- Precious metal royalty company with a portfolio of 16 royalties
- Focused on writing royalties and streaming agreements on development to production stage mining projects rather than acquiring existing royalties
- Most advanced royalty is over the Pinos gold-silver project, located in Zacatecas, Mexico
What Empress Royalty does:
Empress Royalty Corp. (CVE:EMPR) is a new precious metal royalty company with a portfolio of 16 royalties.
The company is focused on creating royalties and streaming agreements on development to production stage mining projects rather than acquiring existing royalties, where there is a higher level of competition and the value generated is, as a result, lower.
Empress is targeting small to mid-tier sized mining and development companies and plans to invest between US$500,000 to US$20mln per deal. While focused on precious metals, it plans to access projects all over the globe.
Of the company’s current portfolio of 16 royalties, the most advanced is a 1% net smelter return royalty (NSR) over the Pinos gold-silver project in Zacatecas state, Mexico.
Empress also has two deals in progress, both with exclusivity agreements in place. In addition to those deals in progress Empress is currently assessing the creation of royalties and or steams on an additional ten projects that vary in size from less than US$1mln to US$10mln. While there is no certainty that all or any of these deals will close, the pipeline demonstrates Empress's aggressive approach to building its portfolio.
The company is currently negotiating on over US$50mln of potential investments and can leverage its strategic relationships to assist in sourcing any additional funds required to complete these deals. The team behind Empress has an impressive pedigree with over 250 years (in aggregate) of proven management and board experience in mining finance and has completed over US$6bn in transactions.
The company has strategic partnerships with Endeavour Financial in London, Terra Capital in Australia and Accendo Banco in Mexico which allow Empress to not only access global investment opportunities but also bring unique mining finance expertise, deal structuring and access to capital markets
Strategic partners, board and management own 55% of the company. Empress plans to implement a dividend policy, paying out a percentage of gross profits to shareholders, once the company has reached critical mass.
How is it doing:
Empress Royalty shares began trading on the TSX Venture Exchange on Tuesday, December 29, 2020 under the symbol EMPR.
A month earlier it had completed its acquisition of the 1% Net Smelter Return (NSR) royalty on production from the Pinos gold and silver project owned by Candelaria Mining Corp. (TSX-V:CAND, OTC:CDELF)
The acquisition was a combination of a newly created 0.5% NSR royalty on the Pinos project from Candelaria for consideration of US$750,000 and the purchase of an additional 0.5% NSR royalty on the project from an existing royalty holder on the same terms and conditions.
The Pinos project, 100% owned by Candelaria, is located in Zacatecas, the second-largest gold producing district in the country after Sonora, which is a stable, mining-friendly state that includes Newmont Mining’s Peñasquito mine and Capstone Mining’s Cozamin mine.
The project, which has excellent infrastructure with paved roads to the entry of the mine and electricity on-site, consists of 29 concessions comprising 3,816 hectares which is roughly 17 kilometers worth of veins containing gold and silver.
Pinos has all permits in-place for production and is currently being moved towards construction under its PEA and will begin construction of a 200 tonnes-per-day (tpd) mining operation with a path to ramp-up to 400 tpd within two years of initial production.
And in February this year, Empress said it had acquired a 2.25% production royalty on the Manica gold project in Mozambique owned by Mutapa Mining & Processing LDA (MMP) for US$2 million.
The main deposit, Fair Bride, has a SAMREC-compliant resource statement that Empress is currently in the process of updating to NI 43-101 requirements. In April this year, it completed the C$2 million purchase.
In March, Empress said it had closed a previously announced bought deal public offering raising around C$15.75 million, including the partial exercise of the over-allotment option. The net proceeds, said the company, will be allocated to the company's cash reserve retained for future acquisitions, due diligence and expenditures and for general corporate purposes.
On July 22, the company said it had made the final US$3 million payment as part of a previously-announced US$5 million silver stream agreement on the Tahuehueto project in Mexico owned by Altaley Mining Corporation (TSX-V:ATLY) (TSX-V:ATLY), previously known as Telson Mining Corp.
Empress will receive 100% of the payable silver production from Tahuehueto for the first 1,250,000 payable ounces, after which the percentage will be reduced to 20% to a maximum of 10 years from first production after which the stream terminates.
Empress’ silver stream agreement is part of a US$25 million full financing package provided to Altaley by Empress and its strategic partners Accendo Banco and Endeavour Financial, which includes a US$8 million equity private placement by Altaley that closed on March 30 and a US$12 million debt facility from Accendo.
A 2017 pre-feasibility study estimated that the Tahuehueto project has a 21-year mine life at a production rate of 550 tonnes per day, although Altaley has elected to build a 1,000 tonnes per day mining operation to achieve improved economics. When fully ramped up, the project will provide arond US$3 milllion in revenue to Empress every year for about ten years.
On July 26, Empress reported that it had amended its agreement with mining sector financial advisor Endeavour Financial Ltd to source and evaluate debt facility opportunities and/or corporate transactions to accelerate its growth.
Founded in 1988, Endeavour has a well-established reputation and has arranged over US$500 million in royalty and stream finance, US$4 billion in debt finance and US$28 billion in mergers and acquisitions.
Its team has diverse experience in both natural resources and finance, including investment bankers, geologists, mining engineers, cash flow modellers and financiers.
Inflection points:
- Further royalty/streaming deals
- Progress at the Pinos project in Mexico
- Progress on Altaley's Tahuehueto mine project
What the analyst says:
In a note on July 26 this year, Research Capital Corp repeated the 'Speculative Buy' rating and target price of C$0.70 that it had put on Empress stock in its initiation report of July 5, 2021.
Analysts highlighted that Empress had recently made the final installment payment of US$3 million for the Tahuehueto silver stream purchased from Altaley Mining and that Altaley had also mow finalized the US$12 million loan agreement with Accendo Banco (a partner of Empress).
"Together, these funds will help bolster Altaley’s balance sheet and help complete the construction of the mine/mill facilities," said the analysts.
Research Capital said it valued the Tahuehueto stream at C$25.1 million which accounted for more than 77% of Empress’ asset value, excluding cash, etc..
"Therefore, the success of the Tahuehueto project is extremely important for Empress and represents the most significant risk and reward for the company," they added.
What the boss says:
"We have expanded the role of Endeavour to help Empress accelerate its growth strategy. We have been working closely with Endeavour since our inception, building a strong platform to identify investment opportunities and continue to do so. Endeavour's expanded role is to source and evaluate debt facility opportunities and/or corporate transactions for Empress. Endeavour's team is an award-winning group of mining finance experts with a proven track record of success," said Alexandra Woodyer Sherron, CEO of Empress Royalty in the group's most recent statement.
Contact the author at giles@proactiveinvestors.com