Flora Wood - Director, IR Brian Dalton - Co-Founder, President, CEO & Director Ben Lewis - CFO Stephanie Hussey - Director, Finance Royalty Division

Brian Macarthur - Raymond James Ltd. John Tumazos - John Tumazos Very Independent Research

Thank you, Brian. We've got an operator named Brian and the CEO named Brian, which could be interesting in the Q&A.

Anyway, good morning everyone, and welcome to the conference call. Our press release and year end filings were done yesterday after the close and you'll notice the comparison periods are different.

For the balance of the year, we'll be comparing full quarters to full quarters, but period end dates will match during this transition. This event is being webcast live and you'll be able to access a replay of the call along with the presentation slides.

To get to the webcast, go under Investor Information, Webcasts and Presentations or use the link on the press release. Brian Dalton, CEO is on the phone with us and Ben Lewis, CFO is here.

Both of them will be speaking on the call and for the Q&A, we have Lawrence Winter, VP Exploration and Stephanie Hussey, Director of Finance. The order today will be Brian with a general overview and then Ben will follow with a report on financials at which point we'll open up the line for questions.

Getting started, the forward-looking statement is on Slide 2 and applies to everything we'll say both in our formal remarks and during the Q&A session. And with I'll turn over to the Brian, the CEO.

Thank you, Flora. Good morning, everyone.

Thanks all for joining. Apologies in advance today for any confusions around the fact that we're reporting on a fiscal year that included only 8 months.

The future benefits of doing this is that it results in better alignment with the reporting schedules of most of royalty counterparties. In spite of the abbreviated 8 month period, our royalty revenue of $46.7 million was actually higher than that for the full 12 month period of $46 million last fiscal year.

To put this in further perspective, just under 5 years ago, our royalty revenue was just over $6 million. So this represents the compound annual growth rate of 64%.

It means that Altius now generates almost as month per month as it did back then in a year. Our adjusted EBITDA margin also continues to improve and came in last year at 81%, which is higher than our royalty and streaming peer average and reflective of the fact that we're 75% royalty revenue and 25% stream, while most of the industry is closer to 70% stream and 30% royalty.

Overall 2017 saw stronger average commodity prices for most base metal and bulk mine commodities. Base metals, and primarily copper, are our largest contributors to total royalty revenue.

Chapada production volumes were higher than forecast with 127 million pounds produced in 2017 compared to initial guidance of 120 million pounds. At 777, copper production was lower, but zinc production higher.

This is consistent with Hudbay's mine sign adjustments that were affected to target higher grade zinc stopes and capture strong movement in zinc prices. Thermal coal royalty revenue continues to be steadily delivered, but is being diluted relatively by higher base metals, iron ore and potash revenue.

Given that these are benefiting from commodity price improvements, while our thermal coal revenue is solely volume based. Sheerness revenues were down on the year, however as mine sequencing moved down to lower paying royalty lands at the end of the year, but is expect to move back on to higher paying lands in 2018.

We're continuing to work with our legal advisors in preparation for an expected litigation lines this year that will include claims for compensation related to policy changes of the Alberta government that serve to effectively expropriate our thermal coal royalty revenues after 2029. Our metallurgical coal royalty from the Cheviot mines are continued strong pricing.

This was offset by a decline in production volumes. Our position in Labrador Iron Ore Royalty Corporation or LIORC, which holds royalty and equity interest related to the operation of the iron ore companies in Canada, contributed $6.1 million in revenue in the 8 month period.

In calendar 2017, LIORC dividends were up sharply to $265 per share and IOCs, pallets and high grade concentrate sales are benefiting from the emergence of environmental impacts related structural premium over base 62% iron ore prices. This has had the effect of dramatically shifting the mine into a very favorable position on a global iron ore margin curve.

Note, that I referred to margin curve rather than cost curve, because the cost curve has essentially become meaningless in properly understanding competitiveness in global iron ore mining today. On the down side, at least in the short term, the main collective labor agreement at IOC expired at the end of February, which introduces near term risk of a production disruption.

We see this as immaterial relative to our longer term views and the multi-decade long potential resource life of these high quality assets to lever. Potash revenue continues to improve on a higher royalty exposure weighted capacity utilization, which reflects the continuing ramp up of production at Rocanville and continuing global demand growth, as well as improving potash prices.

