ELE.TO · 2022-06-14

Indirectly, in or into or from Any Jurisdiction Where to do so Would Constitute a Violation of the Relevant Laws or Regulations of Such Jurisdiction

Management Changes

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

FOR IMMEDIATE RELEASE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

14 June 2022

RECOMMENDED ALL-SHARE MERGER OF EQUALS OF ALTUS STRATEGIES PLC AND ELEMENTAL ROYALTIES CORP.

to be implemented by means of a scheme of arrangement under Part 26 of the Companies Act 2006

Summary

The boards of Elemental Royalties Corp. (ELE.V) ("Elemental") and Altus Strategies plc (ALTS.V) ("Altus") are pleased to announce they have reached agreement on the terms and conditions of a recommended share-for-share merger of equals of Elemental and Altus with the entire issued and to be issued share capital of Altus being acquired by Elemental (the "Merger"). It is intended that the Merger will be implemented by way of a court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006.

Under the terms of the Merger, each Altus Shareholder will be entitled to receive:

0.5940 New Elemental Shares for each Altus Share

This exchange ratio (the "Exchange Ratio") has been agreed between the boards of Elemental and Altus taking into account the relative market capitalisations of both companies.

Upon completion of the Merger, Elemental Shareholders will own approximately 52.9 per cent. and Altus Shareholders will own approximately 47.1 per cent. of the total issued share capital of the New Elemental Altus Group (based on the undiluted issued share capital of Elemental and Altus on the Last Practicable Date).

The boards of Elemental and Altus believe that the Merger has compelling strategic logic and represents an attractive opportunity for both companies to create a global gold royalty company.

Background to and reasons for the Merger

Substantial benefits for all Altus and Elemental stakeholders as a result of the creation of the New Elemental Altus Group

The Elemental Directors and Altus Directors believe that the creation of the New Elemental Altus Group will deliver substantial benefits for all stakeholders of both Elemental and Altus, including:

Increased scale and diversification: a combined portfolio of 69 assets across 13 jurisdictions, concentrated in tier-1 mining jurisdictions, of which 11 are in production, and primarily focused on gold;
Transformed adjusted revenue profile: estimated combined adjusted 2022 revenue of the New Elemental Altus Group of US$19.6 million with significant near term growth potential from first expected revenue from Ming, Bonikro and Mercedes in 2022 estimated to lead to combined

adjusted 2023 revenue of the New Elemental Altus Group of US$24.6 million, combined with opportunities to add further portfolio revenue and duration*;

see "Non-IFRS financial measures - (i) Adjusted Revenue" below. The sources and bases for the calculation

of the estimated combined New Elemental Altus Group adjusted revenue for FY 2022 and 2023 are set out in Appendix 2.

Strengthened asset portfolio: centred around 3 cornerstone royalties, the majority of the New Elemental Altus Group's NAV will be based on producing assets, providing investors with exposure to the top line revenue of underlying assets (without direct exposure to the operating costs / capex of those assets and associated inflationary risks) while keeping long dated optionality from existing development pipeline and organic royalty generation portfolio;
Strong shareholder support: recognised strategic investors have supported the Merger, in La Mancha and Condire having provided shareholder irrevocable undertakings over 44.6 per cent. of Altus's issued share capital; and South32 and La Mancha having entered into voting and support agreements in respect of 25.96 per cent. of Elemental's issued share capital. Additionally, EuroPacific Asset Management and Adrian Day Asset Management have provided letters of intent to vote in favour of the Elemental Shareholder Resolution in respect of a further 10.42 per cent. of Elemental's issued share capital;
Enhanced capital markets profile: increased scale and liquidity for enhanced market relevance and financial flexibility and a lower cost of capital, with wider investor appeal, analyst coverage and M&A potential coming with a larger market capitalisation; providing the opportunity for a rerating of the shares of the New Elemental Altus Group;
Complementary management skills: an experienced management team with Elemental's proven history of accretive royalty acquisitions being a natural fit to the disciplined royalty generation and royalty acquisition track record of Altus;
Potential cost synergies: opportunity to deliver cost efficiency synergies at the corporate level through simplification of operations and listings; and
Canadian tax election: the disposition of Altus Shares on the Merger by a Canadian resident holder will constitute a taxable disposition for purposes of the Income Tax Act (Canada) (the "Tax Act") resulting in the realisation of any accrued gain that the holder may have in the Altus Shares. Elemental will permit an 'eligible holder' to partially or fully defer a gain that would otherwise be realised, if any, by making a joint election with Elemental pursuant to section 85 of the Tax Act (in accordance with all applicable rules). An 'eligible holder' refers to (i) a person who is resident in Canada and not exempt from tax under Part I of the Tax Act or (ii) a 'Canadian partnership' no member of which is exempt from tax under Part I of the Tax Act.

