- Unique royalty company focused on originating new royalties and streams in Tier 1 jurisdictions
- Disciplined portfolio with 70/20/10 split between cash flowing, near-term cash flow and non-cash flowing assets
- Pioneered the first forest carbon credit royalty on the Lac Seul First Nation forest project in Ontario
- Strong focus on green investments with an 80/20 split between precious metals and green project opportunities
What Star Royalties does:
Star Royalties Ltd (CVE:STRR) is a different kind of royalty company.
Sure, the Toronto-based company invests capital in highly prospective metal projects with cash flow visibility in low-risk jurisdictions around the globe, like any royalty firm would do. What really sets it apart, however, is its commitment to invest in green opportunities, spearheading the first forest carbon credit royalty and pursuing a pipeline of additional green investments.
Currently, Star Royalties is targeting 80% of its capital allocation to precious metals, with up to 20% available for predominantly green investments – namely copper and nickel projects. Its longer-term portfolio allocation will target a 70% weighting in cash flowing royalties and streams, 20% weighting towards near-term development opportunities where the development-to-cash-flow timeline is less than two years, and 10% to geologically prospective, advanced exploration targets with no cash flow.
Right now Star Royalties has a handful of standout assets in its portfolio: the Copperstone gold project in Arizona; Keysbrook, which is a mineral sands project in Western Australia, and a unique royalty on a carbon offset project in Ontario.
Copperstone is owned by Arizona Gold Corp (TSE:AZG) and is located within the Walker Lane gold trend, which hosts a known gold endowment of over 40 million ounces in the state. Star owns a gold stream of 9.9% of gold produced until a cumulative 21,000 ounces are delivered, then 3.3% of gold produced until a cumulative 27,200 ounces are delivered, then 1.2% of gold produced thereafter.
At Keysbrook, Star owns a 2% gross revenue royalty on the open pit mineral sands mine operated by Keysbrook Leucoxene Pty Ltd, a subsidiary of Doral Mineral Sands Pty Ltd.
It is the interest in the Lac Seul First Nation forest pilot project that adds a unique dimension to the company. AurCrest Gold and Bluesource Canada ULC are assisting Lac Seul First Nation in developing forest carbon sequestration opportunities on the Nation’s Reserve lands and Traditional Territory that will deliver carbon offset credits that can be sold to federally regulated industrial emitters.
The forest covers an area of 22,063 hectares of the Nation’s Reserve lands and has the potential to sequester significant amounts of CO2 per year. Future benefits from the monetization of the carbon offset credits, net of expenses, will be split with the significant majority going to the Lac Seul First Nation and the remainder to AurCrest Gold and Bluesource. Star Royalties owns a 16% gross revenue royalty on AurCrest Gold’s forest carbon sequestration revenue share from the forest pilot project (with a right of first refusal on any forest carbon sequestration within the overall Lac Seul Forest Management Unit).
Led by an experienced team including former Barrick Gold veteran Alex Pernin – and with four women on its board of directors – Star Royalties is advancing a strong pipeline of more than 10 different opportunities in 2021.
How is it doing:
Star Royalties is busy building out its asset portfolio, having raised over $40 million over the last 12 months.
In November 2020, Star purchased the Copperstone royalty for US$18 million, which it said will be used to finance the restart of underground operations and gold production. The US$18 million advance payment will be made in three equal installments, with the first payment completed upon signing and the second advanced in February 2021. The final $6 million installment is expected to come by the end of April.
The firm recently closed an upsized IPO of $24 million and listed on the TSX Venture Exchange under the symbol ‘STRR.’
Star Royalties is expecting to generate nearly $7 million in free cash flow next year, according to its CEO Alex Pernin.
Inflection points:
- Restart of mining operations at Copperstone
- Execution of more deals from pipeline of more than 10 opportunities
- Multiple additional carbon credit opportunities
- Potential US listing to increase trading liquidity
What the boss says:
“Star Royalties is unique in three ways: our team, our differentiated model and our superior alignment,” CEO Alex Pernin told Proactive in March.
“Our rule is to structure mutually beneficial deals. This differs from many of our peers who are focused on the existing royalty market, which has become more competitive lately. Most of our pipeline is exclusive to us, which is also unique, because of our focus on origination and our deep relationships.”
Contact Angela at angela@proactiveinestors.com
Follow her on Twitter @AHarmantas