Thursday, June 22, 2017

Altius Minerals reports fiscal 2017 results

Altius Minerals:

Altius Minerals Corporation reports annual attributable revenue of $46,365,000 or $1.07 per share and adjusted EBITDA(2) of $34,711,000 or $0.80 per share compared to attributable revenue of $33,085,000 or $0.83 per share and adjusted EBITDA of $24,199,000 or $0.61 per share for the prior year.

Attributable revenue grew 40% or $13,300,000 in 2017 from 2016. The increased year to date revenue results from higher realized prices for copper, zinc and metallurgical coal, improved potash royalty production volumes and mine sequencing based volume increases from its thermal coal royalties. These revenue increases were partially offset by lower realized potash prices and a nil payment related to the Voisey’s Bay royalty.

The net loss for the year was $65,006,000, or $1.50 per share, compared to a net loss of $38,464,000, or $0.97 per share, in the prior year. The higher annual net loss results largely from the previously reported recognition of a non-cash  impairment charge of $72,001,000 for the Corporation’s Genesee royalty interest. This decision was made in response to policy changes in the province of Alberta that are intended to phase out coal fired electrical generation by 2030. 

Revenue exploded year over year and the company incurred a big accounting lost. The loss is a non-cash loss due to the policy changes to its coal plants. many retail investors do not like this stock because the financial statements are difficult to understand.

However it is important to focus on cashflow and cashflow is increasing at Altius. There will be times when they have one time gains and losses that will skew headline earnings. Investors like to see consistent earnings growth not the lumpy and difficult to understand financials.

My contention is that spending time understanding this business will eventually lead to a nice long term return. That is why Canadian billionaire Prem Watsa's Fairfax Financial has ponied up $100 million for Altius to invest into the resource sector. I am long because I understand the resource sector and Altius's business model.

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