Fair value for both sets of shareholders

The Exchange Ratio has been agreed between the boards of Elemental and Altus taking into account the relative market capitalisations of both companies and offers fair value for both sets of shareholders consistent with valuations expected in an all-share merger of equals.

Key Highlights of the Merger

Upon completion of the Merger, it is intended that:

An eight (8) member board will be constituted from a combination of existing directors from both Elemental and Altus (including four (4) Elemental representatives and four (4) Altus representatives);
Steven Poulton, current CEO of Altus, will be appointed as Executive Chair and Frederick Bell, current CEO of Elemental, will be appointed as Chief Executive Officer;
Martin Turenne, a current non-executive director of Elemental, will be appointed as Chair of the Audit Committee and Robert Milroy, a current non-executive director of Altus, will be appointed as Chair of the Compensation Committee;
After the Merger, Elemental will continue to be listed on TSX-V and will be headquartered in Vancouver, Canada and have teams located in Canada, the United Kingdom and Australia; and
Elemental's name will be changed to Elemental Altus Royalties Corp. shortly after Completion.

Altus Recommendation and Irrevocable Undertakings

The Altus Directors, who have been so advised by UBS AG London Branch ("UBS") as to the financial terms of the Merger, unanimously consider the terms of the Merger to be fair and reasonable. In providing its advice to the Altus Directors, UBS has taken into account the commercial assessments of the Altus Directors. UBS is providing independent financial advice to the Altus Directors for the purposes of Rule 3 of the Takeover Code.

Accordingly, the Altus Directors intend to recommend unanimously that (a) Scheme Shareholders vote in favour of the Scheme at the Altus Court Meeting; and (b) Altus Shareholders vote in favour of the Special Resolution to be proposed at the Altus General Meeting, as the Altus Directors who are interested in Altus Shares have irrevocably undertaken to do in respect of their own beneficial holdings (and those of their connected persons) in respect of which they control the voting rights amounting to 15,550,327 Altus Shares representing, in aggregate, approximately 13.25 per cent. of the ordinary share capital of Altus in issue on the Last Practicable Date.

In addition to the irrevocable undertakings from Altus Directors described above, Elemental has also received irrevocable undertakings to vote (or, where applicable, procure voting) in favour of the Scheme at the Altus Court Meeting and the Special Resolution to be proposed at the Altus General Meeting (or in the event that the Merger is implemented by an Offer, to accept or procure acceptance of such Offer) from:

La Mancha Explorers; and
Condire Resource Master Partnership, LP,

in respect of 41,158,454 and 11,170,102 Altus Shares, respectively, representing in aggregate approximately 44.6 per cent. of the existing issued ordinary share capital of Altus and 44.6 per cent. of the Scheme Shares being eligible to vote at the Altus Court Meeting, in each case, as at the Last Practicable Date.

Therefore, Elemental has received irrevocable undertakings in respect of, in aggregate, 67,878,883 Altus Shares, representing approximately 57.9 per cent. of the Altus Shares in issue on the Last Practicable Date.

Further details of the irrevocable undertakings are set out in paragraph 8 of this Announcement.

Elemental Recommendation, Voting and Support Agreements, Letters of Intent and Break Payment

The issuance of the New Elemental Shares pursuant to the Merger requires the Elemental Shareholder Resolution to be approved by a simple majority of the votes cast by Elemental Shareholders represented in person or by proxy at the Elemental Special Meeting.

The Elemental Directors, after an extensive review and thorough discussion of all facts and issues they considered relevant with respect to the Merger, unanimously determined that the issuance of the New Elemental Shares pursuant to the Merger is fair to the Elemental Shareholders, and authorised Elemental to enter into the Co-operation Agreement and recommend to Elemental Shareholders that they vote in favour of the Elemental Shareholder Resolution. In connection with making this determination, on 13 June 2022 the Elemental Directors received a fairness opinion from Canaccord Genuity Corp. to the effect that, as of such date, and subject to the analyses, factors, assumptions, qualifications and limitations set forth in such opinion, the Exchange Ratio is fair, from a financial point of view, to Elemental Shareholders. The full text of Canaccord Genuity Corp.'s fairness opinion will be included in the Elemental Information Circular.

