# Altius Minerals: Royalty Check - [Business Breakdowns, EP.243] Business Breakdowns · 2026-04-24 · 34 min · https://colossus.com/episode/altius-minerals-royalty-check/ ## Transcript Speaker 0 All right, Luke, it is great to have you back on Business Breakdowns. Today we are talking about Altius Minerals, which was a name I was unfamiliar with prior to our initial conversation and doing some research about it. It’s one of these fascinating names that is kind of in the niche category, I think, for investors, but it’s a really interesting business, and I’m excited to get into it today. Maybe we could just kick off with how you would describe it to those who aren’t familiar with it, similar to myself, and that can give us a kickoff to the conversation. Luke Bridgeman Thanks, Matt. Altius Minerals is a royalty company, and it’s a royalty company focused on base metals, which makes it a little different from other royalty companies, which tend to focus on precious metals or oil and gas. As well as doing base metals, it has also ventured into royalties on renewables, which makes it extremely different from other royalty companies. Speaker 0 What would you put into the category of base metals? I can kind of fill in the blanks on precious metals, but if there’s a description that you would give to it, or things that you would bucket into that category, that would be helpful as well. Luke Bridgeman It’s things like copper, which is obviously in demand in the energy transition; battery materials like nickel and lithium; and then minerals used for agriculture, like potash. It has iron ore, and it has some gold as well. Speaker 0 You mentioned it’s a royalty business with oil and gas and minerals. You see these businesses in these industries, but can you talk about how they actually fit into the capital-markets dynamics, why they exist, and what they represent? Just a little bit about the business model, which, again, I think is unique, and it speaks to the true finance angle of things and how people think about it from that side of the equation. ### How Mining Royalties Work Luke Bridgeman When we think about royalties, we often think about things like music royalties, so it’s a perpetual interest in a revenue stream. A more formal definition might be a passive interest in future cash flows from what will be an extractive operation in the future. I think what’s key here is we’re talking about something that really comes off the top line rather than the bottom line. So we’re getting a share of revenue rather than a share of profits, and that makes it more difficult to interfere with. When we’re talking about very long-dated assets or projects, the provider of the royalty can be fairly confident that whatever happens to markets, whatever happens to businesses, and whatever financing is required, nevertheless, they will continue to have a claim that will have some value in the future. Mines tend to be relatively long-lived assets, and therefore, having a simple structure like that, which is more difficult to interfere with, is important. It compensates for the geological risk that a miner is undertaking by taking that revenue share. But every royalty is different. Some royalties have costs taken out in terms of insurance, transport, or the cost of smelting, and some don’t. Some royalties are, in fact, streams, so it’s more of a contractual financing arrangement rather than an actual interest in land that could be registered. They come in all shapes and sizes, and I think one of the key features of Altius is that it has a huge amount of experience in terms of structuring and putting together these royalties so that you can maximize value into the future. Another way of approaching what a royalty is is to think about how they came about. When you think about the Canadian railways, they were actually funded by the sale by the Canadian government of mineral royalty interests on the land through which the railways would go to connect East and West. Those royalties still exist. Funnily enough, they are perpetual. They’re mostly to be found in a company called PrairieSky Royalty. ### Altius Builds Its Royalty Portfolio Altius’s royalties have come about in 2 ways. One, Altius simply acquired them from owners of mines or mining companies that needed to raise capital in order to fund development. But the other thing that Altius has done, and which makes it almost unique, is that it has a project-generation business. So it goes out, it has a team of geologists, and it’s real bootstrapping. They do the geological work, stake a claim, structure a royalty into that claim, and then, over time, they might sell that claim to another company, or they might list it. So they end up with a royalty and potentially an ownership interest in a company that is exploiting that mineral interest. Over time, they can hold onto or sell that equity interest, that ownership interest, but they will tend to hold onto the royalty for much longer. In the last mining cycle, Altius invested about $30 million in project-generation deals, at a rate of $2 million or $3 million a year. Small amounts of money. But it monetized $200 million from selling the equity proceeds from those while holding onto the associated royalties. So that’s how royalties come into being: for owners of mines to raise capital for a project; for a project-generation company like Altius to actually create the thing in the first place; or for governments to sell the mineral interests they have in land in order for other projects to be accomplished. Speaker 0 It’s a concept that really gets to the academic theory of finance and thinking about these extended periods of cash flows, to your