‘Revenue Is Doubling’ – Why Empress Royalty Could 10x in This Gold Bull Market
Summary
Investment Strategy: Empress Royalty focuses on gold and silver royalty and streaming investments, emphasizing early-stage cash-positive assets to capitalize on the current bull market in precious metals.
Market Dynamics: The podcast highlights a shift in investor sentiment towards optimism in the gold market, with capital flowing from top-tier royalty companies to mid-tier producers, but not yet reaching exploration companies.
Company Performance: Empress Royalty has successfully doubled its revenue annually for four consecutive years, with projections to continue this trend by strategically investing in producing and development-stage assets.
Geopolitical and Economic Factors: The discussion underscores the impact of geopolitical uncertainty and decreasing trust in fiat currencies, which are driving increased interest in gold and silver as safe-haven assets.
Portfolio Diversification: Empress has a globally diversified portfolio with four producing assets across Mozambique, Peru, South Africa, and Mexico, and plans to expand into development-stage assets to enhance returns.
Competitive Landscape: The podcast notes a growing interest from institutional investors in junior royalty companies like Empress, as well as increased competition in the project finance space.
Future Outlook: Empress aims to expand its portfolio by focusing on development and restart projects, leveraging its expertise in structured finance to capture opportunities in the gold and silver sectors.
Commitment to Shareholders: The company maintains a disciplined approach to capital allocation, avoiding dilution and focusing on sustainable growth, which has attracted a strong base of supportive shareholders.
Transcript
One of the key attractions to Empress is that at this stage, you're already net cash positive, right? At an early stage, you have four assets producing for you and more in the pipeline that I want to talk about. >> This is J Martin. >> Alex, it's so good to finally get you here in the studio. Thanks for coming in. >> Thank you so much for having me here. I am so excited to have this chat today. >> Okay. Me, too. So, the last time I saw you was in Florida at Rick Rule's Boca Raton conference, and I really wanted to catch you. It's wild. That's It's not a massive conference, but it's incredibly well produced. And I was like run off my feet busy the entire time. And I know we caught each other in the aisle way, and you were going this way, I was going that way, and we got a quick hug in, and then we ran other directions, but it struck me that being there for 4 days at a pretty tight event, and I still didn't get to connect with everybody that I wanted to talk to. No, it's exactly that. I mean, there's what 40 50 companies there. The panelists are speaking are amazing. So, you you know, as having a booth, you want to be in listening. Thank god that's all in replay. So, I'm slowly turning and going through those. >> But, it's just amazing supportive shareholders we've had there. There's people we've met a couple years from going. There's still, you know, very supportive shareholders. We've met new shareholders. It's uh it was very, it was, as you said, it was really busy. It was full of energy. It was a really great time to be there. smart investors asking great questions like the conversations on the floor were awesome and it struck me that sentiment in addition like sophisticated money is always nice but the energy was in a great place people were walking around with confidence in this bull market that I haven't seen in a long time I think for the last few years whenever we've had a bit of a you know maybe like a false start or a bit of a rally in the gold price um I'm at events or I'm hosting events and I'm talking to investors and the most common term I would hear is we're feeling cautiously optimistic, right? And you know, I don't want to get ahead of ourselves, but the feeling was definitely just optimistic. That was and that wasn't just the investors walking on the floor. That was the company CEOs and that was everybody from the stage as well. It seemed like the trifecta. Everybody is experiencing this market a bit differently. And I wanted to ask you about that because um if we look at how this precious metals bull market is unfolding, I would say it's incredibly textbook, right? A couple years ago, the pillar idea, physical gold, began to run towards all-time highs, eventually hit them, and the capital has trickled down very methodically to sort of the best-in-class royalty companies, best-in-class miners, then mid-tier producers, and it's worked its way down the chain. So if you're an investor in gold mining companies, you're happy. But today, if you're a speculator in gold exploration develop companies, those people are still impatient because the money hasn't reached all the way down yet. I think that's healthy. But what's your take on this market, how it's unfolding? What are you paying attention to? I really appreciate your insight here because in a way, you and I do the same thing. We're capital allocators into the mining sector. you work with much bigger checks than I do, but we look at similar assets in terms of their stage. So, >> how are you interpreting this market, Alex? And what are you paying attention to? >> We obviously follow it very closely. We're only gold and silver and I, you know, that was very uh done with uh very clear vision and to really be able to capitalize when the gold and silver market moves. I think all the fundamentals are there that we're in a proper bull market now. Um especially now we're hitting alltime silver and gold highs. I think it's just going to continue. So, you know, when I look at companies, it's, you know, what gold can we get now? What silver can we get now? But as as you're saying, as the environment is opening up more and we believe there's more long-term really long-term value coming here with all the effects of the geopolitical uncertainty, you know, the meetings that are happening right now in China, the various crisises around the world, you're looking at, you know, the lack of confidence in some basic fundamentals like the Swift system with what happened there and the reserve starting to build it all up. There's a lot of shifts happening in that. Um and so we as a company are were really focused initially on producers but now we're looking at development stage assets. I'm seeing a lot of restarts uh people wanting to capitalize in gold now. So the market really is shifting and changing. Um and I think it's a very interesting time and there's a lot of opportunity. >> Yeah. >> For investors is like sort of just like broad sector decreasing trust in the dollar whether you're a foreign central bank or you're just a you know gen pop walking around watching your purchasing power uh disintegrate. And I don't see any path forward that doesn't include massively increasing inflation of the currency. Yeah. >> Um and that's going to continue to pivot people. And I'm seeing more and more friends of mine who are not mining investors. And this is what's striking to me. You know, the last couple years whenever there's been a rally in the gold price and maybe even just a bit of a blip in the equities, most people don't care. And I would even argue today, I don't know, what's your take on this? Most people today still aren't paying attention. You know, gold miners are up twice what Nvidia is up year to date. But everyone's talking about Nvidia, which is great news if you're a gold investor because there's a bit of a stealth rally occurring. Do do you see it that way? >> Yeah, I mean you look at like Pneumont, right? If you look at Pneumont over the last year, S&P 500, it's up 100% over that. So, you really are seeing those companies start to think general public as well. I'm starting to see friends who are wanting to understand the market. You know, I think your commodity TV is a fantastic university is a fantastic platform for people to start educating themselves on our sector. um because there's so many different aspects to our sector. It's a lot for an investor to start to digest and to learn how they want to invest in the different stages of companies, the different commodities. >> Um but yeah, there's a lot of a lot of interesting things happening. >> And are you seeing more institutions come to the table because you're on the road like more than anybody I know uh every continent, right? Sitting down with um financial institutions telling the emperor story. So talk to me about that landscape. Yeah. So, we we obviously do a lot of uh time with our retail investors and we're seeing the institutions. You know, I'm going to a conference in Colorado shortly and at that conference, you know, a couple years ago, we'd have sort of 10 meetings and now I'm getting fund managers, large fund managers reaching out to have contact and we've got an absolutely packed schedule. So there's definitely a lot more interest where I think perhaps you know they weren't looking such at the junior side of the market like we are as being a junior royalty company but now those fund managers are definitely wanting to have the meetings to understand our story to understand our growth platform. >> Yeah. Okay. And what is it right now? Let's just get into the Empress story a little bit. You know I could I could nominate a few reasons that I believe institutions and retail will be more interested in Empress, right? Doubling revenue every year for three years. um getting to cash quickly, uh being very specific with your deals. And I know I I believe you've actually received some criticism from the market or shareholders about what I would call patience, but I guess people want you to do more deals than you're doing. Um I really respect the volume of deals that you look at and the infrequency with which you pull the trigger. And when you do, you mean it, right? Um, but at a at a super high level right now, Empress has invested around $19.5 uh million and you project to receive back about 50 million over 5 years in return. Is that >> even higher than that? We've invested uh close to about 22 and2. Yeah. And so using uh not even current price about 3,000 gold, $30 silver, that should be close to $80 million in revenue coming in over the next 5 years. So, you know, we really set the company up to invest in assets that would bring revenue into Empress. Um, and that's been our key focus and tying it directly to gold and silver. So, as gold and silver prices go up, you know, the net asset value and the revenue come into Empress directly go up as well. We're very correlent. >> So, let's back up a minute and imagine someone has tuned