Highly Attractive, Lower Risk Financing Solutions for MiningBy Paloma Duran | Tue, 06/08/2021 - 12:39
Q: What does Empress Royalty do for mining projects?
A: Empress Royalty is a royalty and streaming company. Royalty companies have people like me who invest in a company to obtain a percentage of the company's profits or revenues. Streaming companies are similar in that we invest in a company and its project, but instead of getting a percentage of the revenue, we get a percentage in gold or silver at a discounted price. We choose and structure the financing according to what each company needs to continue developing its projects.
Q: What types of companies does Empress Royalty target?
A: The creation company is what we focus on. We work with a mining company to create a new royalty or streaming source. We work with companies that want to put the mine into production or obtain additional capital, as well as with mines that are already producing, but do not have access to capital or do not want to take capital and dilute themselves. We can help them increase their production through streaming or royalties. For us, it is important to have a close and direct relationship with the mining company because we believe it should be a mutually beneficial relationship.
Q: Who are Empress Royalty's strategic partners and how are they improving your financial proposition?
A: We have three strategic partners: Endeavour Financial, Terra Capital and Accendo Banco. Endeavour Financial is a leading global investment banking firm that focuses on mining and has over 30 years of experience. Endeavour Financial's Managing Director is David Rhodes, who is also our executive chairman. This partnership gives us access to cash flow modelers, bankers, mining engineers and geologists. As a result, we can quickly get deals, negotiate and turn them into investments for Empress. In addition, Endeavour Financial has a strong global presence, so it also benefits us by giving us access to deals in Africa, South America, Asia and other countries we have previously worked with.
Our second partner, Terra Capital in Australia, is run by Jeremy Bond. It is one of Australia's leading boutique fund firms, which gives us access to Australian deals, projects and listed companies with international projects. Bond is also one of our directors and is part of our Investment Committee. Bond has been an active investor in the Canadian natural resources market for the past 10 years, providing us with a fantastic network of capital markets.
Finally, our third partner, Mexico’s Accendo Banco, is led by Javier Reyes, who is now a strategic adviser to Empress. We signed a strategic alliance with Accendo Banco in August 2020 and this agreement has given us exclusive access to investment opportunities in Mexico. Accendo is one of the leading banks in mining financing and has a fantastic network in Mexico. In addition, it has a fantastic technical team and good relationships within state and federal governments. We are very happy with the alliance and excited to find more great opportunities in Mexico.
Q: What characteristics should a mining project have to qualify for Empress’ royalty financing solution?
A: We are looking for projects in the development and production stage that need financial assistance to go into production or expand their resources. We are looking for small and medium-sized companies, whether public or private. However, they must be purely gold or silver, as we are a true precious metal royalty streaming company.
We are looking for projects in Mexico, South America and Africa. The size of our investment is US$500,000 to US$20 million, and ideally between US$1 million and US$10 million.
Q: Empress recently closed and funded the Tahuehueto silver stream. What is the significance of adding this near-term producer to the company’s portfolio?
A: We are a new company that started trading in December. We became a public company with an initial portfolio that included Candelaria’s Pinos project in Zacatecas completed in November. However, the most interesting deal to date has been Telson Mining's Tahuehueto project, where we are providing a silver stream. We have executed the documents and financed the first tranche and we are waiting for the final pieces to come together to fully fund this project.
Tahuehueto is a great example of how our strategic partners and Empress work together. To do this, we have provided a complete financing solution: Accendo Banco is providing US$12 million in debt, Empress is providing a silver stream of US$5 million, and both Accendo and Endeavour have helped arrange equity totaling US$8 million. The entire group is providing a financing solution of US$25 million, which is expected to bring the project that is 60 percent constructed into production toward the end of 2021 or the beginning of next year.
Q: What does Empress have in its deal pipeline for 2021?
A: We are looking for many opportunities. Some deals are being executed and we have other investments in progress. We are looking for one in Kenya and one in Peru to improve their production. We also have a portfolio of 12 other opportunities that we are reviewing, four of which are in Mexico.
For this year, we have US$75 million in potential investments. We have three development assets: Manica, Pinos and Tahuehueto and we would like to expand our portfolio by adding production assets. We need to see which ones make the most sense for us to move forward. It all comes down to the technical, environmental and social aspects.
Q: Why is Empress Royalty a good investment option?
A: I think it is a good option for anyone who wants to access gold and silver in their portfolio. We are a new company but we are on the way to rapid development. We are highly leveraged on the price of gold and silver. By investing in our royalty company, people gain access to a globally diverse portfolio of assets.
Another benefit of investing in a royalty and streaming company is that you get limited exposure to capital and operating costs compared to typical mining companies. We provide a non-dilutive highly competitive cost of capital, so companies do not have to raise their equity and dilute their shareholders. We provide the initial capital necessary for a project and flexible solutions that are less restrictive than bank debt.
We know that every situation is unique because each company has different restrictions or objectives for its future, and as a result, we do not provide the same financial solution to all mining companies; we customize them according to their needs.
Our company continues to grow with a focus on revenue in the near future. We want to get to a point where we set the dividend policy, a percentage of gross profit and generate great returns for our shareholders.
Empress Royalty is a royalty and streaming creation company withhas a strong portfolio of global investment opportunities in precious metals mining companies. It focuses on finding industry partners with development and production stage projects that require additional non-dilutive capital.