A New Royalty Company & Tether's $100M Gold Bet | EMX & Elemental Altus CEO Interview
Summary
Merger Announcement: EMX Royalty Corporation and Elemental Altus Royalties are merging, with Elemental acquiring all EMX shares, resulting in a 51/49 ownership split. The new entity will be named Elemental Royalty Corp.
Financing Details: Tether, a private stablecoin company, is financing the merger by purchasing 75 million shares of Elemental Altus at $18 per share, totaling approximately $140 million CAD.
Portfolio Expansion: The merged company is expected to hold 200 royalties, with 16 currently producing, and aims for $80 million in revenue by 2026, primarily from precious metals.
Strategic Rationale: The merger is seen as a strategic move to increase net asset value (NAV) and market positioning, with a focus on discovery and production optionality through a larger, diversified portfolio.
Market Position: The combined entity is positioned to become a mid-tier royalty company with increased liquidity and potential for index inclusion, enhancing its attractiveness to investors.
Operational Synergies: The merger will leverage the technical expertise and royalty generation capabilities of both companies, aiming for efficient capital allocation and increased deal flow.
Commodity Focus: The portfolio will maintain a focus on precious and base metals, particularly gold and copper, while exploring opportunities in other minerals like tungsten.
Risk Management: The company acknowledges risks such as commodity price fluctuations and operational challenges but emphasizes its diversified portfolio as a buffer against potential setbacks.
Transcript
Today on the CEO barbecue, we're talking royalties, royalties, and more royalties together with EMX Royalty Corporation and Elemental Altus Royalties. And if you want a bullet point summary of this conversation and all the other CEO barbecues in your inbox once a week, go to resource.com and subscribe to our free newsletter. Now, the company you're about to hear from has paid us for the production of this video, which means that this is not research. It's an advertisement and you should treat it as such. Research is conducted by reading the company's official filings which you can find on setplus.ca. And please only watch this if you absolutely know what you're doing. This interview is intended only for experienced junior mining speculators because mineral exploration development and mining is a very tough business where failure is the norm and should be the expectation. This is going to be a conversation that is general and impersonal in nature containing forwardlooking statements. I am not a licensed financial adviser and my business sells content producing services which also makes me biased in multiple ways. So before continuing on, please talk to an independent investment adviser with a good long-term track record because your capital might be at risk. If you're not 100% sure you understand 100% of the disclaimers I just showed you, please go to the last section of this video and do not consume this content unless you fully understand and agree with everything said therein. That all said, this is where I normally dive into some of the numbers behind the company that's being interviewed as well as some of the trading data and whatnot, but that doesn't really make too much sense in this scenario because these two are merging. Uh, more specifically, it was on September 4th that EMX agreed to a merger with Elemento Altus where Elemento is going to acquire all of the issued and outstanding shares of EMX for a 0 2822 Elemental Alto shares for each EMX share resulting in a 5149 ownership split for Elemental and EMX respectively. The new company is going to be renamed to Elemental Royalty Corp. with three Elemento Altus board members and two EMX board members. Dave is going to be the CEO and Fred will be the CEO of the newly merged company. Together with the transaction, Elemento Alus is also doing a financing, but an interesting one which uh definitely raises some questions because it's Tedar uh a private stable coin crypto company doing that financing and it's not a small financing either is they are buying 75 million shares of Elemental Altus uh at a$184. So that's nearly, let's call it, $140 million Canadian. So a big financing there. And the merged company is expected to have 200 royalties in total, 16 of which already producing. And the analyst consensus is that they will be able to do $80 million. And that's $80 million US in revenue for 2026. 2/3 of which stemming from the precious metals portfolio and one/3 from the base metal portfolio. So as you can imagine, I do have a lot of questions and uh that means it's time for me to shut up already and gentlemen let you do the talking. But first of all, thank you for being here today. >> Thanks. >> Yeah, >> pleasure is mine and and I am looking forward to the conversation because when when um Dave, when you and I spoke uh back in February, you told me that you were, you know, trying to back buy back as many shares as you could at the time, not issue new ones, unless what you at the time called an unbelievable opportunity walked in. And I'm I'm quoting on that one. So how or or why did you know a share-based merger here in this case make more sense for EMX shareholders instead of continuing to buy back stock and maybe do smaller you know cash deals down the line. >> So just make sure we understand the anatomy of that uh Antonio and thank you for that question. Um first of all we were buying back stock at a dramatically lower price than we are today. We knew that we were trading at a fraction of our net asset value per share in a situation where our net asset value per share as defined by the analysts was moving upward consistently year after year. Um and those percentages of upward moves were salient. So our net asset value per share is moving up and we're buying back shares down here. That turned out to be an astonishingly astute decision. Uh we ended up buying back over 6% of the issued outstanding shares of the company and erasing those shares. Furthermore, just to define the anatomy, make sure we understand. So, Elemental issued shares at a premium to buy EMX. So, the merge company is formed by Elemental is Elemental Altus issuing shares to buy EMX and then and then we're merging that together. My pleasure to have the opportunity to work with Fred and the team. The um so just want to get that statement correct. And also, you pointed out that Tether was buying in at a $180 per share. It's actually $18 per share as those shares have now been consolidated, which is why the share ratio that you mentioned previously was 282. Just to make sure we're all on the same page, if you don't mind, cuz I know you like to get the details uh correct cuz you always grind me on those. So, so I'll point those out. Yeah. And you might ask, I'm sure the next question is, you know, why now? And why are you doing this merger? And it might be an overused phrase, but you know, 1 plus 1 equals three. Uh we've had a long time to get to know the elemental altus guys. Uh keep in mind that the Altus a significant portion of the assets in Altus. We're part of a Michael win company. Michael W's our chairman. So there's a long history there. Michael Win was on their board of directors. So we've always had a strong element of communication uh with Elemental Altus way back way back to the Altus days and prior to that Legend Gold that has resulted in us looking at many opportunities over the years to syndicate. Most of those opportunities were failed which is the right way to do business in our business and that is look a lot opportunities and failed them. We shared due diligence costs and we shared business acumen in regards to those analysis >> and thus got to know each other quite well. We think there's an excellent cultural fit and then we did um syndicate the purchase of Castronis which for both companies and now the combined company is a very important asset that we have on the books here. It's exposure to an immense copper malibdinum system operated by Londine and they're pouring money into the ground to create more resources and reserves which is why we own royalties. That's just one of a couple of different sister royalties that the companies have which look very very nice together and the overall portfolio merged together looks well it separates us from the crowd. will say the um there's a there's a fact within the royalty space and that is that the more royalties you own, the more they're all worth individually. And the way that that is actually actuated in the market is in net asset value multiple. So Franco Nevada and the big three trade a commonly two times NAV5 on a per share basis. when we were separate companies, we were trading at a discount to NAB, which is frustrating. And thus that's why EMX was buying back stock, right? Which was the right thing to do wholeheartedly. We believe that we can increase our NAV multiple upwards towards 1.5, if not 1.8 in addition to the net asset value growing on a per share basis. So, we're really exposing our shareholders to a nice opportunity here, bringing together two teams that have different backgrounds, but are quite synergistic and ever expanding the amount of discovery optionality and production optionality within the portfolio. The market has told us that they really appreciate what we're doing. There's loads in there that to to get into and Fred, I'll give you the word here in a couple of um seconds, but I I suppose in the end it does come down to valuation, right? And and maybe you can talk to me more about that as well. Um here Dave, from from your perspective, I believe EMX shareholders again will own 49% of the combined venture, >> but you're bringing more than half of the immediate immediate revenue. And then you're also I mean depending on how you would value T-Mobile, you would also bring more of the NAV here if I'm not mistaken. So how did you come up with that valuation? You know 4951 split is almost effectively a 50/50 split but then at the same time not really. So yeah once again I'll just just make sure everybody understands the numbers exactly. It's it's EMX gets close to 50% but 49 50% it's right in that number. Let's call it 49. Um, and then Elemental in its current state plus the hund00 million investment from Tether equals 51. >> So that's so the 51% from the Elemental side for those people that care about these numbers. What I care about is a company that looks good going forward and we're going to do great things. That's more important. But you're zeroing in on the percentages. I just want to make sure we all understand. So the Tether $100 million investment plus Elemental Altus is 51% and EMX is 49%. Now coming back to what is accretive for both sides. um it's accreted for both sides clearly because of the u portfolio effect moving forward and when you grind into the details which of course the bankers love to do EMX is contributing greater NAV because of the long lived copper assets that we have exposure to and copper assets with very long lives commonly trade at a lower NAV multiple in the market elementals bringing in more near-term gold production EMX is adding that but but more so long-term copper production. So, those can be valued differently in the marketplace. Neither of us were receiving the the proper value that we deserved as separate companies. Together, we're going to get that and more. If that helps answer your question. So, it's a creative to the elemental shareholders on a NAV basis. It's accretive to EMS on a current cash flow basis and on a gold to copper ratio basis. and accretive to both companies from a portfolio allocation or portfolio effect basis. >> Definitely >> Dantain. >> Yeah. No, like I think it makes total sense and the the you know if you look at just the share prices since announcement uh looking at it today I think EMX is up 40% since announcement and and the other thing that we we don't cover it as much but I think is really important as well is the combined liquidity and I know for elemental out that was always we had a very tight register we had some very big shareholders and that was really good in some regards and in other regards such as liquidity actually it was sometimes a hindrance and if you look at the combined entity the liquidity we've had is is already orders of magnitude greater than what it was individually. And when we have the US listing, which we're planning to have prior to this deal closing, and then we come as a combined company onto that US listing, I think our liquidity will be even better. And if you have greater liquidity, it's easier to trade. You generally have a lower cost of capital as well as as alongside all the benefits that Dave talked to in terms of diversification and and a larger portfolio. And so I think that that combined entity uh is is going to be much more attractive for investors who are looking for a really material uh royalty and streaming company in the space who have the liquidity and enable them to participate in a meaningful way. >> I think the the combined company now just continuing on with you Fred here. the combined company. We also have a new partner get um a bit of a an an orthodox partner if you say like a crypto mining comp crypto not a crypto mining company maybe not yet but a crypto company coming into mining you know into gold and and base metals as well um how come and and and I guess this is more your domain but what's the strategic angle here and how does having better on board make sense for elemental altos and and and soon elemental royalty corp >> look it's it's a really good question probably not one that either Dave or I had on our bingo cards for 2025. But I think what's really fascinating about Teller is that if you look at their own account attestations of of of what is in their in their holdings, I think they have acquired uh nearly 20 tons of physical gold so far this year. And to put that into perspective, that would make them one of the largest single purchasers of physical gold after a number of central banks in the world. And so clearly that is a a cornerstone shareholder who is looking to increase their exposure in the gold space. And the royalty and streaming model is a fantastic business model that gives you direct exposure to the commodity prices. It gives you uncapped optionality going ahead for decades and decades. and you can have such a diverse portfolio of of interests and all that optionality that is embedded within it that it's a really good smart way for them to play the market and increase their exposure in the gold space. And uh coming out of this transaction they'll be approximate 33% pro- former shareholder. So, I think for us it's it's great because we know going forwards, not only will we have $50 million coming out in cash on on the close of this transaction approximately, we should also be able to upsize our credit facility, which is currently completely undrawn, we should be able to upside that on the basis of our revenue profile to probably $200 million order of magnitude. So, we'd be coming out of this with the ability to deploy maybe $250 million of non-dilutive capital between cash and credit facility. We have a major shareholder who is so far in the first half of this year one of the largest buyers of physical gold in the world and they are a 33% shareholder. I think they're going to continue to support us going forwards in terms of acquisitions any deals that we do need to do. So it puts the company in a phenomenally strong position to continue the growth both organically and if we need it with the support of some really key shareholders. And that's probably also one other point worth touching on is that EMX and Elemental Outas, we've always had a quite a strong overlap of some cornerstone shareholders and and there's a few groups in there that have been very supportive for the company. talk about the Paul Stevens and the the Extract Capitals and Sprocks of the world, but some of those groups who have been very supportive in in in getting the companies here and I think aligned in the philosophy and approach we take of of actually trying to have a creative growth and not just growth for the sake of it, but really making sure that whatever transactions we do are adding value to the company at the same time. >> Does it also provide the opportunity for the company to switch from smart casual to hoodies and Crocs because it's a crypto company now? Yeah. Not sure we've covered that point on the umation work so far. >> We don't have ties on today. >> Yes. One step at a time. >> Yeah. >> Dave, talk to me a little bit about what you think about what Fred just said because again, just from from your perspective, you know, having having built this uh royalty company in a traditional way for over what 20 years now, I believe. Uh this is completely new. Yeah, exactly. And a completely new angle, right? So, how do you how do you think about it? How do you view it? Well, we've always believed that astute gain of scale was smart, right? And we've always been the value players on the block or certainly consider ourselves to be that looking for the for the you know the bar bargain basement opportunities in addition to things that we pay up for that add to the top of the pyramid to gain scale. Um this is an opportunity to do that to a whole another level. Uh we have done two corporate transactions earlier in our history. So this will be our third in 23 years. So, we've always had this approach that we're willing to look at M&A and corporate transactions as a method to help gain scale to the business, but want to be very smart about it. I believe this deal is exactly that. And I agree wholeheartedly with all the points that that Fred made. Mhm. >> How much control do they have as a large shareholder? How how often Fred, how often do you talk to them? 3% but they they um they have a strong presence and the chairman of the incipient board. >> So to factually answer your question that being said from a conversational perspective and a strategy perspective we find them very open to learning more about the mining industry. They want to learn from our collective team's experience and utilize their desire to invest within the space and our expertise to build an even better company. >> Mhm. What I'm really asking about there is is yes strategy. So from the perspective of you know the the whole kind of tech or crypto world they value things in multiples whereas we in mining we value them based on how how big is the discount because there's almost always a discount to mining assets. So, so strategically, how much of a say do they really get given that again it is it is you two that are the the mining brains essentially and everyone else in the team? Um, but they are a large shareholder. So, how much of a say do they get in situations like that? >> I'm not sure I fully understand your question, but but I believe the gist of it um boils down to that they understand the value of hard assets. That's why they're buying gold. That's why they're buying farmland and it's why they own tea bills. >> And what's the next best thing to own or maybe even better than a bar of gold in the bank is a gold royalty >> because gold royalties have optionality at no cost to the royalty holder. And that's why uh Pier