in for the first time to the Empress story. Um, what is it that Empress does and walk me through the origin and structure of the company? Okay, so essentially we are a royalty and streaming creation company um investing old in gold and silver. And so breaking that down a little bit more. So royalty is where we invest in a company and we receive a percentage of revenue cash essentially. And then stream is where we invest in a company and we're able to buy gold or silver at a deeply discounted price. So we're basically pre- buying gold or silver and we're paying 20% of spot for that. So we get the 80% in return for it. And that typically is coming in gold and silver credits. And so right now we're sitting on a lot of cash, gold and silver. So we're seeing our actual treasury rise with the price of gold and silver as well. Um and at Empress we do a combination of both. We mostly do streams because it's more of a project financing. We're directly investing into companies helping them get into production or expand on the production capacity. So we really have derisk the investment. They've got their permits in place. They're at that final stage where revenue will start coming in for them and for us. And it's also because we're directly investing into the company. We have a direct relationship with that company. I'm not waiting for their financial reports to come out quarterly. We have monthly reporting. We're able to understand what's happening with the companies, work with them because we need them to be successful for us to be successful. Um, in the portfolio right now, we have four revenue producing assets that we've layered in. Some were development. They're now in producing. So, we have four sources of revenue. Uh, we have one silver stream in Mexico. That's roughly about 50% of our revenue. So, where silver prices are now, that's going to even increase our revenue further from our forecasts. And then we've got three producing gold mines as well. >> Um, one of the unique things about us as well is we're in Africa, we're in South America, and that really does come down from our background. And you know, you mentioned the origin story. Um, you know, my background as investment banker. I was director of structured finance at a group called Endeavor Financial out of London. And Endeavor Financial is a leading boutique investment banking firm run by David Rhodess. And we worked together at Endeavor. And what we were seeing was the streaming companies like Wheaten and the larger ones were doing $100 million plus investment sizes. This is 5 years ago when we set this company up. Yes. >> And that streaming finance solution wasn't available to junior market. They were struggling with equity. Debt was more restrictive. So we can come in either team up with those groups or we can come in solely and provide that financing for them. Yeah. >> Um, so we saw the opportunity. We've been patiently deploying the capital we have without diluting our shareholders and letting that revenue now start accumulating so that we can redeploy it into the portfolio. >> Okay. And so right now you have four producing assets. You're in Mosamb beek, you're in Peru, you're in South Africa, you're in Mexico. >> Yes. >> Um, so globally diversified and that's a consequence of your background with Endeavor Financial Investment Banking. You had a very global outlook. Yes. >> Right. And your team does as well. You brought that team with you. >> Yeah. And a lot of that's our experience. We've worked in these countries before. We know how to structure in these countries. We understand the legal framework. We understand how to take security over the assets. We understand how to get the money out of the country. So our expertise and experience and we have, you know, contacts within the government and the experience to understand what's happening there so we can invest wisely. And you mentioned your deal size relative to some more familiar names, the Wheatens, the Franco doing the, you know, nine figure deals in the streaming and the royalty business. Empress is focused on like around 10 million. >> Yeah. >> Correct. >> Yeah. We're mandated up to 25 million. We started out, we've done sort of five $10 million deal sizes. As we've now hit that critical point with the cash flow coming in, we'll start looking at larger investment opportunities staying in that 25 range. So sort of 5 to 25 as well. I think you'll see us do most of the deals. >> Okay. >> Um and that's just there's this lack of opportunity for financing for them. So it's a perfect time to get in. >> Yeah. That's the piece of the market that you're cornering here. And so that's why I opened up this conversation. I was like we kind of do the same thing in that we're vetting these projects and allocating capital in exchange for a return down the road. >> Um and we look at similar stage assets, right? Um which is what I wanted to get into. Now I have been asked uh many times by subscribers and attendees about Empress's deal size and they've asked me is the 10 million the 5 to 10 million deal size the mandate or is it a consequence of their company stage and should we expect 5 years down the road for that deal size to increase and if so to what? And it's like it's it's the mandate, right? You're mandated up to 25 million, but as a consequence of market conditions, you're now looking at larger deals, uh larger deals than you've looked at for the last few years. Is that >> we basically been in sort of 5 to 10 for the last couple of years. Now I'm, you know, looking up towards a 25 range. Yes. >> Um you know, as we evolve over the next 5 years, our cost of capital comes down. We've got a more diversified portfolio. You know, we might get a little bit bigger than that, but you we don't want something huge and lumpy in there. We really are focused on portfolio diversification. >> Yes. >> So I think you'll see us stay in this area because we can manage the risks that we're dealing with. Again, we're patiently deploying it, choosing the right assets, doing all the due diligence that supports it. >> Um but there's just a lot of opportunity in that size of the market. >> So for somebody again who just I want to simplify the the model a little bit. >> Uh we've discussed what it is you do and and how how you do it. To date, you've invested around 22 million. Uh you say 22.5 22. Yeah. Um and right now we have four producing assets. So what are those producing for us? What's the return from those assets that we're uh gaining annually at present? >> Yeah. So we did uh was it for the first half of this year we did $6.5 million in revenue from those Jimming investments. Net revenue is about 4.5. Um we're looking to double that. Revenue last year was $8 million. We're going to be close to doubling it this year. Um and that will continue to grow out. Um we've got the asset in Peru. Now, the Proving Assess actually a private company. We invested $10 million helping them expand their production from 750 tons to a,000 tons. That was a couple of years ago. We've been receiving consistent revenue from them and they're finishing off that expansion now and getting to a new part of the or body. Um, we did the Talawa Silver Stream with Luca Mining. Uh, we got in pretty early on that one and that one's obviously got into production now and that one's moving forward. We're getting pure silver coming from from that investment. Uh we did Mosamb beek that was a $3 million investment. Um and that was finishing off a plant. That one we invested was a development asset. It got into production. We've received over $5.5 million US to date from that $3 million investment. Initially there was a three-year mine plan. They've done extra development work. They're currently doing some exploration at the moment and that is going to keep running even longer. So that's another example of how these things can run a lot longer um when the work's being done around it. Uh we did uh Galaxy in South Africa. That one's still ramping up now in production. So we're getting a small amount of gold now, but that will be part of the catalyst as well as Luca for doubling our revenue this year. >> Yes, >> we're getting close to that. Yeah, >> getting close to doubling revenue. And if you double revenue this year, that would be four years in a row. Three years in a row. >> Four. >> Four years in a row of doubling revenue year-over-year. And what's the income look like? Because right now you're building the treasury, correct? >> Yeah, exactly. So we've got our net income. We're first uh as of the June financials, we now have a positive uh positive cash flow, net income about $1.5 million US. We're able to keep our GNA low because we obviously the relationship with Endeavor Financial. We're a lean team. Um our GNA is about 22 $2.5 million US. So the rest of that is pure profit that we can reinvest. We're sitting on about $4.5 million uh in cash and gold and silver um at June and we've been accumulating cash since then. And now we've got free cash flow, gold and silver to reinvest in the portfolio. >> And that's been a really critical point for us to hit like a huge milestone to now have the ability to act very quickly to be more agile in the opportunities we're seeing and to seize them faster when they obviously make sense from the due diligence side. >> Okay. And just one thing I want to point out there because um from a market cap standpoint, Empress would be in sort of the the junior um part of the industry, right? But what I like about it is that because of the model, you're an earlystage royalty company. You're building the treasury right now. We're joking about this, but I call it the Vancouver M2 money supply. People don't think about every gold and silver equity investor is familiar with the Fed printing money and devaluing their currency, and they think that's wrong. We all agree on that, right? But if a junior mining company does it, they don't bat an eye, right? And what can occur as a consequence of too much share issuance going back to the market to raise money again and again and again too frequently is you can have a junior company market cap go from 5 million up to 30 million and the share price doesn't move because all they've done is issue more paper. And one of the key um attractions to uh Empress is that at this stage you're already um net cash positive right at an early stage when you have four assets producing for you. um and more in the pipeline that I want to talk about. So um yeah, key key reason number one I suppose to have a look at Empress right now is because um some of the pillar companies that I encourage any mining investor to look at are the ones that you mentioned. It's the Wheatens, it's the Franco, and then maybe look at