We received a retroactive royalty adjustment of $2.6 million for our Esterhazy royalty that is related to higher potash pricing calculation inputs for the period since 2014. We believe this adjustment, which now reflects a FOB Saskatchewan basis and is consistent with provincial regulations, will continue into future periods as well.

Our Project Generation business continued its strong progress during the past quarter and year. At year end, the market value of our portfolio of Junior equities grew to $44 million, as several new positions are created from the vending of exploration projects for equity interest and new pipeline royalties.

This does not include the value of our holding in LIORC or of our convertible note in Champion iron ore. A particular note, with the cofounding of [indiscernible] Copper Corporation around are partly owned Chilean project portfolio, with listing expected next quarter, and also exciting new discoveries at both the Lynx Diamond Project in Manitoba and the sale of our silver and base metals project in Newfoundland.

Before heading over to Ben, I'd like to add something a little different to this update. As sentiment continues to improve for industrial type metals and mining commodities, we are being asked increasingly about what types of option value and future catalysts all these offered to shareholders.

This is actually refreshing change from questions around when we expect all our mining company counterparties to go bankrupt. The response to the question about our underlying option value relates mostly to our focus on the royalties with very long potential life, which has resulted in our highest average underlying resource life in this sector.

I know that in today's investment world, long term means holding through a long weekend and for talking about future decades and generations, you get branded as practical lunatics the most. But we have no intention of trying to better confirm.

To give an extreme example of optionality as it relates to the royalties sector, consider our portfolio of Saskatchewan potash royalties, while noting that we could make similar cases for IOC, Chapada or Voisey's Bay. Our potash royalties are based on mines that have a 49 year average remaining life, considering only proven resources, unmeasured and indicated resources.

Adding inferred resources and continuing exploration upside and we believe it's potentially much, much longer than that. About 10 years ago, the potash markets got cut short of production capacity relative to demand and prices shot up by more than 6x, on a combination of fundamentals and short term sentiment exuberance.

These prices created incentive conditions for those with sufficient resources to expand their capacities. Creating new potash production capacity is very time consuming with construction and commissioning taking up to 7 to 10 years.

It is also very expensive, which is why it never happened although price took up. The major Saskatchewan producers all made big strategic bids and collectively invested around $9 billion with no share of its cost passed to royalty holders by the way, to grow out their capacities from 12.7 million to 23.4 million tonnes per year.

Over the last few years, these expansions have been commissioning unmet and as a result, production capacity relative to demand became high and prices fell sharply. The broader market sentiment shifted to something ranging between aberrance and apathy into royalties.

We signed out market that is woefully oversupplied and going nowhere, but instead our royalties unmined, that have just completed investment that will allow them to almost double production volume for minimum additional capital as market demand grows over time. We saw that at global potash demand growth rate that this could occur over a 10 to 15 year period.

We saw sector that will need prices to double or triple before they need order to incentivize the next round of 7 to 10 year builds and expansions and which are as likely as not to come from these same mines. We see great long term option value for our shareholders.

In terms of more eminent catalyst to keep an eye out for I'll point out that, Yamana has begun to consider its expansion options for the Chapada mine and has indicated plans to stay more on this around the time of its AGM later this spring. Excelsior is expected to receive the results of its final remaining permit application for the Gunnison project, which we hold a royalty at any time now.

We are scheduled to get our day in court to assert our rights around the Voisey's Bay royalty in September. Champion iron ore's recent restart of Bloom Lake has implication not only for our investment there, but also for the financing potential of the nearby Kami project where we hold a significant royalty and equity interest.

And we will be watching closely the results from as much as 50 kilometers of drilling that our equity and our royalty base investee companies including Adventus, Wolfden, Canstar and Aldebaran among several others will carry out. And with that I will hand over to Ben, Thank you.

Thank you, Brian, and good morning, everyone. Turning to the financial results, so I agree with Brian that attributable royalty revenue and EBITDA growth are both great numbers in the shortened year end.