point. You mentioned a lot of the interesting dynamics about it being at the top line versus at the bottom line and why you would consider different things here. I think you answered this in the last part of that answer, but in terms of where Altius is buying these royalties or entering into these contracts, is it usually in the buildout stage of a mine, where there’s still a lot of risk that exists? I’m just wondering where in the spectrum of a mine and its production royalties will typically be sold. You can imagine the price of that royalty will differ based on how much the mine is de-risked. Luke Bridgeman Once a mine is up and running, the owner of the mine is going to be reluctant to sell any sort of equity interest in that project. So it tends to be a lot earlier. Altius has that geological expertise, which means it’s comfortable transacting and structuring deals at a very early stage, often before mine development, for example. They come in all shapes and sizes, and Altius has acquired existing royalties from other owners as well. The very big theme of Altius is just countercyclicality. So when capital is scarce, there’s the opportunity to get involved and structure something that’s really interesting. Speaker 0 Can you tell me the origin story of Altius? I think there are other mineral companies that exist… Speaker 0 Or, excuse me, mineral royalty companies that exist. You could find them across industries. What is the backstory with Altius? Speaker 2 Despite being quite an international company today, with interests in mines in Canada, Brazil, Argentina, and even Mali in Africa, as well as more pre-production projects in other countries, Altius’s story really begins 29 years ago in a university dormitory room. A geology student called Brian Dalton and a few fellow students earned some money to fund their way through college by staking and then reselling projects. It IPO’d a few years later, in 1997, raising less than $1 million. The story since then has been one of deploying capital countercyclically, and it’s now a $2 billion company. Speaker 0 You make it sound awfully simple in terms of the way they approached it. I know that’s not the case. In terms of what they did to differentiate themselves, it sounds like they have geologists. I don’t know how much of a differentiator that actually is. That feels like it could or couldn’t be the thoughtful capital allocation, which seems incredibly important in this business. But what did they do to stand out from a peer group that existed or from anyone who might be competing over these same deals? ### Altius Wins Through Cycles Speaker 2 The key is to be countercyclical. Mining is inherently a cyclical business, and I think Altius’s success has been to deploy capital ahead of cycles and to harvest capital as those cycles peak. Way back, the uranium cycle in the first decade of this century was a key part of Altius’s development, which it successfully exited, selling its uranium exposure around 2008 and 2009. I think this is testament to the very strong management at Altius, its long-term approach, and its countercyclical mindset. It really sat on its hands until around 2013 or 2014, when it started looking for cash-flowing royalties and deployed into a few big deals in the middle of that decade, in 2015 and 2016. At that point, they were really the only game in town when it came to providing capital to mining projects after the supercycle had come to an end. Speaker 0 You touched on uranium exposure that they then sold. How have they approached the diversification of mineral exposure? You went through a long list at the beginning of this conversation, but what is the general thought process? Are they making a call on these cycles in some way or another based on their exposure? Speaker 2 They are first and foremost geologists and royalty experts, but they’re mineral agnostic. The aim is to invest at cyclical lows, when prices are low and capital is therefore too expensive for the developers and operators of these projects. Then, as the cycle turns, the projects tend to get developed when capital becomes available, and that’s when prices are higher. From a royalty point of view, that means Altius is benefiting not only from higher prices, but also from the greater likelihood of an expansion in the project size, brownfield opportunities, and all sorts of exciting things happening. The capital to make those things happen is provided by somebody else. Altius sits there owning the royalty, and the operator of the mine, or someone like that, is the one writing the check to fund the CapEx and see the project scope enlarged, or whatever happens. In terms of minerals, it was involved in nickel in the Voisey’s Bay project in Canada in the early days. I mentioned uranium. It got into thermal coal in Canada and potash. It has royalties over most of Nutrien’s and Mosaic’s Canadian potash assets, which represent 25% of global potash production, and these mines supply 90% of the potash used in the US. Those were royalties they acquired in 2014, and they have a remaining life of at least 50 years. Production has grown at about 2.5% annually over the last few decades. That’s potash supporting the world’s growing need for agriculture. There’s gold, there’s lithium, and then there’s also renewable energy, which we can come on to talk about. Speaker 0 One more question on geographic diversification. They’re everywhere. That also happens to do with where these minerals can be mined. When you think about their expansion abroad, is that a natural thing, in terms of working with companies that are generally based in regions they’re familiar with? You can obviously paint the