Agniko. Really well-run companies, great leadership. They're the hallmarks of the industry, right? Um, and if you follow that logic down from a business model standpoint to the early stage, there aren't a lot of companies that are doing what you're doing. I mean, you cornered this part of the market early. Um, question for you actually, is there more competition in this deal size today? Like, are you seeing some copycat companies emerge who are looking at what you've built over the last few years and they're trying to do something comparable >> that we are seeing other groups who have who've been uh who've built their portfolios more on acquisitions, okay? more exploration starting to look at the project finance side a little bit. Um which is interesting to see because they're realizing the returns we're getting and the cash flow basis that we're getting because if you're going to the side of the market we are which is so close to production or in production there's more opportunity there um for the immediate cash and I think the market has shifted generally in the royalty and streaming space over the last couple of years where you were rewarded for long-term royalties of streams but now I think people are being more rewarded for cash flow. >> Yes. and be able to redeploy exactly for that lack of like not having to dilute the shareholders being able to be more strategic actually getting you know gold and silver coming into the account rather than potentially what might happen 1015 years down the road so I think the market is rewarding that now and so it's a bit of a shift in that um to me that's great because that's bringing more finance to mining companies >> right there's more minds will get more produ into production so I think that's a very positive thing for our sector um you know we have a very much an expertise and a specialist in the jurisdictions we're going into we're all structured finance backgrounds. So, we work with these complex structures. We're even seeing the streaming agreements change over the last 5 years. You know, it was very simple. You buy X% of gold and you get it. But now there's different milestones that go into it and different um I call them sort of levers that can be played with. And there are all the financing are very much more bespoke in streaming. You know, a royalty agreement is a simple agreement. You produce I get X%. streaming agreement is much more complex and because you're working directly with the mining company and understanding their goals and objectives is just you know is this a simple development project that get production do they have debt okay well there's certain things that the debt providers will need so we can structure around that do they have the ability to raise equity okay well we can structure around that do they you know are they've got offtake financing and all these other elements and we can work with the company understanding their goals to make sure that the streaming increment really works for them and we're still obviously getting a good return. It works for our shareholders, but it has to work for both parties and their long-term goals. And a restart, it's different. Usually, we've got a restart going and they want to get a bare minimum amount of gold coming out that they can use that financing themselves to expand the plant down the road. So, you know, we can structure around that as well. >> And you're seeing uh bit of a surge in restarts. These are mines that maybe shut down, went on care and maintenance for the last 12 years because gold prices didn't support production. But now with gold prices where they're at, a lot of mines can be restarted. So you're seeing a surge. This is a trend you're watching. >> Absolutely. I'm seeing an absolute surge in the restarts and groups that maybe had some development assets or some exploration assets that have now realized there's a there's a you know a plantary mill they can get their hands on. They can start pushing things through and actually use that cash flow to fund the bigger exploration that they wanted to do. But in rather than just going out and raising equity and diluting. So that's I think been a shift I've seen in the last couple of months and I think there's some really good companies out there making that shift right now and then trying to accumulate more land but using their own you know get themselves funded with our support and a few other support and then they can really expand that. So that's going to be an interesting story I think to watch the next couple years these kind of companies. >> Okay. Um you did a deal last year in the US. So we talked about some assets you have in Mozambique, Peru, Mexico and South Africa. Yes. Can we walk through the structure of this deal you did at the >> To be clear, we haven't actually closed that deal yet. We've been working on that deal now for quite a while. So, I'm looking forward to be able to come back. But, you know, when we go through this process and working with these companies, there's extensive due diligence that we do. So, actually, I'll just step back and even explain sort of our process and then so the elements that go into it. So, you know, as you're an investor in the space, obviously we are as well. And so we're fortunate and positioned because we're dealing directly with a company and providing them usually substantial financing. We really get to, you know, get in there and go through all of their data, understand it, and it starts right out of the gate from the technical perspective. We have an amazing technical adviser, David Lang, who's been in the business for 40 years, um, involved with many companies. We work together, Endeavor Financial. He was key over there as still is. And so we go through, we look at the technical aspects, we identify if the project makes sense. If it does, we then will talk with a company, negotiate a term sheet. If we agree on terms, um we then move forward with our third party technical due diligence, which David Lang manages for us. We hire the right expert team in that jurisdiction with that mineralization, the geography. We might have identified areas early on that we think might be issues for them to dig deeper into in a real thing. So it's it's really kick the tires and see what this works. site visits, extensive reporting. Often in that process, things fall off. They don't stack up. They don't meet the criteria at that point or we'll make suggestions of what we think needs to be done. They can take it or leave it. Often a couple of situations now groups have gone away done that additional work and come back to us. Um we do a full extensive legal DD. So we look at all of their NESG reviews. We look at all of their permitting, their licenses, their social relations. You know, a lot of these places are remote communities. So they have to be able to work within their community and have the support from the community, be able to provide jobs in an effective way and whether resources are needed in those environments. Obviously full extensive financial review. We look at their contracts, make sure their offtake agreements make sense, make sure all of their they've got a healthy enough balance sheet to be able to support what they want to do. If all of that stacks up, then it gets into the detailed legal negotiations and the final contract work that goes through. Sometimes that can be quick. Sometimes we identify an issue along the way that needs to be resolved before we can advance to actually be able to fund it. So we've been working a long time on this opportunity on a copper mine that's a restart that's restarted in Utah and we would be doing a gold and silver royalty on that and then if you know that's hopefully the next deal we can announce but until it's done it's not done. Um but we've got the cash on hand to fund it. >> Okay. So we still are just at four of the producing assets at the moment. But that's a cool example of a a restart project within that trend that you're watching that you're now looking at. And you know, important to note that the quality of a royalty company, royalty and or streaming company stands on the quality of the operators in their portfolio. And so the diligence process that you just outlined is critical. And I imagine having a partner like Endeavor Financial on the team really helps with that. You joked on my stage at VR last year. You're like, "My job is to kill things quickly." You know, and we see deals come in and that should be every investor's goal is to get to the no, right? Get the nose off your desk so you can find the yeses. >> Exactly. And and that is it. It's get the nose off the desk and usually it's technical. We move them a little bit further forward and then something else comes out. But, you know, it has to be the right investment. We're all large shareholders in this company. We want to see this company succeed. We're aligned with shareholders. So, we are patiently deploying capital. um and the market shifting now um as there's more opportunity coming out said with these restarts um and people really wanting to take advantage of the gold and silver price. >> Okay. So Milford, one example. Walk me through sort of the ideal deal that you're looking for right now. You know, you're going up a little bit in terms of deal size. So what's appealing to Empress today? >> So probably about $10 million. Um it would either be a re ideally it would be a restart. So there would be um a restart or or development stage asset. You know, for the last couple years, I have really focused on producing assets. You know, I did I did two developments, became producers, but I needed to get to the point where I had free cash flow. I needed to get net income. I needed these milestones to happen before I was willing to take the risk on development stage assets. So, now that we've got stability in the portfolio, we're servicing our debt. We've got $20 million available from Nabari, we've building up our treasury, I can look at development stage assets again, and that's exciting. So whether they're sorry development meaning um you know I was developments but also restarts so they can be six to 12 to 18 months from production because I can fund them without the heavy burdens um that we had before. So that's exciting. Um and there's some really good opportunities. There's ones you know that are project financing where they've got most the milestones in place and then there's a gap again kind of similar what we did with Taloto. That's, you know, that would be a great one. And some of these restarts as well are really interesting. >> And are you jurisdiction specific right now or you're just like whatever looks good from the economic standpoint? We're moving on. >> It's about