Altius Minerals invests when capital is scarce and harvests when cycles peak, which Luke Bridgeman calls its central theme of countercyclicality.
Altius's royalties over Nutrien's and Mosaic's Canadian potash assets supply 90% of US potash and have at least 50 years of remaining life.
Altius trades at about 1.4 times net asset value while precious metals royalty companies trade above 2 times, which makes Bridgeman's main risk a takeover by one of them.
Altius Minerals Buys Royalties When Mining Capital Is Scarce
Altius Minerals is a royalty company that buys and builds royalties on base metals and renewables when capital is scarce, then harvests as cycles peak. Revenue royalties give commodity exposure without operating the mine, and a 17-person team with a founder who owns real equity keeps it lean. It grew from a university dormitory venture to a $2bn company, and investors overlook it because it is neither a miner nor a conglomerate.
Takeaways
Altius invests against the cycle. It deploys capital when miners cannot raise it and harvests as cycles peak. It exited uranium around 2008 and 2009, waited until 2013 and 2014, then did large deals in 2015 and 2016. It bought out Lithium Royalty Corporation at a low, and lithium is now double.
Revenue royalties give simple, durable commodity exposure. A royalty takes a share of revenue, not profit, so owners find it hard to interfere with. It compensates for the geological risk a miner carries. Once royalties produce, economics come down to volume times price, and Altius does not hedge because investors want the exposure.
Project generation creates royalties cheaply. Altius also buys royalties from owners needing capital. Geologists additionally stake claims, structure royalties, then sell or list the claims while keeping the royalty. Up to 2011 it invested about $30m and monetized $200m of equity. A Nevada gold project cost $400,000 and part sold for $250m.
Potash royalties anchor a developed-world portfolio. Royalties over most of Nutrien's and Mosaic's Canadian potash assets, acquired in 2014, cover 25% of global potash production and 90% of US supply. Remaining life is at least 50 years. Most royalties sit in developed jurisdictions, which limits expropriation risk.
Renewables royalties extend the model to power projects. Almost ten years ago Altius devised contractual interests, a bit like mezzanine financing for developers. They cover 2.9 gigawatts of US generation, with 1.7 under construction and 14 in development. The listed vehicle was taken private with a partner, and Altius kept its stake.
A tiny team led by an aligned founder. Altius has 17 employees, half in finance and administration and half technical, including five in project generation. Founder Brian Dalton, 53, has signed a new five-year contract and owns at least 2%. It buys back shares below net asset value and is net cash.
Main risk and growth target
The main risk is a takeover by a precious metals royalty company. Altius trades at about 1.4 times net asset value while such companies trade above 2 times, which gives them a lower cost of capital.
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On this episode 2
Show 1
Management talks about tripling royalty revenue from about $60m last year to $200m by 2030.