by James Kwantes
Published first at Patreon
Altius Minerals (ALS-T) has worn different hats in its nimble 30-year life as a public company, but a vital part of the DNA is high-margin, long-life royalties.
Altius added a couple of those Nov. 11 with its acquisition of TNR Gold (TNR-V), which owns a 0.36% NSR royalty on McEwen Copper's Los Azules copper deposit in Argentina and a 1.35% royalty on Ganfeng Lithium's Mariana brine project, also in Argentina. Altius already owned a 0.5% NSR on Mariana in its growing lithium portfolio.
The deal was the inevitable outcome after Altius and TNR entered an exclusivity agreement on Oct. 7 after Altius presented TNR with a non-binding acquisition proposal. Altius owned 12.7% of TNR shares after topping up following an initial 9.8% investment that included a right of first offer on each of TNR's flagship royalties.
Today's all-share deal is valued at about $122 million, payable as .38/share in Altius shares ($97M) and .10/share ($25M) in TNR Gold spinco shares. Each TNR share will be exchanged for 0.0072 of an Altius share and 0.25 of a TNR spinco share.
The deal follows a proxy campaign by activist shareholder Jon Christian Evensen (@YellowLabLife or "The Koala" on X), who owned or controlled about 13.6% of TNR shares and has now signed a support agreement for Altius's buyout.
Evensen had steadily added to his TNR stake, which I wrote about here: Superpower, Proxy Battles and Power Players. He accused TNR CEO/chairman Kirill Klip of self-dealing, nepotism and being a prolific social media user whose promotion and marketing of TNR bordered on the bizarre.
The Los Azules development project in Argentina's San Juan province will produce copper, gold, silver and molybdenum for decades and probably generations. The producing Mariana lithium brine project is owned by China-based global lithium powerhouse Ganfeng Lithium.
It's a good, if not great, outcome for TNR Gold shareholders - the stock traded at just 12 cents a year ago. However, $97 million sounds like a bargain for two long-life, world-class royalties in copper and lithium. Some might even call it a steal.
As mining executive Michael Hornor, a proposed director on Evensen's alternative TNR slate, put it on X ...
As for Altius, it was a case of using strong share currency to add two meaningful royalties. The stock trades at $51 after hitting almost $70 in late September, but has still doubled in the past two years.
The day before the deal was announced, Altius reported Q3 attributable royalty revenue of $33.3 million (.56/share), compared to $21.4M (.46/share) a year earlier. Electricity royalties led the way at $13.24 million, followed by base metals ($8.45M), potash ($4.57M), lithium ($4.24M and iron ore ($1.56M).
Disclosure: I own shares of Altius Minerals and have no business relationship with any company mentioned. This article is for information purposes only and all investors need to do their own due diligence.