economics. Absolutely. For us >> and you got a BD team now um focused on North America. You're looking to fill that role in Africa, but you you're seeing deals there. Walk me through that structure a little bit. How do you scour the earth for the best deals? >> Yeah, I mean there's a lot of inbounds. There's a lot of opportunities we're seeing. So we were building the team out to be able to and we've obviously endeavor helping us building the team out to be able to vet more and bring more in. Um so we've brought in Mark Ashcraftoft out of Toronto. You know David and I knew him back from the standard bank and Barklay's days. Um so he's a mining engineer by background um in Toronto. Uh very well connected with the industry. Run several companies. So he's come on as our BD North America and that really is helping uh expand the the relationships we currently have and it just you know solidifies them and and builds on that. Um we're looking for someone for Africa and we've we've got a good contact there that hopefully is the right person to come along as well. We've got some other feelers out. But it really is going for that sort of people who've been in senior roles either in banks, running their own companies who have that extensive network like we have that cross crosses with ours as well. So it creates more uh ability to have better relationships and be able to execute. >> Is there is there enough opportunity for a company like Empress staying within this mandate? I guess what is the opportunity for a company like Empress staying within this mandate if you were to share with us like the bigger the B hag vision down the road >> it is to repeat what we've done before you know we focus on the producers now we're want to layer in development assets and so you know because we get a little bit better returns in development assets are taking a little bit more risk >> to build it out to you know 5 6 7 8 9 10 investments in the portfolio okay >> we've done to date just creation side so that means directly investing in the companies you directly with them. We are seeing some portfolios that might be attractive to bring into the port into the company. We're getting that point where we've built the foundation. Now it's about accelerating that growth and getting the critical mass. And that's really what we're looking at is some different strategic opportunities and some different ways of actually growing faster. Um I think we're finally starting to get the recognition of what we're capable of and the financials are proving that. So it's now okay, how do we get bigger? You know, we can bring bringing the deals on. You know, Mark, as I mentioned, is also a mining engineer. We're expanding the technical side as well um and be able to execute on those. >> Do you anticipate any M&A in the royalty space? I mean looking at the Royal Sandstorm deal that was a huge deal. >> Uh what's your take on M&A in the royalty and streaming sector? >> Yeah. And you're seeing Tether crypto groups coming into the space which I think is really interesting because they want that hard asset backing with their Tether coin. I mean you're seeing a lot of different things shifting in that space. I think we will finally start to see some consolidation. I think you know there was a lot of talk about it especially when we you know we launched Empress it was you know a few companies and there was a whole bunch of us that came out of the gate around the same time so I think that consolidation will start to happen and and start to see that um I think probably more so now than ever before in our sector okay >> um but it'll depend on the different variables I mean some of us are just pure gold and silver there's other ones that have mixed commodity bases and different theories >> um but I think it comes down to cash flow >> and do you anticipate staying in that we've seen some royalty companies begin gold and silver and then the pivot to poly metallic over the years. It's not in the cards for Empress. >> For Empress will be gold and silver. If we were to acquire something that had another metal in it, we would then probably sell that off. But I see >> um but for us it's gold and silver. And we have, you know, we've been >> over the years, you know, when it wasn't so in favor of everyone saying you should pick up this copper deal, you should look at this, you should look at that. And you know, we've stayed true to it, believing where we believe gold and silver are going. And I think that's been demonstrated now. And we're going to stay true to that going forward. And when you look at the royal tune sector as a whole and the trends in it, you're seeing the M&A starting to happen. You're seeing the precious metals uh leading companies getting more recognition, you know, you're seeing a lot more shift in the financial terms as I was mentioning on these contracts. They're getting more sophisticated. There's more bells and whistles added onto them to be more flexible for both sides. So, there's definitely trends that are happening within our sector at the moment. So for any prospective shareholders who are looking at Empress now and they're thinking about what can I expect to see from them, you know, the next 6 to 12 months news flow, what would you tell them, Alex? >> Uh more deal flow. I would I would love to be able to execute on more deals. I am 100% focused on that. Um so that is that is key. Um I would love to, you know, news flow will be the deal flow. It'll be our financial statements showing the revenue, showing we're being conservative with our spending. um showing we've got the cash in the in the can and growing it. So, it it really is me growing it, bringing people onto the team, um building out our board. >> Sounds like a business. >> It's um it's really rewarding to take something from concept and actually have the financials to prove it works >> and then now just really trying to grow it out and build it out further. It's that critical point we finally hit where we have the freedom with the cash flow to be more agile and to be more aggressive. >> To be more agile, more aggressive. you've continued to pick up >> uh celebrity shareholders along the way. All right. Good to see you in Florida right in Boca R. >> Very good shareholder base and that's something that shifted. You know, we've over the last couple years we've brought in some amazing shareholders. We obviously have Rick Rule. We did that private placement with him. We've got Jeff Phillips, we've got Stefan Gleason who runs one of the largest deposiitories in the US, one of the biggest um bullion traders. Uh we've got Sprat Maria from there. Frank Holmes US Global. We've got obviously our key um shareholders being uh and directors Jeremy Bond from Terara Capital um David Rhodess from Endeavor Financials. So I feel very privileged for the supportive shareholders we have who are such and yourself such experts in the industry who really know the industry. >> You know what's funny? I was just thinking about this as you were saying that everybody who works for me I'm quite certain is also a shareholder of Empress. The whole team. Yeah. Independently like we don't co-invest, right? They do their own thing. >> Yeah. Uh but as you were saying that I was like I I think Empress would be one of the top definitely one of the top if not the top companies mentioned on our VR media platform. Um constantly coming up in conversation. You know we publish every day of the week on that channel. It's like a channel built by junior mining investors for junior mining investors. So we get into companies all the time. >> Empress is definitely one of the most mentioned companies and maybe as a consequence or not. I'm pretty sure everybody that works for me is independently a shareholder of Empress as well. >> That's amazing. >> Feels good, right? Cuz like we have a lot of new folks on our team that are new to the industry and so you want to see them go to good homes with their money, right? >> Yeah. you know, when I was just when we were at Rick's conference and also when I was at your conference in January, you know, meeting shareholders there who invested early on coming through where we're at now and knowing there's such a huge potential for us to even, you know, go so much higher if you're looking at the multiples in the sector of where we're trading now and what we're capable of doing and where we should be. So, there's still so much torque left in this um especially because we're gold and silver and where gold and silver are going. >> I agree. And um you know, and I say I agree because I've watched you do everything you said you were going to do since we connected and and you took the company uh public four years ago, right? >> Yeah. Four and a half. Yeah. >> Four and a half years ago. You've continued to deliver on your promise to the shareholders and the market. >> Um good market, bad market be damned. You stayed true to the focus. Every entrepreneur is seduced by fast cars and shiny objects. Maybe we should look at this copper project, right? You're not. You're saying, "We've got the vision. We know what we're best in the world at. We're going to stick to that. We got the team to execute. >> We're not going to get distracted and dilute the focus. Right. It's the Achilles heel of entrepreneurship. >> Yeah. >> But it's important. It's very important. >> It is. And and and yeah, we had a clear vision. We've been executing on that and really delivering on it. And it there's just so much there's so much we can do now. So it's it really is exciting. Like there's just so much we can do. So it's going to be a really exciting, you know, >> I'm excited to see what you do with a good market. >> Yeah, I know, right? Oh my goodness. >> See what you can do with a bad one. So, um, look, Alex, it's been so great to get you in the studio finally >> and, uh, just, yeah, share the journey as a shareholder over the last four years with Empress. Um, and it's so nice bringing an entrepreneur back on the show again and again and again because you just feel good about, you know, getting them in front of your audience when you know they're the kind of person who does what they say they're going to do, right? It's a rare attribute in this industry. So, thank you for ticking that box. >> Thank you so much. No, thank you for your support. Thank you for being a shareholder. You know, you have been definitely along with me on this journey. It hasn't always been smooth, but we've always delivered and we've been consistent in that. And that's what we plan on doing going forward. And really, now is the time to crank it up. So, it's going to be fun. >> Let's crank it up. I like it. >> Awesome. >> All right. Thank you, Alex. >> Thank you so much, Jay.
