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Empress Royalty (TSX-V: EMPR)(OTC: EMPYF) CEO Alexandra Woodyer Sherron on Building a Powerful Gold-Silver Royalty-Streaming Company in the Strongest Gold-Silver Bull Market on Record
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Empress Royalty Corp. (TSX-V: EMPR)(OTC: EMPYF) — Ms. Alexandra Woodyer Sherron. Alex, how are you today? It's an absolute pleasure to have you on.
Alexandra Woodyer Sherron: I’m doing great and it's so wonderful to be here. Thanks for having me.
Gerardo Del Real: Well listen, let's get right into it… and this intro is going to be a bit long.
When I started digging into the Empress Royalty story, I loved the diversification in the portfolio. I really loved the fact that your shareholder base boasts some of the most influential names in our space. We have a gentleman that needs no introduction, Mr. Rick Rule. We have Stefan Gleason, the CEO of Money Metals Exchange.
And then, when I started digging into the team and I started digging into where you were with the business model, I thought that with gold near record highs and silver due to overperform — and, by the way, you focus specifically on those two metals — I thought the timing would be perfect to have you on. So, thank you so much for joining me.
Alexandra Woodyer Sherron: I’m very, very excited to be here. The timing is beautiful. We just put out our year-end financials last night.
Gerardo Del Real: Well, let's start there. And then, right after that, I'd love to dig into the team. You have a top-notch team. Your background is storied, of course; Mr. David Rhodes, and we’ll get into that. But let's talk about the news because you just achieved something that doesn't usually happen very often in our business, right?
We're in a space where everybody works really, really hard for a very long time in hopes of being able to put together a company that’s cash flow positive. And here you are starting in 2025 in what seems like the sweet spot.
Alexandra Woodyer Sherron: It absolutely is, and I can give you more background on the business strategy behind it. We launched Empress Royalty in December 2020. We had a concept, and we've now proven that concept out. And that was to invest in assets that would generate significant revenue for Empress Royalty.
I am so happy to announce that we put out our financials last night, and we surpassed our annual revenue projection by 25%. We generated US$8 million in revenue for 2024, which is about 2.2 times higher than our revenue for 2023. We doubled our revenue in 2023, and we've now more than doubled our revenue for 2024.
Gerardo Del Real: I have to believe that that execution is what has allowed you to put together such a strong shareholder base. I mentioned some of the names there… but just a spectacular team.
You have a history of raising — and I want to touch on your experience here first — over a billion and a half dollars in deals for Endeavor. Obviously, Mr. David Rhodes, also from Endeavor Financial, has secured and arranged over US$10 billion of funding for companies across the globe.
When you see those numbers getting thrown around and that level of capital markets experience, that has got to be attractive to the Rick Rules of the world and some of the shareholders you've been able to attract to a relatively new company.
Alexandra Woodyer Sherron: Yes, absolutely. And I started out in mining in 1997 just after Bre-X, so everyone was leaving. I was in accounting at PWC. Everyone was jumping off the floor and going into the dot-coms. I stuck with mining so I've seen a lot of different cycles. Then, I joined Endeavor Financial as an analyst when we had a natural resource fund back in the day.
I moved over to London and became director of structured finance where I worked closely with David Rhodes who had been at Barclays Bank and Standard Bank previously across the table from us. And then, he came in as a managing director of Endeavor Financial. We worked together quite closely for a long period of time.
The whole concept of Empress Royalty — and a lot of the team is from Endeavor Financial — is that we were seeing that the streaming companies were doing bigger and bigger investment sizes; like one hundred million dollars plus. And no one was providing that direct finance solution to mining companies in terms of helping them get in production or expand production sub-US$25 million.
That's why we set up Empress Royalty. The concept was to do it, and, now, we're proving it out. It's a pretty exciting time.
One of the other founders was Jeremy Bond from Terra Capital Resources, a natural resource fund in Australia. Terra, Endeavour, David, and myself — management and board — own 25% of the company. As we've grown the company, taking it from an initial concept and proving it out the last couple of years, we've had some amazing supportive shareholders. We have Rick Rule. We did a placement for him in 2022 to get him into a position at Empress.
We have Stefan Gleason who bought in in the market when he understood our business strategy and how we were deploying our capital and generating real gold and silver credits. We have Frank Holmes who has been a shareholder and supporter for US Global from the beginning. And Maria Smirnova from Sprott Asset Management… just to mention a few.
We have a lot of support from some, I think, well-established people with excellent reputations in the industry. I'm very proud of our supportive shareholder base.
Gerardo Del Real: Well, listen, let's talk about the name of the game in our business: everybody that looks at companies is looking to make some money. And then, in a gold bull market, in a precious metals bull market… sure, it's going to be a fun, fun run. But first and foremost, you have to mitigate risk, right?