The Elemental Directors who are interested in Elemental Shares and certain shareholders of Elemental have agreed to vote their own shareholdings in Elemental representing 11,207,575 Elemental Shares, being approximately 14.32 per cent. of the Elemental Shares in issue on the Last Practicable Date, in favour of the Elemental Shareholder Resolution.

In addition to the voting and support agreements with the Elemental Directors and certain employees of Elemental who are interested in Elemental Shares, Altus has also entered into voting and support agreements to vote in favour of the Elemental Shareholder Resolution at the Elemental Special Meeting with:

La Mancha Investments; and
South32,

in respect of 7,250,000 and 13,065,100 Elemental Shares, respectively, representing in aggregate approximately 25.96 per cent. of the Elemental Shares in issue on the Last Practicable Date in favour of the Elemental Shareholder Resolution.

EuroPacific Asset Management and Adrian Day Asset Management have also given non-binding letters of intent to vote (or, where applicable, procure voting) in favour of the Elemental Shareholder Resolution at the Elemental Special Meeting in respect of a further 6,296,529 and 1,861,700 Elemental Shares respectively, representing approximately 10.42 per cent. of the Elemental Shares in issue on the Last Practicable Date.

Therefore, Altus has received voting undertakings and letters of intent in respect of, in aggregate, 39,680,904 Elemental Shares, representing approximately 50.7 per cent. of the Elemental Shares in issue on the Last Practicable Date.

Further details of the voting and support agreements and letters of intent are set out in paragraph 8 of this Announcement.

Elemental has agreed to pay to Altus a break payment in the amount of US$2,000,000 in certain circumstances, as agreed in the Co-operation Agreement and described further in paragraph 9.3 of this Announcement.

General

Under the terms of the Merger, Elemental and Altus have agreed that if, on or after the date of this Announcement and before the Effective Date, any dividend and/or other distribution and/or other return of capital is declared, made or paid or becomes payable in respect of Altus Shares, Elemental reserves the right to reduce the consideration payable under the terms of the Merger by an amount up to the amount of such dividend and/or distribution and/or return of capital, in which case any reference in this Announcement to the consideration payable under the Merger will be deemed to be a reference to the consideration as so reduced. Any exercise by Elemental of its rights referred to in this paragraph shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the terms of the Merger. In such circumstances, Altus Shareholders would be entitled to retain any such dividend, distribution or other return of capital declared, made or paid or which becomes payable.

Under the Co-operation Agreement, Elemental has agreed that until the Effective Date, except (i) with Altus's prior written consent (not to be unreasonably withheld, conditioned or delayed), (ii) as required by applicable law, or (iii) to the extent the relevant matter is expressly permitted by or in the Co-operation Agreement or this Announcement, Elemental shall not and shall procure that no member of the Elemental Group (provided the actions are not at the direction of Elemental) shall agree, resolve, commit or announce any agreement or intention to authorise, declare or pay any distribution or reduction or return of capital on or with respect to the Elemental Shares (whether in cash, assets, shares or other securities).

It is intended that the Merger will be implemented by way of a court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006 (although Elemental reserves the right to effect the Merger by way of an Offer, subject to the consent of the Panel and the terms of the Co-operation Agreement). Accordingly, the terms of the Merger will be put to Scheme Shareholders at the Altus Court Meeting. In order to become Effective, the Scheme must be approved at the Altus Court Meeting by a majority in number of Scheme Shareholders, present and voting to the extent permitted pursuant to the Takeover Code, applicable law or the Court whose sanction is required for the Scheme, whether in person or by proxy, representing 75 per cent. or more in value of the Scheme Shares held by those Scheme Shareholders. The Altus Shareholders will further be asked to vote in favour of the Special Resolution to be proposed at the Altus General Meeting (which is expected to take place immediately following the Altus Court Meeting) to authorise the Altus Directors to give effect to the Scheme and deal with certain ancillary matters, which requires the approval by Altus Shareholders representing at least 75 per cent. of the votes cast at the Altus General Meeting (either in person or by proxy). The Scheme is expected to become Effective in the third quarter of the calendar year 2022, subject to the satisfaction (or, if applicable) waiver of the Conditions and further terms set out in Appendix 1.