picture of there being more risk once you move out into certain developing or emerging-market countries, and in terms of how the operations might work there. But how has that gone, and is it a very similar story to how they think about mineral exposure? Speaker 2 Because a royalty owner is a little more passive than a mining operator, I think they are more alert to political risk, for example, and to their ability to enforce this contractual interest, or this interest in land. So it does make it more likely that their royalties are going to be found in developed-world jurisdictions, starting in Canada and then going south from there. They do have a lithium royalty in Mali, which is hugely exciting, through a company they’ve recently acquired. But most of their royalties would tend to be in developed-world jurisdictions. There’s obviously diversification between jurisdictions within the Altius portfolio, and diversification also in terms of counterparties and minerals themselves. So diversification is a key feature of Altius and makes it a relatively attractive one-stop shop for investors who want simple exposure to mining and mining companies, but don’t really know where to begin. Speaker 0 To get to the renewable business, I also understand there’s a financing arm attached to this. Can you walk through what the strategy is in renewables and how it may differ from what they’ve historically done? ### The Royalty Model Goes Renewable Speaker 2 Generally, a royalty is an interest in land, and renewables are obviously to do with the sun and the wind, which are difficult to claim ownership of. Altius has been fairly innovative in devising the intellectual property to allow it to take some sort of contractual interest that is not an interest in land. It did this almost 10 years ago, and what it’s done is effectively turned itself into, or created, a financing product that is a little like a mezzanine product. It provides capital to renewable developers to fund the stage in their life cycle where they are assembling the land rights, permits, and contracts to put together a project, which they then go out and raise financing for. That earlier stage is something where there’s very little to show and it’s more difficult to finance. But because Altius is able to retain an interest in the project that is subsequently developed, it’s able to take a royalty interest in these pre-production projects. So now it has royalties over power-generation projects in the US totaling 2.9 gigawatts, with a further 1.7 gigawatts under construction and 14 gigawatts in development-stage projects. It did this in a way where it initially listed a business called Altius Renewable Royalties to bring in a little more capital, diversify its risk, and make sure it didn’t have too concentrated an exposure. Unlike mines, which eventually deplete, a renewable project theoretically lasts forever. It’s just another example of the contrarian and creative application of the royalty approach, reflecting Altius’s ability to exploit the need for capital when capital is scarce. Speaker 0 You mentioned they created another vehicle for the renewable financing. Was that a listed vehicle, like a separate security? Speaker 2 Yes. They floated a business called Altius Renewable Royalties. Altius retained a majority stake in that listed company, and then that company had a 50% stake in a joint venture with a private equity firm. It was that vehicle that ultimately provided the royalty. Speaker 0 To frame this business, I assume it’s similar in that the financing is provided up front, that initial financing would be taken out at some stage when the capital is gathered to build out construction, but they maintain the royalty. Is it similar to one of the earlier examples you described about the equity plus royalty, except in this case it’s essentially mezzanine plus royalty? Speaker 2 It’s similar. They don’t actually end up with an equity interest in the generation project. They only have the royalty itself. But there is an intermediate stage where they’ve provided the capital. The project doesn’t yet exist, so they will actually have a claim over a range of different projects. Royalties are then put in place until they’ve achieved some minimum IRR hurdle, and that’s what crystallizes things. Speaker 0 From an investor’s perspective, do you view that renewables business as drastically different from the remainder of what I would call the legacy traditional minerals business? Speaker 2 It’s less diversified. You are relying there on a single structure. But it has been hugely successful since its establishment. The listed vehicle has actually been taken private. Altius has found a partner to delist the company while Altius has held on to its own stake, in order to make sure that there is sufficient capital available to fund the growing pipeline of opportunities in front of it. So I think that’s a measure of the success it’s had. Speaker 0 I was wondering when we were talking about that previously listed vehicle, because it felt like there was something else there. But I think that may have finished the story for me. Just to transition into the business model, I think it’s fairly straightforward in my mind. Once we’re producing and getting that royalty, I think of this as essentially a volume-times-price equation. Both of those things can swing. But is that the right way to think about the business? Speaker 2 I think that’s fair. It's pretty simple from that point. Then, of course, if the wind turbine is replaced or the solar panels are succeeded by some new, more efficient technology, Altius would continue to have a royalty over those new facilities, so it is