Lassand, you know, used the term the gold investment that works for Franco Nevada in the early days and it that has absolutely come to fruition over the decades that Franco has has been built and other royalty companies as well. And and and we're on our way. So it's this whole concept that royalties are phenomenal financial instruments because of embedded optionality, price optionality, but more importantly discovery optionality which results in production optionality moving forward. That really drives the value of these assets. And so when Juan and Tether look at this and they say, "Holy smokes, we're buying farmland. We're buying physical gold. We should own royalties." And what's the best way to own royalties? Let's help build a royalty company that was trading below NAV and we're going to get them to where they're trading above NAV and we're going to increase NAV per share. >> That's the right strategy. >> Well, don't worry about it, Dave. Most of the times I don't understand my own questions either, so you're not >> and maybe Antonio, if you were asking along, I think one of the inferences was was how involved are they in in decision- making and and strategy? Maybe a good illustration of that is this transaction because we've we've talked to the point that we actually started this conversation in 2024 and in the in the shareholder circular and documents that will come out. It will show that we've been we've been discussing this and and looking at the merits of it uh for a not insubstantial amount of time and I think having Tether's involvement was actually very helpful for that in in giving us a cornerstone shareholder going forwards who who really wants to grow it and back it but these discussions we've been having now for for over a year um to get to this stage and make sure that it really makes sense and it fits. And if you look at the two we announced two transactions 48 hours before we announced this merger and actually one of those we had been talking to for uh for quite a long time as well in in terms of the elemental altus management team and had been working on that deal for a while um and another one. So I think in terms of uh our ability to go forwards, it actually means that we can go even further and even faster when we see an opportunity we really want to take advantage of. and having the confidence of knowing that we got a really supportive major shareholder behind us when there is something that we have conviction on we can push the button on it which I can tell you certainly from the elemental side was not always the case when you're starting off small and actually your biggest constraint is access to capital >> and you can find a great opportunity but you might not actually be able to to execute on it so that is a huge difference game changer for us I think going forwards and the for my entity a whole another level Yeah, >> I think you you've told me that story before, Fred, where you essentially started a company with a million bucks. Uh it was it was the two of you, you know, two guys essentially who started it. So, this is it is a huge change. I mean, 140 million bucks when that comes in, how much money is is the combined company going to have uh on close? So we'll we'll with the $68 million in acquisitions that we are simultaneously doing and also paying down the Franco credit facility with the EMX have so we'll have one combined credit facility subsequently we will have approximately 50 million US in cash on closing >> and then we're obviously extremely cash cash flow positive even more so at today's prices and um sometimes can't quite keep up week to week at the moment month to month with where the prices But one of the wonderful benefits of having a cash flowing portfolio with direct exposure to the commodity prices is every week, every month those commodities are trading at these prices. We capture the benefit of it straight away. So we're going to be in an increasingly strong cash position on close. And I think then as alluded to at the moment we will have a $50 million credit facility uh with National Bank uh um CRBC and and RBC on our side and on close I think we'd look to increase and expand that credit facility and based on the proform of revenue you could probably quite easily support a $200 million order of magnitude size credit facility. >> Mhm. when what's it going to take for you to get to a point where you're investing off of your balance sheet, where you don't need credit facilities or loans or or cap raises in any way anymore? What what's it going to take for you to be a not only a cash flow positive royalty company, but also royalty company that can again grow on its own? Both of us have already done that with with moderate and small size deals and we'll have the ability to ever increase our our arrows in the quarter to be able to accomplish that uh as our cash flows increase. >> I think it also comes partly to your ambition and and and and what you you know how you're valued and um and the relative discussion there. And so it's always uh I don't think it's a that that is a a discussion that evolves month on month when we're looking at the opportunities and we're looking at the the funds we have available and if we see some fantastic opportunities that are going to really drive value then at least now we're in the position we know we could raise more money and do it if we think actually there's there's so much value in our stock as Dave said in EMX at the beginning of this year when I think you were probably trading below $3 Dave um but um and maybe I Canadian But I think um you know you saw the best thing to do was just repurchase your own chairs there actually has some secret to creative on and you're probably up 160% or so since then. So, so yeah. >> So, so clearly different different times to to adopt each strategy and I think it will it will partly be the opportunity set but really uh Dave mentioned earlier one of the synergies or one of the benefits maybe of this deal is actually having the two combined teams being able to look at twice as much deal flip and cover twice as much ground. And so that's something that earlier today actually we had a call working um across opportunities and I'm not sure how far down the list we made it. We certainly didn't make it to the bottom but we yeah it's a pretty good sign when there are more opportunities and there are people in the company to review them. >> Is an NCIB going to be the mandate for the newly formed company on on on day one as well or in the future of the company? How do you how do you see that? Fred, would you like to address that? I guess we had the NCIB in place before. Did you have one, Fred? Just put one in place. >> We did set one up for the first time around the middle of this year. We've never actually used it yet. And um and we've also one of the challenges with NCIB is sometimes you're you're so uh in possession of material information that you you can rarely adjust it, put it in place or change it. So we short answer is we have it but we just haven't used it yet. So the combined company should have an NCIB in place and then it will be up for the for the new board to determine the best timing and use of that going forwards. >> Yeah. And I think philosophically just to add to that it's always good to have the NCI in place so you can execute if there was a situation where you thought it was appropriate. The overall strategy from my point of view of buying back our stock when we're trading at 0.5 NAV or less, which is where we were at, it was a no-brainer, right? When we're trading up towards 8.91 times NAV, um, and we're looking at a plethora of opportunities to uh to conduct um um a creative deal flow, then that puts us in a different situation and probably would not be as aggressive on the NCIB. What is that sweet spot? What's that discount that makes it, you know, makes you want to buy your own stock instead of look at at other stuff? Is it a 0.5? Does it get a little bit higher than that? >> There's a lot of variables in that equation, right? So, um, you have to look holistically at all the opportunities for that capital. And so, there's a lot of variables that would go into that. And, um, uh, yeah, I'm sure I'm sure you can envision that, right? So it's comparative of if if you do X with capital versus Y versus ABC and uh both companies have a long track record of allocating capital appropriately. >> This is a no-brainer when we're trading below.5 to buy back our stock. >> Yeah. And that's that's been proven, right? Because as I said, we've three bagged the stock since we did that. So >> yeah. Yeah. But you know uh today we bringing in $100 million uh and uh come out of this with a strong balance sheet. >> I was going to say that though not a very good one. I am an accountant by education. So I want fixed numbers. It's 7 I buy back stock. It's 08 I don't buy back stock. Doesn't always work like that in mining though. >> The you have to compare what other things you would do with that capital, right? >> Yeah. Yeah. >> Yeah. If we have a chance to buy some phenomenal thing that comes in the door, even if you're trading at 0.5, you might do it, right? >> Yeah. >> The Franco, by the way, on that topic as well, I wrote it down and otherwise I'm going to forget here, but I believe they still have um in the money warrants, if I'm not mistaken, any any idea what they plan on doing with them? What's that relationship going to look like once you've paid back that debt? >> So, yeah, Franco, long-term friends of ours and supporters of EMX. They were friendly and supportive for me long before they were shareholders. They ended up syndicating the Castron's purchase with us and became a shareholder. They've given us our blessing with respect to this deal. We actually had to have their approval um because of the debt and the covenances associated with that debt. So, we will pay off that debt. We've had meetings with them. They've congratulated us and I believe it's very likely that they will remain shareholders in EMX. their warrants um expire in a little over one year's time, >> right? >> They have shares and warrants. >> Yeah. And so the idea >> probably on a go forward basis they'll be a little over 3% fully diluted. >> But the idea is that they remain a shareholder um in the company. That's kind of that's your expectation essentially. >> Yeah, that's our expectation. Yep. >> Okay. Let's maybe talk a little bit about strategy here for a minute because this deal will or would put you both very comfortably in the mid-tier range. How do you go grow from here on out though? And and I'm asking broadly first maybe and then we can narrow it down. But what does it take to grow a mid-tier comp royalty company into a major? Is it just having a lower cost of capital? Is it having that deal flow? Is it a combination of it all? Yeah. What does that look like? >> So I'm going to let Fred answer that question, but first I'm going to make the big picture point. Our goal is not to become a major wealthy company. Our goal is to make money for shareholders, >> right? So, we're here to we're here to invest astutely and create value. You know, a lot of people talk about how we're filling a gap in the in the space between juniors and and there was a vacancy there. I, you know, okay, that sounds cool and bankers like to talk about that and analysts like to talk about it, but I don't really care. What I care about is that we're growing a portfolio that creates value for our shareholders that translates to long-term compounded annual growth rate of our share price. But with respect to the strategy as to how we grow the company on the left for identity that question. >> Well, Dave actually took the big picture point that I was about to start with which was the assumption the premise that we we need to be a major because I think that actually it's it's it's really driven by the opportunities and creating value. And sometimes I think if you can take a million dollar if you could take a million dollar royalty and turn it into a $200 million royalty without doing anything else, maybe you shouldn't do anything else. maybe you should just sit on that one royalty. So, um, look, in in terms of where we are, I think part of the reason this part of the reason the combination worked is is because we've got a similar philosophy in terms of not chasing growth just for the sake of it. I mean, obviously, there are some benefits that come with it and we're seeing it here with increased liquidity and size and ability to talk to larger investors, but the fundamental premise has to be that the actual assets are are additive to each other. And here we we both own part of Casseron's. We both owned part of uh the um of the cactus royalty with with Arizona and Sonorin. And there's actually two other smaller royalties we both owned we both owned part of that I was reminded at at Beaver Creek. So there's there's a couple that that cross over, but it's it's in terms of growth. It's it's from here looking at what makes sense and that can be anything from early stage assets all the way through to producing. I don't think that that range of what we're looking at has changed. It's it's really still the same analysis that we're trying to do in terms of what actually adds value to the company and share members and makes sense, but that that we're in a very much stronger position to do it. >> What do you mean you were reminded of royalty? You don't know all 200 royalties off the top of your head. It's it's actually it's funny, but I remember years ago meeting the CEO of one of the mid-tier royalty companies and I asked him about a specific asset in their portfolio, a small one, because there was actually another part of that royalty available. And he was adamant that they didn't own the royalty and I'd got it wrong. I knew they had cuz we've been working on it, but I sort of thought, how can you not know every single royalty to granular detail that you own? And I think now with this deal closing, we're probably going to have 220 odd royalties, 210 odd royalties. I I think I, you know, I'd like to think I would I would recognize everyone, but will I remember some of the granular details about them? Maybe not as much as I did when we only had four and we were a 3 million market cap private startup. >> You know, a similar story to what Fred said. I heard David Harkle one time give a presentation to a big group in Vancouver and he said that some of the best royalties they have on the books today he didn't know the name of 5 years prior and that's because of deep portfolio discovery optionality. So royalties that you hardly remember that you own all of a sudden there's a drill hole that hits the next thing you know it's turning into a major deposit. That's why you own royalties right there and that's the part of the portfolio effect. the the best example of that Dave is some of the ones where it's it's not even the right commodity that they were buying the royalty for initially but it it's suddenly actually it's a different commodity altogether the discovery is made and suddenly they've got an incredibly valuable royalty uh that no one not only for saw but no one even anticipated so a fun recent example of that is the Bangi royalty that we own in Sweden that was originally a copper prospect there was a geohysical anomaly um uh from an electrical method that was was utilized It turned out to be a false anomaly related to graphite, not copper. So, it was originally a copper prospect that was completely defunct. It was sold a couple of times. The royalty remained in effect. It turned into one of the most significant advancing graphite deposits on the planet that we have a royalty on now. So, you know, phenomenal example of exactly that. Yeah, that's why you want to own royalties. They're perpetual lottery tickets. But that is also why Dave, you've always wanted to have more optionality through your royalty generation business which you've done a lot of and that was part of your competitive advantage I believe as well. What's going to happen to that business? >> So that that business will remain strong and I'll point out that um Elemental and Altus uh have a background in royalty generation as well and and the prospect generation business model. We believe that's incredibly astute allocation of capital and the team that executes that model and the secret sauce actually comes from the synergies between generation and royalty purchase and strategic investing because that puts smart economic geologists and engineers that are making business decisions and making observations about how the industry is working in mineral belts around the world. gives us a leg up with respect to being able to do due diligence and a specific leg up in regards to smoothing and discovering of royalty and investment opportunities that are not going through sales process. And that's the secret sauce. You know, if we go back and we look at the return on purely uh royalty generation has a positive expectation. If we look at buying royalties to gain scale in the company and adding to the top of the pyramid has a positive expectation. But where the huge wins come is the integration of the two where the teams find a royalty that you can buy. And of course the pre-minent example would be buying the team royalty for 200,000 Canadian dollars that now has a analyst average NAV of 260 million >> and growing. Uh and that's the secret sauce. >> I'm going to try and ask one of those questions where I may I may not understand the question myself in the end, but I'll try. I'll do my best. Uh do do you does doing that still make sense for the size of company that you're going to become eventually is what I'm thinking. So do do you think that becoming a larger royalty company might be costing you sort of your competitive edge in the market where you didn't have to compete with bigger companies on your royalty generation business and on bigger royalties because it was yours. And so bigger being a bigger company now, wouldn't that mean the royalty generation business is sort of less efficient in terms of value generation and and couldn't that essentially erode that that alpha there? >> Well, I I think you know my answer to that question, so I'm going to hear Fred's. But before Fred answers the question because I want to hear him answer this, >> I want to point out that Franco Nevada specifically and that's, you know, one of the largest world companies in the business invested in AMX because they wanted exposure to that side of our business. So that answers to you whether or not that makes sense for larger companies to do RP generation or have expend have exposure to that type of deal flow. So that's the one data point, but I want to hear Fred's answer to the question if you don't mind, Fred. >> Yeah. Well, it's it's an interesting one because actually one of our our newest producing royalty on the elemental artist side is actually one that originated with EMX's current chairman, Michael Win, uh many years ago through Legend Gold. And that is a Kerali SD asset that is part of Allied Gold's tier 1 geological deposit Sadiola in Marley over 10 million ounces there. And um that that that royalty went all the way back through the prospect generating arm for for many years and and and as that came into a mine it was a great partner for us to put the royalty