Chad Wells - VP, Corporate Development Brian Dalton - CEO Ben Lewis - CFO

Carey MacRury - TD Securities

Thank you, operator. Good morning, everyone, and welcome to our regular quarterly conference call to present our fiscal 2017 second quarter financial results.

This event is being webcast live and you will be able to access a replay of this call in addition to a presentation highlighting the results of the quarter on our corporate website. Participating on the call today are Brian Dalton, President and CEO; Ben Lewis, CFO, while myself; Lawrence Winter, VP Exploration; and Stephanie Hussey, Altius's Director of Finance, are also in the room.

Brian will open with an overview of the quarter, followed by Ben with a general financial update. After management completes their opening remarks, we will open the line for a Q&A session.

I will now turn the call over to Brian. Thank you.

Thank you, Chad. If there were little bit of levity and ask the listeners does anyone else remember last December and the outlook for the sector and it's participants, I am pretty sure the whole industry was supposed to be wiped off the map by now.

Anyway simplicity is alive and well. We had a solid quarter too with royalty revenue improving to $10 million on the strength of full period integration of Chapada and increased prices for base metals and met coal.

Our royalties typically lag production and failed by the mine operators and so we expect the second half of the year to even more fully reflect these increased prices. Copper and zinc have rallied strongly as supply and demand forces and sentiment turns positive.

We're still well below incentive prices for both of these metals in our opinion however. Potash continues as a laggard, but we still like what is happening there, is one of the main effects of lower prices have been portfolio optimization by the major operators.

Production plans are shifting from higher cost operations on to the lower-cost mines such as Rocanville, where we have our largest potash royalty exposure. This will serve us well long term as prices eventually recover and then multiply by higher attributable portfolio volume: Met coal been a particularly pleasant surprise with the Q1 benchmark price settling recently at more than 2.5 times the amount we use for modeling purposes at the beginning of the financial year, seven months ago.

For a better grasp of all the sensitivity to commodity prices, I encourage you to have a look at the presentation available with the webcast information posted on our website. Our thermal coal royalties in Alberta have not [fared] as well, with intensifying government policy pressures to curtail the lifespan of these operations by 2030.

We were encouraged however by the recent offer of compensation from the Alberta Government to those utilities who made prior faith investments in the coal sector in expectation of returns beyond 2030. This was cited as a demonstration of Alberta's continuing status as a [fared] and favorable investment jurisdiction.

We are optimistic that similar acknowledgment will therefore be made to the other impacted sector participants who have made good faith investment and of course we've included ourselves there. We look forward to advancing discussions with the Alberta Government in the New Year.

Turning now to our project generation business, we're happy to report that the positive sentiment shift towards exploration has continued and deal flow around the large portfolio of projects we assembled during the bear market continues to emerge. In September, we've banded out an exciting new gold discovery at Wilding Lake in Central Newfoundland.

We converted our exploration lands into a 19.9% shareholding in newly listed Northwest Arm Capital soon to be renamed [Amta] Gold while retaining a 2% royalty. Subsequent to quarter end, we sold a gold project in Chile [1200] Australia Stock Exchange Junior EMU for 15 million shares and a royalty.

We also restructured a conventional exploration option agreement for a Telkwa coal project for further equity and cash payment and royalty. Finally just announced transfer of a suite of 10 Irish and Eastern Canadian zinc exploration projects into Adventus Zinc, which is seeking to go public early in the New Year, leaving Altius as a significant equity and royalty holder.

We continue to advance dozens of additional projects located around the world towards further equity and royalty conversion type agreements. Now I'll turn over to Ben Lewis to discuss the quarter in detail.

Thank you, Brian. Altius reported attributable revenue of $10 million or $0.23 per share and adjusted EBITDA of $6.8 million or $0.16 per share for the second quarter.

As Brian noted, this revenue growth was caused in the quarter but the inclusion of Chapada for the current period as well as better met coal and base metal prices, continued lower potash prices, mine sequencing on the thermal coal royalties and the lack of royalty payment from Voisey's Bay partially offset some of this revenue growth. I encourage you to refer -- encourage you to review our quarterly MD&A for additional analysis on each of our royalties including tonnage and realized price information.