The Merger is conditional, amongst other things, on:

the Scheme becoming unconditional and Effective including, without limitation, its approval by a majority in number of Scheme Shareholders present and voting (in person or by proxy) representing 75 per cent. or more in value of the Scheme Shares held by those Scheme Shareholders; and
the requisite approval of the Elemental Shareholder Resolution by the Elemental Shareholders at the Elemental Special Meeting.

The Merger will be on the terms and subject to the Conditions set out in Appendix 1 and to be set out in the Scheme Document. It is expected that the Scheme Document, containing further information about the Merger and notices of the Altus Meetings, together with the associated forms of proxy, will be posted to Altus Shareholders within 28 days of this Announcement (or such later time as Altus, Elemental and the Panel agree). An expected timetable of key events relating to the Merger, including the dates of the Altus Meetings, will be provided in the Scheme Document.

It is expected that the Elemental Information Circular, containing further information about the Merger and notice of the Elemental Special Meeting, will be mailed to Elemental Shareholders at or around the same time as the Scheme Document. It is also expected that the Elemental Special Meeting will be held on the same day as the Altus Meetings.

Comments

Commenting on the Merger, Steven Poulton, Chief Executive of Altus, said:

"Combining Altus and Elemental will create a new, strong and dynamic income-generating champion in the mining royalty sector. The transaction will bring significant benefits to all current shareholders and establish a compelling investment proposition to potential new institutional and other investors. Our enlarged scale and combined revenues will not only enhance our access to further high-quality royalties, but will also potentially reduce our cost of capital going forward. Shareholders of the enlarged group will also benefit from its differentiated strategy of low-cost and potential high-return royalty generation. As we succeed, we look forward to targeting medium-term capital distributions, as well as participating in further accretive consolidation opportunities in the royalty sector."

Commenting on the Merger, Frederick Bell, CEO and Director of Elemental, said:

"We are very pleased to announce a compelling merger with Altus Strategies that delivers materially increased revenue, scale and market relevance to both companies. The complementary nature of the portfolios and management teams alongside fast growing revenue from a portfolio of predominantly producing royalties will deliver significant benefits to shareholders. In addition, the combined company will have a low-cost royalty generation business arm to complement the continuing acquisition of producing royalties. We see continuing consolidation in the royalty space as an opportunity for the enlarged group. We expect to be able to demonstrate the benefits through this merger of equals with a lower cost of capital, greater diversification and growing liquidity for shareholders."

This summary should be read in conjunction with, and is subject to, the following full Announcement and the Appendices. The Merger will be subject to the Conditions and other terms set out in Appendix 1 and to the full terms and conditions which will be set out in the Scheme Document. The sources and bases of calculation of certain information contained in this Announcement are set out in Appendix 2. Details of irrevocable undertakings, voting and support agreements and letters of intent received or entered into by Elemental and Altus are set out in Appendix 3. Certain terms used in this Announcement are defined in Appendix 4.

Joint Analyst and Investor Webcast and Conference Call

An analyst and investor conference call to discuss the Merger will be held for c. 60 minutes on Tuesday 14 June 2022 at 8.00 a.m. (Eastern Standard Time) / 1.00 p.m. (British Summer Time).

To participate in the conference call, use the following dial-in numbers, or join the webcast using the link below:

Dial-in numbers:

Canada/USA Toll Free: 1-800-319-4610

International Toll: +1-604-638-5340

UK Toll Free: 0808-101-2791

UK Toll: +44-161-250-8208

Callers should dial in 5-10 minutes prior to the scheduled start time and simply ask to join your call.

Webcast URL: https://services.choruscall.ca/links/elementalroyalties202206.html

Webcast and Conference Call Queries:

Andy Lloyd / Shannon Hazlett

Longview Communications & Public Affairs

Telephone: +1 416 402 5029 / +1 403 614 0593

Email: [email protected] / [email protected]

Enquiries:

Elemental +44 (0) 7554 872 794

Frederick Bell, CEO and Director

Canaccord Genuity Limited (Financial Adviser to Elemental) +44 (0) 20 7523 8000

Raj Khatri (Canaccord Genuity Limited)

James Asensio (Canaccord Genuity Limited)

David Sadowski (Canaccord Genuity Corp.)

Brad Cameron (Canaccord Genuity Corp.)

