TNR Gold Kirill Klip talked with Proactive about the company’s latest developments, including a key milestone in its transition to a cash-flow-generating royalty business.
Klip highlighted that TNR Gold holds royalties on significant projects, including the Los Azules Copper project and the Mariana Lithium project in Argentina.
With Los Azules now applying for Argentina's incentive regime for large investments, he explained that the project could see substantial tax reductions, making it easier to attract the $2.7 billion investment required for construction.
Proactive: Hello, you're watching Proactive. I'm joined by TNR Gold Corp Executive Chairman Kirill Klip. Kirill, good to speak with you as always. You're out with an update on your NSR royalty. McEwen Los Azules Copper has requested admission to Argentina's incentive regime for large investments. So, good news for Los Azules and also potentially for TNR Gold?
Kirill Klip: Yes. Thank you for having us. Today, we reached another major milestone for our company. As you know, we are building the green energy metals royalty and gold company, TNR Gold. And today, we are celebrating another step closer to the construction of Los Azules.
This month, we transitioned from a project generation junior mining company to a cash-flow-generating royalty company. This follows the inauguration of the Mariana Lithium production in Argentina on February 12. Now, we can discuss this major step for Los Azules, which will allow its development.
Argentina's investment incentive plan for large investments means that for this giant copper project, income tax could be reduced from 35% to as low as 25%. There will be no value-added tax during construction, and McEwen Copper will be able to keep its export revenue outside of Argentina, to repay its investors and make royalty payments.
This means it will be easier for Rob McEwen to attract investment, which could be as high as $2.7 billion to construct this giant project in Argentina.
I suppose this is just another example of the economic performance under Argentina’s President Javier Milei?
Yes, this is correct. President Javier Milei has created a bold economic plan to position Argentina as a powerhouse in the energy revolution. We are now talking about the construction of a $2.7 billion copper project in South America.
What is important to mention here is that Argentina's incentive plan for large investments provides 30 years of stability, which is crucial for attracting large-scale investment.
I’d also like to take a moment to illustrate our business model as a green energy metals royalty and gold company. Recently, we celebrated the creation of a $1 billion project by Ganfeng Lithium at the Mariana Lithium Project in Argentina. Now, we are looking at a major step toward a construction decision for Los Azules, which carries a $2.7 billion valuation.
TNR Gold, despite having a market cap below $10 million, holds royalties on both projects in Argentina.
In the meantime, McEwen Copper has also secured an environmental permit for construction, hasn’t it?
Yes, that is correct. We celebrated this milestone in December. Now, we are moving toward the feasibility study for the project.
So, take us through that. After the feasibility study, is there a timeline for construction?
Yes, Rob McEwen recently updated us. They expect to release the feasibility study in the first half of this year. I’d like to remind our audience that previous preliminary economic assessments produced very solid results.
Here, we are talking about a $2.7 billion investment into Argentina’s economy. The project is expected to produce 175,000 tonnes of copper anually, not in concentrate but in copper plate form. This is important because it means it can be sold both within Argentina and exported via Chile.
If we convert all metals contained in the property—including copper, gold, and silver—into a gold equivalent, we are talking about 60 million ounces of gold equivalent. This includes 10.9 billion pounds of copper in the indicated category and 26.7 billion pounds in the inferred category.
A feasibility study could not only confirm previous economic assessments but could also significantly increase the estimated resources. The preliminary economic assessment only included drill holes up to December 2022, so we expect an increase in resource estimates.
You mentioned your transition to a cash-flow-generating royalty company. Fundamental Research has been evaluating the company's valuation. What do they say about TNR Gold’s NSR royalty?
Yes. We've been discussing the potential valuation of Los Azules for some time now. For example, Rob McEwen estimated that his own royalty on Los Azules could be worth as much as $100 million based on the Osisko deal with SolGold in Ecuador. Based on that transaction, TNR Gold’s valuation could exceed $30 million.
We were pleased to receive a new updated research report from Fundamental Research Corporation. They reiterated a buy rating on TNR Gold and increased their price target from $0.24 to $0.28. I should note that this research reflects the analysts’ views and not those of our management, but it represents a nice milestone for us.
The report highlights our transition from a project generation model to a cash-flow-generating royalty company. With the inauguration of Mariana Lithium this month, we are starting to generate an estimated $1.2 million annually in lithium royalties. When Los Azules reaches production, we could generate as much as $6.5 million per year. This presents significant potential for shareholder value.
Quotes have been lightly edited for clarity and style