ended September 30, 2018.
| Three months ended | ||||
| (in thousands of Canadian Dollars) | September 30, 2018 | October 31, 2017 | ||
| Revenue | ||||
| Attributable royalty | $17,084 | $17,939 | ||
| Project generation | $550 | $108 | ||
| Attributable revenue (1) | $17,634 | $18,047 | ||
| Adjust: joint venture revenue | $(3,953) | $(5,873) | ||
| IFRS revenue per consolidated financial statements | $13,681 | $12,174 | ||
| Net earnings | $6,273 | $6,748 | ||
| Net earnings per share | ||||
| basic and diluted | $0.14 | $0.16 | ||
| Total assets | $609,078 | $448,426 | ||
| Total liabilities | $182,904 | $108,125 | ||
| Cash dividends declared & paid to shareholders | $1,724 | $1,296 | ||
| (1) See non-IFRS measures section of this MD&A for a reconciliation and explanation of attributable revenue. | ||||
| Summary of attributable royalty revenue | Three months ended | Nine months ended | ||||||||
| (in thousands of Canadian dollars) | September 30, 2018 | October 31, 2017 | Variance | September 30, 2018 | October 31, 2017 | Variance | ||||
| Revenue | ||||||||||
| Base metals | ||||||||||
| 777 Mine | $1,901 | $3,371 | $(1,470) | $8,420 | $10,216 | $(1,796) | ||||
| Chapada | $4,659 | $4,915 | $(256) | $13,050 | $11,369 | $1,681 | ||||
| Voisey's Bay | $351 | - | $351 | $351 | - | $351 | ||||
| Metallurgical Coal | ||||||||||
| Cheviot | $934 | $505 | $429 | $2,368 | $1,840 | $528 | ||||
| Thermal (Electrical) Coal | ||||||||||
| Genesee | $1,448 | $1,666 | $(218) | $4,751 | $4,988 | $(237) | ||||
| Paintearth | $148 | $89 | $59 | $372 | $371 | $1 | ||||
| Sheerness | $780 | $1,848 | $(1,068) | $4,224 | $4,885 | $(661) | ||||
| Highvale | $292 | $269 | $23 | $708 | $915 | $(207) | ||||
| Potash | ||||||||||
| Cory | $131 | $52 | $79 | $421 | $317 | $104 | ||||
| Rocanville | $2,943 | $1,155 | $1,788 | $6,936 | $3,328 | $3,608 | ||||
| Allan | $220 | $102 | $118 | $510 | $207 | $303 | ||||
| Patience Lake | - | - | - | $87 | $124 | $(37) | ||||
| Esterhazy | $849 | $355 | $494 | $2,249 | $1,008 | $1,241 | ||||
| Vanscoy | $23 | $17 | $6 | $121 | $65 | $56 | ||||
| Lanigan | $3 | $1 | $2 | $5 | $4 | $1 | ||||
| Other | ||||||||||
| Iron ore(2) | $1,923 | $2,992 | $(1,069) | $3,814 | $5,237 | $(1,423) | ||||
| Coal bed methane | $98 | $175 | $(77) | $419 | $832 | $(413) | ||||
| Interest and investment | $381 | $427 | $(46) | $627 | $711 | $(84) | ||||
| Attributable royalty revenue | $17,084 | $17,939 | $(855) | $49,432 | $46,417 | $3,015 | ||||
| See non-IFRS measures section of this MD&A for definition and reconciliation of attributable revenue | ||||||||||
Note
1. Attributable revenue and adjusted EBITDA are intended to provide additional information only and do not have any standardized meaning prescribed under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate these measures differently. The attributable revenue and adjusted EBITDA per share metrics divide the respective values by the weighted average number of shares at period end. For a reconciliation of these measures to various IFRS measures, please see the Corporation’s MD&A which is available at http:/altiusminerals.com/financial-statements.
Additional information on the Corporation’s results of operations and developments in its Project Generation division are included in the Corporation’s MD&A and Financial Statements which were filed on SEDAR today and are also available on the Corporation’s website at www.altiusminerals.com.
Outlook, Liquidity and Dividend Declaration
Cash at September 30, 2018 was $33.8 million. During the quarter, the Corporation increased its LIORC position by $8.7 million and expended $2.7 million to repurchase shares under the Normal Course Issuer Bid, along with smaller investments in royalties related to co-participation rights associated with Lithium Royalty Corp. and project generation partners. The value of Mining and Other Investments on the balance sheet has increased from $115 million at June 30 to $145 million at September 30, reflecting new additions and mark-to-market gains. Despite the overall weakness in the junior mining investment sector, our Project Generation business continues to perform well, ending the quarter with increased value in its junior equity portfolio and strong demand for its remaining project inventory. The Corporation’s junior equity portfolio value was $67.8 million at quarter end compared to $44.1 million at January 1, 2018 and $60.3 million at June 30, 2018. In addition, Altius holds a $10 million, 8% debenture that is convertible into Champion Iron Ore common shares at $1.00 per share, and share purchase warrants and indirectly held equity interests that are not included in this quarter end total. The Corporation’s outstanding debt decreased by $5 million during the quarter bringing the outstanding balance to $120 million at quarter end.
The Corporation also advises that its board of directors has declared a cash dividend of four cents per common share payable to all shareholders of record at the close of business on December 6, 2018. The dividend is expected to be paid on or about December 20, 2018. The declaration, timing and payment of future dividends will largely depend on the Corporation’s financial results as well as other factors. Dividends paid by Altius on its common shares are eligible dividends for Canadian income tax purposes unless otherwise stated.
Q3 2018 Financial Results Conference Call and Webcast Information:
A conference call will be held on Thursday, November 8, 2018, starting at 9:00 a.m. ET to further discuss the quarter and guidance for 2018. To participate in the conference call, use the following dial-in numbers, or join the webcast on-line as detailed below.
| Time: | 9:00 a.m. ET on Thursday, November 8, 2018 | |||
| Dial-In Numbers: | +1(647) 427-2311 local or +1-866-521-4909 toll-free | |||
| Pass code: | None required, but provide title of call | |||
| Conference Title: | Altius Q3 2018 quarterly results | |||
| Webcast URL: |
The call will be webcast and archived on the Corporation’s website for a limited time.
About Altius
Altius directly and indirectly holds diversified royalties and streams that generate revenue from 15 operating mines. These are located in Canada and Brazil and produce copper, zinc, nickel, cobalt, iron ore, potash and thermal (electrical) and metallurgical coal. The portfolio also includes numerous pre‐development stage royalties covering a wide spectrum of mineral commodities and jurisdictions. In addition, Altius holds a large portfolio of exploration stage projects which it has generated for deal making with industry partners that results in newly created royalties and equity and minority interests.
Altius has 42,955,726 shares issued and outstanding that are listed on Canada’s Toronto Stock Exchange. It is a member of both the S&P/TSX Small Cap and S&P/TSX Global Mining Indices.
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