potentially forever. Speaker 0 At a high level today, if you look at Altius broadly, how do you think about the diversification across commodities, revenue streams, or whatever it might be? You have all of these different royalty streams—price times volume. Do you think about very extreme exposure in one category versus another? How would you simplify that in terms of the revenue exposure for Altius? Speaker 2 The company is conscious of the need for diversification, so it will bring in external capital in order to avoid excessive concentration simply because it has particularly attractive opportunities in front of it. It's been very good at maintaining its mineral diversification, most recently with the acquisition of a company which it actually seed-funded back in 2017–2018 as a very early strategic investor. This is a business called Lithium Royalty Corporation. At the end of last year, it acquired the rest of that company and delisted it at a great time in terms of the lithium price, which is now double what it was then. So again, great countercyclical investing. But in terms of diversification, commodities are cyclical and volatile, so if you're trying to be countercyclical, you should at least be diversifying away from commodities, jurisdictions, counterparties, or whatever. Speaker 0 Do they ever hedge commodity price exposure? Speaker 2 Not as far as I'm aware. Investors want the exposure to the commodity price. Speaker 0 That makes sense. The beauty of these businesses is that you don't have the heavy operating expenses associated with the mine itself. What goes into overhead expenses, or what gets between revenue and profit or earnings at the end of the day? What are the major expenses that actually exist in Altius? Speaker 2 That's a great point, because at the mine level, somebody else is writing the checks, both for CapEx and OpEx. So there really is a free ride, and all you're left with is the embedded optionality from these royalties which you've paid for. These mine lives are very long, so the value of that optionality is very high. In terms of Altius itself, it has a headcount of just 17 people. Half of those are in finance and administration, and half of them are technical, which would include the 5-person project generation team. It's a pretty lean operation. We're not paying for too many salaries. Speaker 0 It is truly a beautiful business model, particularly once you have some scale to it in terms of what can be done. It doesn't make it easy, but it is a beautiful business model. On capital allocation and cash flow, you've referenced how thoughtful they seem to be about not just what they acquire and when they acquire it, but what they monetize and when they monetize it. In terms of shareholders, do they step in with buybacks, dividends, or anything along those lines? Is that a piece of the equation as well when it comes to capital allocation? What is the history there in terms of their framework for thinking about acquiring new assets versus buying back shares at moments in time? ### Capital Allocation Stays Opportunistic Speaker 2 It might be worth just saying a few words about the founder. I mentioned Brian Dalton founding the business 29 years ago in his college dormitory. He remains the chief executive. He's 53 years old today and just signed a new 5-year contract. He is key to the business and owns at least 2% of the equity. He's based in Newfoundland, which is as far from Toronto as it is close to London, give or take. So that's really a sign of the independent thinking which Brian brings with him and which defines Altius. Brian is a geologist, a very long-term thinker, has real skin in the game, and has demonstrated an innovative approach to deploying capital and a real countercyclical mindset. Over the history of the company, it has issued equity to fund certain acquisitions. It's also bought back shares when they are cheap. It's had quite a lot of debt at certain moments and less debt at other moments. It's currently net cash, having sold a couple of very large equity interests which arose out of the project generation business. There isn't a rigid capital allocation framework. This is really a management team which has earned the right to take those decisions and to do that in an intelligent and countercyclical way. Speaker 0 In terms of the buybacks, was there any reference to what made them decide? Obviously, there's some valuation or opportunity relative to what's available in the market and why it might be accretive. But did they reference anything—price-to-book or any type of valuation metric—that would make them consider the buyback opportunity relative to other investments in the marketplace? Speaker 2 When they've done buybacks, they've talked about being at a discount to net asset value. I think what's really in their head is knowledge of the embedded optionality in the portfolio which will materialize in the future. Speaker 0 And your point on debt—I mean, royalty streams are very advantageous for raising debt capital because of the visibility and why a credit investor would love to lend against those. You mentioned it's net cash today. When they're seeing those debt levels rise, is it typically associated with acquisitions, or is there anything else they use debt for? I think sometimes it can be really tempting to bring in leverage to a business where creditors are happy to provide that leverage. Speaker 2 It's been opportunistic to fund acquisitions. Debt is not a way simply to juice returns. Given the position Altius has as the first port of call for anyone who's looking to raise royalty capital, they need to be opportunistic to be able to take advantage of these