ALTIUS MINERALS CORPORATION Altius Minerals Corporation
Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
Independent Auditor's Report
To the Shareholders and the Board of Directors of
Altius Minerals Corporation
Opinion
We have audited the consolidated financial statements of Altius Minerals Corporation (the "Corporation"), which comprise the consolidated balance sheets as at December 31, 2023 and 2022, and the consolidated statements of earnings, comprehensive earnings(loss), changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information (collectively referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Corporation as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS").
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards ("Canadian GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Corporation in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matter
A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the consolidated financial statements for the year ended December 31, 2023. This matter was addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.
Interest in Joint Venture - Fair value determination of renewable royalty interests and investments in renewable royalties - Refer to Note 2, 3, 5 and 17 to the financial statements
Key Audit Matter Description
The Corporation's joint venture has renewable royalty interests and holds investments in renewable royalties, which are accounted for as financial instruments held at fair value through other comprehensive income. The Corporation's methodology to determine the fair value of the investments at the reporting date is based on complex models and unobservable inputs. The valuation of these investments is subjective and include several assumptions that are required to determine the fair value. The judgments with the highest degree of subjectivity and impact on the fair values are the determination of an appropriate valuation methodology, expected timing of cashflow from royalties, discount rates, power purchase agreement prices and merchant power pricing, and timing of commercial operations.
Given the significant judgments made by management to estimate the fair value of the renewable royalty interests and investments in renewable royalties, performing audit procedures to evaluate the reasonableness of the estimates and assumptions related to the determination of an appropriate valuation methodology, expected timing of cashflow from royalties, discount rates, power purchase agreement prices and merchant power pricing, and timing of commercial operations required a high degree of auditor judgment and an increased extent of audit effort, including the need to involve fair value specialists.
How the Key Audit Matter Was Addressed in the Audit
Our audit procedures related to the fair value determination of the renewable royalty interests and investments in renewable royalties included the following, among others:
-
Evaluated the reasonableness of management's expected timing of cashflow from royalties, power purchase agreement prices and merchant power pricing, and timing of commercial operations, as applicable, by comparing management's forecasts to:
o Contractual terms; o Historical forecasts;
o Internal communications to management and the Board of Directors; and
o Forecasted information included in the Corporation's press releases, as well as analyst and industry reports for the Corporation and third-party information. - With the assistance of fair value specialists, evaluated the reasonableness of:
- The valuation methodology and the mathematical accuracy of the calculations.
- The discount rates by testing the source information underlying the determination of the discount rate and developed a range of independent estimates for the discount rate and compared to the discount rate selected by management.
