Elemental Altus Royalties : Q4 Financial Statements & Management Discussion & Analysis 2024 FS

Published: 2025-04-16 17:49:11 ET ELE.V

ELEMENTAL ALTUS ROYALTIES CORP.

CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 2024 and 2023 (Expressed in US Dollars)

Independent auditor's report

To the Shareholders of Elemental Altus Royalties Corp.

Our opinion

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Elemental Altus Royalties Corp. and its subsidiaries (together, the Company) as at December 31, 2024 and 2023, and its financial performance and its cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).

What we have audited

The Company's consolidated financial statements comprise:

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2024. These matters were 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 these matters.

Key audit matter

Impairment indicator assessment of royalty interests and its investment in associates

Refer to note 2(c) - Critical accounting estimates and judgments; note 3 - Material accounting policies; note 6 - Royalty interests; and note 8 - Investment in associates to the consolidated financial statements.

As at December 31, 2024, the carrying amounts of the Company's royalty interests and its investments in associates were $135.7 million and $41.1 million, respectively.

Management assesses whether any indication of impairment exists at the end of each reporting period for each royalty interest and the investments in associates, including assessing whether there are observable indications that the asset's value has declined during the period. If such an indication exists, the recoverable amount of the interest or investment is estimated in order to determine the extent of the impairment (if any).

Management uses judgment when assessing whether there are indicators of impairment, such as significant changes in future commodity prices, operator mineral reserve and resource estimates or other relevant information received from the operators that indicate production from the interests or investments will not likely occur or may be significantly reduced in the future.

We considered this a key audit matter due to the judgment made by management in assessing whether impairment indicators exist for royalty interests and the investments in associates, and a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate audit evidence related to management's assessment of impairment indicators.

How our audit addressed the key audit matter

Our approach to addressing the matter included the following procedures, among others:

Other information

Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis.

Our opinion on the consolidated 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 consolidated 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 consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company'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 Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated 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 generally accepted auditing standards 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 consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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 James Lusby.

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Ontario

April 16, 2025

ELEMENTAL ALTUS ROYALTIES CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

For the years ended December 31, 2024 and 2023

(Expressed in thousands of US Dollars)

Notes

December 31,

2024

2023

$'000

Assets

Current assets

Cash and cash equivalents

4,454

11,287

Accounts receivable and other

16,632

7,194

Held-for-sale assets

303

Total current assets

21,086

18,784

Non-current assets

Royalty interests

135,720

110,186

Accounts receivable and other

4,031

13,525

Investments in associates

41,087

42,978

Investments

2,243

3,449

Total non-current assets

183,081

170,138

Total assets

204,167

188,922

Liabilities

Current liabilities

Accounts payable and accrued liabilities

3,349

1,932

Held-for-sale liabilities

Total current liabilities

3,349

1,993

Non-current liabilities

Borrowings

2,687

30,000

Deferred tax liability

1,747

1,730

Total non-current liabilities

4,434

31,730

Total liabilities

7,783

33,723

Equity

Share capital

217,449

177,424

Contributed surplus

6,535

5,664

Accumulated other comprehensive income ("AOCI")

1,416

1,280

Deficit

(29,016)

(29,169)

Total equity

196,384

155,199

Total liabilities and equity

204,167

188,922

Approved by the Board of Directors on April 16, 2025

Subsequent events (note 19)

Frederick Bell, CEO/Director

___ "Frederick Bell" ______

Martin Turenne, Director

_ "Martin Turenne" ____

ELEMENTAL ALTUS ROYALTIES CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

For the years ended December 31, 2024 and 2023

(Expressed in thousands of US Dollars)

Notes

December 31,

2024

2023

$'000

Revenue from royalty interests

15,993

11,335

Other income from royalty interests

330

409

Total revenue

16,323

11,744

Depletion of royalty interests

(7,218)

(6,901)

Gross profit

9,105

4,843

General and administrative expenses

(6,755)

(7,215)

Project evaluation expenses

(241)

(575)

Transaction related expenses

(400)

Impairment charge

(436)

(292)

Share-based compensation expense

(1,388)

(243)

Share of profit of associates

2,036

2,158

Gain on disposal

373

1,583

Profit from operations

2,294

259

Other income and expenses

Interest income

198

106

Interest and finance expenses

(2,028)

(2,648)

Fair value (loss) / gain on investments

(5)

106

Foreign exchange (loss) / gain

(54)

Other income

604

427

Profit / (loss) before income taxes

1,009

(1,749)

Tax expense

(1,321)

(1,292)

Net loss for the year of continuing operations

(312)

(3,041)

Net loss of discontinued operations

(52)

(860)

Total net loss

(364)

(3,901)

Other comprehensive income

Items that may be reclassified subsequently to profit

and loss:

Foreign currency translation adjustment

136

940

Other comprehensive income

136

940

Total comprehensive loss

(228)

(2,961)

Loss per share - basic and diluted

Continuing operations

(0.00)

(0.02)

Discontinued operations

(0.00)

Total net loss

(0.00)

