Elemental Altus: Major Expansion Study at Karlawinda Gold Project & New Tungsten Royalty Acquisitions

• Karlawinda Gold Project initiates major expansion study, targeting 50% throughput increase for Elemental Altus capacity.
• Mineral Reserves in Karrlawinda increased by 15% to 1,428,000 ounces of gold, and pre-expansion mine life has been extended to over 13 years.
• Elemental Altus holds uncapped 2.0% NSR royalty on Karlawinda poising substantial growth to increase the company's royalty revenue.
• The company also completed the acquisition of strategic Mactung and Cantung tungsten projects.
• The acquisition provides ELE 4% NSR royalty over the Mactung project which is described as one of the largest, high-grade tungsten deposits in the world.

Elemental Altus Royalties Corp. (TSXV:ELE) is a rapidly growing precious metals royalty company with a diverse portfolio of producing and pre-production assets. The company's strategy focuses on acquiring uncapped royalties and streams over producing or near-producing mines operated by established counterparties. With 10 producing royalties and a pipeline of discovery-stage assets, Elemental Altus aims to provide investors with superior exposure to gold and other strategic metals while minimizing operational risks.

Karlawinda Expansion Study

In a significant development for investors, Elemental Altus has announced that Capricorn Metals Ltd has initiated a major expansion study at the Karlawinda Gold Project (KGP) in Western Australia. This project, on which Elemental Altus holds an uncapped 2.0% Net Smelter Return (NSR) royalty, is poised for substantial growth that could dramatically increase the company's royalty revenues.

The expansion study, targeted for completion by the end of 2024, is exploring an increase in throughput from the current 4.5 million tonnes per annum (Mtpa) to between 6.5 and 7.0 Mtpa. This represents a potential increase of approximately 50% in production capacity, which could translate directly into increased royalty income for Elemental Altus.

Frederick Bell, CEO of Elemental Altus, emphasized the significance of this development:

"The initiation of an expansion study at Karlawinda, targeting a throughput increase of approximately 50%, underscores the significant upside potential of our material royalties. Karlawinda's expansion potential has always been a principal reason for our investment, and Capricorn has the track record to implement a successful expansion study quickly."

Mineral Reserve & Resource Update

Accompanying the expansion study announcement, Capricorn Metals has reported a substantial increase in Mineral Reserves at Karlawinda. The updated JORC-compliant Mineral Reserves now stand at 57.7 million tonnes of Probable Reserves with a grade of 0.8 g/t gold, containing 1,428,000 ounces of gold. This represents a 15% increase in total ounces and, more importantly, a 27% increase after accounting for mining depletion as of July 2024.

This reserve update is particularly significant for investors for several reasons:

• Extended Mine Life: The increased reserves support a pre-expansion life of mine exceeding 13 years, providing long-term visibility on royalty income for Elemental Altus.
• Resource to Reserve Conversion: The successful upgrading of Inferred Resources to Indicated Resources, and subsequently to Reserves, demonstrates the quality of the asset and the potential for further reserve growth.
• Expansion Potential: The additional reserves provide a solid foundation for the proposed expansion, potentially extending the life of mine even further once the expansion is implemented.

The Mineral Resource estimate has also seen a significant boost, with Indicated Resources now totaling 85.0 million tonnes at a grade of 0.7 g/t gold, containing 1,965,000 ounces of gold. An additional 287,000 ounces of gold are classified as Inferred Resources, suggesting further upside potential.

Expansion Study Details: A Roadmap for Growth

The expansion study initiated by Capricorn Metals is comprehensive in scope, focusing on several key areas:

• Processing Plant Upgrade: The study will evaluate an expanded processing plant flowsheet, plant configuration, and equipment installation logistics to accommodate the increased throughput.
• Mining Schedule Optimization: An accelerated mining schedule is being considered, potentially allowing for the blending of additional ore with lower-grade stockpiled material.
• Infrastructure Assessment: The study will address necessary upgrades to supporting infrastructure, including an expansion of the tailings storage facility.
• Capital Cost Estimation: Process plant and infrastructure capital costs will be estimated as part of the study, providing clarity on the investment required to achieve the expansion.
• Permitting Requirements: The study will outline the permitting process needed to implement the expansion, allowing for a swift transition from study to execution.

Capricorn's commitment to moving into permitting and execution as quickly as possible upon successful completion of the study is a positive indicator for Elemental Altus shareholders, suggesting a potentially rapid timeline from study to increased production and royalty revenues.