‘Revenue Is Doubling’ – Why Empress Royalty Could 10x in This Gold Bull Market
Summary
Transcript
One of the key attractions to Empress is that at this stage, you're already net cash positive, right? At an early stage, you have four assets producing for you and more in the pipeline that I want to talk about. >> This is J Martin. >> Alex, it's so good to finally get you here in the studio. Thanks for coming in. >> Thank you so much for having me here. I am so excited to have this chat today. >> Okay. Me, too. So, the last time I saw you was in Florida at Rick Rule's Boca Raton conference, and I really wanted to catch you. It's wild. That's It's not a massive conference, but it's incredibly well produced. And I was like run off my feet busy the entire time. And I know we caught each other in the aisle way, and you were going this way, I was going that way, and we got a quick hug in, and then we ran other directions, but it struck me that being there for 4 days at a pretty tight event, and I still didn't get to connect with everybody that I wanted to talk to. No, it's exactly that. I mean, there's what 40 50 companies there. The panelists are speaking are amazing. So, you you know, as having a booth, you want to be in listening. Thank god that's all in replay. So, I'm slowly turning and going through those. >> But, it's just amazing supportive shareholders we've had there. There's people we've met a couple years from going. There's still, you know, very supportive shareholders. We've met new shareholders. It's uh it was very, it was, as you said, it was really busy. It was full of energy. It was a really great time to be there. smart investors asking great questions like the conversations on the floor were awesome and it struck me that sentiment in addition like sophisticated money is always nice but the energy was in a great place people were walking around with confidence in this bull market that I haven't seen in a long time I think for the last few years whenever we've had a bit of a you know maybe like a false start or a bit of a rally in the gold price um I'm at events or I'm hosting events and I'm talking to investors and the most common term I would hear is we're feeling cautiously optimistic, right? And you know, I don't want to get ahead of ourselves, but the feeling was definitely just optimistic. That was and that wasn't just the investors walking on the floor. That was the company CEOs and that was everybody from the stage as well. It seemed like the trifecta. Everybody is experiencing this market a bit differently. And I wanted to ask you about that because um if we look at how this precious metals bull market is unfolding, I would say it's incredibly textbook, right? A couple years ago, the pillar idea, physical gold, began to run towards all-time highs, eventually hit them, and the capital has trickled down very methodically to sort of the best-in-class royalty companies, best-in-class miners, then mid-tier producers, and it's worked its way down the chain. So if you're an investor in gold mining companies, you're happy. But today, if you're a speculator in gold exploration develop companies, those people are still impatient because the money hasn't reached all the way down yet. I think that's healthy. But what's your take on this market, how it's unfolding? What are you paying attention to? I really appreciate your insight here because in a way, you and I do the same thing. We're capital allocators into the mining sector. you work with much bigger checks than I do, but we look at similar assets in terms of their stage. So, >> how are you interpreting this market, Alex? And what are you paying attention to? >> We obviously follow it very closely. We're only gold and silver and I, you know, that was very uh done with uh very clear vision and to really be able to capitalize when the gold and silver market moves. I think all the fundamentals are there that we're in a proper bull market now. Um especially now we're hitting alltime silver and gold highs. I think it's just going to continue. So, you know, when I look at companies, it's, you know, what gold can we get now? What silver can we get now? But as as you're saying, as the environment is opening up more and we believe there's more long-term really long-term value coming here with all the effects of the geopolitical uncertainty, you know, the meetings that are happening right now in China, the various crisises around the world, you're looking at, you know, the lack of confidence in some basic fundamentals like the Swift system with what happened there and the reserve starting to build it all up. There's a lot of shifts happening in that. Um and so we as a company are were really focused initially on producers but now we're looking at development stage assets. I'm seeing a lot of restarts uh people wanting to capitalize in gold now. So the market really is shifting and changing. Um and I think it's a very interesting time and there's a lot of opportunity. >> Yeah. >> For investors is like sort of just like broad sector decreasing trust in the dollar whether you're a foreign central bank or you're just a you know gen pop walking around watching your purchasing power uh disintegrate. And I don't see any path forward that doesn't include massively increasing inflation of the currency. Yeah. >> Um and that's going to continue to pivot people. And I'm seeing more and more friends of mine who are not mining investors. And this is what's striking to me. You know, the last couple years whenever there's been a rally in the gold price and maybe even just a bit of a blip in the equities, most people don't care. And I would even argue today, I don't know, what's your take on this? Most people today still aren't paying attention. You know, gold miners are up twice what Nvidia is up year to date. But everyone's talking about Nvidia, which is great news if you're a gold investor because there's a bit of a stealth rally occurring. Do do you see it that way? >> Yeah, I mean you look at like Pneumont, right? If you look at Pneumont over the last year, S&P 500, it's up 100% over that. So, you really are seeing those companies start to think general public as well. I'm starting to see friends who are wanting to understand the market. You know, I think your commodity TV is a fantastic university is a fantastic platform for people to start educating themselves on our sector. um because there's so many different aspects to our sector. It's a lot for an investor to start to digest and to learn how they want to invest in the different stages of companies, the different commodities. >> Um but yeah, there's a lot of a lot of interesting things happening. >> And are you seeing more institutions come to the table because you're on the road like more than anybody I know uh every continent, right? Sitting down with um financial institutions telling the emperor story. So talk to me about that landscape. Yeah. So, we we obviously do a lot of uh time with our retail investors and we're seeing the institutions. You know, I'm going to a conference in Colorado shortly and at that conference, you know, a couple years ago, we'd have sort of 10 meetings and now I'm getting fund managers, large fund managers reaching out to have contact and we've got an absolutely packed schedule. So there's definitely a lot more interest where I think perhaps you know they weren't looking such at the junior side of the market like we are as being a junior royalty company but now those fund managers are definitely wanting to have the meetings to understand our story to understand our growth platform. >> Yeah. Okay. And what is it right now? Let's just get into the Empress story a little bit. You know I could I could nominate a few reasons that I believe institutions and retail will be more interested in Empress, right? Doubling revenue every year for three years. um getting to cash quickly, uh being very specific with your deals. And I know I I believe you've actually received some criticism from the market or shareholders about what I would call patience, but I guess people want you to do more deals than you're doing. Um I really respect the volume of deals that you look at and the infrequency with which you pull the trigger. And when you do, you mean it, right? Um, but at a at a super high level right now, Empress has invested around $19.5 uh million and you project to receive back about 50 million over 5 years in return. Is that >> even higher than that? We've invested uh close to about 22 and2. Yeah. And so using uh not even current price about 3,000 gold, $30 silver, that should be close to $80 million in revenue coming in over the next 5 years. So, you know, we really set the company up to invest in assets that would bring revenue into Empress. Um, and that's been our key focus and tying it directly to gold and silver. So, as gold and silver prices go up, you know, the net asset value and the revenue come into Empress directly go up as well. We're very correlent. >> So, let's back up a minute and imagine someone has tuned in for the first time to the Empress story. Um, what is it that Empress does and walk me through the origin and structure of the company? Okay, so essentially we are a royalty and streaming creation company um investing old in gold and silver. And so breaking that down a little bit more. So royalty is where we invest in a company and we receive a percentage of revenue cash essentially. And then stream is where we invest in a company and we're able to buy gold or silver at a deeply discounted price. So we're basically pre- buying gold or silver and we're paying 20% of spot for that. So we get the 80% in return for it. And that typically is coming in gold and silver credits. And so right now we're sitting on a lot of cash, gold and silver. So we're seeing our actual treasury rise with the price of gold and silver as well. Um and at Empress we do a combination of both. We mostly do streams because it's more of a project financing. We're directly investing into companies helping them get into production or expand on the production capacity. So we really have derisk the investment. They've got their permits in place. They're at that final stage where revenue will start coming in for them and for us. And it's also because we're directly investing into the company. We