And I really love the royalty and streaming model because of the way it mitigates risk right off the bat. For those that are not as familiar with the business model, can you speak to why royalties and streams are the preferred route that you've chosen to take with Empress Royalty?
Alexandra Woodyer Sherron: Yes, and I'll break it down into a couple of pieces. I'll talk about what a royalty is and what a stream is. I'll talk about different types of royalty and streaming companies and explain how Empress is a little bit different from some of them.
A royalty is where you invest in a mining company and you receive a percentage of revenue from production. It's kind of like a record deal. And there are a lot of companies out there that buy existing or new royalties. And it's about a 30-page agreement.
Essentially, it's top-line dollars so there’s no effect on the operating costs or capital costs required to build the mine. You're just taking a pure percentage of production. Then, there are the streaming companies, which is what we mostly do. And that’s a much more complex structure.
They are asset-backed investments. We take security over the assets, and we are essentially pre-buying a percentage of gold or silver at a deeply discounted price. We're getting an 80% discount, which means we're paying 20% of spot. We're getting that direct gold and silver credit coming into our bank account or into our metals account.
I like it because we're tied much more directly to gold and silver. We don't have the operating and capital costs of typical mining companies, and we're taking it at the top line. So we're not affected, as I mentioned, by those costs.
Gerardo Del Real: And I want to be absolutely clear… the focus is just on gold and silver right now, correct?
Alexandra Woodyer Sherron: Yes, absolutely. Commodity-wise, we are only gold and silver. We are truly pure gold and silver. We're not mixing anything else in there, and we won't be mixing anything else in there. It's direct exposure to gold and silver.
When you look at the sector, the royalty and streaming companies have typically outperformed the price of gold and the Gold Miners ETF. It is definitely a great place to invest if you're looking to invest in the natural resource sector. But there are different types.
There's the prospect generators, which are early-stage, expensive to acquire, and have a long lead time to revenue if, in fact, it does turn into a mine. There are some great success stories out there with that business model.
And then, there are a bunch of people buying existing royalties and buying third-party royalties. And the problem with that, typically, is that it’s competitive so you're not getting a great rate on those and there's no direct relationship with the company.
At Empress, we are on the creation side so we directly invest our cash into mining companies, helping them get either into production or expand upon their production capacity. As a result of that, we’re able to go to site.
In fact, I was just at two of our projects in Africa a couple of weeks back. We put boots on the ground. We get monthly reporting. We understand the annual budgets. We're close to the management teams, and we can work with them through whatever challenges they have.
So that’s why I like our approach; the money we invest goes straight into getting things into production or close to production.
Gerardo Del Real: Excellent. And as a shareholder, I'll tell you another thing I really like is the jurisdiction diversification. That's becoming increasingly important, and you're off to a heck of a start. And I have to believe that with the experience you and the team have, that the pipeline here in 2025 to grow the asset base… you probably have some pretty good options.
But before we get to that part, I definitely want to touch on the portfolio as it's currently constructed as it is delivering those great results you just mentioned.
Alexandra Woodyer Sherron: Yes, absolutely. I'll walk you through the portfolio. And it does articulate well that the kind of investments we're looking to bring into the portfolio will be similar to what we've done to-date.
Starting off in the Americas, we have the Tahuehueto project, or Tahuehueto Mine, which is in Durango, Mexico, and owned by Luca Mining. This one we structured as a silver stream. We get 100% of the silver up to 1.25 million ounces, and then there's a step-down after that.
We initially invested US$5 million into this. The assets were in the development-stage, and it’s now in production. The revenue for 2024 was about US$3.8 million, and we've generated close to US$4.2 million cumulatively since our initial investment. So this is roughly about a third of our cash flow, of our revenue coming in, which, obviously, is pure silver exposure.
Then, we have the Sierra Antapite Gold Project in Peru. We’ve invested US$10 million cumulative to-date revenue since our initial investment is about US$5 million. That was a producing asset owned by a private company called Sierra Sun. The mine was owned by Buenaventura, and then it was purchased in 2016 by Sierra Sun. The mine has produced one million gold ounces to-date so this has been a very successful investment for us as well.
The other one we have is in Mozambique. We invested in it when it was a development-stage asset called Manica and owned by a private group called MMP. Since our initial investment, we've received close to US$4.2 million; of our revenue for 2024, about US$2 million from Manica.
This initially had a three-year mine life. We invested in it two and a half to three years ago. They’ve picked up some new concessions, which I visited a couple of weeks ago and was able to see the potential there. That has been a fantastic investment. They have a great management team that has been well-known to us for a long time.
In 2024, we invested into the Galaxy Gold Mine in South Africa, which is owned by a great group called Golconda. Here, they needed additional capital of US$5 million to buy some additional underground equipment and to open up some new phases to feed the plant. That's starting to happen now, and we're very excited about the growth that's going to happen in 2025.
