Investing in Elemental Altus Royalties - A Unique Opportunity in the Royalty Space

• Elemental Altus Royalties was formed in August 2022 through the merger of Elemental Royalties and Altus Strategies.
• The company has a strong portfolio of 90 royalties and is focused on royalty acquisition and generation.
• Key royalties include Karlawinda, Casserones, and Wahgnion which generate significant cashflow for the company.
• The company sees significant upside potential through exploration and resource growth on its royalty land packages.

Elemental Altus Royalties offers investors a unique opportunity within the royalty and streaming space. Formed in August 2022 through the merger of Elemental Royalties and Altus Strategies, the company has quickly established itself as a leading royalty company. With peer-leading revenue and a highly attractive valuation, Elemental Altus provides investors commodity exposure, exploration upside and an exceptional growth outlook.

Revenue Generation Sets Elemental Altus Apart

With around $20 million in revenue forecast for 2023, Elemental Altus generates more revenue than royalty peers with similar market capitalizations. This substantial cash flow comes from a diversified portfolio of over 80 royalties across 11 producing mines and 7 countries. The revenue base is heavily weighted towards gold but also includes exposure to copper and other commodities.

A key aspect that sets Elemental Altus Royalties apart is its focus on acquiring royalties on producing mines. Since its inception in 2017, the company has systematically acquired royalties on mines like Karlawinda, Mercedes and Casserones. The producing royalties provide immediate cash flow along with exploration upside and extension potential. For investors, this generates steadier returns compared to traditional exploration companies while still offering resource growth.

Attractive Valuation Creates Opportunity

Thanks to the significant revenue generation, Elemental Altus trades at a deep discount to royalty peers on typical valuation metrics. With a market capitalization of around $160 million, the stock trades at under 10x price to revenue. This compares very favorably to larger royalty companies trading at multiples above 15-20x. The discounted valuation presents a compelling opportunity for investors.

Additionally, the company trades at only about 1x net asset value (NAV). NAV represents the value of its royalty portfolio if sold individually. The low NAV multiple indicates investors can gain royalty exposure well below the cost of acquiring the royalties outright. As Elemental Altus continues to build out its portfolio, the NAV should expand over time.

Leveraging Project Generation for Further Growth

Beyond royalty acquisition, Elemental Altus Royalties benefits tremendously from Altus' renowned project generation expertise. With a vast footprint in Africa, the company actively generates exploration projects and partners with mining companies to advance them, retaining an attractive royalty. This royalty generation provides a pipeline of future cash-flowing royalties and significant blue-sky potential. All good news for its investors.

For instance, the company holds a 2% royalty on a project in Mali which hosts 670,000 ounces of gold resources. As the project advances towards production, Elemental Altus stands to benefit without any capital outlay. The royalty generation arm gives Elemental Altus an added growth driver compared to conventional royalty companies.

The Path Forward

Thanks to its initial royalty portfolio, Elemental Altus already generates substantial revenue that covers costs and funds further investments. Additionally, the company has over $17 million in cash along with an undrawn $30 million credit facility. This enviable financial position allows management to focus aggressively on new royalty acquisitions and project generation.

For investors, Elemental Altus offers an optimal mix of commodity exposure, free cash flow from producing royalties and significant upside from exploration and resource growth. The company's attractive valuation, strong existing portfolio and dual-pronged growth drivers set it apart in the royalty space. As Elemental Altus continues executing, investors should see steady royalty portfolio expansion translating to increasing cash flow, higher NAV and share price appreciation over time.

Elemental Altus Royalties presents a unique royalty investment opportunity.