into their hands with a combination of milestone payments and also at 3% royalty initially dropping down to 2% uncapped forever royalty on it. And I think if that 10 million ounce, we say this internally, if that 10 million ounce deposit was in a Canada or the US and it had been a public company forever, that royalty would probably attract order of magnitude greater value. Uh because it's been a private company up until very recently. There's actually not nearly as much knowledge and awareness of of that project. But uh we really like the exploration optionality that we get with that. And I think that look one of the uh maybe two things to just touch on other than that which is one of the ones Dave mentioned which is always trying to find royalties off pie is a phrase we use internally which is which is not ones that are brought to you uh and and sort of but ones you actually go out and generate you find yourself and and in that sense actually having people on the ground in the flow knowing what is going on with projects exploration new discoveries and minds That's incredibly valuable for us because there's always a danger as you get bigger. I think that you end up sort of trapped in a corporate office siloed from actually where the real exploration and discovery work is going on in the ground. And I think having people with that technical background and you mentioned earlier starting the company with Richard and Richard Evans and Peter Williams on the elemental side years ago and both of those Richard is a is a geologist 30 years plus experience at Western Mining. Peter was a geohysicist by background, 30 plus years western mining, both with experience prospect generators. A few of our other directors subsequently also experience with prospect generators. And I think having that really technical background to the company was critical when we started. Um, and I think that going forwards, one of the areas that EMX was best known for and where they were undoubtedly the strongest in that junior royalty space was on the technical side. And so actually that gives us a really really strong addition in terms of our ability to evaluate deals and do it efficiently and quickly because part of the challenge is there are there are so many opportunities. You have to use your time efficiently and you have to really make sure you're identifying the best ones quickly. And so so having a combination of teams there I think is is really valuable. having that presence on the ground in multiple countries that network and it can be understated but a lot of our deals have come through network through other people in the industry who have said yeah we think this is a great project it it looks like a great discovery have you looked at it and and you know not just the existing asset but you can look in the area you can look at other projects I would say most projects nowadays have a third party royalty on them probably 70% of all projects have a third party royalty on them somewhere along the way so there's a huge uh uh sort of pool of existing opportunities there to look at. So, so that's really important. And um and then the other part I think you touched on as well, which is the size and scale, but some of the team were just doing a site visit uh since we announced a merger um on on a new potential royalty generation opportunity that that actually does have some really meaningful size and scale um just on that one. So, I I think it's a there's a whole range that you can do, but I think that it makes sense on a number of fronts for us. I think that we've got the benefit of it today in one of our producing assets and I think that the technical skills EMX team have are going to be incredibly additive to our existing business development team um on both sides and enabling us to cover more ground >> and it seems like that technical skill is focused on precious metals and base metals as well and you're about 2/3 precious as I mentioned earlier the rest is base metals is that where you want to keep it or do you expect an increase in in any of them? Well, my patent answer to that and my fundamental value and belief around this topic is that we want to be exposed to prospective mineral rights and that's the key thing because we want to be exposed to discovery optionality because that's how you separate yourself. Um, and that's why royalties are amazing because that discovery optionality of course translates to increased production over time, right? And so the key thing is expose ourselves to prospective mineral rights. um the gold, excuse me, the world will consume as much copper in the forthcoming 20 or 22 years as we have throughout all of human history. That's a conservative prediction based upon current macro u mineral economic analysis. The if you want to summarize all that, you know, as Bristo, the former CEO of Bareric said, gold's the most precious metal. Copper is the most strategic. They're great metals to be exposed to. Our view big picture is that copper is good, gold is great and uh we probably will do our best to aim that uh gold plus silver is 50% or more of our revenues but we fully want to be exposed to prospective mineral rights. >> What about compet and Dave you and I have talked about this I think the last time you and I spoke about this but I I asked essentially what about competition? Competition in the golden and silver space is way higher. there's virtually no competition in tungsten and zinc and boxite and whatnot. Is that something that might be of interest or will it still remain on on that end? >> We look at we have we look at those opportunities occasionally they come across um our desk. They're happy to take a look at them. Um but the fundamental criteria is you know is it a suit allocation? the the tungsten. You mentioned tungsten. That's an interesting one because we bought a tungsten. We bought a tungsten royalty last year and and actually I I can you know there were some shareholders who who liked it and some shareholders who didn't like it because they sold tungsten initially um and and they they were wondering if it was a pivot in strategy but it was it was simply a value decision. We we saw the deposit. It's Farweed um Fireweed who who are advancing the project and Lundine's obviously major shareholders there alongside our Caserone royalty and and that is a project that rather uniquely has had about 7 years of permitting historically in Canada. So it has been through that really long time frame already and on the basis of the previous work done and they're updating it now but on the basis of the previous work done I think it would have repaid us almost our acquisition cost on an annual basis for 30 or 40 years based on on the results at that point. So, it's it's going to be uh I think an incredibly valuable royalty when they update the the project later this year um coming out next year and um and that was only available to us because it was tungsten. Had that been a gold deposit with similar economics with similar potential and optionality, we would have had to pay orders orders of magnitude higher price for it. And and because we're in the I think the really beneficial position of having the majority of our portfolio in gold and copper, it gives us the flexibility to go and take advantage of an opportunity like that where it's not going to suddenly change the waiting of our portfolio, but it could actually be really meaningful in terms of value created. And part of that is because, as you said, there's just less competition and less people, I think, looking at opportunities like that sometimes. >> Yeah, that's absolutely true. I I used to talk to uh the Fireweed's previous CEO, Brandon McDonald, and uh he used to say that his job would be orders of magnitude easier if he was pitching a silver or gold asset. Instead, he was pitching, you know, zinc and tungsten. And um I actually went to see Mac Tongue this year in the Yukon and it was incredible to see everything up close. Um so yeah, that that's the deal that I had in mind when I was when I was asking this question there. >> Oh, there you go. Yeah. >> Yes. >> But we're yet to get to site, but um hopefully can can follow in your footsteps and uh get a site visit out there shortly. >> You'll enjoy it. It's it's it's higher up, which means fewer mosquitoes. Uh it had the least amount of mosquitoes there uh relative to all the rest. So, I did enjoy it. And uh they give a really wonderful tour um of of a large land package and everything. So, I think you'll enjoy it. And um obviously the next best thing would be to watch my video from there. Uh a little bit of a bit of a personal plug there. Uh, what about jurisdiction though? I mean, just Yeah, you're reminding me of, you know, or I'm reminding myself of of jurisdiction. You mentioned Mali there, and you you made sure to emphasize on it being a tier one geological deposit because the jurisdiction sure isn't. Uh, but geologically, all all the all the discoveries in that greenstone belt have been have been, you know, tier one. U most of them, not all of them. So, yeah. Where do you go as a, you know, as a combined company? What's the focus going to be? Go ahead, Fred. You're in Molly in 20 countries, but Fred should answer the question. >> Uh, and look, I I mean, Dave's got a long history of working across the globe in different different countries, particularly Turkey, but I think one of the the ways we tried to think about it internally was balancing the geological potential with the jurisdiction risk. And our view starting off was that we were likely to see, this is at a high philosophical level, we were likely to see less green fields, opportunities in unexplored opportunities in West Australia or in Canada in some of the famous gold belts and and we would likely be looking at more brownfields opportunities or assets that already been explored partially. Whereas we could go to some emerging jurisdictions and actually you're looking at a mine that is starting with a 10-year mine life but actually we we could see that going for you know many many decades beyond that um because it was a grassroots project. So I think for us we can see an awful lot of geological potential and some of our licenses that we have got in emerging jurisdictions have been very very large land packages hundreds or even a thousand square km >> which is sometimes again hard to get in the middle of much more established gold belts. So we we we did that but we have also along the way we have turned down some opportunities that we actually we liked the potential of from the operator counterparty and the geology perspective and we turned them down because we thought it would make us overweight a certain jurisdiction or even a certain region within a jurisdiction >> and and so always back of our mind the operator the country the balance of our portfolio across it I I think um today we're incredibly diverse I mean if you look at our portfolio um we have uh Europe, South America, North America, Australia, it's it's it's really more diverse than than any other company sort of within our region. And I think a number of them have focus in a uh sometimes the Americas, sometimes Australia, but but rarely across the whole spectrum. And I think EMX have a almost um unique uh portfolio exposure to certain European um opportunities, projects as well. But maybe I'll hand over to Dave there for anything you'd add. >> Yeah, I'll just say a couple of big picture points. I agree with everything you just said 100%. And um some of the things that that Fred's been articulating point out exactly why we want to work with them. So, you know, we really see clearly this this path forward um from the same viewpoint. But I'll point out something that Rick Rule often says, and that is that, you know, rocks don't change, but politicians do. And the political risk in the mining business is different than political risk in other businesses. And the larger risks in the mining business are engineering and environmental and geologic risk particularly particularly when you go to the early stage, right? But we read about political risk in the newspaper every day. And so commonly people are keenly aware if not over aware of political risk factors because they're being put in our face. You know, Turkey is a good example. You know, I've worked in Turkey for a very long time. It's a very comfortable place to work. Um, and but you know, I I commonly hear people, you know, reference the some of the movies made in the past about Turkey, which were exaggerated, etc., etc. But anyways, the point being is that um there's an arbitrage there. you can capture great geology with vastly less competition because the perception of there being risk factors that maybe don't exist. Long story short, and EMX and Elemental have taken advantage of that in building our portfolios over time. The other thing I'll point out is that Dr. Richard Chay, an advising macro mineral economist to um our company, just recently published a century compendium of exploration and discovery data in a recent society of economic geologist report. That's a very nice piece of work to go back to and there's a number of trends there. Some of the trends are discoveries being made at greater depth. um the amount of money that's going into exploration discovery around the world, where the destination of those monies are going and where discoveries are being made. So a lot of the huge discoveries that were made decades ago were in angry file countries um Canada, United States, Australia. The now we're seeing a trend of more and more major discoveries being made throughout the globe and um more far-flung from some people's perspective jurisdictions. These are all trends that we as a royalty company want to be in front of. >> Well, as you as you mentioned earlier, you know, you have a larger combined team now, but you still have more opportunities than uh people to look at those opportunities essentially. And Dave, this is something you and I have talked about before. You explained it to me back then as well in terms of the accounting and everything, but sort of the biggest criticism that I've seen so far of EMX since you and I have been speaking has been the size of your GNA. Um, and that is related is again you've explained to me to your prospect or to your royalty generator model. Will the combined company have a a lower GNA than the sum of the parts? Is there any efficiency to be had there? >> We're expecting to save millions of dollars, but we've not yet given guidance to exactly what that is. Going back to the first part of the question, it a significant component of that is a difference in accounting technique of doing royalty generation where 100% of EMX's expenditures in the royalty generation world are expensed each quarter. Whereas most royalty companies capitalize their expenditures when they buy royalties and EMX does that as well as does Elemental. When we buy royalties, we capitalize all of the costs associated with that as well as the purchase price itself. So if a royalty company is only buying assets, they're capitalizing all that. It goes as book value for that asset on the books. EMX has over 100 mineral assets on the books at zero book value because all of the expenses related to creating those assets were expensed each quarter. So part of that analysis that I that you've mentioned to me and other people have mentioned me for years is because of a difference in accounting technique, because of a difference in the business model. It's kind of like when if you have a a restaurant and and you have a cook come in to make a recipe for you, you have to pay them. And if you pay them right now for the recipe, so you make that expense right now, but you're going to make money off that recipe potentially down the road. That's kind of how I look at that. >> Okay. I that that I've not heard that analogy before. I remember it. >> Is that But is that right? I mean, is that is that is that fair? >> Yeah, that's fair. >> Okay. >> Yeah. Okay. >> I guess in both cases, you're paying up front, but Yeah. You know, um, accountants love to capitalize stuff so they don't have to talk about how much money they spent, right? >> Exactly. Yeah. Exactly. Um, you think my wife might be an accountant, uh, but she's not. Now, options, insider compensation and everything. Kind of like um, it's a bit of a, you know, housekeeping note that I have on here. Going forward, how is that going to be determined? How for the combined entity? What are the KPIs going to be that you're basing off incentive? Look, I think all of those uh Antonio still to be worked on by the by the new um the by the new comp committee and and the board. So I think that uh part of the job here is to align the first integrate the teams, align the strategy and make sure everyone knows what what we want to achieve and what everyone's role in that. And then flowing from that is is some of the parts you talked about. So I think that similar to some of the more detailed metrics on on the numbers going forwards I think we're um we're about uh just over uh 4 weeks post announcement now I think um today and I think that uh we had the first uh the week and a half or so in in the conferences. So we are working through all of those in parallel with the uh with the listing in the US closing one of the other acquisitions and also um the shareholder meetings and combinations on this. Those are those are things that we will have to uh come back on um and talk to you again at some point in the near future hopefully in in terms of uh what those are. >> Yeah. What who would be of you that would come back and talk to me essentially is what kind of my initial thought thinking here because again you guys are kind of doing the tour right now as as a as a duo. Is that how you're going to be running the company going forward or what like Dave you're going to be the CEO and Fred you're the COO. What does that mean though? Who's going to be doing what? How do you divide and and and hopefully conquer here? >> I think both companies come at this from a standpoint that titles aren't that important. A lot of people focus on those. We really work at EMX and I know Elemental works on a roundt environment. We're trying to put smart people together to make intelligent decisions. Um I think initially it's good for Fred and I to go and and do joint presentations to you and this is a great example and thanks for the opportunity. But of course over time we'll divide and conquer and uh um there'll be opportunities for Stefan as CFO to give presentations on his own for me for Fred for David Baker etc. Um but initially I I think it I think the market is appreciating the fact that Fred and I are are speaking to folks like you join them. >> Yeah. When and and where is the new venture expected to be trading? So, we'll we'll have a US listing. Um, and once we once that's confirmed, we can um we can yeah put out exactly uh which market and date. But that that application is underway at the moment. And then we'll also retain the listing in Canada as well. So, we'll have the Canadian and US joint listing. >> Did you I think what do you think the ticker symbol is going to be? Cuz I heard it might be EL, but it seems like that's taken on the New York Stock Exchange. Uh so the the existing ticker symbol is e. Yeah. So I think that that