Categories: Base Metals / Energy
Topics: General Base Metals / General Energy

Electric Royalties (TSX-V: ELEC)(OTC: ELECF) CEO Brendan Yurik on Aggressively Expanding Electric Metals Portfolio & $10 Million Financing

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 Gerardo. How are you doing today?

Gerardo Del Real: I am well. Thank you for asking. You have been busy. On May the 5th you announced a private placement, an impressive one because it's non-brokered for up to $10 million. You followed that up with news a few days ago where you signed an LOI to acquire two graphite royalties from Vox Royalty. Of course, the business model for Electric Royalties is exactly what the name implies, royalties on electric metals, which of course are the metals of the future. A lot of chatter. Mr. Elon Musk himself has said we expect a bottleneck of supply and a shortage of these metals here in the next decade or so. It's a position now, I think your timing is perfect. Tell me a bit about these graphite royalties and then give us an update on that private placement.

Brendan Yurik: I appreciate that. Look, I think Elon Musk maybe underestimating it a little bit in terms of there's going to be a supply shortage much sooner than 10 years out. We're looking at supply shortages in the next couple of years if money doesn't start coming to the sector and moving some of these projects along.

That's why this first transaction with Vox and it really is the first and what we hope is a long successful partnership with these guys. They have a portfolio or a proprietary database of royalties that they put together over the last kind of seven-eight years. I think it's been proof in the pudding in terms of their growth profiles and among the fastest of any royalty company really in the last kind of two years or so.

They're precious metals focused, but they have a lot of deal flow and access to a lot of proprietary deal flow, that kind of matches our space. They're excited to be able to help modify some of that deal flow with us and in partnership with us. Obviously it works well for us if we get to keep consolidating and acquiring roles within our space.

Look, these two royalties, the first one, Graphmada is really kind of the main event on this. This was already, it's care and maintenance right now, but that's really only because of COVID restrictions in Madagascar. This thing could be producing back up to 6,000 tonnes as soon as COVID is a thing of the past. But they had 20 months of continuous production and really in the graphite space, something that people may not know is it really takes about 18 months of production to actually go out there and qualify what your product is at the end of the day with off-takers and groups that are actually going to be using that.

They're really far advanced, much more far advanced than most groups out there. The operator is one of two companies listed on the ASX is actually capable of producing graphite right now at this moment in time. There just isn't a whole lot of producing graphite mines or graphite mines that have proven out that, hey, their product is fully capable of fulfilling the needs of batteries, electric vehicles and other high end applications.

We're excited about that. I mean, it's got the right place distribution and in terms of it stage, it's definitely far advanced. The one that knocked against it, to be honest, is that it's got a cap on it. I understand that, but at the end of the day, we are going to renegotiate that. I always say that we plan to be long-term partners with every group that operates a project we hold a royalty on and definitely these guys are going to need more money for expansion. We plan to be there to discuss that and help them move forward.

I'm sure there's going to be a moment in time where we'll be able to renegotiate that, but just getting you're kind of deep into an asset like this, it hasn't been very many producing or hasn't been very many graphite mines brought in production over the last decade. This was one of the few. It kind of fit in the theme of we've got royalties in and around the only producing lithium mine in Canada, royalties on two-thirds of the only Manganese district being developed in the space in North America. Our zinc growth even vertically integrated with the Clarksville smelter, the only primary zinc producer in the US.

It's not like the gold space. There's just not that many assets like that, that are this far advanced and really fit that profile of what groups are looking for in the EV space. We're excited. I mean, it's an exciting project, exciting opportunity and where we go with these guys and take it from here remains to be seen. But like I said, we find to be good operating partners to these guys and we'll probably renegotiate that at some point in the future here.

Gerardo Del Real: I was going to say you have royalties on, I believe it's what, you're up to 12 now that have been closed. I think you have four or five that are under contract. Is that accurate?

Brendan Yurik: Yeah. We've got 12 royalties that we've closed on to date, and we have two more, the Glassville Manganese royalty and the Middle Tennessee Zinc royalty, which is in production and operated by Trafigura et cetera, that we are working on closing. That's hence the reason for bringing in Sprott royalty and streaming to invest, bringing in $9.15 of the $13 million cash acquisition costs and us announcing that financing last week. That's all kind of work towards closing that deal.

This deal is actually an all shares deal, essentially. There's $50,000 cash as a payment, but that's mostly to cover legal costs and that type of thing. But the majority of it is stock in the company. We won't need to go raise financing to close this deal. This is something that we can get done relatively quickly over the next kind of 30 days.

Gerardo Del Real: Excellent. My followup question would be with that many royalties in such a wide range of commodities, we're talking lithium, tin, graphite, cobalt, nickel, copper, vanadium, I could go on, is there a near term focus on specific commodity types that you'd like to check off here in the next, say, couple of quarters, or are you really receptive to doing accretive deals on a most accretive deal basis?

Brendan Yurik: Well, it's interesting. I think you do find better deals, obviously, when metals are maybe not as hot in the spotlight as it were. Ultimately our strategy is to really stay diversified across all these different metals. They really are going to be all critical to this transition to clean energy as we move forward. We want to stay diversified such that we're not making a bet in terms of where battery chemistry's go, which new technologies might come in and kind of disrupt the industry from the supply side. That's kind of our general aim.

There are a couple of commodities that we would like to go get some exposure and increase our exposure to over the next few months. Those are some of the hotter ones, but we're really looking to make a splash in the tin space next, to be honest, and definitely we're looking at going out and putting together some producing copper royalties as well.

That'll be probably a little bit of our kind of near term focus, but at the same time, always looking to be accretive and do deals and increase exposure across these other commodities. It's just so precious, honestly. I mean, precious metals is maybe going to be a term of the past because a lot of these metals are going to be more precious in the future.

Gerardo Del Real: I absolutely agree with you. I think there's room in this space for all the metals to rise together. I think that's the environment that we're moving into, right?

Brendan Yurik: Yeah. Well, definitely. I mean, you look at it from the inflationary standpoint. I'll use copper as an example, but copper, when they started printing money out back in 2008, copper ran from about $1.50 to $4.50, and gold was definitely more in the limelight. But gold only really went from $1,000 to close to $2,000. There's kind of an inflation happens and affects the metal prices across all these metals, whether it be copper or whether it be gold.

I think what you're seeing globally right now with this massive kind of spending campaign. You've never seen spending like this and printing the money like this in the history of the world. It's on a multiple levels of what it was back in 2008. But all that money for the most part is going into infrastructure spending, specifically right now, clean energy infrastructure. You of get a little bit of both sides of it. You get a little bit of the inflation acting going on, these metals holding their value is you can't print more copper or more tin when you need it. But you also have this kind of other side of it where governments are basically pouring money into infrastructure that will require these metals. I think they both bode well, quite frankly, for the whole mining sector.

Gerardo Del Real: The history of the world is a really long time, Brendan. I think we're in for a bright future, pun intended. Thank you so much for your time. Thanks for the update. It sounds like we'll be chatting again soon.

Brendan Yurik: No, thanks Gerardo. Always a pleasure. Thanks for having me back on.

Gerardo Del Real: All right. Take care now.

Brendan Yurik: Cheeers.