Longview Communications & Public Affairs (Financial PR & IR to Elemental)

Andy Lloyd +1 416 402 5029

Shannon Hazlett +1 403 614 0593

Yellow Jersey PR (Financial PR & IR to Altus) +44 (0) 7951 402 336

Charles Goodwin

Henry Wilkinson

Altus +44 (0) 1235 511 767

Steven Poulton, Chief Executive

UBS (Financial Adviser to Altus) +44 (0)20 7567 8000

Jason Hutchings

Sandip Dhillon

Frank Geary

SP Angel Corporate Finance LLP (Nominated Adviser to Altus) +44 (0)20 3470 0470

Richard Morrison

Adam Cowl

SP Angel Corporate Finance LLP (Broker to Altus) +44 (0)20 3470 0471

Grant Barker

Rob Rees

Shard Capital (Broker to Altus) +44 (0) 20 7186 9927

Damon Heath

Isabella Pierre

Fasken Martineau LLP is retained as legal adviser to +44 (0)20 7917 8500

Elemental

Norton Rose Fulbright LLP is retained as UK legal adviser to +44 (0)20 7283 6000

Altus

Important notices

Canaccord Genuity Limited, which is authorised and regulated by the FCA in the United Kingdom, and Canaccord Genuity Corp. (together, "Canaccord Genuity") are acting as financial adviser to Elemental and for no one else in connection with the Merger and other matters referred to in this Announcement and will not be responsible to anyone other than Elemental for providing the protections afforded to their clients or for providing advice in relation to the Merger, the contents of this Announcement or any other matters referred to in this Announcement. Neither Canaccord Genuity nor any of their subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Canaccord Genuity in connection with any matter referred to in this Announcement or otherwise.

UBS AG London Branch ("UBS") is authorised and regulated by the Financial Market Supervisory Authority in Switzerland. It is authorised by the Prudential Regulation Authority and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority in the United Kingdom and is acting as financial adviser to Altus and for no one else in connection with the Merger and other matters referred to in this Announcement and will not be responsible to anyone other than Altus for providing the protections afforded to its clients or for providing advice in relation to the Merger, the contents of this Announcement or any other matters referred to in this Announcement. Neither UBS nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of UBS in connection with any matter referred to in this Announcement or otherwise.

SP Angel Corporate Finance LLP ("SP Angel") is authorised and regulated by the FCA in the United Kingdom and is acting as nominated adviser and broker to Altus and for no one else in connection with the Merger and other matters referred to in this Announcement and will not be responsible to anyone other than Altus for providing the protections afforded to its clients or for providing advice in relation to the Merger, the contents of this Announcement or any other matters referred to in this Announcement. Neither SP Angel nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of SP Angel in connection with any matter referred to in this Announcement or otherwise.

Each of Canaccord Genuity, UBS and SP Angel have given and not withdrawn their consent to the publication of this Announcement with the inclusion in it of the references to their respective names and (where applicable) advice in the form and context in which they appear.

Further information

This Announcement is for information purposes only and is not intended to, and does not, constitute or form part of any offer or inducement to sell or an invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of an offer to buy any securities, any vote or approval in any jurisdiction pursuant to the Merger or otherwise, nor shall there be any sale, issuance or transfer of securities of Altus in any jurisdiction in contravention of applicable law.

The Merger will be implemented solely pursuant to the terms of the Scheme Document (or, if the Merger is implemented by way of an Offer, the Offer Document), which will contain the full terms and conditions of the Merger, including details of what action is required from Altus Shareholders in respect of the Merger. Any decision in respect of, or other response to, the Merger should be made only on the basis of the information in the Scheme Document (or, if the Merger is implemented by way of an Offer, the Offer Document).

Altus and Elemental shall prepare the Scheme Document (or, if the Merger is implemented by way of an Offer, the Offer Document) to be distributed to Altus Shareholders. Altus and Elemental urge Altus Shareholders to read the Scheme Document in its entirety (or, if the Merger is implemented by way of an Offer, the Offer Document) when it becomes available because it will contain important information relating to the Merger (including details of how to vote in respect of the Scheme) and the New Elemental Shares. Any vote in respect of resolutions to be proposed at the Altus Meetings to approve the Merger, the Scheme or related matters, or other responses in relation to the Merger, should be made only on the basis of information contained in the Scheme Document.

Elemental will prepare the Elemental Information Circular to be distributed to Elemental Shareholders, containing details of the Merger, notice of the Elemental Special Meeting and information on the New Elemental Shares. Elemental urges Elemental Shareholders to read the Elemental Information Circular carefully when it becomes available because it will contain important information in relation to the Merger and the New Elemental Shares. Any vote in respect of the Elemental Shareholder Resolution to be proposed at the Elemental Special Meeting to approve the issuance of New Elemental Shares under the Merger should be made only on the basis of the information contained in the Elemental Information Circular.