that one is available as well. So I think that would hopefully provide some um continuity there as well. Um if that rolls forward. >> Yeah. Yeah, that would make sense obviously. Yeah. US listing meaning NYC or NASDAQ or or I mean when you say that you don't you're not talking about like >> those those are the two major ones. And so, um, we're just, I think, being cautious in terms of what we say before we have official approval to say it. Um, but working on that on that track. And of course, at the moment, EMX have the benefit of having the NYC listing. And if you look at the royalty space and especially in that sub 500 million space, every company that has a US listing, most of the the majority of the liquidity, it it transfers over to that US listing. And I think we anticipate that going forwards that the combined company is going to have the majority of our listing occurring on that on that US market. >> Are you going to try and get in front of that by by going and maybe marketing to larger funds in New York and trying to get some of that maybe even passive funds flow? Is that too early to talk about that or Yeah. How do you see that? >> No, definitely. We had we had uh we have a road show lined up um for the US. I think we're going to do some virtual marketing as well. And one of the benefits of having the bigger team actually is that we don't need to do every single conference and every single road show and and marketing together. And so I think that will be a benefit in terms of uh making the most of our time and and splitting it. But uh in terms of the passive um funds, it's a really interesting point um because for uh index like the GGXJ, one of the major we we obviously uh over the threshold in terms of market cap, but I think one of the con one of the constraints hurdles you normally have is liquidity. And the liquidity required is is about I think a million US a day traded. And at the moment we're trading multiples of that on a combined basis every day. So we are well over the threshold for that. And I think there's one or two other indices where we would expect the combined company to potentially qualify for. So once that happens, it starts to be a bit of a virtuous circle as well because that liquidity that you get, we get more liquidity >> and and that can be a real advantage. And I think that for the for the for our shareholders, ultimately the owner of the business, the easiest path we can give them to having flexibility to buy and sell their shares and hopefully buy more is to give them as much liquidity as possible. And so um that's that's something that should be a real positive coming out of this and expect that with the index inclusion with the merger closing and with that US listing we should have a really good platform for investors and for people who wish to participate to be able to to buy part ownership ultimately of the company in as frictionless and as easy a way as possible wherever they are in the world. You're I'm actually just looking at that right now. Uh and your average three-month volume is actually half of what your average 10day volume is. So you your volume has gone up tremendously after announcing this. Obviously for both of you more or less um same numbers. Um Elemental, you're doing over a million uh Canadian now on the 10day average. And then um you mix I think um let's see what you're doing. So 7, call it 750. Yeah, close to a million and a half. So together you'd be two and a half million Canadian, which even >> majority of our volume is on the New York Stock Exchange. Um, our 30-day average trading volume on New York is well over 600,000 shares at five bucks a share. So that's $3 million a day. >> That's interesting. Yeah. So it should be really no problem to get any of those um passive income funds. Um that that's Yeah, that is interesting as well. What's um >> one of the questions we have is you know if they absorb 5 to 10% from force index buying which is highly likely where's that stock going to come from. We have a lot of sticky shareholders so it's going to be very interesting uh equation. >> What is going on in in the meantime with the assets might be interesting as well because that might get new attention as well on top of all that. Dave I get I guess we'll start with you. What are the imminent updates you're expecting from let's do Casrones because it's a combined one obviously but also team and get interesting. So great assets all three of those. The um we're very excited about what Lentine's doing at Castronis. Uh they continue to put out hints and data uh illustrating strong success from inpit drilling of higher grade brutes zones. And from a royalty holders perspective, there's no better place to find high-grade than in the pit. So they're doing inpit drilling and they put out these cross-sections and throw these high-grade breones going off into the one of the high walls. Very very interesting. Um, great to see Londine being aggressive on the exploration front, which is exactly what you'd expect to see from a Londine family. And in addition to that, they're also talking about pushing that production up towards name name plate capacity and potentially expanding name plate capacity. Whereas GX Nepon when they were operating the mine were were operating about 75 70% of name plate capacity. So, we're seeing discovery optionality driving production optionality on that asset in addition to the price of copper performing exceptionally well. price of them lived in them as was a key byproduct from that mine also performing well key asset for us and um in addition to that I'll I'll point out that the that the footprint of this royalty coming back to my favorite topic about royalties is discovery optionality the footprint of this royalty is bigger than the city of Phoenix the giggantuan footprint there's a dozen copper anomalies that that have seen drill holes that have intercepts uh within this footprint and the one that the Lundines are talking about specifically is Angelica which is well within the footprint and immediately adjacent to Castro Mason and would have operational synergies of course and they're talking about that which was an oxide resource in the past and they're getting into the sulfide that depth now and we're very very very excited about that. Um the so that's this is going to turn into a phenomenal asset for us backward looking Fred correct me if I'm wrong I think our our combined royalty revenue is about $15 million pre-tax with a combined royalty percentage of 1.306% 306% NSR phenomenal position to be in. All right, so now let's go to T-Mok um also phenomenally valuable asset for the combined company. Um there the L excuse me, Zen continues to discuss the favorable drill results that they get last quarterly report. They alluded to more success in expanding the lower zone which last year they expanded by 250 million tons at over a percent compet. That's a major discovery just in the expansion of that zone right um in addition to expanding the mine life of the two upper zones. Uh so last March the mine life there was now up to 14 more years uh from that and then the MG discovery which has a had at one time a dozen drill rigs at surface I believe now they're down to 10 uh as they move some of those rigs over to drill more lower zone materials. So so there's four combined deposits within our royalty footprint there MG being the most recent discovery the maiden resource which is just the beginning 150 million tons of 1.87% 87% copper 61 g per jund gold and uh um the geologists have a twinkle in their eye when we tour two are there on site discussing what the long-term potential is of that asset. So this is this is a phenomenal asset for the combined company. Uh two commodities we love of course and gold. Um then get gety they've successfully raised the money and are are working towards the transition from going from an oxide open pit that's focused on the gold and silver to a polytalic uh copper zinc and silver valin um um sulfide deposit at depth. There'll be a bit of a hiatus as the gold peels off and as the sulfide ramps up. Uh we have recently renegotiated the royalty there that will enable the operator to put lower grade oxide on the heap um because the oxide is essentially very close to being mined out now. So we've reduced the royalty there from 10% to 2.25%. That will enable them to to be able to put some of the skinnier ores on that pad and continue production there. And then we've increased the royalty and the sulfide from 2 to 2.25 to help accommodate that reduction. um on a NAF basis that works out neutrally and gives us more long-term exposure to that sulfi deposit which we think will grow and we're pleased with their advancement of that asset. So that touches upon the three that you mentioned to ask about a couple of the key assets um in Australia. >> Yeah, I do want to talk about Carloinda and Bono um obviously uh Fred with you as well. Uh Dave, what's the what's the most kind of overlooked asset that you think you have or like you're very happy about it? Uh but when you go and talk to people like myself, nobody ever asks you about. >> So, um the most overlooked asset that we have is the immense number of lottery tickets at the base of the pyramid being advanced by hund00 million in exploration expenditures annually. And results of that would include the South 32 discovery at peak ripping off big drill holes of copper, zinc, and silver. That's the extension of the of the Arizona mining Taylor lead zinc silver deposit that zones into a copper zinc silver deposit on our side of the royalty line there where we have a full 2% royalty unbiable odd capped and we're very excited about that. It's a great example of deep portfolio discovery optionality. Another one u off the top of my head would be the Viscaria copper gold iron deposit in northern Sweden. That's uh that's moving towards production. They continue to find more good grades at depth. That's going to be a nice royalty for us. The Vitangi uh uh um graphite royalty falling out of the sky. That that that's another good example. All this speaks to deep portfolio discovery optionality and that's why you want to own royalties. >> Yeah. Fred, what about yourself? Um again obviously Cast Roness is the overlap there but Carloinda Bono what's going on there? >> Well Colinda is and and maybe um Colinder and Leverton might be the other one I talked to because I think it's an interesting point when you look at our portfolio actually if you said there were five assets sort of four or five assets at the top you might say that out of those Timok actually planning to massively increase their production going into the lower zone. So that is a producing royalty cornerstone that will get bigger. Carlo Winda producing cornerstone royalty that is going through a 50% plant expansion at the moment. And so that is going to come out middle of next year. That's under construction now. So that is going to come out as one of our cornerstone roies materially increasing its revenue um production at the same time as the gold prices hitting all new highs. So that is probably going from a 2024 $5 million royalty to a 2026 major onwards $10 million a year royalty. Uh not even accounting for the spot price today. And then Leverton which is another cornerstone royalty but actually not yet in production. And this is one of the ones that we added to in the recent acquisition. So we will now have a 2 to 4% NSR royalty over um uh up to 4 million ounces. So we have 2% on half, we have 4% um on on um sorry 4% on two million ounces and 2% on on on the other half. And for us that's going to be a really key driver of growth going forward. It's a 4 billion US market cap operator in Australia. very well known in Australia, Genesis Minerals, previous management put together to combine to make Northern Star and they have an operating mine there and they have recently acquired all of this ground immediately adjacent as close as 15 20 km away east of the mine. So I think it hasn't been hasn't been properly explored for going back now nearly 15 years and in Aussie dollar gold terms that that is a period where the Aussie dollar gold price has has almost tripled in that time and it has seen virtually no exploration and now it is in the hands of a very well- reggarded very well capitalized mid-tier Australian gold miner with a mine next door that they have already spoken to multiple times this year expanding themselves. So we will get the benefit there of not just the discovery optionality where they start exploring and actually making up for the last lost decade but we will also see them starting to put some of those existing resources 99% of which are on granted mining licenses in West Australia starting to put those into production at their mill and then we will have the upside on that which is the plant expansion which I think they've spoken to half a dozen times this year which will be coming down the line and then they will be increasing the production there. So that's three of our cornerstone assets where they are actually currently expanding the mine. Um and expecting substantially increased revenue. So when you talk about we mentioned it earlier touched on growth in the portfolio. Uh there's some really substantial organic revenue growth there coming over the next 2 to 3 years from those three cornerstone assets that will all be substantially larger and contributing even more going forwards. What do what do you think is the uh I understand you guys are here to present a bullish picture and all that and and and we've managed the conversation well in my opinion but what what's the biggest risk in the meantime and between now and getting to that level that we initially talked about where you're kind you know financing your own business going forward yeah what's the biggest risk what's the biggest challenge and and Fred we might continue on with yourself and then Dave I'll get back to you in a second >> look there was a point in the early days when you there where we We were a company that was so concentrated and the portfolio we had a relatively small number of assets that if something went materially wrong at one of our assets that's actually a systemic risk to the company and we got to a certain point as we grew and I I remember thinking I'm in the mining business and I no longer see our portfolio as having a systemic risk. One of the beautiful things about being a royalty company, we're diversified enough now that I think we could absorb anything. And when you put this combination the portfolios together that that the portfolio combined that we have it is so diverse and it is so strong and the number of counterparties we have the number of existing producing operations we have and growth we have it's more diversified than most mid-tier miners or even majors could be. And so I always it's one of the favorite attributes of this company on the downside is that downside protection. So I think the two risks I would talk to generally and I think these are omnipresent are individual asset operator risk where there is an issue at a mine and and um and and that can either temporarily interrupt revenue and operations um or it can it can it can sterilize some existing resources or the commodity price risk that we have where we we have direct exposure to the underlying commodity prices. Um and and so that is that's always a downside risk there. And then maybe the third one which I'd add is is um is ill um I think uh ill allocation of capital, poor allocation of capital. But I think that if you look at the portfolios today uh we're diversified enough across operators assets. We have commodity diversification although relatively concentrated to copper and gold and we both teams have individual very good track records of astute allocation of capital and now we're effectively also going to be marking each other's homework as we work together and so I think even more likely to protect against that. Those are the the general risks I would say for a company, a royalty company of our combined size. Um, at this point in time, >> Dave, you're going to have to get creative to top that answer, but go ahead. >> Well, I agree with everything that Fred said and risks are multiplicative. the the the mining industry is full of risks and there's plenty of black swans that land in the mining business and quite unfortunately uh the recent example at Grber the world's largest gold mine and one of the world's largest copper mines um is a um recent large example of that and could something of that nature happen at t-ok or caserones and the answer is of course and the Fred answered that question very well and that you know thanks to the portfolio effect that has less of an impact on the overall corporation. But for Freeport, 40% of the revenue was just taken offline and quite unfortunately they lost seven employees. The um no one would have predicted that. At least no one that I know would have predicted that. And the mining is a risky business. >> Yeah. >> Commodity price risk, social risk, environmental risk. In this case, it was engineering failure risk. And uh you know we're ever present and aware of these risks in determining how we move forward. >> Well, gentlemen, you've done the the unthinkable. Managed to endure listening and and even responding to my questions for over an hour now and uh even even survived a couple of my jokes there. So, um I'm going to let you go here in a minute, but what am I what what do you think I'm forgetting to ask you? What did you come here hoping to talk about that I failed to bring up? Well, I always like to talk about the amount of other people's money that are going into the portfolio because that's what creates this discovery and and production optionality that they all love to to to talk about, right? And so, we're looking at a portfolio that has over $100 million in exploration expenditures at no cost to us creating those discoveries across 200 assets. It's actually, yeah, even more than that. Um and then hundreds of millions of dollars of mind development expenditures creating that production uh optionality as well. That's why you want royalties. >> Britain, what about yourself? >> Well, look, I'd just say that one interesting feature of today's market, particularly in the gold space, is that the long-term consensus price is probably trading at the largest discount to swap prices certainly that I've ever seen. And I think that is a it's a fascinating um point in history because if if gold prices even just remain where they are, you know, you're going to see in terms of our revenue base, in terms of some of our assets, uh the benefits there are not just going to be the direct benefits from the cost price. But it's also then going to be people starting to no longer use $1,600 gold to work out their reserves, but they might be doing a pitch shell at $2,000 gold. they might be doing at $25,000 gold one day. They might be doing it at $3,000. But that that has enormous benefits in terms of some of the assets and some of the optionality we get there um from that from that higher commodity price. So it's I think a really uh a really interesting position to be at today where we are seeing such a big disconnect from analyst sort of backward looking and and using those forecasts then going forwards and and where the gold price is today and really interesting opportunity for us when we get to analyze different projects at those levels >> and hopefully it's going to be before long that we get back together and talk about some of those opportunities. Hopefully next time we can do um a deep dive on the numbers at that point. sometime next year. 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A New Royalty Company & Tether's $100M Gold Bet | EMX & Elemental Altus CEO Interview
