Altus in the red on Newcrest royalty buy

The London-quoted equity in Altus Strategies (AIM: ALS; TSXV: ALTS; US-OTC: ALTUF) traded more than 14% in the red on Tuesday following the overnight announcement that it and a privately-held partner have agreed to pay US$37.5 million for a portfolio of 24 Newcrest Mining (ASX: NCM; TSX: NCM) royalties.

Altus and AlphaStream will gain three royalties on operating gold mines, including the Bonikro Push Back 5, South Kalgoorlie Operations and Ballarat. The deal also includes 21 development and exploration stage projects across Australia.

Newcrest managing director and CEO Sandeep Biswas said that the move was part of the company’s strategy to apply capital discipline while crystalizing value for shareholders amid “continued competition” for royalty investments.

The transaction is expected to complete in two phases entailing settlement of rights of first offer/refusal on some of the royalties and subject to an Altus financing.

Altus shares lost as much as 15.5% in the opening hour in Toronto to a low of C93c, while the stock traded at 57.5p in London. The price is on par with the year-earlier level despite a white-knuckle ride for owners over the past 12 months that saw shares touch a respective low and high of 50p and 94.99p.

Newcrest also announced overnight that the New South Wales Department of Planning, Industry & Environment (DPIE) has an expansion of the processing capacity of the Cadia gold mine from 32 million tonnes a year to 35 million tonnes a year.

The Newcrest board previously approved the execution of a two-stage expansion of Cadia, including increased plant capacity. Work on both stages of the development is currently in progress, with completion expected in September 2022.

The modification also allows Newcrest to repair the slumped section of the Northern tailings storage facility (NTSF) at Cadia and revise its and the southern tailings storage facility footprints to allow for a change from an upstream to a centreline lift design.

The adaptation is subject to conditions including Newcrest commissioning an independent audit report to the satisfaction of the DPIE Secretary about Newcrest’s approach to managing and reducing off-site air quality impacts of the project.

The Newcrest board approved gating of the NTSF embankment remediation to a feasibility study in July. Detailed design work on a single design option is currently in progress, with execution expected to cost less than A$100 million.

Newcrest’s Toronto-quoted equity last traded at $20.28, capitalizing it at $16.6 billion (US$12.95 billion).