This Announcement does not constitute a prospectus or prospectus equivalent document.

Elemental reserves the right to elect to implement the Merger by way of an Offer as an alternative to the Scheme (subject to the Panel's consent). In such event, the Merger will be implemented on substantially the same terms, so far as applicable, as those which will apply to the Scheme, subject to appropriate amendments to reflect, among other things, the change in method of effecting the Merger (including, without limitation: (i) the inclusion of an acceptance condition set at such percentage of the Altus Shares to which such Offer relates as Elemental may, subject to the rules of the Takeover Code and with the consent of the Panel, decide; and (ii) those required by, or deemed appropriate by, Elemental under applicable law). Further, if sufficient acceptances of such Offer are received and/or sufficient Altus Shares are otherwise acquired, it is the intention of Elemental to apply the provisions of the Companies Act 2006 to acquire compulsorily any outstanding Altus Shares to which such Offer relates.

Technical information

The technical and scientific information contained in this Announcement in respect of Altus has been reviewed and approved for release by Steven Poulton, Chief Executive Officer, who is Altus's Qualified Persons as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

The technical and scientific information contained in this Announcement in respect of Elemental has been reviewed and approved for release by Richard Evans, FAusIMM, Senior Vice President Technical, who is Elemental's Qualified Person as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

Overseas Shareholders

The release, publication or distribution of this Announcement in or into jurisdictions other than Canada, the United States and the United Kingdom and may be restricted by law and therefore any persons who are subject to the law of any jurisdiction other than Canada, the United States and the United Kingdom should inform themselves about, and observe, any applicable legal or regulatory requirements. In particular the ability of persons who are not citizens of and resident in Canada, the United States or the United Kingdom to vote their Altus Shares with respect to the Scheme at the Altus Court Meeting, or to appoint another person as proxy to vote at the Altus Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction.

Relevant clearances have not been, and will not be, obtained from the securities commission or similar regulatory authority of any province or territory of Canada. To the fullest extent permitted by applicable law, the companies and persons involved in the Merger disclaim any responsibility or liability for the violation of such restrictions by any person.

This Announcement has been prepared for the purposes of complying with applicable English law, certain applicable securities laws in Canada and the United States, the AIM Rules and the Takeover Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside of the UK. The Merger will be subject to the laws of England and Wales and to the applicable requirements of the Takeover Code and the Panel, as well as applicable securities laws of Canada that apply to Elemental due to its status as a "reporting issuer" in the provinces and territories of Canada other than Quebec.

Copies of this Announcement and formal documentation relating to the Merger will not be and must not be, mailed or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction or any jurisdiction where to do so would violate the laws of that jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of the Merger. If the Merger is implemented by way of Offer (unless otherwise permitted by applicable law or regulation), the Offer may not be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, facsimile, email or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Offer will not be capable of acceptance by any such use, means, instrumentality or facilities or from within any Restricted Jurisdiction.

Further details in relation to Overseas Shareholders will be contained in the Scheme Document and Altus Shareholders are advised to read carefully the Scheme Document and related forms of proxy once these have been mailed.

Notice to US investors in Altus

Altus Shareholders in the United States should note that the Merger relates to the shares of an English company and is proposed to be made by means of a scheme of arrangement provided for under, and governed by, the laws of England and Wales.

Any securities issued by Elemental as a result of this Merger by means of a scheme of arrangement will be issued in reliance upon the exemption from the registration requirements of the US Securities Act of 1933 ("US Securities Act"), pursuant to the exemption from registration set forth in Section 3(a)(10) thereof, and also will not be subject to the tender offer rules promulgated under the US Securities Exchange Act of 1934. Accordingly, the Scheme will be subject to disclosure requirements and practices applicable in the UK to schemes of arrangement, which are different from the disclosure requirements that would be applicable in the US if the securities were registered under the US Securities Act or if the transaction were subject to the US tender offer rules. Except as described below under the heading 'Non-IFRS financial measures', the financial information included in this announcement and the Scheme documentation has been or will have been prepared in accordance with International Financial Reporting Standards ("IFRS") and thus may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US. If Elemental exercises its right to implement the acquisition of the Altus Shares in accordance with the Co-operation Agreement by way of an Offer, such offer will be made in compliance with applicable US laws and regulations, including the registration requirements of the US Securities Act of 1933 and the tender offer rules under the US Securities Exchange Act of 1934 and any applicable exemptions provided thereunder.

