Elemental Altus Royalties Projects 100% Revenue Growth in 2025

• Elemental Altus Royalties has recently added three new board members with significant royalty sector expertise, strengthening their focus on North American capital markets.
• The company is projecting a significant increase in revenue for 2025, from $21.6 million in 2024 to approximately $45 million, driven by the AlphaStream portfolio acquisition and the Karlawinda royalty with Allied Gold.
• The company has completely paid off its $30 million debt and now has an undrawn credit facility, putting it in the strongest financial position in its history.
• Trading at about 6.5x revenue (compared to junior peers at 10x, mid-tier at 15x, and majors at 20x), the company believes it presents compelling value with diverse exposure to 10 producing assets and 60-70 exploration/development royalties.
• Management is evaluating various capital allocation strategies, including potential acquisitions (from $1M to $50-60M range), share buybacks, and possibly introducing a dividend.

Elemental Altus Royalties (TSXV:ELE) is positioning itself for a transformative year in 2025, with projections of nearly doubling its revenue amid favorable gold prices and recent strategic acquisitions. In a recent interview, CEO Frederick Bell outlined the company's evolution from a private million-dollar entity to a fast-growing gold and copper royalty company with a market capitalization over $200 million. The company has strengthened its board with industry veterans, paid down all debt, and is projecting record quarterly results in the coming months.

Strategic Board Additions Enhance North American Focus

The company recently made three significant additions to its board of directors, reflecting its increased focus on North American capital markets and the royalty space. Prashant Francis, a principal of AlphaStream (a 14% shareholder based in the UAE) brings deal flow and co-investment capabilities. Matthieu Bos, the President and CEO of Falcon Energy Materials plc, adds Canadian market expertise. Most recently, Sandeep Singh, former CEO of Osisko Gold Royalties, joined the board.

"All three of those give us a better market presence in North America. We're really grateful for the directors we had on the board who helped us get to here and I think we're really excited about what we can add to it as well in terms of their skill sets, networks and connections going forwards."

These additions reflect the company's evolution and its focus on accessing North American capital markets more effectively. The deeper experience in the royalty sector is particularly valuable, as Bell noted: 

"I think sometimes the challenge is not just finding the opportunities but also being able to recognize the good ones and focus your limited time and energy on that."

Substantial Revenue Growth Projected for 2025

Elemental Altus is guiding for $30-34 million US in revenue for 2025 at a $2,600 gold price and $4.20 copper price. Additionally, they expect approximately $13-15 million in portfolio payments, with the largest (around $10 million) expected in April. In total, the company anticipates midpoint revenue of about $45 million US for 2025, compared to $21.6 million in 2024, representing more than a 100% increase.

"This year Q1 is going to be a record, Q2 is going to be a record by a large margin. I think we're forecasting all in about 100% increase in revenue from 2024 to 2025.”

The company's cost structure remains relatively fixed with G&A projected at approximately $6 million US and estimated tax payments of $4-4.5 million. With total costs of around $10 million, the growing revenue directly improves margins.

Drivers of Growth: Acquisitions & New Production

Two major factors are driving the company's projected growth for 2025. First is the consolidation of the AlphaStream portfolio announced in October 2024, which is expected to contribute an additional $7-8 million in revenue this year. Second is the startup of the Karlawinda royalty with Allied Gold, which began production in late 2024, with Q1 2025 being the first quarter Elemental Altus will receive payments.

Bell explained that unlike previous years when growth was weighted toward the second half: 

"Unusually this year, the first half of the year actually, a lot of our revenue growth is weighted towards H1. You're going to see over the next three months some really material revenue growth feeding into the company."

Financial Position & Valuation

The company has paid down all $30 million of its previously drawn debt over the past year, leaving it with an increased but completely undrawn credit facility coinciding with record revenue. Bell believes the current valuation represents a compelling opportunity, noting that historically the company has traded at around 10 times price-to-revenue, but is currently trading at approximately 6.5 times projected 2025 revenue.

"If you look at the junior space we've got the lowest price to revenue in the junior space. If you look at the mid-tier space, they might be trading around 15 times the price to revenue. And if you look at the majors they're probably trading around 20 times."