(0.02)

Weighted average number of shares outstanding -

basic and diluted

204,297,422

186,846,532

ELEMENTAL ALTUS ROYALTIES CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2024 and 2023 (Expressed in thousands of US Dollars)

2024

2023

$'000

Operating activities

Net loss for the year

(364)

(3,901)

Adjustments for:

Depletion of royalty interests

7,218

6,901

Impairment charge

436

292

Unrealized foreign exchange

201

249

Share-based compensation expense

1,388

243

Gain on disposal

(373)

(1,529)

Fair value loss / (gain) on investments

(106)

Share of profit of associate

(2,036)

(2,158)

Interest income

(198)

(106)

Interest and finance expenses

2,028

2,648

Tax expense

1,321

1,292

Other non-cash items

(523)

325

9,103

4,150

Changes in non-cash working capital items:

Accounts receivable and other

(2,537)

146

Accounts payable and accrued liabilities

(479)

(671)

Cash generated from operating activities before taxes

6,087

3,625

Taxes paid

(1,271)

(1,632)

Net cash generated by operating activities

4,816

1,993

Investing activities

Purchase of royalty interests

(3,241)

(3,863)

Investment in exploration assets

(1,708)

Payment of acquisition of associate

(4,603)

Proceeds from sale of equity investments (note 8)

3,500

Proceeds from disposal of stream assets (note 8)

283

Proceeds from disposal of subsidiary (note 18)

1,016

Loss of cash on disposal of subsidiary

(537)

Distribution from associate (note 7)

3,922

4,140

Cash generated from / (used for) investing activities

4,514

(5,555)

Financing activities

Interest received

198

106

Interest paid

(1,979)

(2,648)

Repayment of loan principal (note 10)

(27,000)

Proceeds from private placement of shares (note 11)

12,763

Share issue costs (note 11)

(91)

(57)

Finance lease payments

(31)

Cash used for financing activities

(16,109)

(2,630)

Exchange differences on cash and cash equivalents

(54)

Change in cash and cash equivalents

(6,833)

(6,191)

Cash and cash equivalents, beginning of the year

11,287

17,478

Cash and cash equivalents, end of the year

4,454

11,287

ELEMENTAL ALTUS ROYALTIES CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2024 and 2023 (Expressed in thousands of US Dollars)

Ordinary

Contributed

Total

capital

Surplus

AOCI

Deficit

Equity

$'000

Balance as at December 31, 2022

180,886,010

165,038

6,987

340

(25,938)

146,427

Issued during the year:

Pursuant to the acquisition of royalty assets

12,709,273

11,547

Less: other cash issuance costs

(57)

Share-based compensation expense

243

Exercise of share-based options

2,395,109

896

(896)

Forfeit of share options

(670)

670

Loss and comprehensive loss for the year

940

(3,901)

(2,961)

Balance as at December 31, 2023

195,990,392

177,424

5,664

1,280

(29,169)

155,199

Issued during the period (note 11):

Pursuant to the acquisition of royalty assets

50,586,520

40,762

Less: other cash issuance costs

(91)

Share-based compensation expense

1,388

Forfeit of share options

(517)

517

Share cancellation (note 11)

(814,321)

(646)

Loss and comprehensive loss for the period

136

(364)

(228)

Balance as at December 31, 2024

245,762,591

217,449

6,535

1,416

(29,016)

196,384

ELEMENTAL ALTUS ROYALTIES CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2024 and 2023 (Expressed in US Dollars, except where otherwise noted)

The consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards").

The financial statements are presented in US Dollars. The notation "$" represents US dollars, "C$" represents Canadian dollars, and "A$" represents Australian dollars.

The financial statements were approved by the board and authorized for issue on April 16, 2025.

These consolidated financial statements include the accounts of the Company and its subsidiaries. Material subsidiaries are listed in the following table:

% Equity Interest as at

Country of

December 31,

Name

Incorporation

Functional Currency

2024

2023

Altus Royalties Limited

England & Wales

US Dollar

100

Altus Strategies Limited

England & Wales

US Dollar

100

Alpha 2 SPV Limited*

UAE

US Dollar

100

Alcrest Royalties Australia Pty Limited*

Australia

US Dollar

100

Elemental One Limited

BVI

US Dollar

100

Elemental Royalties (Australia) Pty Ltd

Australia

US Dollar

100

Elemental Resources Limited

England & Wales

Pound Sterling

100

Elemental Royalties Delaware LLC

United States of

US Dollar

100

America

*Refer to note 6 for further information on acquisition of the remaining 50% interest in Alpha 2 SPV Limited and Alpha 3 SPV Limited. This acquisition includes Alcrest Royalties Australia Pty Limited, a wholly owned subsidiary of Alpha 3 SPV Limited.

The results of each subsidiary will continue to be included in the consolidated financial statements of the Company until the date the Company's control over the subsidiary ceases. Control is achieved when the Company satisfies the following conditions:

Disclaimer

Elemental Altus Royalties Corp. published this content on April 16, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 16, 2025 at 21:48 UTC.