have a direct relationship with that company. I'm not waiting for their financial reports to come out quarterly. We have monthly reporting. We're able to understand what's happening with the companies, work with them because we need them to be successful for us to be successful. Um, in the portfolio right now, we have four revenue producing assets that we've layered in. Some were development. They're now in producing. So, we have four sources of revenue. Uh, we have one silver stream in Mexico. That's roughly about 50% of our revenue. So, where silver prices are now, that's going to even increase our revenue further from our forecasts. And then we've got three producing gold mines as well. >> Um, one of the unique things about us as well is we're in Africa, we're in South America, and that really does come down from our background. And you know, you mentioned the origin story. Um, you know, my background as investment banker. I was director of structured finance at a group called Endeavor Financial out of London. And Endeavor Financial is a leading boutique investment banking firm run by David Rhodess. And we worked together at Endeavor. And what we were seeing was the streaming companies like Wheaten and the larger ones were doing $100 million plus investment sizes. This is 5 years ago when we set this company up. Yes. >> And that streaming finance solution wasn't available to junior market. They were struggling with equity. Debt was more restrictive. So we can come in either team up with those groups or we can come in solely and provide that financing for them. Yeah. >> Um, so we saw the opportunity. We've been patiently deploying the capital we have without diluting our shareholders and letting that revenue now start accumulating so that we can redeploy it into the portfolio. >> Okay. And so right now you have four producing assets. You're in Mosamb beek, you're in Peru, you're in South Africa, you're in Mexico. >> Yes. >> Um, so globally diversified and that's a consequence of your background with Endeavor Financial Investment Banking. You had a very global outlook. Yes. >> Right. And your team does as well. You brought that team with you. >> Yeah. And a lot of that's our experience. We've worked in these countries before. We know how to structure in these countries. We understand the legal framework. We understand how to take security over the assets. We understand how to get the money out of the country. So our expertise and experience and we have, you know, contacts within the government and the experience to understand what's happening there so we can invest wisely. And you mentioned your deal size relative to some more familiar names, the Wheatens, the Franco doing the, you know, nine figure deals in the streaming and the royalty business. Empress is focused on like around 10 million. >> Yeah. >> Correct. >> Yeah. We're mandated up to 25 million. We started out, we've done sort of five $10 million deal sizes. As we've now hit that critical point with the cash flow coming in, we'll start looking at larger investment opportunities staying in that 25 range. So sort of 5 to 25 as well. I think you'll see us do most of the deals. >> Okay. >> Um and that's just there's this lack of opportunity for financing for them. So it's a perfect time to get in. >> Yeah. That's the piece of the market that you're cornering here. And so that's why I opened up this conversation. I was like we kind of do the same thing in that we're vetting these projects and allocating capital in exchange for a return down the road. >> Um and we look at similar stage assets, right? Um which is what I wanted to get into. Now I have been asked uh many times by subscribers and attendees about Empress's deal size and they've asked me is the 10 million the 5 to 10 million deal size the mandate or is it a consequence of their company stage and should we expect 5 years down the road for that deal size to increase and if so to what? And it's like it's it's the mandate, right? You're mandated up to 25 million, but as a consequence of market conditions, you're now looking at larger deals, uh larger deals than you've looked at for the last few years. Is that >> we basically been in sort of 5 to 10 for the last couple of years. Now I'm, you know, looking up towards a 25 range. Yes. >> Um you know, as we evolve over the next 5 years, our cost of capital comes down. We've got a more diversified portfolio. You know, we might get a little bit bigger than that, but you we don't want something huge and lumpy in there. We really are focused on portfolio diversification. >> Yes. >> So I think you'll see us stay in this area because we can manage the risks that we're dealing with. Again, we're patiently deploying it, choosing the right assets, doing all the due diligence that supports it. >> Um but there's just a lot of opportunity in that size of the market. >> So for somebody again who just I want to simplify the the model a little bit. >> Uh we've discussed what it is you do and and how how you do it. To date, you've invested around 22 million. Uh you say 22.5 22. Yeah. Um and right now we have four producing assets. So what are those producing for us? What's the return from those assets that we're uh gaining annually at present? >> Yeah. So we did uh was it for the first half of this year we did $6.5 million in revenue from those Jimming investments. Net revenue is about 4.5. Um we're looking to double that. Revenue last year was $8 million. We're going to be close to doubling it this year. Um and that will continue to grow out. Um we've got the asset in Peru. Now, the Proving Assess actually a private company. We invested $10 million helping them expand their production from 750 tons to a,000 tons. That was a couple of years ago. We've been receiving consistent revenue from them and they're finishing off that expansion now and getting to a new part of the or body. Um, we did the Talawa Silver Stream with Luca Mining. Uh, we got in pretty early on that one and that one's obviously got into production now and that one's moving forward. We're getting pure silver coming from from that investment. Uh we did Mosamb beek that was a $3 million investment. Um and that was finishing off a plant. That one we invested was a development asset. It got into production. We've received over $5.5 million US to date from that $3 million investment. Initially there was a three-year mine plan. They've done extra development work. They're currently doing some exploration at the moment and that is going to keep running even longer. So that's another example of how these things can run a lot longer um when the work's being done around it. Uh we did uh Galaxy in South Africa. That one's still ramping up now in production. So we're getting a small amount of gold now, but that will be part of the catalyst as well as Luca for doubling our revenue this year. >> Yes, >> we're getting close to that. Yeah, >> getting close to doubling revenue. And if you double revenue this year, that would be four years in a row. Three years in a row. >> Four. >> Four years in a row of doubling revenue year-over-year. And what's the income look like? Because right now you're building the treasury, correct? >> Yeah, exactly. So we've got our net income. We're first uh as of the June financials, we now have a positive uh positive cash flow, net income about $1.5 million US. We're able to keep our GNA low because we obviously the relationship with Endeavor Financial. We're a lean team. Um our GNA is about 22 $2.5 million US. So the rest of that is pure profit that we can reinvest. We're sitting on about $4.5 million uh in cash and gold and silver um at June and we've been accumulating cash since then. And now we've got free cash flow, gold and silver to reinvest in the portfolio. >> And that's been a really critical point for us to hit like a huge milestone to now have the ability to act very quickly to be more agile in the opportunities we're seeing and to seize them faster when they obviously make sense from the due diligence side. >> Okay. And just one thing I want to point out there because um from a market cap standpoint, Empress would be in sort of the the junior um part of the industry, right? But what I like about it is that because of the model, you're an earlystage royalty company. You're building the treasury right now. We're joking about this, but I call it the Vancouver M2 money supply. People don't think about every gold and silver equity investor is familiar with the Fed printing money and devaluing their currency, and they think that's wrong. We all agree on that, right? But if a junior mining company does it, they don't bat an eye, right? And what can occur as a consequence of too much share issuance going back to the market to raise money again and again and again too frequently is you can have a junior company market cap go from 5 million up to 30 million and the share price doesn't move because all they've done is issue more paper. And one of the key um attractions to uh Empress is that at this stage you're already um net cash positive right at an early stage when you have four assets producing for you. um and more in the pipeline that I want to talk about. So um yeah, key key reason number one I suppose to have a look at Empress right now is because um some of the pillar companies that I encourage any mining investor to look at are the ones that you mentioned. It's the Wheatens, it's the Franco, and then maybe look at Agniko. Really well-run companies, great leadership. They're the hallmarks of the industry, right? Um, and if you follow that logic down from a business model standpoint to the early stage, there aren't a lot of companies that are doing what you're doing. I mean, you cornered this part of the market early. Um, question for you actually, is there more competition in this deal size today? Like, are you seeing some copycat companies emerge who are looking at what you've built over the last few years and they're trying to do something comparable >> that we are seeing other groups who have who've been uh who've built their portfolios more on acquisitions, okay? more exploration starting to look at the project finance side a little bit. Um which is interesting to see because they're realizing the returns we're getting and the cash flow basis that we're