incredible opportunities as they arise. Speaker 0 And does the renewable financing business—I guess, the way you described having the publicly listed entity for a period of time, and having that vehicle to attract capital to finance the business—do anything else to the balance sheet or cash flows that is unique, in terms of tying up a lot of cash maybe because it's earlier-stage or anything along those lines, which changes the profile of the business in any material way? Speaker 2 What's quite interesting is that over the last couple of years, Altius has monetized its equity interest in a gold project in Nevada. It's pre-development, but it's owned by AngloGold Ashanti. This is an interest which it originally acquired in its project generation business for $400,000, and it's recently sold part of its exposure to Franco-Nevada for $250 million while retaining a significant royalty interest for itself. It's also sold a separate royalty to Triple Flag, which is another precious metals royalty company, for about $200 million. That's a phenomenal return on the original investment while retaining continuing exposure to it and really strengthening its balance sheet. So the risk of future dilution from other opportunities to deploy capital is reduced. It's a really good example of the project generation business working, and the royalties have not yet even started paying out. So that's very exciting. Speaker 0 The fact that they retained an interest after realizing those sales at those prices makes it hurt a little bit more for me. But I'm sure as an investor, it's quite interesting and really speaks to the thesis behind that opportunity. Really interesting—something I need to read a bit more about after our conversation. When you think about risks with this business, you're going to have cyclicality in commodity prices, which we've talked about. Capital allocation feels like the most important thing. Is there anything else you would point to in terms of risks that you think about as an investor? ### Altius Faces Key Risks Speaker 2 You might add expropriation to that list you just gave, but I think that's mitigated by being mainly in developed-world jurisdictions, so it's less of a risk there than we've seen with some mining companies. I think for me, one of the biggest risks is that it gets bid for by a precious metals royalty company. Altius trades at around 1.4 times net asset value, and you can justify that premium because of the embedded optionality in projects which are visible but are not yet producing. Precious metals royalty companies trade at over 2 times net asset value, so they have a much lower cost of capital. They might take advantage of that to potentially acquire Altius. Remember, Altius has some gold exposure. If they could acquire Altius and apply their own multiple to it, then that would be an opportunity for them. And that would be a risk as far as I'm concerned, because it would be a real pity to see this countercyclical value creator acquired by someone who's just playing a dollar-cost-averaging game. Speaker 0 What explains the premium for the precious metals businesses in terms of the 2 times NAV? Speaker 2 It's a bit of a head-scratcher. I think if you were to ask them, they would justify it by saying that royalties always end up having a much longer life and a greater scope than is reflected in the net asset value. But they are also a means for investors to get exposure to the underlying precious metal. Speaker 0 That also makes sense. Fascinating. A very interesting business, and one that, from any angle we took, we could talk about for extremely extended periods of time. But I think you've done a great job covering everything. When we close up these conversations, we always like to hit on the lessons that you could potentially take away and apply elsewhere. What would you say about Altius that stands out in terms of applicable lessons that you might be able to use elsewhere? ### Lessons From A Countercyclical Investor Speaker 2 Strong managers like Brian Dalton are difficult to come across—almost unique. Luke Bridgeman Number two, taking a long-term approach, as they have and continue to do, is really important. I think that surfaces opportunities which other people wouldn't be able to surface. The project-generation business exemplifies that. Counter-cyclicality is written throughout Altius's playbook, and that's really what it's all about. Embedded optionality: when you have exposure to very long-lived mining projects, there is so much which can happen in the future. The company talks about tripling its royalty revenue from about $60 million last year to $200 million by 2030, on the basis of projects which are already in hand. And then beyond that, there are even bigger projects, so there is a lot of upside there. Altius is also an example of the alpha that exists between silos, between asset classes. It's neither a mining company nor a conglomerate. It's one of a kind and therefore overlooked by a lot of investors, maybe not so well understood. And that's a real opportunity for anyone who can do the work. Those would be the key points to hit on. Speaker 0 I love it, and particularly that last lesson, where this doesn't fit cleanly into a specific bucket. It combines a lot of different aspects. But at the end of the day, I go back to the academic approach to investing and thinking about this very clearly in terms of what a royalty represents, embedded optionality, and a lot of these concepts that you see pretty cleanly in this one. So thank you, Luke. It has been a fascinating conversation again. I really appreciate you joining us. Luke Bridgeman It's been a treat. Thanks, Matt.