Other Information
Management is responsible for the other information. The other information comprises Management's Discussion and Analysis.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Corporation's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Corporation's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Corporation to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Corporation to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Jacklyn Mercer.
/s/ Deloitte LLP
Chartered Professional Accountants
St. John's, Newfoundland and Labrador
March 11, 2024
CONSOLIDATED BALANCE SHEETS
As at | ||||
In Thousands of Canadian Dollars | Note December 31, 2023 | December 31, 2022 | ||
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | $ | 130,422 | $ | 82,385 |
Accounts receivable and prepaid expenses | 6,935 | 10,937 | ||
Income tax receivable | 2,074 | 4,048 | ||
Loan receivable | 7 | 5,303 | 6,773 | |
$ | 144,734 | $ | 104,143 | |
Non-current assets | ||||
Royalty and streaming interests | 8 | 206,209 | 228,321 | |
Investments | 7 | 221,745 | 218,210 | |
Interests in joint ventures | 5 | 174,873 | 209,247 | |
Exploration and evaluation assets | 4 | 8,011 | 9,416 | |
Deferred tax assets | 9 | 7,907 | 6,773 | |
Investment in associates | 6 | 1,579 | 1,613 | |
Loan receivable | 7 | 6,628 | - | |
Derivative - cash flow swap | 10 | 1,339 | 2,148 | |
Property and equipment | 513 | 713 | ||
$ | 628,804 | $ | 676,441 | |
TOTAL ASSETS | $ | 773,538 | $ | 780,584 |
LIABILITIES | ||||
Current liabilities | ||||
Accounts payable and accrued liabilities | 4,155 | 5,642 | ||
Current portion of long-term debt | 10 | 8,000 | 8,000 | |
Income tax payable | 734 | 6,046 | ||
$ | 12,889 | $ | 19,688 | |
Non-current liabilities | ||||
Long-term debt | 10 | 104,173 | 112,873 | |
Other liability | 418 | 801 | ||
Deferred tax liabilities | 9 | 43,520 | 38,413 | |
$ | 148,111 | $ | 152,087 | |
TOTAL LIABILITIES | $ | 161,000 | $ | 171,775 |
EQUITY | ||||
Shareholders' equity | 488,727 | 486,193 | ||
Non-controlling interest | 123,811 | 122,616 | ||
$ | 612,538 | $ | 608,809 | |
TOTAL LIABILITIES AND EQUITY | $ | 773,538 | $ | 780,584 |
See accompanying notes to the consolidated financial statements |
1
CONSOLIDATED STATEMENTS OF EARNINGS
In Thousands of Canadian Dollars, except per share amounts | Note | Year ended | |||
December 31, | December 31, | ||||
2023 | 2022 | ||||
Revenue and other income | 11 | $ | 68,957 | $ | 102,047 |
Costs and Expenses | |||||
General and administrative | 11 | 11,489 | 10,511 | ||
Cost of sales - copper stream | 5,098 | 5,646 | |||
Share-based compensation | 13 | 3,968 | 3,408 | ||
Generative exploration | 1,048 | 201 | |||
Exploration and evaluation assets abandoned or impaired | 4 | 602 | 84 | ||
Mineral rights and leases | 227 | 227 | |||
Amortization and depletion | 15,982 | 24,292 | |||
Earnings before the following: | $ | 30,543 | $ | 57,678 | |
(Loss) earnings from joint ventures | 5 | (1,826) | 1,835 | ||
Realized gain (loss) on disposal of derivatives | 349 | (716) | |||
Gain on disposal of mineral property | 4 | 594 | 2,166 | ||
Impairment of royalty interest | 8 | (6,338) | - | ||
Interest on long-term debt | (9,276) | (7,019) | |||
Foreign exchange gain (loss) | 980 | (1,699) | |||
Unrealized gain (loss) on fair value adjustment of derivatives | 325 | (382) | |||
Share of loss in associate | 6 | (34) | (7) | ||
Earnings before income taxes | $ | 15,317 | $ | 51,856 | |
Income taxes (current and deferred) | 9 | 5,195 | 12,374 | ||
Net earnings | $ | 10,122 | $ | 39,482 | |
Net earnings attributable to: | |||||
Common shareholders | 9,537 | 37,489 | |||
Non-controlling interest | 585 | 1,993 | |||
$ | 10,122 | $ | 39,482 | ||