The company distinguishes itself from gold producers by offering a more diversified portfolio, typically generating revenue from 10 assets - more than most mid-tier or large gold mining companies. Additionally, the royalty model provides protection against inflation as royalties come off top-line revenue, though it may not offer the same leverage as gold producers in certain market conditions.

Interview with Chief Executive Officer, Frederick Bell

Capital Allocation Strategy

With the company's strengthened financial position, management is actively evaluating various capital allocation strategies. The company recently established a normal course issuer bid (share buyback program), though it hasn't been utilized yet due to financial reporting blackout periods. Bell also mentioned that introducing a dividend is "on the radar," noting that the company had previously paid dividends when it was private but hasn't done so since going public.

In terms of cash management, Bell explained: 

"We moved last year into a sort of active cash management phase where if we had over a certain amount of cash on the balance sheet and we didn't have a transaction in the immediate pipeline in front of us, we just use that to pay down the debt."

Looking forward, with projections of $15-20 million in cash building on the balance sheet, management is considering options including long-term deposits, deal deployment, share buybacks, and potential dividends.

Acquisition Strategy & Growth

Elemental Altus continues to prioritize cash-flowing royalty acquisitions while also strategically adding development assets that may take years to mature but offer deep value. 

"Almost every year without exception we have transacted on cash flowing royalties. So that still is a high priority for the right opportunity where we can add more revenue.”

Recent acquisitions include the AlphaStream portfolio with its 3 producing royalties and 21 exploration/development royalties, as well as a royalty on the Mactung tungsten project, which is being supported by US and Canadian governments for fast-tracking to a final investment decision by 2028. Bell sees potential for this $3.5 million acquisition to eventually return its cost on an annual basis once in production.

The company is evaluating opportunities ranging from $1 million to $50-60 million transactions, maintaining flexibility to pursue both smaller opportunistic acquisitions and larger transformative deals. Bell emphasized the importance of staying hungry and nimble: 

"One of the advantages of being a relatively small royalty company is that hopefully you can maintain that sort of fleet-footed entrepreneurial attitude.”

The Investment Thesis for Elemental Altus Royalties

• Revenue Growth Trajectory: Projecting ~100% revenue increase from $21.6M in 2024 to ~$45M in 2025, driven by AlphaStream acquisition and Karlawinda royalty startup
• Margin Expansion: Fixed cost base of ~$10M means additional revenue flows largely to the bottom line, creating significant operating leverage
• Valuation Discount: Currently trading at ~6.5x revenue vs. historical 10x, junior peers at 10x, mid-tiers at 15x, and majors at 20x
• Debt-Free Balance Sheet: Completely paid down $30M debt, now with undrawn credit facility and building cash position
• Portfolio Diversification: Revenue from ~10 producing assets plus optionality from 60-70 exploration/development royalties covering 13,500+ sq km
• Inflation Protection: Royalty model derives revenue from top-line production, providing natural hedge against mining cost inflation
• Multiple Capital Allocation Options: Share buybacks (program in place), potential dividend introduction, and acquisition capacity from $1M to $60M
• Operational Efficiency: Can significantly scale revenue without proportional increase in overhead, enhancing returns on invested capital
• Management Alignment: "Founders mentality" with entrepreneurial approach maintained despite company's growth

Macro Thematic Analysis

The gold sector is experiencing a structural shift with spot prices recently touching $3,000/oz while long-term consensus forecasts have moved up to around $2,200/oz. This creates a particularly favorable environment for royalty companies like Elemental Altus that generate revenue from producing assets. Unlike developers or explorers who might be years away from production, royalty holders with producing assets immediately benefit from higher metal prices.

The royalty model offers unique advantages in the current inflationary environment. As Bell emphasized:

"When you're looking at a producer versus a royalty company, for the royalty company you're looking at... more downside protection... you don't have the inflation side of it and you have all the exposure to the upside." 

This inflation-hedged exposure to gold and copper provides investors with precious metals exposure without the operational risks and cost pressures faced by miners.

Global economic uncertainties, including geopolitical tensions and potential "tariff wars," have historically supported gold prices. In this context, Bell's perspective is particularly relevant: 

"Every single day that gold price is above consensus pricing we are actually benefiting from it and our shareholders are betting from it, notwithstanding what is the noise and goings on in the market around it."