Summary
Transcript
Today on the CEO barbecue, we're talking royalties, royalties, and more royalties together with EMX Royalty Corporation and Elemental Altus Royalties. And if you want a bullet point summary of this conversation and all the other CEO barbecues in your inbox once a week, go to resource.com and subscribe to our free newsletter. Now, the company you're about to hear from has paid us for the production of this video, which means that this is not research. It's an advertisement and you should treat it as such. Research is conducted by reading the company's official filings which you can find on setplus.ca. And please only watch this if you absolutely know what you're doing. This interview is intended only for experienced junior mining speculators because mineral exploration development and mining is a very tough business where failure is the norm and should be the expectation. This is going to be a conversation that is general and impersonal in nature containing forwardlooking statements. I am not a licensed financial adviser and my business sells content producing services which also makes me biased in multiple ways. So before continuing on, please talk to an independent investment adviser with a good long-term track record because your capital might be at risk. If you're not 100% sure you understand 100% of the disclaimers I just showed you, please go to the last section of this video and do not consume this content unless you fully understand and agree with everything said therein. That all said, this is where I normally dive into some of the numbers behind the company that's being interviewed as well as some of the trading data and whatnot, but that doesn't really make too much sense in this scenario because these two are merging. Uh, more specifically, it was on September 4th that EMX agreed to a merger with Elemento Altus where Elemento is going to acquire all of the issued and outstanding shares of EMX for a 0 2822 Elemental Alto shares for each EMX share resulting in a 5149 ownership split for Elemental and EMX respectively. The new company is going to be renamed to Elemental Royalty Corp. with three Elemento Altus board members and two EMX board members. Dave is going to be the CEO and Fred will be the CEO of the newly merged company. Together with the transaction, Elemento Alus is also doing a financing, but an interesting one which uh definitely raises some questions because it's Tedar uh a private stable coin crypto company doing that financing and it's not a small financing either is they are buying 75 million shares of Elemental Altus uh at a$184. So that's nearly, let's call it, $140 million Canadian. So a big financing there. And the merged company is expected to have 200 royalties in total, 16 of which already producing. And the analyst consensus is that they will be able to do $80 million. And that's $80 million US in revenue for 2026. 2/3 of which stemming from the precious metals portfolio and one/3 from the base metal portfolio. So as you can imagine, I do have a lot of questions and uh that means it's time for me to shut up already and gentlemen let you do the talking. But first of all, thank you for being here today. >> Thanks. >> Yeah, >> pleasure is mine and and I am looking forward to the conversation because when when um Dave, when you and I spoke uh back in February, you told me that you were, you know, trying to back buy back as many shares as you could at the time, not issue new ones, unless what you at the time called an unbelievable opportunity walked in. And I'm I'm quoting on that one. So how or or why did you know a share-based merger here in this case make more sense for EMX shareholders instead of continuing to buy back stock and maybe do smaller you know cash deals down the line. >> So just make sure we understand the anatomy of that uh Antonio and thank you for that question. Um first of all we were buying back stock at a dramatically lower price than we are today. We knew that we were trading at a fraction of our net asset value per share in a situation where our net asset value per share as defined by the analysts was moving upward consistently year after year. Um and those percentages of upward moves were salient. So our net asset value per share is moving up and we're buying back shares down here. That turned out to be an astonishingly astute decision. Uh we ended up buying back over 6% of the issued outstanding shares of the company and erasing those shares. Furthermore, just to define the anatomy, make sure we understand. So, Elemental issued shares at a premium to buy EMX. So, the merge company is formed by Elemental is Elemental Altus issuing shares to buy EMX and then and then we're merging that together. My pleasure to have the opportunity to work with Fred and the team. The um so just want to get that statement correct. And also, you pointed out that Tether was buying in at a $180 per share. It's actually $18 per share as those shares have now been consolidated, which is why the share ratio that you mentioned previously was 282. Just to make sure we're all on the same page, if you don't mind, cuz I know you like to get the details uh correct cuz you always grind me on those. So, so I'll point those out. Yeah. And you might ask, I'm sure the next question is, you know, why now? And why are you doing this merger? And it might be an overused phrase, but you know, 1 plus 1 equals three. Uh we've had a long time to get to know the elemental altus guys. Uh keep in mind that the Altus a significant portion of the assets in Altus. We're part of a Michael win company. Michael W's our chairman. So there's a long history there. Michael Win was on their board of directors. So we've always had a strong element of communication uh with Elemental Altus way back way back to the Altus days and prior to that Legend Gold that has resulted in us looking at many opportunities over the years to syndicate. Most of those opportunities were failed which is the right way to do business in our business and that is look a lot opportunities and failed them. We shared due diligence costs and we shared business acumen in regards to those analysis >> and thus got to know each other quite well. We think there's an excellent cultural fit and then we did um syndicate the purchase of Castronis which for both companies and now the combined company is a very important asset that we have on the books here. It's exposure to an immense copper malibdinum system operated by Londine and they're pouring money into the ground to create more resources and reserves which is why we own royalties. That's just one of a couple of different sister royalties that the companies have which look very very nice together and the overall portfolio merged together looks well it separates us from the crowd. will say the um there's a there's a fact within the royalty space and that is that the more royalties you own, the more they're all worth individually. And the way that that is actually actuated in the market is in net asset value multiple. So Franco Nevada and the big three trade a commonly two times NAV5 on a per share basis. when we were separate companies, we were trading at a discount to NAB, which is frustrating. And thus that's why EMX was buying back stock, right? Which was the right thing to do wholeheartedly. We believe that we can increase our NAV multiple upwards towards 1.5, if not 1.8 in addition to the net asset value growing on a per share basis. So, we're really exposing our shareholders to a nice opportunity here, bringing together two teams that have different backgrounds, but are quite synergistic and ever expanding the amount of discovery optionality and production optionality within the portfolio. The market has told us that they really appreciate what we're doing. There's loads in there that to to get into and Fred, I'll give you the word here in a couple of um seconds, but I I suppose in the end it does come down to valuation, right? And and maybe you can talk to me more about that as well. Um here Dave, from from your perspective, I believe EMX shareholders again will own 49% of the combined venture, >> but you're bringing more than half of the immediate immediate revenue. And then you're also I mean depending on how you would value T-Mobile, you would also bring more of the NAV here if I'm not mistaken. So how did you come up with that valuation? You know 4951 split is almost effectively a 50/50 split but then at the same time not really. So yeah once again I'll just just make sure everybody understands the numbers exactly. It's it's EMX gets close to 50% but 49 50% it's right in that number. Let's call it 49. Um, and then Elemental in its current state plus the hund00 million investment from Tether equals 51. >> So that's so the 51% from the Elemental side for those people that care about these numbers. What I care about is a company that looks good going forward and we're going to do great things. That's more important. But you're zeroing in on the percentages. I just want to make sure we all understand. So the Tether $100 million investment plus Elemental Altus is 51% and EMX is 49%. Now coming back to what is accretive for both sides. um it's accreted for both sides clearly because of the u portfolio effect moving forward and when you grind into the details which of course the bankers love to do EMX is contributing greater NAV because of the long lived copper assets that we have exposure to and copper assets with very long lives commonly trade at a lower NAV multiple in the market elementals bringing in more near-term gold production EMX is adding that but but more so long-term copper production. So, those can be valued differently in the marketplace. Neither of us were receiving the the proper value that we deserved as separate companies. Together, we're going to get that and more. If that helps answer your question. So, it's a creative to the elemental shareholders on a NAV basis. It's accretive to EMS on a current cash flow basis and on a gold to copper ratio basis. and accretive to both companies from a portfolio allocation or portfolio effect basis. >> Definitely >> Dantain. >> Yeah. No, like I think it makes total sense and the the you know if you look at just the share prices since announcement uh looking at it today I think EMX is up 40% since announcement and and the other thing that we we don't cover it as much but I think is really important as well is the combined liquidity and I know for elemental out that was always we had a very tight register we had some very big shareholders and that was really good in some regards and in other regards such as liquidity actually it was sometimes a hindrance and if you look at the combined entity the liquidity we've had is is already orders of magnitude greater than what it was individually. And when we have the US listing, which we're planning to have prior to this deal closing, and then we come as a combined company onto that US listing, I think our liquidity will be even better. And if you have greater liquidity, it's easier to trade. You generally have a lower cost of capital as well as as alongside all the benefits that Dave talked to in terms of diversification and and a larger portfolio. And so I think that that combined entity uh is is going to be much more attractive for investors who are looking for a really material uh royalty and streaming company in the space who have the liquidity and enable them to participate in a meaningful way. >> I think the the combined company now just continuing on with you Fred here. the combined company. We also have a new partner get um a bit of a an an orthodox partner if you say like a crypto mining comp crypto not a crypto mining company maybe not yet but a crypto company coming into mining you know into gold and and base metals as well um how come and and and I guess this is more your domain but what's the strategic angle here and how does having better on board make sense for elemental altos and and and soon elemental royalty corp >> look it's it's a really good question probably not one that either Dave or I had on our bingo cards for 2025. But I think what's really fascinating about Teller is that if you look at their own account attestations of of of what is in their in their holdings, I think they have acquired uh nearly 20 tons of physical gold so far this year. And to put that into perspective, that would make them one of the largest single purchasers of physical gold after a number of central banks in the world. And so clearly that is a a cornerstone shareholder who is looking to increase their exposure in the gold space. And the royalty and streaming model is a fantastic business model that gives you direct exposure to the commodity prices. It gives you uncapped optionality going ahead for decades and decades. and you can have such a diverse portfolio of of interests and all that optionality that is embedded within it that it's a really good smart way for them to play the market and increase their exposure in the gold space. And uh coming out of this transaction they'll be approximate 33% pro- former shareholder. So, I think for us it's it's great because we know going forwards, not only will we have $50 million coming out in cash on on the close of this transaction approximately, we should also be able to upsize our credit facility, which is currently completely undrawn, we should be able to upside that on the basis of our revenue profile to probably $200 million order of magnitude. So, we'd be coming out of this with the ability to deploy maybe $250 million of non-dilutive capital between cash and credit facility. We have a major shareholder who is so far in the first half of this year one of the largest buyers of physical gold in the world and they are a 33% shareholder. I think they're going to continue to support us going forwards in terms of acquisitions any deals that we do need to do. So it puts the company in a phenomenally strong position to continue the growth both organically and if we need it with the support of some really key shareholders. And that's probably also one other point worth touching on is that EMX and Elemental Outas, we've always had a quite a strong overlap of some cornerstone shareholders and and there's a few groups in there that have been very supportive for the company. talk about the Paul Stevens and the the Extract Capitals and Sprocks of the world, but some of those groups who have been very supportive in in in getting the companies here and I think aligned in the philosophy and approach we take of of actually trying to have a creative growth and not just growth for the sake of it, but really making sure that whatever transactions we do are adding value to the company at the same time. >> Does it also provide the opportunity for the company to switch from smart casual to hoodies and Crocs because it's a crypto company now? Yeah. Not sure we've covered that point on the umation work so far. >> We don't have ties on today. >> Yes. One step at a time. >> Yeah. >> Dave, talk to me a little bit about what you think about what Fred just said because again, just from from your perspective, you know, having having built this uh royalty company in a traditional way for over what 20 years now, I believe. Uh this is completely new. Yeah, exactly. And a completely new angle, right? So, how do you how do you think about it? How do you view it? Well, we've always believed that astute gain of scale was smart, right? And we've always been the value players on the block or certainly consider ourselves to be that looking for the for the you know the bar bargain basement opportunities in addition to things that we pay up for that add to the top of the pyramid to gain scale. Um this is an opportunity to do that to a whole another level. Uh we have done two corporate transactions earlier in our history. So this will be our third in 23 years. So, we've always had this approach that we're willing to look at M&A and corporate transactions as a method to help gain scale to the business, but want to be very smart about it. I believe this deal is exactly that. And I agree wholeheartedly with all the points that that Fred made. Mhm. >> How much control do they have as a large shareholder? How how often Fred, how often do you talk to them? 3% but they they um they have a strong presence and the chairman of the incipient board. >> So to factually answer your question that being said from a conversational perspective and a strategy perspective we find them very open to learning more about the mining industry. They want to learn from our collective team's experience and utilize their desire to invest within the space and our expertise to build an even better company. >> Mhm. What I'm really asking about there is is yes strategy. So from the perspective of you know the the whole kind of tech or crypto world they value things in multiples whereas we in mining we value them based on how how big is the discount because there's almost always a discount to mining assets. So, so strategically, how much of a say do they really get given that again it is it is you two that are the the mining brains essentially and everyone else in the team? Um, but they are a large shareholder. So, how much of a say do they get in situations like that? >> I'm not sure I fully understand your question, but but I believe the gist of it um boils down to that they understand the value of hard assets. That's why they're buying gold. That's why they're buying farmland and it's why they own tea bills. >> And what's the next best thing to own or maybe even better than a bar of gold in the bank is a gold royalty >> because gold royalties have optionality at no cost to the royalty holder. And that's why uh Pier Lassand, you know, used the term the gold investment that works for Franco Nevada in the early days and it that has absolutely come to fruition over the decades that Franco has has been built and other royalty companies as well. And and and we're on our way. So it's this whole concept that royalties are phenomenal financial instruments because of embedded optionality, price optionality, but more importantly discovery optionality which results in production optionality moving forward. That really drives the value of these assets. And so when Juan and Tether look at this and they say, "Holy smokes, we're buying farmland. We're buying physical gold. We should own royalties." And what's the best way to own royalties? Let's help build a royalty company that was trading below NAV and we're going to get them to where they're trading above NAV and we're going to increase NAV per share. >> That's the right strategy. >> Well, don't worry about it, Dave. Most of the times I don't understand my own questions either, so you're not >> and maybe Antonio, if you were asking along, I think one of the inferences was was how involved are they in in decision- making and and strategy? Maybe a good illustration