Net earnings per share | |||||
Basic | 12 | 0.20 | 0.82 | ||
Diluted | 12 | 0.20 | 0.80 | ||
See accompanying notes to the consolidated financial statements |
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)
In Thousands of Canadian Dollars | Note | Year ended | ||
December 31, | December 31, | |||
2023 | 2022 | |||
Net earnings | $ | 10,122 | $ | 39,482 |
Other comprehensive earnings (loss) | ||||
To be reclassified subsequently to profit or loss | ||||
Foreign currency translation adjustment | ||||
Gross amount | (5,607) | 14,430 | ||
Net amount | $ | (5,607) | $ | 14,430 |
Net unrealized (loss) gain on fair value adjustment of cash flow swap | ||||
Gross amount | (716) | 2,217 | ||
Tax effect | 191 | (431) | ||
Net amount | $ | (525) | $ | 1,786 |
Revaluation of cash flow swap held in joint venture | ||||
Gross amount | 5 | (5,275) | - | |
Tax effect | 1,168 | - | ||
Net amount | $ | (4,107) | $ | - |
To not be reclassified subsequently to profit or loss | ||||
Net unrealized gain (loss) on investments | ||||
Gross amount | 7 | 14,958 | (12,469) | |
Tax effect | (1,219) | 1,431 | ||
Net amount | $ | 13,739 | $ | (11,038) |
Revaluation of investments held in joint venture | ||||
Gross amount | 5 | 24,278 | 14,641 | |
Tax effect | (5,489) | (2,123) | ||
Net amount | $ | 18,789 | $ | 12,518 |
Realized (loss) gain on investments | 7 | (747) | 1,105 | |
Tax effect | - | - | ||
Net amount | $ | (747) | $ | 1,105 |
Other comprehensive earnings | $ | 21,542 | $ | 18,801 |
Total comprehensive earnings | $ | 31,664 | $ | 58,283 |
Total comprehensive earnings attributable to: | ||||
Common shareholders | 24,924 | 50,908 | ||
Non-controlling interest | 6,740 | 7,375 | ||
$ | 31,664 | $ | 58,283 | |
See accompanying notes to the consolidated financial statements |
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended | ||||
In Thousands of Canadian Dollars | Note December 31, 2023 | December 31, 2022 | ||
Operating activities | ||||
Net earnings | $ | 10,122 | $ | 39,482 |
Adjustments for operating activities | 14 | 23,523 | 33,026 | |
$ | 33,645 | $ | 72,508 | |
Changes in non-cash operating working capital | 14 | 2,861 | 1,752 | |
$ | 36,506 | $ | 74,260 | |
Financing activities | ||||
Repayment of long-term debt | 10 | (8,000) | (8,000) | |
Proceeds from long-term debt | 10 | - | 10,000 | |
Lease payments | (168) | (168) | ||
Net proceeds from equity issuance of subsidiary | 16 | - | 15,219 | |
Cash settled stock options and RSUs | 13 | (1,900) | (3,703) | |
Payments to non-controlling interest | 16 | (2,030) | (2,775) | |
Preferred securities distributions | 12 | - | (3,346) | |
Repurchase of common shares | 12 | (12,528) | (4,835) | |
Dividends paid | (14,300) | (13,143) | ||
$ | (38,926) | $ | (10,751) | |
Investing activities | ||||
Proceeds from sale of investments | 7 | 1,157 | 3,416 | |
Cash received from joint ventures | 5 | 75,730 | 28,302 | |
Return of capital | 7 | 8,950 | - | |
Proceeds from sale of mineral properties | 4 | 161 | - | |
Generative exploration | (1,048) | (201) | ||
Exploration and evaluation assets, net of recoveries | (396) | (777) | ||
Cash taxes paid | - | (2,113) | ||
Investment in joint venture | 5 | (21,222) | (58,583) | |
Loan receivable | 7 | (5,283) | (6,422) | |
Purchase of non-controlling interest units | 16 | (1,357) | - | |
Acquisition of royalty interests | 8 | - | (1,529) | |
Acquisition of investments | 7 | (1,609) | (47,814) | |
Acquisition of property and equipment | (9) | (29) | ||
$ | 55,074 | $ | (85,750) | |
Net increase (decrease) in cash and cash equivalents | 52,654 | (22,241) | ||
Effect of foreign exchange on cash and cash equivalents | (4,617) | 4,605 | ||
Cash and cash equivalents, beginning of year | 82,385 | 100,021 | ||