Net earnings attributable to common shareholders was $341,000 and approximately $0.01 per share for the three months ended October 31, compared to a net loss of $1.1 million or $0.03 per share for the same period last year. The previous year loss included losses from associates which negatively affected results with no such one-off items during the current period.

Since the acquisition of Chapada in early May we've made principle repayments of $18.3 million under our new term and revolving debt facilities. The repayments were funded from receipt of proceeds from sale of junior exploration equities as well as from operating cash flows.

As of October 31, the corporation's net debt position has been reduced to $39 million or less than one year of annual revenue. Our net debt position consists of total remaining debt of $86.1 million, less cash on hand of $13 million and public equity holdings of $33.9 million.

I would also like to point out that as of today with continued market value appreciation in our junior equities, additional share receipts from the sale of mineral properties and further cash proceeds from our portfolio of royalties, our net debt position today is well below $25 million. I'll now hand it back to Chad to open it up for questions.

Thank you, Ben. Operator that concludes our prepared overview and we'll be happy to open the line for questions.

Thank you.

Can you hear me?

Brian?

Yes.

Good morning. Just a couple questions on the zinc IPO, in terms of the timing of the prospectus, are we expecting that in the next couple weeks or is that something we'll see in early 2017?

Before Christmas.

Okay. And then in terms of you mentioned you'll be part of the seed capital for that, is there an order of magnitude that you're thinking on that or can you talk to this point from Altius's perspective?

$1 million to $2 million that range.

Okay. And then finally on the coal side, clearly the government settled with the power producers is in -- you have claim out there, is this part of the same process or is this a different process?

It's essentially the same process, all that’s ever been said by the Alberta Government on the matter was that yes, this is a policy change. We understand that it will have collateral damage and negatively impact some players and that they want to demonstrate that Alberta remains a [fare] and attractive place for investments that it will deal with those who are impacted.

It's been vague, but also broad ranging even including communities and what not. So it's hard to really answer that question more precisely than that, but we're clearly an impacted party and we're making our case more optimistic that it will be well heard.

Okay. Great.

Thank you very much.

Thank you.

Good morning. I just wanted to get your -- what kind of forecast do you have for earnings in 2017 and beyond?

Sorry for earnings, do you mean exploration agreement.

No, as far as earnings per share, what kind of -- you can expect the growth in earnings to continue since I know it's hard to know exactly, but that’s what forecast or about is your best guess for revenue for 2017 and several years up to five years ahead?

Well in the next year we see, generally we see the amount of materials produced at the mines we're receiving royalties from the look -- for the most part relatively stable. We've obviously seen some big price increases over the past six or eight months.

The way our royalties often work is that there is a lag between when the mine produces the metal, sells the metal and then it further lags when they calculate incentives or payment. So the royalty revenues we reported this quarter for example haven’t actually reflected a whole lot of the increased prices.

So we start to see that in the coming quarters as that lag effect gets consumed. So simply looking at improved metal prices and a basic assumption that’s across the portfolio volumes are relatively consistent.

Metal prices or the basket of commodities we are exposed to [our math] have gone up by 20%-30%. So we would be hopeful that we'll see a lot of that translate back to our bottom line as well.

That's good and do you expect more projects to come online within the next five years to further enhance the earnings growth?

Well the thing about higher prices is that the operators of these mines when prices are higher they've got incentive to invest in their operations and try to grow out their capacity. The kinds of pricing we've seen over the last year certainly have not incentivized any kinds of volume growth and to be quite honest, I think the prices that we're seeing today still don't do that job.

But in the fullness of the cycle, we would be -- we do think that the mines that we've got exposure do have generally long lives and big resources and are ultimately expandable. I'll go further and say that when incentive prices return, I think it will still be cautious investment that we see from the mine operators with respect to production growth.

It's unlikely to be dominated by decisions to build brand new mines. I think that there will be a consciousness to do it.

There will be a lot of memory about how bad things were in this past fear market. So we're much more likely to see expansions from existing operations and new developments at least in the early part of the cyclical recovery.

And so yes, our assets are in general anyway have quite a lot of room for expansions.

Thank you so much.

Thank you.

Thank you very much everybody for participating today. If you have any follow-up from our conference call, certainly feel free to contact me at Altius' headquarters at 1877-579-2209 or [see] altiusminerals.com.

Thank you very much.