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Electric Royalties (TSX-V: ELEC)(OTC: ELECF) CEO Brendan Yurik on Growing Royalty Portfolio & Financing Restructuring
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the very busy CEO of Electric Royalties, Mr. Brendan Yurik. Brendan, how are you?
Brendan Yurik: I'm doing fantastic today. How are you doing, Gerardo?
Gerardo Del Real: I am doing well. Thanks for coming on. You've had a heck of a run, news flow wise. Two news releases here within the last week. I wanted to catch up. I joked on Twitter yesterday that it's nice to have friends that validate the friendship with a checkbook, and do so on favorable terms.
And I want to start there, with the news from yesterday, Brendan. You went ahead and renegotiated the MTM Royalty acquisition, and the financing package, and so can you explain a bit the motivation behind it, and how it's actually really beneficial for shareholders moving forward?
Brendan Yurik: Yeah. So, we're excited about it. I think it's a big show of support from both Sprott and Globex. Essentially, we renegotiated this deal on both sides. So, we went back to Globex and we renegotiated the acquisition costs.
It was going to be a big amount of dilution for us, even with bringing in a co-investor. We essentially changed the terms by adding a little bit more cash, so going from 13 million to 13.75 million, of which we've already paid 250,000 of that, and we decreased the shares portion from 14.5 million shares Electric Royalties, down to nine million shares. A big reduction in terms of our shares cost.
Then we've actually gone to Sprott, and basically had them come in now for 13.5 million cash to acquire 75% of the MTM Royalty alongside of us, initially. And basically, lets us push ahead and close this deal with our capital on hand. Now, Sprott's getting an extra 25% of the MTM Royalty upfront initially. However, there's two royalties in that portfolio so we are now getting the Glassville Manganese Royalty essentially for free, at the end of this. Sprott's putting up close to 80% of the overall total acquisition cost. So, it's much better costs in terms of relative costs and overall cost Electric Royalties. And really essentially, we still have an option to go acquire back another 25% of the MTM from Sprott at a future date.
So, we're acquiring 25% today at our reduced cost, but we still have an option to go back and acquire that, essentially for what Sprott is paying for it, but we can do that and raise that capital at a point in time when it makes sense. We're not so undervalued as we are today. So, it lets us push ahead, close our first cash flow with Royalty Acquisition and on much better terms, and without requiring us to go out and dilute with a $10 million equity financing. So, we're excited about it.
Gerardo Del Real: No, no good work. You mentioned the value and you mentioned being undervalued, and every CEO that comes on, of course, believes that their company is undervalued, but you had a pretty important royalty asset update yesterday, or two days ago, excuse me, that I thought really spoke to the diversified approach to the multiple metals and commodities that are going to contribute and play a big part in the electrification of everything. Can you speak to what that portfolio looks like now, Brendan?
Brendan Yurik: Yeah. We've now got 12 royalties closed on, and we are fully funded and capitalized to proceed with closing on the four currently under acquisition. Essentially, we'll have 16 royalties at the end of this. We'll have established relationships now with Globex, Vox Royalties, and with Sprott. We've had a number of big developments really across our entire portfolio. It's exciting. Last week, or earlier this week, we announced a massive update, our flagship lithium royalty, operated by ASX listed Sayona Mining Ltd. They just raised $20 million as part of acquiring the Canada lithium mine. The plan is to basically blend ore from both projects, which we have a royalty on right next door to ramp up production at that mine. So, that means we're looking at cashflow now coming from that asset, in the range of 12 months out.
Our vanadium royalty, they just brought in Glencore there to basically help them with feasibility funding. They signed an off take contract for the first eight years. Then a week later, they doubled the resource. Exciting news on that front, and then our manganese royalty, it's really the only district in all of North America being developed, or developing a manganese project for the EV space, and we're expecting internally that'll be our biggest royalty, once in production, but without economics out there for the market to kind of wrap their head around, I don't think we're getting much value for it today. We think it'll be about five, six million a year, 35, 40 year mine life once in production, and they've just announced that they've selected groups to put that PEA together. That'll be exciting to see, and we've had updates really across the board from our flagship graphite royalty. They had some more news even today.
So that would be the asset update for the future, but they've had a lot of work done on the concentrate there and qualifying now with off-taker. So it's exciting. It really is. I think there's a lot of people out there, or not that many people out there, that really understand how critical all these metals are going to be for the future. When you look at really the task ahead of us of rebuilding the global infrastructure towards a clean energy future, it's a monumental amount of demand that's going to hit all these different metals, and we're really at day one today.
So, it's exciting. You're definitely seeing things pick up in the space, and we really look forward to the future.
Gerardo Del Real: Let's talk about the future and what that looks like. What comes next, as far as corporate focus, moving forward?
Brendan Yurik: Yeah. Now that we've basically made sure that we can actually close on our first cash only acquisition as is, we're all good to go. We are going to raise a smaller equity financing. We're going to cut it back quite a bit because it was very dilutive and at very attractive terms. It's a full warrant, and given our current valuation, so we are going to do a smaller equity financing. We'll probably close that out, close the book on that next week. Close that out the following week, and then we're really funded to go out and put some more cashflow, and royalty deals together. For me, and for us, closing this transaction really validates that we can put a syndicate together to allow us to take down larger royalties than maybe a company that doesn't have the cash on hand, or is our size, to be able to do.
This really validates our ability to do that, and allows us to actually go out now and create new royalties on producing opportunities. We fully expect that we can go get another two or three producing royalties with the cash on hand with the financing that we'll get completed in the next few weeks, with our ability to bring in a co-investment partner, and ultimately we're also looking at a convertible debt acquisition facility that we hope to put together over the next month.
Between all this and between going to our next equity raise, we can hit a number of different milestones, and cashflow is getting another two or three of those in the company. Definitely going to be a focus over the next few months.
Gerardo Del Real: A lot to look forward to. A lot to do. I'll let you get to it, Brendan. Thank you so much for your time.
Brendan Yurik: Thank you. I always enjoy it, and I'm sure we'll be talking again sometime here in the near future.
Gerardo Del Real: I suspect that'll be the case. You take care now.
Brendan Yurik: Yeah, you as well. Take care.
Gerardo Del Real: All right. Bye, now.Click here to see more from Electric Royalties