Cash and cash equivalents, end of year | $ | 130,422 | $ | 82,385 |
Supplemental cash flow information (Note 14) | ||||
See accompanying notes to the consolidated financial statements |
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Common Shares | Preferred Securities | Other | Accumulated | Total | Non- | |||||||||||||||
Equity | Other | Retained | ||||||||||||||||||
In Thousands of Canadian Dollars | Shareholders' | controlling | Total Equity | |||||||||||||||||
Reserves | Comprehensive | Earnings | ||||||||||||||||||
Note | Number | Amount | Number | Amount | Equity | interest | ||||||||||||||
(Note 12) | Earnings | |||||||||||||||||||
Balance, December 31, 2021 | 41,185,595 | $ | 260,793 | 10,000,000 | $ | 57,061 | $ | 26,015 | $ | 76,971 | $ | 12,646 | $ | 433,486 | $ | 95,493 | $ | 528,979 | ||
Net earnings and comprehensive earnings, | ||||||||||||||||||||
January 1 to December 31, 2022 | - | - | - | - | - | 13,419 | 37,489 | 50,908 | 7,375 | 58,283 | ||||||||||
Payments to non-controlling interest | - | - | - | - | - | - | - | - | (2,775) | (2,775) | ||||||||||
Transactions with non-controlling interests | - | - | - | - | - | - | (7,269) | (7,269) | 22,523 | 15,254 | ||||||||||
Shares repurchased and cancelled | (268,000) | (1,886) | - | - | - | - | (2,949) | (4,835) | - | (4,835) | ||||||||||
Preferred securities distributions | - | - | - | - | (1,150) | - | (1,410) | (2,560) | - | (2,560) | ||||||||||
Preferred securities redemption | - | 87,061 | (10,000,000) | (57,061) | - | - | - | 30,000 | - | 30,000 | ||||||||||
Warrants exercised | 6,670,000 | 12,012 | - | - | (12,012) | - | - | - | - | - | ||||||||||
Dividends paid to common shareholders | - | - | - | - | - | - | (13,854) | (13,854) | - | (13,854) | ||||||||||
Shares issued under dividend reinvestment | ||||||||||||||||||||
plan | 34,125 | 711 | - | - | - | - | - | 711 | - | 711 | ||||||||||
Share-based compensation | - | - | - | - | 3,408 | - | - | 3,408 | - | 3,408 | ||||||||||
Cash settled RSUs and stock options | - | - | - | - | (3,703) | - | - | (3,703) | - | (3,703) | ||||||||||
Shares issued under long-term incentive plan | 3,238 | 6 | - | - | (105) | - | - | (99) | - | (99) | ||||||||||
Balance, December 31, 2022 | 47,624,958 | 358,697 | - | - | 12,453 | 90,390 | 24,653 | 486,193 | 122,616 | 608,809 | ||||||||||
Net earnings and comprehensive earnings, | ||||||||||||||||||||
January 1 to December 31, 2023 | - | - | - | - | - | 15,387 | 9,537 | 24,924 | 6,740 | 31,664 | ||||||||||
Payments to non-controlling interest | 16 | - | - | - | - | - | - | - | - | (3,387) | (3,387) | |||||||||
Transactions with non-controlling interests | - | - | - | - | - | - | 2,232 | 2,232 | (2,158) | 74 | ||||||||||
Shares repurchased and cancelled | 12 | (611,800) | (4,613) | - | - | - | - | (7,915) | (12,528) | - | (12,528) | |||||||||
Dividends paid to common shareholders | - | - | - | - | - | - | (15,191) | (15,191) | - | (15,191) | ||||||||||
Shares issued under dividend reinvestment | ||||||||||||||||||||
plan | 43,081 | 891 | - | - | - | - | - | 891 | - | 891 | ||||||||||
Share-based compensation | - | - | - | - | 3,968 | - | - | 3,968 | - | 3,968 | ||||||||||
Cash settled RSUs and stock options | - | - | - | - | (1,900) | - | - | (1,900) | - | (1,900) | ||||||||||
Shares issued under long-term incentive plan | 24,498 | 314 | - | - | (176) | - | - | 138 | - | 138 | ||||||||||
Balance, December 31, 2023 | 47,080,737 | $ | 355,289 | $ | - | $ | - | $ | 14,345 | $ | 105,777 | $ | 13,316 | $ | 488,727 | $ | 123,811 | $ | 612,538 |
See accompanying notes to the consolidated financial statements
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Altius Minerals Corporation published this content on 11 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 March 2024 23:09:03 UTC.