of that is this transaction because we've we've talked to the point that we actually started this conversation in 2024 and in the in the shareholder circular and documents that will come out. It will show that we've been we've been discussing this and and looking at the merits of it uh for a not insubstantial amount of time and I think having Tether's involvement was actually very helpful for that in in giving us a cornerstone shareholder going forwards who who really wants to grow it and back it but these discussions we've been having now for for over a year um to get to this stage and make sure that it really makes sense and it fits. And if you look at the two we announced two transactions 48 hours before we announced this merger and actually one of those we had been talking to for uh for quite a long time as well in in terms of the elemental altus management team and had been working on that deal for a while um and another one. So I think in terms of uh our ability to go forwards, it actually means that we can go even further and even faster when we see an opportunity we really want to take advantage of. and having the confidence of knowing that we got a really supportive major shareholder behind us when there is something that we have conviction on we can push the button on it which I can tell you certainly from the elemental side was not always the case when you're starting off small and actually your biggest constraint is access to capital >> and you can find a great opportunity but you might not actually be able to to execute on it so that is a huge difference game changer for us I think going forwards and the for my entity a whole another level Yeah, >> I think you you've told me that story before, Fred, where you essentially started a company with a million bucks. Uh it was it was the two of you, you know, two guys essentially who started it. So, this is it is a huge change. I mean, 140 million bucks when that comes in, how much money is is the combined company going to have uh on close? So we'll we'll with the $68 million in acquisitions that we are simultaneously doing and also paying down the Franco credit facility with the EMX have so we'll have one combined credit facility subsequently we will have approximately 50 million US in cash on closing >> and then we're obviously extremely cash cash flow positive even more so at today's prices and um sometimes can't quite keep up week to week at the moment month to month with where the prices But one of the wonderful benefits of having a cash flowing portfolio with direct exposure to the commodity prices is every week, every month those commodities are trading at these prices. We capture the benefit of it straight away. So we're going to be in an increasingly strong cash position on close. And I think then as alluded to at the moment we will have a $50 million credit facility uh with National Bank uh um CRBC and and RBC on our side and on close I think we'd look to increase and expand that credit facility and based on the proform of revenue you could probably quite easily support a $200 million order of magnitude size credit facility. >> Mhm. when what's it going to take for you to get to a point where you're investing off of your balance sheet, where you don't need credit facilities or loans or or cap raises in any way anymore? What what's it going to take for you to be a not only a cash flow positive royalty company, but also royalty company that can again grow on its own? Both of us have already done that with with moderate and small size deals and we'll have the ability to ever increase our our arrows in the quarter to be able to accomplish that uh as our cash flows increase. >> I think it also comes partly to your ambition and and and and what you you know how you're valued and um and the relative discussion there. And so it's always uh I don't think it's a that that is a a discussion that evolves month on month when we're looking at the opportunities and we're looking at the the funds we have available and if we see some fantastic opportunities that are going to really drive value then at least now we're in the position we know we could raise more money and do it if we think actually there's there's so much value in our stock as Dave said in EMX at the beginning of this year when I think you were probably trading below $3 Dave um but um and maybe I Canadian But I think um you know you saw the best thing to do was just repurchase your own chairs there actually has some secret to creative on and you're probably up 160% or so since then. So, so yeah. >> So, so clearly different different times to to adopt each strategy and I think it will it will partly be the opportunity set but really uh Dave mentioned earlier one of the synergies or one of the benefits maybe of this deal is actually having the two combined teams being able to look at twice as much deal flip and cover twice as much ground. And so that's something that earlier today actually we had a call working um across opportunities and I'm not sure how far down the list we made it. We certainly didn't make it to the bottom but we yeah it's a pretty good sign when there are more opportunities and there are people in the company to review them. >> Is an NCIB going to be the mandate for the newly formed company on on on day one as well or in the future of the company? How do you how do you see that? Fred, would you like to address that? I guess we had the NCIB in place before. Did you have one, Fred? Just put one in place. >> We did set one up for the first time around the middle of this year. We've never actually used it yet. And um and we've also one of the challenges with NCIB is sometimes you're you're so uh in possession of material information that you you can rarely adjust it, put it in place or change it. So we short answer is we have it but we just haven't used it yet. So the combined company should have an NCIB in place and then it will be up for the for the new board to determine the best timing and use of that going forwards. >> Yeah. And I think philosophically just to add to that it's always good to have the NCI in place so you can execute if there was a situation where you thought it was appropriate. The overall strategy from my point of view of buying back our stock when we're trading at 0.5 NAV or less, which is where we were at, it was a no-brainer, right? When we're trading up towards 8.91 times NAV, um, and we're looking at a plethora of opportunities to uh to conduct um um a creative deal flow, then that puts us in a different situation and probably would not be as aggressive on the NCIB. What is that sweet spot? What's that discount that makes it, you know, makes you want to buy your own stock instead of look at at other stuff? Is it a 0.5? Does it get a little bit higher than that? >> There's a lot of variables in that equation, right? So, um, you have to look holistically at all the opportunities for that capital. And so, there's a lot of variables that would go into that. And, um, uh, yeah, I'm sure I'm sure you can envision that, right? So it's comparative of if if you do X with capital versus Y versus ABC and uh both companies have a long track record of allocating capital appropriately. >> This is a no-brainer when we're trading below.5 to buy back our stock. >> Yeah. And that's that's been proven, right? Because as I said, we've three bagged the stock since we did that. So >> yeah. Yeah. But you know uh today we bringing in $100 million uh and uh come out of this with a strong balance sheet. >> I was going to say that though not a very good one. I am an accountant by education. So I want fixed numbers. It's 7 I buy back stock. It's 08 I don't buy back stock. Doesn't always work like that in mining though. >> The you have to compare what other things you would do with that capital, right? >> Yeah. Yeah. >> Yeah. If we have a chance to buy some phenomenal thing that comes in the door, even if you're trading at 0.5, you might do it, right? >> Yeah. >> The Franco, by the way, on that topic as well, I wrote it down and otherwise I'm going to forget here, but I believe they still have um in the money warrants, if I'm not mistaken, any any idea what they plan on doing with them? What's that relationship going to look like once you've paid back that debt? >> So, yeah, Franco, long-term friends of ours and supporters of EMX. They were friendly and supportive for me long before they were shareholders. They ended up syndicating the Castron's purchase with us and became a shareholder. They've given us our blessing with respect to this deal. We actually had to have their approval um because of the debt and the covenances associated with that debt. So, we will pay off that debt. We've had meetings with them. They've congratulated us and I believe it's very likely that they will remain shareholders in EMX. their warrants um expire in a little over one year's time, >> right? >> They have shares and warrants. >> Yeah. And so the idea >> probably on a go forward basis they'll be a little over 3% fully diluted. >> But the idea is that they remain a shareholder um in the company. That's kind of that's your expectation essentially. >> Yeah, that's our expectation. Yep. >> Okay. Let's maybe talk a little bit about strategy here for a minute because this deal will or would put you both very comfortably in the mid-tier range. How do you go grow from here on out though? And and I'm asking broadly first maybe and then we can narrow it down. But what does it take to grow a mid-tier comp royalty company into a major? Is it just having a lower cost of capital? Is it having that deal flow? Is it a combination of it all? Yeah. What does that look like? >> So I'm going to let Fred answer that question, but first I'm going to make the big picture point. Our goal is not to become a major wealthy company. Our goal is to make money for shareholders, >> right? So, we're here to we're here to invest astutely and create value. You know, a lot of people talk about how we're filling a gap in the in the space between juniors and and there was a vacancy there. I, you know, okay, that sounds cool and bankers like to talk about that and analysts like to talk about it, but I don't really care. What I care about is that we're growing a portfolio that creates value for our shareholders that translates to long-term compounded annual growth rate of our share price. But with respect to the strategy as to how we grow the company on the left for identity that question. >> Well, Dave actually took the big picture point that I was about to start with which was the assumption the premise that we we need to be a major because I think that actually it's it's it's really driven by the opportunities and creating value. And sometimes I think if you can take a million dollar if you could take a million dollar royalty and turn it into a $200 million royalty without doing anything else, maybe you shouldn't do anything else. maybe you should just sit on that one royalty. So, um, look, in in terms of where we are, I think part of the reason this part of the reason the combination worked is is because we've got a similar philosophy in terms of not chasing growth just for the sake of it. I mean, obviously, there are some benefits that come with it and we're seeing it here with increased liquidity and size and ability to talk to larger investors, but the fundamental premise has to be that the actual assets are are additive to each other. And here we we both own part of Casseron's. We both owned part of uh the um of the cactus royalty with with Arizona and Sonorin. And there's actually two other smaller royalties we both owned we both owned part of that I was reminded at at Beaver Creek. So there's there's a couple that that cross over, but it's it's in terms of growth. It's it's from here looking at what makes sense and that can be anything from early stage assets all the way through to producing. I don't think that that range of what we're looking at has changed. It's it's really still the same analysis that we're trying to do in terms of what actually adds value to the company and share members and makes sense, but that that we're in a very much stronger position to do it. >> What do you mean you were reminded of royalty? You don't know all 200 royalties off the top of your head. It's it's actually it's funny, but I remember years ago meeting the CEO of one of the mid-tier royalty companies and I asked him about a specific asset in their portfolio, a small one, because there was actually another part of that royalty available. And he was adamant that they didn't own the royalty and I'd got it wrong. I knew they had cuz we've been working on it, but I sort of thought, how can you not know every single royalty to granular detail that you own? And I think now with this deal closing, we're probably going to have 220 odd royalties, 210 odd royalties. I I think I, you know, I'd like to think I would I would recognize everyone, but will I remember some of the granular details about them? Maybe not as much as I did when we only had four and we were a 3 million market cap private startup. >> You know, a similar story to what Fred said. I heard David Harkle one time give a presentation to a big group in Vancouver and he said that some of the best royalties they have on the books today he didn't know the name of 5 years prior and that's because of deep portfolio discovery optionality. So royalties that you hardly remember that you own all of a sudden there's a drill hole that hits the next thing you know it's turning into a major deposit. That's why you own royalties right there and that's the part of the portfolio effect. the the best example of that Dave is some of the ones where it's it's not even the right commodity that they were buying the royalty for initially but it it's suddenly actually it's a different commodity altogether the discovery is made and suddenly they've got an incredibly valuable royalty uh that no one not only for saw but no one even anticipated so a fun recent example of that is the Bangi royalty that we own in Sweden that was originally a copper prospect there was a geohysical anomaly um uh from an electrical method that was was utilized It turned out to be a false anomaly related to graphite, not copper. So, it was originally a copper prospect that was completely defunct. It was sold a couple of times. The royalty remained in effect. It turned into one of the most significant advancing graphite deposits on the planet that we have a royalty on now. So, you know, phenomenal example of exactly that. Yeah, that's why you want to own royalties. They're perpetual lottery tickets. But that is also why Dave, you've always wanted to have more optionality through your royalty generation business which you've done a lot of and that was part of your competitive advantage I believe as well. What's going to happen to that business? >> So that that business will remain strong and I'll point out that um Elemental and Altus uh have a background in royalty generation as well and and the prospect generation business model. We believe that's incredibly astute allocation of capital and the team that executes that model and the secret sauce actually comes from the synergies between generation and royalty purchase and strategic investing because that puts smart economic geologists and engineers that are making business decisions and making observations about how the industry is working in mineral belts around the world. gives us a leg up with respect to being able to do due diligence and a specific leg up in regards to smoothing and discovering of royalty and investment opportunities that are not going through sales process. And that's the secret sauce. You know, if we go back and we look at the return on purely uh royalty generation has a positive expectation. If we look at buying royalties to gain scale in the company and adding to the top of the pyramid has a positive expectation. But where the huge wins come is the integration of the two where the teams find a royalty that you can buy. And of course the pre-minent example would be buying the team royalty for 200,000 Canadian dollars that now has a analyst average NAV of 260 million >> and growing. Uh and that's the secret sauce. >> I'm going to try and ask one of those questions where I may I may not understand the question myself in the end, but I'll try. I'll do my best. Uh do do you does doing that still make sense for the size of company that you're going to become eventually is what I'm thinking. So do do you think that becoming a larger royalty company might be costing you sort of your competitive edge in the market where you didn't have to compete with bigger companies on your royalty generation business and on bigger royalties because it was yours. And so bigger being a bigger company now, wouldn't that mean the royalty generation business is sort of less efficient in terms of value generation and and couldn't that essentially erode that that alpha there? >> Well, I I think you know my answer to that question, so I'm going to hear Fred's. But before Fred answers the question because I want to hear him answer this, >> I want to point out that Franco Nevada specifically and that's, you know, one of the largest world companies in the business invested in AMX because they wanted exposure to that side of our business. So that answers to you whether or not that makes sense for larger companies to do RP generation or have expend have exposure to that type of deal flow. So that's the one data point, but I want to hear Fred's answer to the question if you don't mind, Fred. >> Yeah. Well, it's it's an interesting one because actually one of our our newest producing royalty on the elemental artist side is actually one that originated with EMX's current chairman, Michael Win, uh many years ago through Legend Gold. And that is a Kerali SD asset that is part of Allied Gold's tier 1 geological deposit Sadiola in Marley over 10 million ounces there. And um that that that royalty went all the way back through the prospect generating arm for for many years and and and as that came into a mine it was a great partner for us to put the royalty into their hands with a combination of milestone payments and also at 3% royalty initially dropping down to 2% uncapped forever royalty on it. And I think if that 10 million ounce, we say this internally, if that 10 million ounce deposit was in a Canada or the US and it had been a public company forever, that royalty would probably attract order of magnitude greater value. Uh because it's been a private company up until very recently. There's actually not nearly as much knowledge and awareness of of that project. But uh we really like the exploration optionality that we get with that. And I think that look one of the uh maybe two things to just touch on other than that which is one of the ones Dave mentioned which is always trying to find royalties off pie is a phrase we use internally which is which is not ones that are brought to you uh and and sort of but ones you actually go out and generate you find yourself and and in that sense actually having people on the ground in the flow knowing what is going on with projects exploration new discoveries and minds That's incredibly valuable for us because there's always a danger as you get bigger. I think that you end up sort of trapped