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ALTUS ST
A unique hybrid ‘royalty generator’
MINING | ALTUS STRATEGIES
TRATEGIES
’ model in the African mining space
“We’re neither a pure play royalty company nor a pure explorer,” explains chief executive and co-founder of Altus Strategies Steve Poulton. “We believe we are positioning our shareholders at the epicentre of the sweet spot in the resources sector. On the exploration side, tremendous returns on capital can be generated by making an economic discovery, while at the mining stage a royalty can deliver an almost perpetual revenue stream off the underlying asset, without assuming the project’s operational risks. That’s what we do at Altus.” The London and Toronto-listed junior stakes ground across the African continent, makes mineral discoveries, partners with leading project developers and gets paid along the way, all while retaining future royalty interest. “We exit the asset, monetise it for our shareholders and retain the royalty interest at the back end. This keeps us nimble and constantly growing,” Poulton says. “It takes a while to develop a portfolio via this model, but the value creation and optionality can be huge. It requires certain skills from management to simultaneously advance and monetise multiple projects in different jurisdictions, as well as shareholders who understand that we are not looking to make a ‘quick buck’. Over time, we believe our model will generate superior returns for our shareholders, for considerably less risk.”
Altus’ high quality shareholder
in Altus and appointed their
base provides a strong
CEO Karim Nasr to the board
endorsement of its unique
as a non-executive director
hybrid business model. First
with the right to appoint
and foremost, the board owns a
another non-executive should
combined 20% of the company.
they wish. Altus has also been
This inside ownership has
backed by Sprott since 2012 and
imbued an additional layer of
has several other high profile
confidence in the management
institutional and high net worth
team among institutional
investors which, together with
backers.
the board, own close to 80% of
Enter La Mancha
the share register.
In February 2020, world-
“Why did La Mancha take
renowned resources investor La
that strategic position in
Mancha acquired a 35% stake
our company? Because their
MINING | ALTUS STRATEGIES
investment strategy dovetails
exposure to a growing,
partnerships and new royalty
elegantly with our business
diversified and gold-weighted
transactions.
model. They are exceptionally
portfolio of discovery stage
strong believers in the African
assets in Africa. Our royalty
Altus chooses to focus
mining sector, having large
portfolio is now also growing
on African opportunities
equity positions in TSX-listed
as we are monetising our
primarily due to the sheer
gold producers Endeavour
assets. It really is a perfect
size of the continent and
Mining and Golden Star
meeting of minds.”
its underexplored nature
Resources.
compared to other established The chief executive declares
mining jurisdictions.
“They are also keen to have
that with La Mancha’s blessing,
Related to its size and lack of
exposure to the discovery
Altus has plans to expand its
exploration, average depths
phase, as well as royalty
portfolio into new jurisdictions
of discovery are a key factor
opportunities,” Poulton
on the African continent
for the company. Whereas in
asserts. “Altus provides
with new projects, new
Canada, average discovery
MINING | ALTUS STRATEGIES
depths are down at 200 metres,
project portfolio contained
in Africa they average just
up to 10 royalty transactions
nine metres (outside of South
and Poulton expects to see the
Africa), according to Poulton.
organic royalty portfolio grow dramatically in the next two to
“All the discoveries Altus has
three years as the cycle of the
made on the continent have
market continues to turn for
been at surface. That means
the better.
we can move quickly from concept to discovery and - if
In addition, the company is
the asset is of merit - on to
expecting to add to the organic
monetisation.
royalties portfolio with some non-organic transactions,
“Of course, sometimes along
which would either be
the way it doesn’t work and
acquired from third parties
you have to make a decision
or Altus could provide capital
to cut your losses in order to
to companies to create new
not waste your shareholders
royalty agreements.
money. This feature of being able to fold and walk away at
“Taking a longer-term view
the earliest opportunity, is a
over four to five years, I’d be
real strength of our model.”
very surprised if our royalty
Cash generating royalties
portfolio was not substantially larger, was not substantially cash paying and was not more
Since striking its first royalty
than 50% backed in value by
deal almost a decade ago, Altus
royalties that we’d acquired
has been growing its portfolio
versus those we’d written.”