Neither the Merger nor this Announcement have been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other US regulatory authority, nor have any such authorities passed upon or determined the adequacy or accuracy of the information contained in this Announcement or the merits of the Merger. Any representation to the contrary is a criminal offence in the United States.

The receipt of consideration by a US holder for the transfer of its Altus Shares pursuant to the Merger may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as non-US and other, tax laws. Each Altus Shareholder is urged to consult their independent professional adviser immediately regarding the tax consequences of the Merger applicable to them, including under applicable US federal, state and local, as well as non-US and other, tax laws.

It may be difficult for US holders of Altus Shares to enforce their rights and any claim arising out of the US federal laws or to enforce against them a judgment of a US court predicated upon the securities laws of the United Kingdom, since Elemental and Altus are incorporated in a non-US jurisdiction, and some or all of their officers and directors may be residents of countries other than the United States. US holders of Altus Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgement.

In accordance with normal UK practice, Elemental or its nominees, or its brokers (acting as agents), may from time to time make certain purchases of, or arrangements to purchase, Altus Shares outside of the US, other than pursuant to the Merger, until the date on which the Merger and/or Scheme becomes effective, lapses or is otherwise withdrawn. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the UK, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com.

Additional information for Canadian Altus Shareholders

No securities commission or similar authority of Canada, or any other jurisdiction has reviewed or in any way passed upon this document or the merits of the securities described herein, and any representation to the contrary is an offence.

If Elemental exercises its right to implement the acquisition of the Altus Shares in accordance with the Co-operation Agreement by way of an Offer, such Offer will be made in compliance with applicable Canadian securities laws or pursuant to an exemption therefrom.

The enforcement by Canadian Altus Shareholders of civil liabilities under the Canadian securities laws may be affected adversely by the fact that Altus is incorporated or organized under the laws of a jurisdiction other than Canada, that some or all of Elemental's and Altus's officers and directors are and will be residents of countries other than Canada, that some or all of the experts named in this Announcement may be residents of countries other than Canada, and that all or a substantial portion of the assets of Elemental, Altus and such persons are and will be located outside Canada. As a result, it may be difficult or impossible for Canadian Altus Shareholders to effect service of process within Canada upon Altus, Elemental's and Altus's respective officers or directors or the experts named herein, or to realize against them, upon judgments of courts of Canada predicated upon liabilities under Canadian securities laws. In addition, Canadian Altus Shareholders should not assume that the courts of England and Wales: (a) would enforce judgments of Canadian courts obtained in actions against such persons predicated upon civil liabilities under Canadian securities laws; or (b) would enforce, in original actions, liabilities against such persons predicated upon civil liabilities under the Canadian securities laws.

The distribution of the New Elemental Shares pursuant to the Merger will constitute a distribution of securities that is exempt from the prospectus requirements of Canadian securities law. The New Elemental Shares received pursuant to the Merger will not be subject to resale restrictions and may be resold through registered dealers in each of the provinces and territories of Canada provided that (i) the trade is not a "control distribution" as defined in Canadian securities law, (ii) no unusual effort is made to prepare the market or to create a demand for Elemental Shares, (iii) no extraordinary commission or consideration is paid to a person in respect of such sale, and (iv) if the selling security holder is an insider or officer of Elemental, as the case may be, the selling security holder has no reasonable grounds to believe that Elemental, as the case may be, is in default of applicable Canadian securities law.

Canadian Altus Shareholders should be aware that the Merger described in this Announcement may have tax consequences in Canada and should consult their own tax advisors to determine the particular tax consequences to them of the Merger in light of their particular circumstances, as well as any tax consequences that may arise under the laws of any other relevant foreign, state, local or other taxing jurisdiction.

Non-IFRS financial measures

(i) Adjusted Revenue

Adjusted revenue is a non-IFRS financial measure, which is defined by Altus (and is intended to be defined by the New Elemental Altus Group following the Effective Date) by including gross equity income from associated entities holding royalty interests related to Altus's effective royalty on the Caserones Mine. Altus's management uses adjusted revenue to evaluate the underlying operating performance of Altus for the reporting periods presented, to assist with the planning and forecasting of future operating results, and to supplement information in its financial statements. Elemental and Altus's management believe that in addition to measures prepared in accordance with IFRS such as revenue, investors may use adjusted revenue to evaluate the results of the underlying business, particularly since the adjusted revenue may not typically be included in operating results. Management believes that adjusted revenue is a useful measures of Altus's performance because they adjust for items which management believes reflect Altus's core operating results from period to period. Adjusted revenue is intended to provide additional information to investors and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. It does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other issuers.

