Altius Minerals (Toronto: ALS) reported revenue up 9% in the first quarter from a year ago, despite a drop in sales. Net earnings jumped 75% from last year, excluding special items, reports Adrian Day, resources sector expert and editor of Global Analyst — and a participant in The MoneyShow Orlando Conference on June 10-12. Learn more here.
Strong base metals prices, offset by an unplanned interruption of production at Chapada, saw revenues for the quarter up 12% from last year. Base metals account for 43% of the company’s royalty revenue. It received its first (nominal) payment from a new mine, Gunnison.
Potash, the second largest revenue source, was down on a year ago, but with strong demand and price increases in recent quarter, continued the improving trend, up 33% on the prior quarter.
Most analysts expect increased demand to continue, and Altius will see higher price realization on sales in coming months. Altius’ CEO Brian Dalton said he believes the market is undervaluing its potash assets.
In the resource sector, one must be a contrarian — and Dalton has a reputation as a contrarian. He believes that we are now past the point in the cycle for outright buying some, though there will always be opportunities to add capital for development, or perhaps specialty minerals.
Altius did an excellent job accumulating prospective land during the long bear market that followed 2012 and has been selling and optioning the last over the past couple of years.
In broad terms, the company wants to use its cash flow to reduce leverage; the time to add leverage is at the bottom. But he added that he was not “maniacal” about going to zero debt; the current debt “does not threaten us at all.”
Altius continues to work with junior companies in the project generation business, which is run separately and funds itself. Most of the assets in this business are gold, giving Altius exposure to that metal. The company has done a great job generating gains as well as increasing the value of the project generation portfolio.
The company ended the quarter with just under $20 million in cash, after repurchasing shares for $7.4 million. The miss on sales in first quarter saw the stock drop, after a very strong spurt. Altius is for us a core holding; if you do not own any, you can buy here.