of royalties and milestone payment agreements for
By the same token, Altus
discoveries made by the
will look to maintain an
company across Africa. At
approximate 50:50 split
the end of Q4 2020, Altus’
between royalties and
discoveries on its project portfolio by remaining focused in the African exploration space over the coming years. The company also intends to continue to have an approximate 70% weighting of its portfolio towards gold, in order to offer maximum exposure to the thriving precious metals sector. “While the royalty companies do quite well and get a good mark up on their prices based on their revenue streams, they simply don’t have exposure to a drill bit discovery that can turn
A LT U S ST RATE G I ES AT A G L A N C E
STOCK TICKER
AIM:ALS, TSXV:ALTS, OTCQX:ALTUF
MARKET CAPITALISATION US$53.5 million (as of December 22, 2020)
j
MINING | ALTUS STRATEGIES
ALTUS STRATEGIES ASSISTS CAMEROON COVID-19 RELIEF CARAVAN
a relatively low value asset into
20,000 metres of drilling taking
“Tabakorole already has
a quarter of a billion dollar
place at the assets within a
approximately 1 million
one. That is the interesting
three-month period.
ounces (Moz) in resource and
part of the Altus model that
further drilling is already
the royalty companies do not
Two of the Malian assets,
underway. Meanwhile,
share,” Poulton explains.
named Lakanfla and
Lakanfla is located just five
Tabakorole, are being
or six km from the pits of the
developed in conjunction
Sadiola gold mine, which has
with the firm’s ASX-listed joint
historically produced well over
venture (JV) partner Marvel
10 Moz of gold. Drilling has
Diving deeper into the
Gold, while the third project is
been completed at Lakanfla
exploration side of the
called Diba and is 100% owned
and we are awaiting assay
business, Altus is currently
by Altus.
results.”
Current exploration programmes
advancing three gold projects in Mali, with approximately
MINING | ALTUS STRATEGIES
In addition, the company is undertaking up to 10,000 metres of drilling at the Diba project, with around two thirds focusing on targets within the wider licence area and a third within the existing resource, which currently hosts 400,000 ounces of gold. Altus announced an updated preliminary economic assessment (PEA) for the Diba project in November. Using a gold price of US$1,800 per ounce, the PEA proposes that Diba will deliver around $140 million in NPV after tax using a 10% discount rate. This figure is approximately three times the company’s current market cap. “We have sold two gold projects in Mali to TSXV-listed Desert Gold and two gold projects in Côte d’Ivoire to TSXV-listed Stellar Africa. We also have a JV with Resolute Mining in Mali,” says Poulton.
ALTUS STRATEGIES CHIEF EXECUTIVE STEVE POULTON
Steve Poulton, Altus Strategies chief executive
“Taking a longerterm view over four to five years, I’d be very surprised if our portfolio was not substantially larger, was not substantially cash paying and was not more than 50% backed by royalties in number that we’d acquired versus that we’d written” Steve Poulton, Altus Strategies chief executive
Elsewhere on the continent,
10 million shares to Altus
Altus has 100%-owned gold
in respect of its former
and copper discoveries in
bauxite JV in Cameroon.
Northern Ethiopia and copper
Canyon is rapidly advancing
and silver discoveries in
Cameroon’s world-class Minim
central Morocco, amongst
Martap bauxite deposit.
other projects and royalty
Poulton describes the firm’s
agreements in the likes
management of multiple
of Liberia and Cameroon,
assets, partners and royalty
where the company has made
transactions in multiple
bauxite, gold and iron ore
jurisdictions across Africa
discoveries.
as ‘a distinct blend of art and science’.
Shareholders of ASX-listed Canyon Resources recently
“We are going to grow our
agreed the issue of a further
portfolio in Africa into new
MINING | ALTUS STRATEGIES
countries with a primary focus
high quality share registry,
in commodities like copper.
The best of both worlds
Having diversification is a real
With a rapidly expanding
investors in the mining
value add to our shareholders.
portfolio in the most
space. “In particular, with
Geopolitical and commodity
prospective region in the world La Mancha’s backing we
risks are a real and present
for new discoveries and a self-
have the opportunity to do
threat to all companies active
sustaining royalty generator
more far-reaching deals and
in the resources sector, so it’s
model, Altus is demonstrating
projects. That is all part and
good to know that with Altus,
that it can successfully
parcel of our current decision
you’re not exposed too heavily
combine the two sweet spots
making process, in terms
to any one country or any one
in the mining sector.
of our allocation of human
on the gold sector, but also
commodity.”
which includes some of the biggest institutional
and financial resources to Further validation of this
take Altus to the next level,”
model is provided by Altus’
Poulton concludes.
Published by Anderson Murray Media Ltd
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