Release Date: November 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Elemental Altus Royalties Corp (ELEMF, Financial) reported a strong Q3 2024 with revenue up 32% compared to Q3 2023, reaching USD 4.8 million.
- The company achieved a record adjusted EBITDA of USD 3.7 million, marking a 70% increase from the previous year.
- Elemental Altus Royalties Corp (ELEMF) is in a net cash position for the first time in years, enhancing its financial stability.
- The acquisition of AlphaStream doubled the company's interest in several royalties, adding approximately USD 6 million in revenue for 2025 at no additional cost.
- The company has a robust pipeline of opportunities and is well-positioned to execute on new acquisitions without diluting shareholders, supported by a USD 50 million credit facility.
Negative Points
- The company reduced its gold equivalent ounce guidance for 2024 due to delays in Mali, impacting expected royalty revenue.
- There have been production delays at the Korali-Sud (formerly Diba) project, affecting the company's revenue projections for 2024.
- Despite increased revenue and EBITDA, the company has not yet achieved consistent profitability, with no profits to distribute to shareholders.
- The share price has not reflected the company's operational improvements, leading to shareholder frustration over perceived lack of value.
- Some assets in the development and exploration stages are not currently valued in the company's portfolio, potentially undervaluing the company's future growth potential.
Q & A Highlights
Q: Can you provide an update on the expected USD20 million in payments from the portfolio over 2024 and 2025?
A: We have already received over USD3 million from the Ming stream settlement and USD400,000 from the sale of Egyptian licenses. We expect significant payments next year, including USD1 million upon Diba's commercial production and USD10 million from the Ming stream settlement. Additionally, we anticipate USD1.9 million from Arizona Sonoran's royalty buydown.
Q: Are you still focused on paying down the remaining USD20 million on the revolver, and what is your capital allocation strategy moving forward?
A: We aim to become debt-free quickly while using the revolver as a revolving credit facility for transactions. We are building a cash reserve and maintaining high-interest savings accounts. The transaction pipeline is strong, focusing on third-party acquisitions and avoiding competitive auctions.
Q: As a long-term shareholder, I haven't seen value reflected in the share price. What will drive a re-rating of the shares?
A: We are at a pivotal point with lower G&A and higher revenue expected year-on-year, leading to increased cash flow margins. We are considering returns to shareholders and non-dilutive acquisitions. The growth in cash flow and strategic acquisitions should drive value.
Q: What changes have occurred since the merger with Altus, and how do they impact shareholder value?
A: Post-merger, we focused on monetizing the generation business, resulting in lower costs and higher revenue. Assets like Korali-Sud Diba are progressing faster with partners, and we expect significant revenue growth from these assets. The market may not fully value our exploration assets yet, but we are positioned to invest countercyclically.
Q: How do you plan to communicate progress and address shareholder concerns in future calls?
A: We aim to make our accounts understandable and communicate our business outlook clearly. Future calls will allow shareholders to track our progress against stated goals and provide transparency on successes and challenges. We encourage shareholders to reach out with questions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