Our royalty revenue in the 2 month period was $2.7 million higher than the amount that we preannounced in January, with most of this coming from the onetime adjustment on the Esterhazy royalty. Base metals revenue in the 2 month period is tracking close to the previous quarter which had been a record even after absorbing a production impact at 777.

With the pace backfill issue that we understand has now been resolved. On an 8 month basis, base metals represented 43% of the total revenue with 37% of that coming from copper and the balance from zinc.

The weighting of iron ore revenue increased to 13% during the period while our thermal coal exposure shrunk to 20% down from 29% last year. Without the Esterhazy adjustment, potash would be closer to its normal of around 11% to 12%, but came in at 16%.

Our revenue remains highly leveraged to copper prices, but changes in the Canadian dollar to U.S. dollar exchange rate also have an impact on EBITDA.

We are also starting to see some correlation between the U.S. dollar to CAD exchange rate changes and the commodity prices that in some cases have offset some of those commodity price benefits.

For example, the average U.S. dollar exchange rate in the 8 months was a $1.28 compared to $1.32 in the previous 12 month period.

Meaning that a stronger Canadian dollar, partially offset the increase in revenues that we saw from commodity price growth. In terms of balance sheet and liquidity, we ended the year with $62 million in cash and debt of $66 million, after debt repayments of $12.5 million during the year.

Our investments had a quarter end total market value of $130 million with approximately $86 million of that being the lift position and the balance is composed of our Junior Equity Portfolio. We now wish to draw your attention to a slide in our presentation that shows how our balance sheet has changed over the past 4 years.

As you can see, our cash based net debt now stands at only $4 million and if we count the value of the investments, it has moved deep into negative territory. At December 31st, we had roughly $132 million in available liquidity at year end consisting of $70 million in revolver availability plus $62 million in cash at year end, which again does not include the value of the publicly traded investments.

I'll now touch on some of our investing activities during the 8 month period. Early in the year we loaned $10 million to Champion Iron Ore in form of a convertible debenture.

Champion used these funds to partially fund the re-commissioning of the Bloom Lake iron ore mine located in Québec. They recently reached an important milestone in February with their first real shipment of high grade iron ore from that mine operation to the port.

We also invested about $39 million in other public equities, most of which was the buildup of our 5% ownership position in lift. Other investments during that period included the addition of a small producing royalty on the Rocanville mine and the acquisition of an early stage royalty on the Pickett Mountain property held by Wolfden Resources for a combined total of about $11 million.

And now a few words on our guidance, we're maintaining our annual royalty revenue guidance announced previously for the year of $60 million to $65 million. Some of the key assumptions we used in the guidance are as follows.

Commodity prices were based on stock prices at the time of release back in January with no notable changes since that time. For lift, our iron ore revenue, we're assuming a dividend in the range of $2.25 to $2.50 per share.

We expect lift to continue to benefit from the premium prices on high grade iron ore that -- products that IOC produces. Our base metal production assumptions used guidance provided by the operators, most of which is in the public domain.

We assume consistent production at the potash mines with some potential shifts towards lower costs mine operations such as Rocanville. We expect the Cardinal River met coal royalty to grow this coming year's production shifts back to its normal level.

We did not factor in any royalty revenue for Voisey's Bay, as Brian noted the trial for the disputed royalty payments is scheduled to commence in September and that could take several months to conclude. Finally, on our guidance, we also did not factor in any royalty receipts for development stage royalties, such as the Excelsior's Gunnison Copper project which could potentially come on stream this year.

I'd also like to remind you that we'd declared a dividend $0.04 per share, providing a bonus month in this 2 month quarter. The dividend payment will be made at the end of this month, which puts us on the regular quarterly cycle with our financial results.

Just before we start Q&A, I'd remind you that we also have Lawrence Winter, VP of Exploration available for questions on project generation. Big kudos to Lawrence and his hardworking team for vending 33 mineral properties for share payments and creating 33 new royalty -- early stage royalty interests in the last 20 to 24 months, while growing the PG equity portfolio.

And now let's go back to the operator to open up the Q&A session.

Thanks for the update on the potash, look I tend to agree with you. But I just want to follow up on the Esterhazy catch up.