(ii) Gold Equivalent Ounces (GEO)

Elemental and Altus's adjusted royalty revenue is converted to an attributable gold equivalent ounce, or GEO, basis by dividing the royalty revenue received in a period by the average gold price for the same respective period. The presentation of this non-IFRS measure is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate these non-IFRS measures differently. The production forecast was derived using information that is available in the public domain as at the date hereof, which included guidance and estimates prepared and issued by management of the operators of the mining operations in which Elemental or Altus holds an interest. The production forecast is sensitive to the performance and operating status of the underlying mines. None of the information has been independently verified by Elemental or Altus and maybe subject to uncertainty. There can be no assurance that such information is complete or accurate.

Third Party / Market Data

This Announcement contains statistical data, market research and industry forecasts that were obtained from government, stock exchange, analysts' or other industry publications and reports or based on estimates derived from such publications and reports and management's knowledge of, and experience in, the markets in which Elemental and Altus operate. Government and industry publications and reports generally indicate that they have obtained their information from sources believed to be reliable, but do not guarantee the accuracy and completeness of their information. Often, such information is provided subject to specific terms and conditions limiting the liability of the provider, disclaiming any responsibility for such information, and/or limiting a third party's ability to rely on such information. None of the authors of such publications and reports has provided any form of consultation, advice or counsel regarding any aspect of, or is in any way whatsoever associated with, Elemental or Altus. Further, certain of these organizations may be advisers to participants in the mining industry, and they may present information in a manner that is more favourable to that industry than would be presented by an independent source. Actual outcomes may vary materially from those forecast in such reports or publications, and the prospect for material variation can be expected to increase as the length of the forecast period increases. While Elemental and Altus believe this data to be reliable, market and industry data is subject to variations and cannot be verified due to limits on the availability and reliability of data inputs, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any market or other survey. Accordingly, the accuracy, currency and completeness of this information cannot be guaranteed. Neither Elemental nor Altus has independently verified any of the data from third party sources referred to in this Announcement or ascertained the underlying assumptions relied upon by such sources.

Cautionary note regarding forward-looking statements

This Announcement (including information incorporated by reference in this Announcement), oral statements made regarding the Merger, and other information published by Elemental and Altus contain certain statements which are, or may be deemed to be, "forward-looking statements" and "forward- looking information", each as defined under applicable securities laws (collectively, "forward-looking statements"). Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of Elemental and Altus about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements.

Forward-looking statements often, but not always, use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", or other words of similar meaning or derivatives thereof (including negative and grammatical variations). These statements are based on assumptions and assessments made by Elemental and/or Altus in light of their experience and their perception of historical trends, current conditions, future developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this Announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements and as such are qualified in their entirety. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions.

The forward-looking statements contained in this Announcement include statements related to: the Merger including statements with respect to the implementation thereof; the benefits of the Merger to the Altus Shareholders and the Elemental Shareholders; the timing of the Opening Position Disclosures of Elemental and Altus; the timing of mailing the shareholder materials and the timing of the Altus General Meeting, the Altus Court Meeting and the Elemental Special Meeting; the timing for and receipt of all required regulatory, court, stock exchange and shareholder approvals and approvals to complete the Merger; the ability of Elemental and Altus to satisfy other conditions to, and to complete the Merger; the anticipated timing for completion of the Merger; the closing of the Merger; the expected effects of the Merger on Elemental and Altus (including their future prospects, developments and strategies), the expected timing and scope of the Merger and other statements other than historical facts; the intention to seek a delisting of the shares of Altus from the AIM; the TSX-V and the OTCQX market in the United States; and the intention for Altus to make an application to certain Canadian securities commissions after the Effective Date to cease to be a reporting issuer in Canada. Forward-looking statements may also include statements relating to the following: (i) future capital expenditures, revenues, adjusted revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Elemental's and Altus's operations and potential synergies resulting from the Merger; and (iii) the effects of global economic conditions and governmental regulation on Elemental's and Altus's businesses.

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