$ATUSF – Buy Altius Minerals For Inflation Protection.

by Retirement Advisor | Oct 8, 2022 | Inflation Hedge

Inflation is now being baked into consumer expectations, which means it will not necessarily be “transitory” in spite of the Fed’s insistence that it is. As we attempted to show in previous articles, inflation continues to represent one of the greatest risks to an investment portfolio, but also a significant opportunity for the informed investor. For example, adding an individually risky streaming firm to an S&P 500-centric portfolio may actually reduce that portfolio’s overall risk, particularly with regard to inflation or purchasing power risk. It is, after all, the ability of a portfolio to maintain purchasing power in retirement that most of us want to ensure. Altius Minerals Inc. is a Canadian mining company based in Calgary, Alberta, Canada. The company is a “streaming” company, meaning that it receives a pre-contracted stream of production . So, when a mine enjoys a doubling of commodity prices, so too does Altius. When higher prices lead to more production, Altius also benefits. For example, higher iron ore prices cause Champion Iron to decide to high-grade ore and expand production at their Bloom Lake mine. Altius benefits from the higher price achieved as well as the increased production. Altius Renewable Royalties Corp. is a Canadian company that produces potash from the Labrador Iron Ore Royalty Corporation in Labrador, Canada. In the first quarter of this year, Altius generated $7.9 million in operating cash flow, and used that and proceeds from some warrants exercised during the quarter to pay off $5 million in debt and buy back 7.4 million worth of common shares. The buyback amounted to a little over 1% of the outstanding shares at an average price of $15.55. Altius has $179 million in cash and fungible equities, even after subtracting out cash already earmarked for further expansion. The company has $107.6 million in long-term debt. Altius Minerals Ltd. is one of the more appealing firms in the royalty and streaming sector. ALSTO has increased 70% in price since November 2020. Safety in Value did an independent full sum-of-the-parts valuation update on Altius a little over a month ago, arriving at a fair value of $22.52 CAD . That was based primarily on the situation at the time, using results that themselves were based on older commodity prices. Those commodity prices continued to rise through Q1, thereby affecting Q2 results. His valuation will likely be higher once Q2 figures are out….(read more)