in a corporate office siloed from actually where the real exploration and discovery work is going on in the ground. And I think having people with that technical background and you mentioned earlier starting the company with Richard and Richard Evans and Peter Williams on the elemental side years ago and both of those Richard is a is a geologist 30 years plus experience at Western Mining. Peter was a geohysicist by background, 30 plus years western mining, both with experience prospect generators. A few of our other directors subsequently also experience with prospect generators. And I think having that really technical background to the company was critical when we started. Um, and I think that going forwards, one of the areas that EMX was best known for and where they were undoubtedly the strongest in that junior royalty space was on the technical side. And so actually that gives us a really really strong addition in terms of our ability to evaluate deals and do it efficiently and quickly because part of the challenge is there are there are so many opportunities. You have to use your time efficiently and you have to really make sure you're identifying the best ones quickly. And so so having a combination of teams there I think is is really valuable. having that presence on the ground in multiple countries that network and it can be understated but a lot of our deals have come through network through other people in the industry who have said yeah we think this is a great project it it looks like a great discovery have you looked at it and and you know not just the existing asset but you can look in the area you can look at other projects I would say most projects nowadays have a third party royalty on them probably 70% of all projects have a third party royalty on them somewhere along the way so there's a huge uh uh sort of pool of existing opportunities there to look at. So, so that's really important. And um and then the other part I think you touched on as well, which is the size and scale, but some of the team were just doing a site visit uh since we announced a merger um on on a new potential royalty generation opportunity that that actually does have some really meaningful size and scale um just on that one. So, I I think it's a there's a whole range that you can do, but I think that it makes sense on a number of fronts for us. I think that we've got the benefit of it today in one of our producing assets and I think that the technical skills EMX team have are going to be incredibly additive to our existing business development team um on both sides and enabling us to cover more ground >> and it seems like that technical skill is focused on precious metals and base metals as well and you're about 2/3 precious as I mentioned earlier the rest is base metals is that where you want to keep it or do you expect an increase in in any of them? Well, my patent answer to that and my fundamental value and belief around this topic is that we want to be exposed to prospective mineral rights and that's the key thing because we want to be exposed to discovery optionality because that's how you separate yourself. Um, and that's why royalties are amazing because that discovery optionality of course translates to increased production over time, right? And so the key thing is expose ourselves to prospective mineral rights. um the gold, excuse me, the world will consume as much copper in the forthcoming 20 or 22 years as we have throughout all of human history. That's a conservative prediction based upon current macro u mineral economic analysis. The if you want to summarize all that, you know, as Bristo, the former CEO of Bareric said, gold's the most precious metal. Copper is the most strategic. They're great metals to be exposed to. Our view big picture is that copper is good, gold is great and uh we probably will do our best to aim that uh gold plus silver is 50% or more of our revenues but we fully want to be exposed to prospective mineral rights. >> What about compet and Dave you and I have talked about this I think the last time you and I spoke about this but I I asked essentially what about competition? Competition in the golden and silver space is way higher. there's virtually no competition in tungsten and zinc and boxite and whatnot. Is that something that might be of interest or will it still remain on on that end? >> We look at we have we look at those opportunities occasionally they come across um our desk. They're happy to take a look at them. Um but the fundamental criteria is you know is it a suit allocation? the the tungsten. You mentioned tungsten. That's an interesting one because we bought a tungsten. We bought a tungsten royalty last year and and actually I I can you know there were some shareholders who who liked it and some shareholders who didn't like it because they sold tungsten initially um and and they they were wondering if it was a pivot in strategy but it was it was simply a value decision. We we saw the deposit. It's Farweed um Fireweed who who are advancing the project and Lundine's obviously major shareholders there alongside our Caserone royalty and and that is a project that rather uniquely has had about 7 years of permitting historically in Canada. So it has been through that really long time frame already and on the basis of the previous work done and they're updating it now but on the basis of the previous work done I think it would have repaid us almost our acquisition cost on an annual basis for 30 or 40 years based on on the results at that point. So, it's it's going to be uh I think an incredibly valuable royalty when they update the the project later this year um coming out next year and um and that was only available to us because it was tungsten. Had that been a gold deposit with similar economics with similar potential and optionality, we would have had to pay orders orders of magnitude higher price for it. And and because we're in the I think the really beneficial position of having the majority of our portfolio in gold and copper, it gives us the flexibility to go and take advantage of an opportunity like that where it's not going to suddenly change the waiting of our portfolio, but it could actually be really meaningful in terms of value created. And part of that is because, as you said, there's just less competition and less people, I think, looking at opportunities like that sometimes. >> Yeah, that's absolutely true. I I used to talk to uh the Fireweed's previous CEO, Brandon McDonald, and uh he used to say that his job would be orders of magnitude easier if he was pitching a silver or gold asset. Instead, he was pitching, you know, zinc and tungsten. And um I actually went to see Mac Tongue this year in the Yukon and it was incredible to see everything up close. Um so yeah, that that's the deal that I had in mind when I was when I was asking this question there. >> Oh, there you go. Yeah. >> Yes. >> But we're yet to get to site, but um hopefully can can follow in your footsteps and uh get a site visit out there shortly. >> You'll enjoy it. It's it's it's higher up, which means fewer mosquitoes. Uh it had the least amount of mosquitoes there uh relative to all the rest. So, I did enjoy it. And uh they give a really wonderful tour um of of a large land package and everything. So, I think you'll enjoy it. And um obviously the next best thing would be to watch my video from there. Uh a little bit of a bit of a personal plug there. Uh, what about jurisdiction though? I mean, just Yeah, you're reminding me of, you know, or I'm reminding myself of of jurisdiction. You mentioned Mali there, and you you made sure to emphasize on it being a tier one geological deposit because the jurisdiction sure isn't. Uh, but geologically, all all the all the discoveries in that greenstone belt have been have been, you know, tier one. U most of them, not all of them. So, yeah. Where do you go as a, you know, as a combined company? What's the focus going to be? Go ahead, Fred. You're in Molly in 20 countries, but Fred should answer the question. >> Uh, and look, I I mean, Dave's got a long history of working across the globe in different different countries, particularly Turkey, but I think one of the the ways we tried to think about it internally was balancing the geological potential with the jurisdiction risk. And our view starting off was that we were likely to see, this is at a high philosophical level, we were likely to see less green fields, opportunities in unexplored opportunities in West Australia or in Canada in some of the famous gold belts and and we would likely be looking at more brownfields opportunities or assets that already been explored partially. Whereas we could go to some emerging jurisdictions and actually you're looking at a mine that is starting with a 10-year mine life but actually we we could see that going for you know many many decades beyond that um because it was a grassroots project. So I think for us we can see an awful lot of geological potential and some of our licenses that we have got in emerging jurisdictions have been very very large land packages hundreds or even a thousand square km >> which is sometimes again hard to get in the middle of much more established gold belts. So we we we did that but we have also along the way we have turned down some opportunities that we actually we liked the potential of from the operator counterparty and the geology perspective and we turned them down because we thought it would make us overweight a certain jurisdiction or even a certain region within a jurisdiction >> and and so always back of our mind the operator the country the balance of our portfolio across it I I think um today we're incredibly diverse I mean if you look at our portfolio um we have uh Europe, South America, North America, Australia, it's it's it's really more diverse than than any other company sort of within our region. And I think a number of them have focus in a uh sometimes the Americas, sometimes Australia, but but rarely across the whole spectrum. And I think EMX have a almost um unique uh portfolio exposure to certain European um opportunities, projects as well. But maybe I'll hand over to Dave there for anything you'd add. >> Yeah, I'll just say a couple of big picture points. I agree with everything you just said 100%. And um some of the things that that Fred's been articulating point out exactly why we want to work with them. So, you know, we really see clearly this this path forward um from the same viewpoint. But I'll point out something that Rick Rule often says, and that is that, you know, rocks don't change, but politicians do. And the political risk in the mining business is different than political risk in other businesses. And the larger risks in the mining business are engineering and environmental and geologic risk particularly particularly when you go to the early stage, right? But we read about political risk in the newspaper every day. And so commonly people are keenly aware if not over aware of political risk factors because they're being put in our face. You know, Turkey is a good example. You know, I've worked in Turkey for a very long time. It's a very comfortable place to work. Um, and but you know, I I commonly hear people, you know, reference the some of the movies made in the past about Turkey, which were exaggerated, etc., etc. But anyways, the point being is that um there's an arbitrage there. you can capture great geology with vastly less competition because the perception of there being risk factors that maybe don't exist. Long story short, and EMX and Elemental have taken advantage of that in building our portfolios over time. The other thing I'll point out is that Dr. Richard Chay, an advising macro mineral economist to um our company, just recently published a century compendium of exploration and discovery data in a recent society of economic geologist report. That's a very nice piece of work to go back to and there's a number of trends there. Some of the trends are discoveries being made at greater depth. um the amount of money that's going into exploration discovery around the world, where the destination of those monies are going and where discoveries are being made. So a lot of the huge discoveries that were made decades ago were in angry file countries um Canada, United States, Australia. The now we're seeing a trend of more and more major discoveries being made throughout the globe and um more far-flung from some people's perspective jurisdictions. These are all trends that we as a royalty company want to be in front of. >> Well, as you as you mentioned earlier, you know, you have a larger combined team now, but you still have more opportunities than uh people to look at those opportunities essentially. And Dave, this is something you and I have talked about before. You explained it to me back then as well in terms of the accounting and everything, but sort of the biggest criticism that I've seen so far of EMX since you and I have been speaking has been the size of your GNA. Um, and that is related is again you've explained to me to your prospect or to your royalty generator model. Will the combined company have a a lower GNA than the sum of the parts? Is there any efficiency to be had there? >> We're expecting to save millions of dollars, but we've not yet given guidance to exactly what that is. Going back to the first part of the question, it a significant component of that is a difference in accounting technique of doing royalty generation where 100% of EMX's expenditures in the royalty generation world are expensed each quarter. Whereas most royalty companies capitalize their expenditures when they buy royalties and EMX does that as well as does Elemental. When we buy royalties, we capitalize all of the costs associated with that as well as the purchase price itself. So if a royalty company is only buying assets, they're capitalizing all that. It goes as book value for that asset on the books. EMX has over 100 mineral assets on the books at zero book value because all of the expenses related to creating those assets were expensed each quarter. So part of that analysis that I that you've mentioned to me and other people have mentioned me for years is because of a difference in accounting technique, because of a difference in the business model. It's kind of like when if you have a a restaurant and and you have a cook come in to make a recipe for you, you have to pay them. And if you pay them right now for the recipe, so you make that expense right now, but you're going to make money off that recipe potentially down the road. That's kind of how I look at that. >> Okay. I that that I've not heard that analogy before. I remember it. >> Is that But is that right? I mean, is that is that is that fair? >> Yeah, that's fair. >> Okay. >> Yeah. Okay. >> I guess in both cases, you're paying up front, but Yeah. You know, um, accountants love to capitalize stuff so they don't have to talk about how much money they spent, right? >> Exactly. Yeah. Exactly. Um, you think my wife might be an accountant, uh, but she's not. Now, options, insider compensation and everything. Kind of like um, it's a bit of a, you know, housekeeping note that I have on here. Going forward, how is that going to be determined? How for the combined entity? What are the KPIs going to be that you're basing off incentive? Look, I think all of those uh Antonio still to be worked on by the by the new um the by the new comp committee and and the board. So I think that uh part of the job here is to align the first integrate the teams, align the strategy and make sure everyone knows what what we want to achieve and what everyone's role in that. And then flowing from that is is some of the parts you talked about. So I think that similar to some of the more detailed metrics on on the numbers going forwards I think we're um we're about uh just over uh 4 weeks post announcement now I think um today and I think that uh we had the first uh the week and a half or so in in the conferences. So we are working through all of those in parallel with the uh with the listing in the US closing one of the other acquisitions and also um the shareholder meetings and combinations on this. Those are those are things that we will have to uh come back on um and talk to you again at some point in the near future hopefully in in terms of uh what those are. >> Yeah. What who would be of you that would come back and talk to me essentially is what kind of my initial thought thinking here because again you guys are kind of doing the tour right now as as a as a duo. Is that how you're going to be running the company going forward or what like Dave you're going to be the CEO and Fred you're the COO. What does that mean though? Who's going to be doing what? How do you divide and and and hopefully conquer here? >> I think both companies come at this from a standpoint that titles aren't that important. A lot of people focus on those. We really work at EMX and I know Elemental works on a roundt environment. We're trying to put smart people together to make intelligent decisions. Um I think initially it's good for Fred and I to go and and do joint presentations to you and this is a great example and thanks for the opportunity. But of course over time we'll divide and conquer and uh um there'll be opportunities for Stefan as CFO to give presentations on his own for me for Fred for David Baker etc. Um but initially I I think it I think the market is appreciating the fact that Fred and I are are speaking to folks like you join them. >> Yeah. When and and where is the new venture expected to be trading? So, we'll we'll have a US listing. Um, and once we once that's confirmed, we can um we can yeah put out exactly uh which market and date. But that that application is underway at the moment. And then we'll also retain the listing in Canada as well. So, we'll have the Canadian and US joint listing. >> Did you I think what do you think the ticker symbol is going to be? Cuz I heard it might be EL, but it seems like that's taken on the New York Stock Exchange. Uh so the the existing ticker symbol is e. Yeah. So I think that that that one is available as well. So I think that would hopefully provide some um continuity there as well. Um if that rolls forward. >> Yeah. Yeah, that would make sense obviously. Yeah. US listing meaning NYC or NASDAQ or or I mean when you say that you don't you're not talking about like >> those those are the two major ones. And so, um, we're just, I think, being cautious in terms of what we say before we have official approval to say it. Um, but working on that on that track. And of course, at the moment, EMX have the benefit of having the NYC listing. And if you look at the royalty space and especially in that sub 500 million space, every company that has a US listing, most of the the majority of the liquidity, it it transfers over to that US listing. And I think we anticipate that going forwards that the combined company is going to have the majority of our listing occurring on that on that US market. >> Are you going to try and get in front of that by by going and maybe marketing to larger funds in New York and trying to get some of that maybe even passive funds flow? Is that too early to talk about that or Yeah. How do you see that? >> No, definitely. We had we had uh we have a