I mean, that's -- going back 4 years and you said something about FOB pricing versus whatever else was happening before, could you just go through with little more detail what happened there, because that sort of begs to question how things are monitored? And secondly, whether there will be any impact on the other royalties or Rocanville or anything else just given you made that FOB comment which makes me wonder exactly what pricing was being done before?

Thanks Brian. It's Brian Dalton here.

Lot of Brians around today. We've been questioning that -- the payment announced there for a while, because we've been noting some discrepancies from Esterhazy payments relative to say Rocanville.

And I guess, the same discrepancy was being noted by the Saskatchewan government and some questions, I guess, were asked. There's -- our royalties are calculated using the same formula as the government's royalties are calculated.

And it's fairly clear that it's meant to be effectively an FOB Saskatchewan basis. And I guess, as a result of that questioning, Mosaic redid some calculations and came up with an adjustment that now matches up very well with the other Saskatchewan operations over time.

So it's just -- I guess just a little of different interpretation in terms of calculation that's now being corrected and we do expect, as I said in the call, we are in the main body representation for this to be a continuing event.

And just so is that FOB Saskatchewan -- so if its domestic tonne, obviously it's priced FOB Saskatchewan, so that's fairly straightforward. So then I guess for the offshore tonnes you got to worry about the mix for the transportation back to the mine if I'm using the FOB Vancouver prices something is that the way it works?

I may need to be corrected on this, but my understanding is that, it's irrespective of where the tonnes end up it is based on the value leaving Saskatchewan. Would that be great ore basis, Stephanie?

Yes, that's correct. Yes.

Probably hit the heart of the matter.

Could you give 1 or 2 case studies in creation of new royalties or stock holdings, maybe Bloom Lake or another one. And are you worried about Altius growing someday to a $1 billion to $2 billion market cap status where the project generation would not be large in relation to the denominator?

Sort of how do those long term planning tradeoffs look to you?

We've addressed this a few times in our history in different strategy sessions. When we were $1 million market cap company back 20 years ago, everything we did in project generation, every deal we signed with a major was obviously quite meaningful to our share price and our market capitalization.

Obviously, those individual developments right now aren't as don't show up as imminently, but we don't have any intention really to separate the businesses at all. Where all this really comes home in the long haul -- and exploration is certainly a long haul, is when some of these development stage or exploration stage royalties that we create suddenly become paying royalties.

And when that happens, we'll have royalties -- paying royalties on our book that not only will have been generated for low cost, in most cases, they'll be less been than the zero cost, because we'll have made other money on the equity components and whatnot. So as that the bigger picture start to factor in, we think that's what's going to differentiate Altius more than any other royalty company in terms of what our long term returns on invested capital will ultimately look like.

We give you an example, our case study as you asked for. Take a look at the royalty that we hold on the Kami project in Labrador.

This was created during the lifecycle, it was an Altius exploration effort that came up with -- identified as deposit. We vended it into Alderon and retained the 3% royalty.

It needed long waves during the lifecycle, it --resources defined, it went through permitting, essentially a shovel ready project, but the market terminated before it was able to get to the point that it reaches project finals. Now what we're seeing in Labrador is that, with structural change in the market towards high grade product, IOCs making all kinds of money, most people who had predicted to be dead two years ago now with one of highest margin iron ore mines in the world.

Champion has restarted the Bloom Lake project and we're quite optimistic about the results that will come from that and we think that it's only logical then that attention would next turn to Alderon again, which has a shovel ready project right in that camp that can produce the same kind of high grade concentrate. If that happens, it will have, obviously, very dramatic impact on the value of our equity holdings, but far more importantly with respect to our royalty.

That 3% royalty at current prices and current PEA level production forecast would generate more $20 million a year in royalty revenue. So if all this becomes a $2 billion to $3 billion market cap company, which would be a great outcome, we will still be loving and talking about our project generation business.

And I've said it a few times to different investors over the years, what we're seeing today is a royalty business. I see the royalties that we hold the pay out all this cash flow now, as essentially the eggs, but the Golden Goose that got us to those royalties is that pre-project generation business.

So we're very, very committed to that part of our business. It's one of the key differentiators and drive more option value in Altius than practically anything else we could do.

Okay, thank you. Thank you, Brian and John for your questions and we'll look forward to talking to everybody at the end of our next quarter.

Thank you, everyone.