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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 w ith 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 n ear term growth potential from first
expected revenue from Ming, Bonikro and Mercedes in 2022 est imated 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 t o 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 invest ors 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 25.9 6 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 re-
rating 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 deli ver 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 T ax 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 b oth
Elemental and Altus (including four (4) Elemental representatives and four (4) Altus
representatives);
• Steven Poulton, current CEO of Altus, will be app ointed 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 t o 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 Mee ting; and (b) Altus Shareholders vote in favour of the
Special Resolution to be proposed at the A ltus 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 amountin g 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 i rrevocable 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 Las t
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 majori ty 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 t he 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 int erested 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 Ele mental 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 S hares
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 th at 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 r educe the consider ation 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 b e 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 in tention to authori se, 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 pu rsuant 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 wil l 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 qu arter of the calen dar 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 in cluding, 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 E lemental 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 tha t the Scheme Doc ument, 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 informa tion about the M erger
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 significan t 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 merg er 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 reven ue 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 royalti es. We see continuing consolidation in the royalt y 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 c onjunction 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. Th e 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)
Grant Barker
Rob Rees
+44 (0)20 3470 0471
Shard Capital (Broker to Altus)
Damon Heath
Isabella Pierre
+44 (0) 20 7186 9927
Fasken Martineau LLP is retained as legal adviser to
Elemental
+44 (0)20 7917 8500
Norton Rose Fulbright LLP is retained as UK legal adviser to
Altus
+44 (0)20 7283 6000
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 ot her 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 referre d 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 st atute or otherwis e) 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 t he
Merger, the co ntents 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 cont ract, 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 t he FCA in the Uni ted
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 Merg er, 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 Elemen tal 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 in formation 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 Share s. Any vote in re spect 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) t hose 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 2 006 to acquire compulsorily any outstanding Altus Shares to which such Offer
relates.