In terms of the portfolio for 2024, it generated about US$1.6 million from Sierra Antapite. Manica was about US$2.2 million. Tahuehueto was close to US$3.8 million. And roughly US$500K for Galaxy. That's about US$8 million in revenue for 2024.
In 2025, we're expecting to double last year’s revenue, and that's with Tahuehueto and Galaxy both increasing their production. It's going to be, hopefully, another very exciting year for us. And that's just from our initial four investments that are currently in the portfolio.
Gerardo Del Real: You stole the words right out of my mouth. I was going to say, ‘And we're talking just those assets that are currently in the portfolio… we're not looking ahead at potential new streaming opportunities.’
I couldn’t help but notice that you had a release here a couple of weeks back saying that you're in advanced discussions for a potential gold and silver stream opportunity on an operating mine located here in the US. Can you speak to your approach in 2025?
Alexandra Woodyer Sherron: I can't speak to that one but our approach is to increase the number of investments.
Gerardo Del Real: I tried.
Alexandra Woodyer Sherron: I know… nice try! Everyone gets the same information. But jokes aside, we really are very focused on growing the portfolio. We have US$20 million available through our debt provider Nebari to deploy into new investments. We're cash flow positive as the financials last night just said; we’ve achieved positive cash flow from operations of US$3.5 million.
We are going to be actively looking to grow the portfolio. We looked at several investment opportunities last fall that, for various reasons, didn't come into the portfolio. The one that’s in the US, obviously, I'm quite excited about by putting the press release out.
We will continue to focus on the Americas and on Africa; pure gold and silver. In terms of investment size, the sweet spot for us right now is in the US$5 million to US$10 million range and going up to US$25 million as we grow the portfolio.
I think it's important to note what we go through in terms of our due diligence to get these deals done. Because we're not buying existing royalties, we're really hands-on. We're very active investors. We're not passive investors. And that starts in the very beginning. When we find the opportunity, we're directly talking with the company. We're working out what their current goals are and what their future goals are.
Management and people are the number one key. We usually have multiple touchpoints within the management and the board through our network and through our other financial and management boards with multiple connection points to the management teams, which is key.
People drive everything in our industry; cash and people. And then, we do a technical review, which is led by our technical advisor, David Laing, who has been in the business for over 40 years. He is chairman of Fortuna. He was the COO of Endeavor Mining and of Equinox. He's been involved with Endeavor Financial for a very long time as well. He does our initial desktop review in connection with Endeavor Financial.
If we like what we see, we'll offer terms. If we can get to agreed terms, we then move into an extensive due diligence process, which involves going to site and hiring the right third-party engineers who understand the geology, the mineralization, the mining process, the country, and the jurisdictional risks.
We do an extensive legal review, an ESG review, a tax review, and a financial review. If we get through all of that, we’ll go into documentation, and, if we still agree on terms, it turns into an investment.
We have been patiently deploying our capital as we're all large shareholders in this company, especially at the point we've hit now where we have four stable sources of revenue. We're going to look to grow that.
And very much a key milestone for us was getting these four initial investments into stable revenue. Our financials, as of last night, have proven that for 2024.
Gerardo Del Real: Well, listen, I love it when management and the board has skin-in-the-game. I believe between the board and management, you own something like 25% of the outstanding shares. Is that accurate?
Alexandra Woodyer Sherron: Yes, it is.
Gerardo Del Real: Wonderful. And then, the last thing I really, really love is when you're trading at a discount. And I know you probably don't love that right now.
But just looking at it as a speculator and as someone who’s looking to allocate capital in the space, I love it when a well-run company with a deep, experienced board and capital markets experience is trading at a pretty significant discount, even to your peers. And that's with record-high gold prices.
That leaves a lot of runway here in 2025. Anything to add to that, Alex? It's been an absolute pleasure, by the way. We absolutely have to do this more often.
Alexandra Woodyer Sherron: Absolutely. Again, it’s all in the numbers I’ve been using in forecasting forward, I’m using US$2,500/oz gold and US$30/oz silver. So, obviously, there’s a lot more upside just based upon commodity prices.
We’re forecasting a doubling of revenue for next year, say, US$15 million to US$16 million in revenue. If you take the price-to-cash flow ratio for 2025 across the sector, it's about 25X. Even if you take just 10X for Empress Royalty and factor in what we're forecasting for next year, you can see how we have the potential for a significant re-rate.
Gerardo Del Real: I love it! It's been a pleasure, Alex. Let's do this again here hopefully soon. And I suspect 2025 is going to be a busy one for the team.
Alexandra Woodyer Sherron: It is indeed! We’re very excited. Thank you so much for your time, Gerardo. It’s been an absolute pleasure speaking with you.
Gerardo Del Real: Same… thank you so much.
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