road show lined up um for the US. I think we're going to do some virtual marketing as well. And one of the benefits of having the bigger team actually is that we don't need to do every single conference and every single road show and and marketing together. And so I think that will be a benefit in terms of uh making the most of our time and and splitting it. But uh in terms of the passive um funds, it's a really interesting point um because for uh index like the GGXJ, one of the major we we obviously uh over the threshold in terms of market cap, but I think one of the con one of the constraints hurdles you normally have is liquidity. And the liquidity required is is about I think a million US a day traded. And at the moment we're trading multiples of that on a combined basis every day. So we are well over the threshold for that. And I think there's one or two other indices where we would expect the combined company to potentially qualify for. So once that happens, it starts to be a bit of a virtuous circle as well because that liquidity that you get, we get more liquidity >> and and that can be a real advantage. And I think that for the for the for our shareholders, ultimately the owner of the business, the easiest path we can give them to having flexibility to buy and sell their shares and hopefully buy more is to give them as much liquidity as possible. And so um that's that's something that should be a real positive coming out of this and expect that with the index inclusion with the merger closing and with that US listing we should have a really good platform for investors and for people who wish to participate to be able to to buy part ownership ultimately of the company in as frictionless and as easy a way as possible wherever they are in the world. You're I'm actually just looking at that right now. Uh and your average three-month volume is actually half of what your average 10day volume is. So you your volume has gone up tremendously after announcing this. Obviously for both of you more or less um same numbers. Um Elemental, you're doing over a million uh Canadian now on the 10day average. And then um you mix I think um let's see what you're doing. So 7, call it 750. Yeah, close to a million and a half. So together you'd be two and a half million Canadian, which even >> majority of our volume is on the New York Stock Exchange. Um, our 30-day average trading volume on New York is well over 600,000 shares at five bucks a share. So that's $3 million a day. >> That's interesting. Yeah. So it should be really no problem to get any of those um passive income funds. Um that that's Yeah, that is interesting as well. What's um >> one of the questions we have is you know if they absorb 5 to 10% from force index buying which is highly likely where's that stock going to come from. We have a lot of sticky shareholders so it's going to be very interesting uh equation. >> What is going on in in the meantime with the assets might be interesting as well because that might get new attention as well on top of all that. Dave I get I guess we'll start with you. What are the imminent updates you're expecting from let's do Casrones because it's a combined one obviously but also team and get interesting. So great assets all three of those. The um we're very excited about what Lentine's doing at Castronis. Uh they continue to put out hints and data uh illustrating strong success from inpit drilling of higher grade brutes zones. And from a royalty holders perspective, there's no better place to find high-grade than in the pit. So they're doing inpit drilling and they put out these cross-sections and throw these high-grade breones going off into the one of the high walls. Very very interesting. Um, great to see Londine being aggressive on the exploration front, which is exactly what you'd expect to see from a Londine family. And in addition to that, they're also talking about pushing that production up towards name name plate capacity and potentially expanding name plate capacity. Whereas GX Nepon when they were operating the mine were were operating about 75 70% of name plate capacity. So, we're seeing discovery optionality driving production optionality on that asset in addition to the price of copper performing exceptionally well. price of them lived in them as was a key byproduct from that mine also performing well key asset for us and um in addition to that I'll I'll point out that the that the footprint of this royalty coming back to my favorite topic about royalties is discovery optionality the footprint of this royalty is bigger than the city of Phoenix the giggantuan footprint there's a dozen copper anomalies that that have seen drill holes that have intercepts uh within this footprint and the one that the Lundines are talking about specifically is Angelica which is well within the footprint and immediately adjacent to Castro Mason and would have operational synergies of course and they're talking about that which was an oxide resource in the past and they're getting into the sulfide that depth now and we're very very very excited about that. Um the so that's this is going to turn into a phenomenal asset for us backward looking Fred correct me if I'm wrong I think our our combined royalty revenue is about $15 million pre-tax with a combined royalty percentage of 1.306% 306% NSR phenomenal position to be in. All right, so now let's go to T-Mok um also phenomenally valuable asset for the combined company. Um there the L excuse me, Zen continues to discuss the favorable drill results that they get last quarterly report. They alluded to more success in expanding the lower zone which last year they expanded by 250 million tons at over a percent compet. That's a major discovery just in the expansion of that zone right um in addition to expanding the mine life of the two upper zones. Uh so last March the mine life there was now up to 14 more years uh from that and then the MG discovery which has a had at one time a dozen drill rigs at surface I believe now they're down to 10 uh as they move some of those rigs over to drill more lower zone materials. So so there's four combined deposits within our royalty footprint there MG being the most recent discovery the maiden resource which is just the beginning 150 million tons of 1.87% 87% copper 61 g per jund gold and uh um the geologists have a twinkle in their eye when we tour two are there on site discussing what the long-term potential is of that asset. So this is this is a phenomenal asset for the combined company. Uh two commodities we love of course and gold. Um then get gety they've successfully raised the money and are are working towards the transition from going from an oxide open pit that's focused on the gold and silver to a polytalic uh copper zinc and silver valin um um sulfide deposit at depth. There'll be a bit of a hiatus as the gold peels off and as the sulfide ramps up. Uh we have recently renegotiated the royalty there that will enable the operator to put lower grade oxide on the heap um because the oxide is essentially very close to being mined out now. So we've reduced the royalty there from 10% to 2.25%. That will enable them to to be able to put some of the skinnier ores on that pad and continue production there. And then we've increased the royalty and the sulfide from 2 to 2.25 to help accommodate that reduction. um on a NAF basis that works out neutrally and gives us more long-term exposure to that sulfi deposit which we think will grow and we're pleased with their advancement of that asset. So that touches upon the three that you mentioned to ask about a couple of the key assets um in Australia. >> Yeah, I do want to talk about Carloinda and Bono um obviously uh Fred with you as well. Uh Dave, what's the what's the most kind of overlooked asset that you think you have or like you're very happy about it? Uh but when you go and talk to people like myself, nobody ever asks you about. >> So, um the most overlooked asset that we have is the immense number of lottery tickets at the base of the pyramid being advanced by hund00 million in exploration expenditures annually. And results of that would include the South 32 discovery at peak ripping off big drill holes of copper, zinc, and silver. That's the extension of the of the Arizona mining Taylor lead zinc silver deposit that zones into a copper zinc silver deposit on our side of the royalty line there where we have a full 2% royalty unbiable odd capped and we're very excited about that. It's a great example of deep portfolio discovery optionality. Another one u off the top of my head would be the Viscaria copper gold iron deposit in northern Sweden. That's uh that's moving towards production. They continue to find more good grades at depth. That's going to be a nice royalty for us. The Vitangi uh uh um graphite royalty falling out of the sky. That that that's another good example. All this speaks to deep portfolio discovery optionality and that's why you want to own royalties. >> Yeah. Fred, what about yourself? Um again obviously Cast Roness is the overlap there but Carloinda Bono what's going on there? >> Well Colinda is and and maybe um Colinder and Leverton might be the other one I talked to because I think it's an interesting point when you look at our portfolio actually if you said there were five assets sort of four or five assets at the top you might say that out of those Timok actually planning to massively increase their production going into the lower zone. So that is a producing royalty cornerstone that will get bigger. Carlo Winda producing cornerstone royalty that is going through a 50% plant expansion at the moment. And so that is going to come out middle of next year. That's under construction now. So that is going to come out as one of our cornerstone roies materially increasing its revenue um production at the same time as the gold prices hitting all new highs. So that is probably going from a 2024 $5 million royalty to a 2026 major onwards $10 million a year royalty. Uh not even accounting for the spot price today. And then Leverton which is another cornerstone royalty but actually not yet in production. And this is one of the ones that we added to in the recent acquisition. So we will now have a 2 to 4% NSR royalty over um uh up to 4 million ounces. So we have 2% on half, we have 4% um on on um sorry 4% on two million ounces and 2% on on on the other half. And for us that's going to be a really key driver of growth going forward. It's a 4 billion US market cap operator in Australia. very well known in Australia, Genesis Minerals, previous management put together to combine to make Northern Star and they have an operating mine there and they have recently acquired all of this ground immediately adjacent as close as 15 20 km away east of the mine. So I think it hasn't been hasn't been properly explored for going back now nearly 15 years and in Aussie dollar gold terms that that is a period where the Aussie dollar gold price has has almost tripled in that time and it has seen virtually no exploration and now it is in the hands of a very well- reggarded very well capitalized mid-tier Australian gold miner with a mine next door that they have already spoken to multiple times this year expanding themselves. So we will get the benefit there of not just the discovery optionality where they start exploring and actually making up for the last lost decade but we will also see them starting to put some of those existing resources 99% of which are on granted mining licenses in West Australia starting to put those into production at their mill and then we will have the upside on that which is the plant expansion which I think they've spoken to half a dozen times this year which will be coming down the line and then they will be increasing the production there. So that's three of our cornerstone assets where they are actually currently expanding the mine. Um and expecting substantially increased revenue. So when you talk about we mentioned it earlier touched on growth in the portfolio. Uh there's some really substantial organic revenue growth there coming over the next 2 to 3 years from those three cornerstone assets that will all be substantially larger and contributing even more going forwards. What do what do you think is the uh I understand you guys are here to present a bullish picture and all that and and and we've managed the conversation well in my opinion but what what's the biggest risk in the meantime and between now and getting to that level that we initially talked about where you're kind you know financing your own business going forward yeah what's the biggest risk what's the biggest challenge and and Fred we might continue on with yourself and then Dave I'll get back to you in a second >> look there was a point in the early days when you there where we We were a company that was so concentrated and the portfolio we had a relatively small number of assets that if something went materially wrong at one of our assets that's actually a systemic risk to the company and we got to a certain point as we grew and I I remember thinking I'm in the mining business and I no longer see our portfolio as having a systemic risk. One of the beautiful things about being a royalty company, we're diversified enough now that I think we could absorb anything. And when you put this combination the portfolios together that that the portfolio combined that we have it is so diverse and it is so strong and the number of counterparties we have the number of existing producing operations we have and growth we have it's more diversified than most mid-tier miners or even majors could be. And so I always it's one of the favorite attributes of this company on the downside is that downside protection. So I think the two risks I would talk to generally and I think these are omnipresent are individual asset operator risk where there is an issue at a mine and and um and and that can either temporarily interrupt revenue and operations um or it can it can it can sterilize some existing resources or the commodity price risk that we have where we we have direct exposure to the underlying commodity prices. Um and and so that is that's always a downside risk there. And then maybe the third one which I'd add is is um is ill um I think uh ill allocation of capital, poor allocation of capital. But I think that if you look at the portfolios today uh we're diversified enough across operators assets. We have commodity diversification although relatively concentrated to copper and gold and we both teams have individual very good track records of astute allocation of capital and now we're effectively also going to be marking each other's homework as we work together and so I think even more likely to protect against that. Those are the the general risks I would say for a company, a royalty company of our combined size. Um, at this point in time, >> Dave, you're going to have to get creative to top that answer, but go ahead. >> Well, I agree with everything that Fred said and risks are multiplicative. the the the mining industry is full of risks and there's plenty of black swans that land in the mining business and quite unfortunately uh the recent example at Grber the world's largest gold mine and one of the world's largest copper mines um is a um recent large example of that and could something of that nature happen at t-ok or caserones and the answer is of course and the Fred answered that question very well and that you know thanks to the portfolio effect that has less of an impact on the overall corporation. But for Freeport, 40% of the revenue was just taken offline and quite unfortunately they lost seven employees. The um no one would have predicted that. At least no one that I know would have predicted that. And the mining is a risky business. >> Yeah. >> Commodity price risk, social risk, environmental risk. In this case, it was engineering failure risk. And uh you know we're ever present and aware of these risks in determining how we move forward. >> Well, gentlemen, you've done the the unthinkable. Managed to endure listening and and even responding to my questions for over an hour now and uh even even survived a couple of my jokes there. So, um I'm going to let you go here in a minute, but what am I what what do you think I'm forgetting to ask you? What did you come here hoping to talk about that I failed to bring up? Well, I always like to talk about the amount of other people's money that are going into the portfolio because that's what creates this discovery and and production optionality that they all love to to to talk about, right? And so, we're looking at a portfolio that has over $100 million in exploration expenditures at no cost to us creating those discoveries across 200 assets. It's actually, yeah, even more than that. Um and then hundreds of millions of dollars of mind development expenditures creating that production uh optionality as well. That's why you want royalties. >> Britain, what about yourself? >> Well, look, I'd just say that one interesting feature of today's market, particularly in the gold space, is that the long-term consensus price is probably trading at the largest discount to swap prices certainly that I've ever seen. And I think that is a it's a fascinating um point in history because if if gold prices even just remain where they are, you know, you're going to see in terms of our revenue base, in terms of some of our assets, uh the benefits there are not just going to be the direct benefits from the cost price. But it's also then going to be people starting to no longer use $1,600 gold to work out their reserves, but they might be doing a pitch shell at $2,000 gold. they might be doing at $25,000 gold one day. They might be doing it at $3,000. But that that has enormous benefits in terms of some of the assets and some of the optionality we get there um from that from that higher commodity price. So it's I think a really uh a really interesting position to be at today where we are seeing such a big disconnect from analyst sort of backward looking and and using those forecasts then going forwards and and where the gold price is today and really interesting opportunity for us when we get to analyze different projects at those levels >> and hopefully it's going to be before long that we get back together and talk about some of those opportunities. Hopefully next time we can do um a deep dive on the numbers at that point. sometime next year. But I really do appreciate your time and thank you so much for doing this. >> Thanks. >> Always pleasure. >> Thanks. >> And as always, thanks to everyone for watching Resource Talks. I have a couple of more things to say though. The fact that this company was interviewed here today does not mean that they're necessarily a good or a bad company. I'm not here to endorse nor attack anyone. I am simply here to ask some questions. If you find that I have failed in asking a question that you would have liked to hear an answer to, which will happen as I'm not an experienced interviewer, please let me know and I will try to correct that mistake in a future interview. As mentioned at the beginning, please understand that mineral exploration and development is an extremely risky business. Losing money is the norm and should be the expectation. 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