David Baker, CFO of Elemental Altus Royalties (TSX.V:ELE – OTCQX:ELEMF), joins me to review their operational and financial results from Q2 2024, and some key royalty project updates at Diba, Karlawinda, Bonikro, Wahgnion, Caserones, and Cactus. We also discuss where the growth will be coming from within their existing royalties portfolio as well as the types of future acquisitions the team is working on.
We start off diving into the key metrics and takeaways from the second quarter financials:
- Royalty revenue of US$3.8 million and adjusted revenue of US$5.2 million, up 10% on Q2 2023
- Attributable Gold Equivalent Ounces (“GEOs”) of 2,211 ounces, down 7% on Q2 2023
- Operating Cash Flow plus Caserones dividends of US$1.4 million, down 33% on Q2 2023 primarily due to working capital movements
- Adjusted EBITDA of US$3.4 million, up 3% on Q2 2023
- Repayment of a further $5.0 million under the credit facility and extension of the maturity date to June 2027
- Cash balance of US$6.5 million and outstanding debt of US$20.0 million as at June 30, 2024
- Elemental Altus is on track to meet the lower end of guidance of 10,000 to 11,700 GEOs and the higher end of expected revenue of US$20.0 to US$23.3 million. Production remains weighted to H2 2024, particularly for the new Diba royalty, while the lower relative performance of the copper price to gold drives the increased difference between GEOs and revenue
- The Company intends to continue reducing the amount drawn on the credit facility, reducing interest costs while maintaining flexibility for new acquisitions
We then transition over to discussing some of the key royalty projects and updates from royalty partners, and the related future production and revenue growth expected from various projects like Diba, Karlawinda, and Bonikro. Next we discussed the passing of the baton from Lilium Mining over to the nationalized operations by Burkina Faso at Wahgnion, but that essentially it’s the same operations team it has been since Teranga and Endeavour Mining, and that the royalties have and will keep coming in for years to come. We spent some time with larger copper royalty on the Caserones project, noting that the brief labor dispute earlier this month did not really affect production, and that Lundin Mining has even increased guidance on production. Then we looked at the larger resources and mine plan released recently from Arizona Sonoran on their Cactus project, and how this means a slightly deferred but much larger production profile over the portion of the project that Elemental Altus holds a royalty over.
Wrapping up we discussed the pipeline of single royalty deals and larger portfolio acquisitions that the company is reviewing, and their capacity to source more deals between their credit facilities, cash on hand, incoming cashflows, and other larger one-off payments expected to keep coming in.
If you have any follow up questions for David regarding Elemental Altus Royalties, then please email me at Shad@kereport.com.
- In full disclosure, Shad is a shareholder of Elemental Altus Royalties at the time of this recording.
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