ALTIUS REPORTS 2018 ROYALTY REVENUE ALTIUS REPORTS 2018 ROYALTY REVENUE OF $67M AND ADJUSTED EBITDA OF $53M
Altius Minerals Corp. had attributable royalty revenue (1) of $67.0-million ($1.55 per share) for the year ended Dec. 31, 2018. The prior financial year was an abbreviated eight month period related to a change of the Corporation's fiscal year end designed to better align its reporting with its royalty counterparties. Attributable royalty revenue for the quarter ended December 31, 2018 was $17.6 million ($0.41 per share), compared to $17.1 million ($0.40 per share) in Q3 2018.
Adjusted EBITDA(1) of $53.0 million ($1.23 per share) for the year represents a margin of approximately 80%. Q4 2018 EBITDA of $13.4 million ($0.31 per share) compares to $13.9 million ($0.32 per share) in Q3 2018.
Net earnings for the year were $1.9 million ($0.03 per share). A Q4 2018 loss of $12.4 million ($0.29 per share) includes non-cash impairment charges of $14.3 million on a pre tax basis ($0.28 per share after tax) relating primarily to the write-down of a pre-production stage royalty interest, goodwill and $3.5 million relating to the Genesee Royalty Limited Partnership's amended royalty calculation. Fourth quarter earnings also include a $4.1 million unrealized loss on fair value of derivatives and a $1.4 million share of loss in associates reflecting equity accounting for the Adventus Zinc Corporation ("Adventus") and Alderon Iron Ore Corp. ("Alderon") holdings. General and administrative costs in the quarter and year were adversely impacted by professional and advisory fees associated with acquisitions and increased corporate development activity.
Operational Overview and Outlook
Attributable royalty revenue per share increased for the 5th consecutive year, and has grown by seven times over that period. The value of the commodity and asset level diversity that has developed in the portfolio was also evident during the year. Commodity prices were mixed with lower base metal prices, particularly in the second half of the year, offset by stronger potash prices and higher iron ore quality differentials. Production volumes from most of our mine royalty exposures were higher, but with exceptions related to a labor disruption that lowered IOC production levels and continued production declines at 777 as it approaches ore exhaustion. Royalty revenue was also negatively impacted by Labrador Iron Ore Royalty Corporation withholding significant cash at the expense of dividend payouts during the second half of the year, which will now be distributed to shareholders in April 2019.
The Corporation has issued 2019 royalty revenue guidance of $67 - $72 million which is based upon operator guidance where provided, and recent trend extrapolation otherwise, and by using spot prices prevailing at the beginning of the year.
The past year was notable as one in which the Altius team brought strong focus to solving our most significant future portfolio management challenges. Specifically, we set out to proactively and strategically address the loss of copper and zinc revenue related to the pending closure of the 777 mine and the planned regulatory phase- out of electrical coal in Alberta by 2030.
We addressed the decline of 777 base metals revenue in part through the increase of our royalty interest on the Gunnison mine in Arizona (Excelsior Mining Corp.), which has begun construction. Subsequently, we also acquired a royalty on the advanced stage Curipamba project (Adventus and Salazar Resources Limited) and have noted the potential for expansion growth being signaled at Chapada in Brazil (Yamana Gold Inc.) that could lead to further growth in our copper stream. The Alberta electrical coal phase-out has begun to be addressed by the acquisition of a portfolio of development stage renewable energy royalties in the U.S. that has the potential to transform this part of our portfolio from short / medium term to ultra-long life. Having met these decline challenges, any future acquisition initiatives and, more particularly, the embedded capital cost free growth potential of the existing portfolio, will now become fully accretive as they occur.
Several other developments emerged during the year that also give us reason to believe that our leading growth record can be further extended. The potash market continued to surprise skeptics by displaying continued strong global demand growth and subdued mine supply. This resulted in higher prices and strong growth in production from our mine royalty portfolio, which has significant remaining capacity available for further production growth as recent expansions continue to ramp up. A fully funded, new mine construction announcement was made by Vale for an underground nickel-copper-cobalt mine at Voisey's Bay in Labrador. Teck Resources has signaled a possible new mine development at Cardinal River with further details and announcements expected this year. Alderon and Allegiance Coal Limited have also provided positive economic study results for Kami and Telkwa. Adventus is set to release a PEA for Curipamba early in the new year that will incorporate some of the world's highest grade exploration drilling results from programs completed in 2018.
Looking deeper into the Altius growth pipeline, the Project Generation business vended 25 exploration projects during 2018. These projects are now being advanced by third parties and are subject to underlying royalties in favor of Altius. In most cases, share payments have also been received that have market values that amount to more than the cost of generating the projects, meaning that the resulting long-term pipeline royalty additions are created at free or negative cost. In this regard, the Corporation's junior equities portfolio grew strongly during the year, particularly considering the relative weakness of the broader junior mining sector through most of 2018, ending the year with a market value of $54 million from $44 million at the end of 2017. This amount excludes the value of investments in Labrador Iron Ore Royalty Corporation and Lithium Royalty Corp that had market values of $84,718,000 and $8,400,000, respectively at year end.