Electric Royalties (TSX-V: ELEC)(OTC: ELECF) CEO Brendan Yurik on Co-Investment with Sprott Resource Streaming and Royalty on MTM Zinc Royalty, Tennessee
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Electric Royalties — Mr. Brendan Yurik. Brendan, how are you?
Brendan Yurik: I'm doing fantastic, thank you! How are you doing today?
Gerardo Del Real: I am well. Thank you for asking. You’ve obviously been very busy. We chatted last time about the business model, and, apparently, you caught the attention of Sprott Resource Streaming and Royalty for a C$9.15 million co-investment.
So congratulations on that front… I know it's a milestone moment for the company!
Brendan Yurik: Yeah, I know, thank you! It's something that we've been working on a little bit in the background. We wanted to chase — especially on the producing side — the right asset. I think that's what we’ve found here in terms of [MTM]... it's operated by Trafigura in the United States; Tennessee to be exact. Long mine life ahead; lots of operational history, historically, and meaningful cash flow.
And so to go up and get a deal like that, you really kind of need to pay up as it were. And with the deal size being close to the size of our overall company at this point, it would be putting a lot of eggs in one basket. So we felt it was prudent for this situation to bring in a co-investor.
Obviously, Sprott… a very well-known group in the space, and not only for this deal, but nice to have them saddled up to us for future opportunities. We've got a lot of deal flow, and so how we finance that and bring capital to the party is a big point for us going forward.
Gerardo Del Real: Now, the cash infusion is only on 50% of the MTM royalty, correct?
Brendan Yurik: Yeah, and that's about 70% of the overall cash acquisition cost for both royalties. We're actually getting two royalties out of this. So Sprott's C$9.15 million acquires 50% of just the MTM royalty.
Gerardo Del Real: Right.
Brendan Yurik: And like I said, that's about 70% of our overall cash acquisition costs. So yeah, I think it was a good move for us at this point in time.
Gerardo Del Real: I know you're looking at other opportunities. I also know that you are in the midst of completing a minimum C$10 million financing. How is that coming along?
Brendan Yurik: Yeah, so we haven't actually announced the terms and formalized the terms on that yet. But we've been having a few discussions with groups, let's say. And we should be putting something out about that in the near future.
The nice thing about it now is that, primarily, most of that money from the financing will be available for us to put into additional acquisitions as we move forward.
And we have a very big pipeline of deals that we're working on right now including a couple of more producing opportunities. And so it should be an exciting couple of months coming up for Electric Royalties.
Gerardo Del Real: Lithium prices are surging; M&A activity is picking up in that sector; copper is at US$4.30 a pound.
For those that are new to the company and look at Sprott getting involved and say, "Oh, okay, they actually have a partner now that's going to be able to help them not just finance potential deals but also identify some," — can you give an overview of the business model that we chatted about last time just for the newer eyes that are coming into the sector?
Brendan Yurik: Yeah, sure. So we're a royalty company. We're the only royalty company out there focused exclusively on the entire suite of metals really required for the drive to clean energy — decarbonizing the global economy.
And so, right now, if you look at our portfolio, we're first-movers in the space. We've already got royalties over two-thirds of the only manganese district being developed for the EV space in North America.
We've got royalties surrounding the only producing Canadian lithium mine. And we're actually looking at our cash flow from that coming 12-to-18 months out now given some recent news by Sayona Mining.
We're really staking some key projects across all of these key metals primarily focused on safe jurisdictions in North America, Europe, and Australia. And we’ve really just started getting going out of COVID last year.
Things are definitely going to get exciting as we ramp up and really start doing more deals in 2021.
Gerardo Del Real: Excellent! I'm looking forward to having you back on. It sounds like we'll be chatting often with all of the news flow you have planned. Anything else to add to that, Brendan?
Brendan Yurik: No, I'll just say… stay tuned! I'm obviously limited a little bit by what I can let you know about the future. But we really do have a fantastic pipeline of opportunities — and it's going to be a very busy year! So it should be a fun one to follow.
Gerardo Del Real: Looking forward to it! Thanks again.
Brendan Yurik: Thank you, Gerardo. Always happy to come on your show.
Gerardo Del Real: Appreciate it.