getting because if you're going to the side of the market we are which is so close to production or in production there's more opportunity there um for the immediate cash and I think the market has shifted generally in the royalty and streaming space over the last couple of years where you were rewarded for long-term royalties of streams but now I think people are being more rewarded for cash flow. >> Yes. and be able to redeploy exactly for that lack of like not having to dilute the shareholders being able to be more strategic actually getting you know gold and silver coming into the account rather than potentially what might happen 1015 years down the road so I think the market is rewarding that now and so it's a bit of a shift in that um to me that's great because that's bringing more finance to mining companies >> right there's more minds will get more produ into production so I think that's a very positive thing for our sector um you know we have a very much an expertise and a specialist in the jurisdictions we're going into we're all structured finance backgrounds. So, we work with these complex structures. We're even seeing the streaming agreements change over the last 5 years. You know, it was very simple. You buy X% of gold and you get it. But now there's different milestones that go into it and different um I call them sort of levers that can be played with. And there are all the financing are very much more bespoke in streaming. You know, a royalty agreement is a simple agreement. You produce I get X%. streaming agreement is much more complex and because you're working directly with the mining company and understanding their goals and objectives is just you know is this a simple development project that get production do they have debt okay well there's certain things that the debt providers will need so we can structure around that do they have the ability to raise equity okay well we can structure around that do they you know are they've got offtake financing and all these other elements and we can work with the company understanding their goals to make sure that the streaming increment really works for them and we're still obviously getting a good return. It works for our shareholders, but it has to work for both parties and their long-term goals. And a restart, it's different. Usually, we've got a restart going and they want to get a bare minimum amount of gold coming out that they can use that financing themselves to expand the plant down the road. So, you know, we can structure around that as well. >> And you're seeing uh bit of a surge in restarts. These are mines that maybe shut down, went on care and maintenance for the last 12 years because gold prices didn't support production. But now with gold prices where they're at, a lot of mines can be restarted. So you're seeing a surge. This is a trend you're watching. >> Absolutely. I'm seeing an absolute surge in the restarts and groups that maybe had some development assets or some exploration assets that have now realized there's a there's a you know a plantary mill they can get their hands on. They can start pushing things through and actually use that cash flow to fund the bigger exploration that they wanted to do. But in rather than just going out and raising equity and diluting. So that's I think been a shift I've seen in the last couple of months and I think there's some really good companies out there making that shift right now and then trying to accumulate more land but using their own you know get themselves funded with our support and a few other support and then they can really expand that. So that's going to be an interesting story I think to watch the next couple years these kind of companies. >> Okay. Um you did a deal last year in the US. So we talked about some assets you have in Mozambique, Peru, Mexico and South Africa. Yes. Can we walk through the structure of this deal you did at the >> To be clear, we haven't actually closed that deal yet. We've been working on that deal now for quite a while. So, I'm looking forward to be able to come back. But, you know, when we go through this process and working with these companies, there's extensive due diligence that we do. So, actually, I'll just step back and even explain sort of our process and then so the elements that go into it. So, you know, as you're an investor in the space, obviously we are as well. And so we're fortunate and positioned because we're dealing directly with a company and providing them usually substantial financing. We really get to, you know, get in there and go through all of their data, understand it, and it starts right out of the gate from the technical perspective. We have an amazing technical adviser, David Lang, who's been in the business for 40 years, um, involved with many companies. We work together, Endeavor Financial. He was key over there as still is. And so we go through, we look at the technical aspects, we identify if the project makes sense. If it does, we then will talk with a company, negotiate a term sheet. If we agree on terms, um we then move forward with our third party technical due diligence, which David Lang manages for us. We hire the right expert team in that jurisdiction with that mineralization, the geography. We might have identified areas early on that we think might be issues for them to dig deeper into in a real thing. So it's it's really kick the tires and see what this works. site visits, extensive reporting. Often in that process, things fall off. They don't stack up. They don't meet the criteria at that point or we'll make suggestions of what we think needs to be done. They can take it or leave it. Often a couple of situations now groups have gone away done that additional work and come back to us. Um we do a full extensive legal DD. So we look at all of their NESG reviews. We look at all of their permitting, their licenses, their social relations. You know, a lot of these places are remote communities. So they have to be able to work within their community and have the support from the community, be able to provide jobs in an effective way and whether resources are needed in those environments. Obviously full extensive financial review. We look at their contracts, make sure their offtake agreements make sense, make sure all of their they've got a healthy enough balance sheet to be able to support what they want to do. If all of that stacks up, then it gets into the detailed legal negotiations and the final contract work that goes through. Sometimes that can be quick. Sometimes we identify an issue along the way that needs to be resolved before we can advance to actually be able to fund it. So we've been working a long time on this opportunity on a copper mine that's a restart that's restarted in Utah and we would be doing a gold and silver royalty on that and then if you know that's hopefully the next deal we can announce but until it's done it's not done. Um but we've got the cash on hand to fund it. >> Okay. So we still are just at four of the producing assets at the moment. But that's a cool example of a a restart project within that trend that you're watching that you're now looking at. And you know, important to note that the quality of a royalty company, royalty and or streaming company stands on the quality of the operators in their portfolio. And so the diligence process that you just outlined is critical. And I imagine having a partner like Endeavor Financial on the team really helps with that. You joked on my stage at VR last year. You're like, "My job is to kill things quickly." You know, and we see deals come in and that should be every investor's goal is to get to the no, right? Get the nose off your desk so you can find the yeses. >> Exactly. And and that is it. It's get the nose off the desk and usually it's technical. We move them a little bit further forward and then something else comes out. But, you know, it has to be the right investment. We're all large shareholders in this company. We want to see this company succeed. We're aligned with shareholders. So, we are patiently deploying capital. um and the market shifting now um as there's more opportunity coming out said with these restarts um and people really wanting to take advantage of the gold and silver price. >> Okay. So Milford, one example. Walk me through sort of the ideal deal that you're looking for right now. You know, you're going up a little bit in terms of deal size. So what's appealing to Empress today? >> So probably about $10 million. Um it would either be a re ideally it would be a restart. So there would be um a restart or or development stage asset. You know, for the last couple years, I have really focused on producing assets. You know, I did I did two developments, became producers, but I needed to get to the point where I had free cash flow. I needed to get net income. I needed these milestones to happen before I was willing to take the risk on development stage assets. So, now that we've got stability in the portfolio, we're servicing our debt. We've got $20 million available from Nabari, we've building up our treasury, I can look at development stage assets again, and that's exciting. So whether they're sorry development meaning um you know I was developments but also restarts so they can be six to 12 to 18 months from production because I can fund them without the heavy burdens um that we had before. So that's exciting. Um and there's some really good opportunities. There's ones you know that are project financing where they've got most the milestones in place and then there's a gap again kind of similar what we did with Taloto. That's, you know, that would be a great one. And some of these restarts as well are really interesting. >> And are you jurisdiction specific right now or you're just like whatever looks good from the economic standpoint? We're moving on. >> It's about economics. Absolutely. For us >> and you got a BD team now um focused on North America. You're looking to fill that role in Africa, but you you're seeing deals there. Walk me through that structure a little bit. How do you scour the earth for the best deals? >> Yeah, I mean there's a lot of inbounds. There's a lot of opportunities we're seeing. So we were building the team out to be able to and we've obviously endeavor helping us