Elemental Altus Royalties Receives $12m Payment from Ming Gold Stream Sale

• Elemental Altus to receive US$12.1M initial payment from Ming gold stream sale
• Total one-off payments of ~US$20M expected in 2024-2025 in addition to royalty revenue growth
• Received US$2.3M in Firefly Metals shares in Feb 2024, with US$9.8M in cash and equity due in Apr 2025
• Minimum total return of US$12.6M from Ming stream vs. US$11M acquisition cost in 2022
• Strong financial position with over US$60M in projected adjusted revenue and milestone payments in 2024-2025

About Elemental Altus Royalties Corp.

Elemental Altus Royalties Corp. (TSX-V: ELE, OTCQX: ELEMF) is a precious metals royalty company generating revenue from 10 producing royalties. The company has a diversified portfolio of pre-production and discovery stage assets, and is focused on acquiring uncapped royalties and streams over producing or near-production mines operated by established partners. Elemental Altus aims to build a global gold royalty company offering investors superior gold exposure with reduced risk and strong growth potential.

Substantial Payout from Ming Gold Stream

Elemental Altus announced it expects to receive an initial US$12.1 million in cash and equity resulting from its secured creditor claim against Rambler Metals and Mining Limited related to the company's Ming gold stream. This sizable payout contributes to approximately US$20 million in total one-off payments Elemental Altus anticipates receiving across its portfolio in 2024 and 2025. Notably, these milestone payments are incremental to the company's projected 2024 royalty revenue, which is expected to show material growth compared to 2023.

The initial Ming stream payout included US$2.3 million (A$3.5 million) in shares of Firefly Metals Ltd (ASX: FFM) received in February 2024. An additional US$9.8 million (A$15 million), split equally between cash and equity, is scheduled for April 2025. Including US$0.5 million in prior stream revenue, Elemental Altus expects a minimum total return of US$12.6 million from the Ming Stream - exceeding its original US$11 million acquisition cost in 2022. A further US$0.9 million has been held back pending final determinations, with any remaining balance also payable to Elemental Altus in cash.

Strengthening Financial Position

CEO Frederick Bell emphasized that the Ming stream outcome provides certainty going forward as well as significant funds to redeploy in the currently undervalued gold sector. He highlighted that the diversified nature of Elemental Altus' portfolio and the downside protection built into the stream agreement enabled the company to more than recoup its investment despite the original thesis not playing out as anticipated.

Looking ahead, Elemental Altus expects to receive over US$60 million in combined adjusted revenue and milestone payments over 2024 and 2025. With more than US$10 million in cash on hand and substantially lower costs compared to 2023, the company is in its strongest financial position at a time when funding to the mining sector is near cyclical lows.

Growth Outlook & Valuation

Elemental Altus plans to release its 2024 guidance shortly, which it expects to mark another consecutive record year. Higher revenue contributions are anticipated particularly from the Ballarat and Bonikro royalties, along with the start of production from the Diba project.

The company's focus on acquiring royalties and streams on producing or near-production mines provides investors with exposure to precious metals cash flows without the operational risks and capital requirements associated with direct mining investments. Elemental Altus' diversified asset base across multiple jurisdictions and counterparties further mitigates concentration risk.

With several potential re-rating catalysts on the horizon, including the receipt of significant milestone payments, an expanding revenue base, and new royalty and stream acquisitions, Elemental Altus offers a compelling value proposition for investors seeking precious metals exposure with strong upside potential.

Risks & Considerations

As a royalty and streaming company, Elemental Altus' financial performance is dependent on the operational and financial success of its mining partners. Any disruptions or underperformance at the underlying mines could negatively impact the company's revenue and cash flows.

Commodity price fluctuations, particularly in gold and silver, also directly influence Elemental Altus' top line and profitability. While the company is not responsible for capital or operating costs, lower metals prices reduce the revenue generated from its royalties and streams. Conversely, a rising precious metals price environment would provide a tailwind to financial results.

Elemental Altus' growth strategy entails continuously evaluating and acquiring new royalties and streams. The company faces competition from other royalty and streaming companies as well as mining operators for these deals. There is no assurance that Elemental Altus will be able to secure accretive transactions on favorable terms.

As with any mining-related investment, Elemental Altus is exposed to various risks including permitting, environmental regulations, geopolitical factors, and local community relations. Any of these issues at the mines underlying the company's interests could result in production delays or stoppages that would directly affect cash flows.

Conclusion

Elemental Altus Royalties Corp. offers investors an attractive option to gain exposure to precious metals through a diversified portfolio of cash-flowing and development-stage royalties and streams. With the Ming gold stream resolution providing a near-term liquidity infusion, Elemental Altus is well positioned to acquire additional royalties and streams in an environment of depressed valuations across the mining sector.

The company's experienced management team has a track record of sourcing accretive transactions and creating value for shareholders. As the existing portfolio continues to advance and with over US$60 million in forecast adjusted revenue and milestone payments in 2024-2025, Elemental Altus is poised to deliver significant returns to investors.

Elemental Altus currently trades at a discount to its larger royalty and streaming peers, presenting a potentially attractive entry point. However, investors should carefully consider the counterparty, commodity price, and jurisdictional risks inherent in the company's business model. As with any investment, a thorough analysis of one's risk tolerance and financial objectives is recommended prior to making an investment decision.