Strategic Importance of Karlawinda to Elemental Altus

The Karlawinda Gold Project has already proven its value to Elemental Altus, contributing US$4.6 million in royalty revenue in 2023 when gold prices averaged less than US$2,000 per ounce. With gold prices currently trading higher and the potential for increased production through expansion, the strategic importance of this asset to Elemental Altus cannot be overstated.

Several factors make Karlawinda a cornerstone asset for the company:

• Uncapped Royalty: The 2.0% NSR royalty is uncapped, meaning Elemental Altus will benefit fully from any production increases or rises in the gold price.
• Tier 1 Jurisdiction: Located in Western Australia, Karlawinda benefits from a stable political and regulatory environment, minimizing geopolitical risks for investors.
• Expansion Potential: The current expansion study demonstrates the asset's growth potential, which could significantly increase royalty revenues without additional investment from Elemental Altus.
• Quality Operator: Capricorn Metals has a strong track record in developing and operating gold projects, providing confidence in the execution of the expansion plans.

Tungsten Royalty Acquisition

In addition to the positive developments at Karlawinda, Elemental Altus has announced the successful completion of its acquisition of royalties on the Mactung and Cantung tungsten projects. The highlight of this acquisition is a 4% NSR royalty over the Mactung project, described as one of the largest, high-grade tungsten deposits in the world.

This strategic move accomplishes several objectives for Elemental Altus:

• Portfolio Diversification: By adding exposure to tungsten, a critical industrial metal, Elemental Altus broadens its commodity base beyond precious metals.
• High-Quality Asset: The Mactung project's status as a world-class tungsten deposit provides significant long-term potential for royalty income.
• Jurisdictional Diversification: Located in Canada, these royalties further strengthen Elemental Altus's presence in Tier 1 mining jurisdictions.
• Development Pipeline: The Mactung project, while not yet in production, adds a high-potential development asset to Elemental Altus's pipeline, balancing the portfolio between producing and growth assets.

Frederick Bell commented on the acquisition, stating:

"We are also pleased to successfully complete the acquisition of an uncapped 4.0% NSR royalty at the Mactung Project. This is a high-quality, high-grade tungsten project in Canada with the potential to be a future long-life operation and fits very well into our development pipeline."

Market Implications & Investor Considerations

The developments at Karlawinda and the acquisition of tungsten royalties present several positive implications for investors considering Elemental Altus:

• Near-Term Growth Potential: The Karlawinda expansion study could lead to increased royalty revenues in the medium term, potentially driving share price appreciation.
• Long-Term Value Creation: The extension of Karlawinda's mine life and the addition of the Mactung royalty provide long-term visibility on cash flows and growth potential.
• Commodity Diversification: Exposure to both gold and tungsten offers a hedge against market volatility and aligns the company with both precious metals and industrial metals trends.
• Quality of Assets: The focus on Tier 1 jurisdictions and partnerships with established operators minimizes operational and geopolitical risks for investors.
• Management Execution: The successful identification of assets with expansion potential and strategic acquisitions demonstrates management's ability to create shareholder value.

Key Takeaways

Elemental Altus Royalties Corp. presents a compelling investment case for those seeking exposure to the precious metals sector with a reduced risk profile. The company's cornerstone asset, the Karlawinda royalty, is demonstrating significant growth potential through the recently announced expansion study. This, combined with the increased Mineral Reserves and Resources, positions Elemental Altus for potential revenue growth without additional capital expenditure.

The acquisition of tungsten royalties, particularly the Mactung project, adds diversification and long-term growth potential to the portfolio. This strategic move aligns with the company's vision of building a global royalty company offering superior exposure to gold and other strategic metals.

For investors, Elemental Altus offers a unique combination of current income from producing royalties, near-term growth potential from expansions like Karlawinda, and long-term upside from development-stage assets like Mactung. The company's focus on uncapped royalties in Tier 1 jurisdictions provides an attractive risk-reward profile, with significant leverage to commodity prices and operational improvements.

As the company continues to execute its growth strategy, investors may find Elemental Altus an attractive option for gaining exposure to the precious metals and strategic metals sectors, with the potential for both capital appreciation and income generation. The developments at Karlawinda and the strategic acquisition of tungsten royalties underscore the company's commitment to creating long-term shareholder value, making it a stock to watch in the royalty and streaming space.