building the team out to be able to vet more and bring more in. Um so we've brought in Mark Ashcraftoft out of Toronto. You know David and I knew him back from the standard bank and Barklay's days. Um so he's a mining engineer by background um in Toronto. Uh very well connected with the industry. Run several companies. So he's come on as our BD North America and that really is helping uh expand the the relationships we currently have and it just you know solidifies them and and builds on that. Um we're looking for someone for Africa and we've we've got a good contact there that hopefully is the right person to come along as well. We've got some other feelers out. But it really is going for that sort of people who've been in senior roles either in banks, running their own companies who have that extensive network like we have that cross crosses with ours as well. So it creates more uh ability to have better relationships and be able to execute. >> Is there is there enough opportunity for a company like Empress staying within this mandate? I guess what is the opportunity for a company like Empress staying within this mandate if you were to share with us like the bigger the B hag vision down the road >> it is to repeat what we've done before you know we focus on the producers now we're want to layer in development assets and so you know because we get a little bit better returns in development assets are taking a little bit more risk >> to build it out to you know 5 6 7 8 9 10 investments in the portfolio okay >> we've done to date just creation side so that means directly investing in the companies you directly with them. We are seeing some portfolios that might be attractive to bring into the port into the company. We're getting that point where we've built the foundation. Now it's about accelerating that growth and getting the critical mass. And that's really what we're looking at is some different strategic opportunities and some different ways of actually growing faster. Um I think we're finally starting to get the recognition of what we're capable of and the financials are proving that. So it's now okay, how do we get bigger? You know, we can bring bringing the deals on. You know, Mark, as I mentioned, is also a mining engineer. We're expanding the technical side as well um and be able to execute on those. >> Do you anticipate any M&A in the royalty space? I mean looking at the Royal Sandstorm deal that was a huge deal. >> Uh what's your take on M&A in the royalty and streaming sector? >> Yeah. And you're seeing Tether crypto groups coming into the space which I think is really interesting because they want that hard asset backing with their Tether coin. I mean you're seeing a lot of different things shifting in that space. I think we will finally start to see some consolidation. I think you know there was a lot of talk about it especially when we you know we launched Empress it was you know a few companies and there was a whole bunch of us that came out of the gate around the same time so I think that consolidation will start to happen and and start to see that um I think probably more so now than ever before in our sector okay >> um but it'll depend on the different variables I mean some of us are just pure gold and silver there's other ones that have mixed commodity bases and different theories >> um but I think it comes down to cash flow >> and do you anticipate staying in that we've seen some royalty companies begin gold and silver and then the pivot to poly metallic over the years. It's not in the cards for Empress. >> For Empress will be gold and silver. If we were to acquire something that had another metal in it, we would then probably sell that off. But I see >> um but for us it's gold and silver. And we have, you know, we've been >> over the years, you know, when it wasn't so in favor of everyone saying you should pick up this copper deal, you should look at this, you should look at that. And you know, we've stayed true to it, believing where we believe gold and silver are going. And I think that's been demonstrated now. And we're going to stay true to that going forward. And when you look at the royal tune sector as a whole and the trends in it, you're seeing the M&A starting to happen. You're seeing the precious metals uh leading companies getting more recognition, you know, you're seeing a lot more shift in the financial terms as I was mentioning on these contracts. They're getting more sophisticated. There's more bells and whistles added onto them to be more flexible for both sides. So, there's definitely trends that are happening within our sector at the moment. So for any prospective shareholders who are looking at Empress now and they're thinking about what can I expect to see from them, you know, the next 6 to 12 months news flow, what would you tell them, Alex? >> Uh more deal flow. I would I would love to be able to execute on more deals. I am 100% focused on that. Um so that is that is key. Um I would love to, you know, news flow will be the deal flow. It'll be our financial statements showing the revenue, showing we're being conservative with our spending. um showing we've got the cash in the in the can and growing it. So, it it really is me growing it, bringing people onto the team, um building out our board. >> Sounds like a business. >> It's um it's really rewarding to take something from concept and actually have the financials to prove it works >> and then now just really trying to grow it out and build it out further. It's that critical point we finally hit where we have the freedom with the cash flow to be more agile and to be more aggressive. >> To be more agile, more aggressive. you've continued to pick up >> uh celebrity shareholders along the way. All right. Good to see you in Florida right in Boca R. >> Very good shareholder base and that's something that shifted. You know, we've over the last couple years we've brought in some amazing shareholders. We obviously have Rick Rule. We did that private placement with him. We've got Jeff Phillips, we've got Stefan Gleason who runs one of the largest deposiitories in the US, one of the biggest um bullion traders. Uh we've got Sprat Maria from there. Frank Holmes US Global. We've got obviously our key um shareholders being uh and directors Jeremy Bond from Terara Capital um David Rhodess from Endeavor Financials. So I feel very privileged for the supportive shareholders we have who are such and yourself such experts in the industry who really know the industry. >> You know what's funny? I was just thinking about this as you were saying that everybody who works for me I'm quite certain is also a shareholder of Empress. The whole team. Yeah. Independently like we don't co-invest, right? They do their own thing. >> Yeah. Uh but as you were saying that I was like I I think Empress would be one of the top definitely one of the top if not the top companies mentioned on our VR media platform. Um constantly coming up in conversation. You know we publish every day of the week on that channel. It's like a channel built by junior mining investors for junior mining investors. So we get into companies all the time. >> Empress is definitely one of the most mentioned companies and maybe as a consequence or not. I'm pretty sure everybody that works for me is independently a shareholder of Empress as well. >> That's amazing. >> Feels good, right? Cuz like we have a lot of new folks on our team that are new to the industry and so you want to see them go to good homes with their money, right? >> Yeah. you know, when I was just when we were at Rick's conference and also when I was at your conference in January, you know, meeting shareholders there who invested early on coming through where we're at now and knowing there's such a huge potential for us to even, you know, go so much higher if you're looking at the multiples in the sector of where we're trading now and what we're capable of doing and where we should be. So, there's still so much torque left in this um especially because we're gold and silver and where gold and silver are going. >> I agree. And um you know, and I say I agree because I've watched you do everything you said you were going to do since we connected and and you took the company uh public four years ago, right? >> Yeah. Four and a half. Yeah. >> Four and a half years ago. You've continued to deliver on your promise to the shareholders and the market. >> Um good market, bad market be damned. You stayed true to the focus. Every entrepreneur is seduced by fast cars and shiny objects. Maybe we should look at this copper project, right? You're not. You're saying, "We've got the vision. We know what we're best in the world at. We're going to stick to that. We got the team to execute. >> We're not going to get distracted and dilute the focus. Right. It's the Achilles heel of entrepreneurship. >> Yeah. >> But it's important. It's very important. >> It is. And and and yeah, we had a clear vision. We've been executing on that and really delivering on it. And it there's just so much there's so much we can do now. So it's it really is exciting. Like there's just so much we can do. So it's going to be a really exciting, you know, >> I'm excited to see what you do with a good market. >> Yeah, I know, right? Oh my goodness. >> See what you can do with a bad one. So, um, look, Alex, it's been so great to get you in the studio finally >> and, uh, just, yeah, share the journey as a shareholder over the last four years with Empress. Um, and it's so nice bringing an entrepreneur back on the show again and again and again because you just feel good about, you know, getting them in front of your audience when you know they're the kind of person who does what they say they're going to do, right? It's a rare attribute in this industry. So, thank you for ticking that box. >> Thank you so much. No, thank you for your support. Thank you for being a shareholder. You know, you have been definitely along with me on this journey. It hasn't always been smooth, but we've always delivered and we've been consistent in that. And that's what we plan on doing going forward. And really, now is the time to crank it up. So, it's going to be fun. >> Let's crank it up. I like it. >> Awesome. >> All right. Thank you, Alex. >> Thank you so much, Jay.