Categories: Precious Metals
Topics: General Precious Metals

Vox Royalty (TSX-V: VOX)(OTC: VOXCF) CEO Kyle Floyd on Building a Top-Tier Gold Royalty Firm in Tier-1 Mining Jurisdictions

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Vox Royalty — Mr. Kyle Floyd. Kyle, how are you this morning?

Kyle Floyd: Gerardo, I am fantastic! Thanks for having us on the program.

Gerardo Del Real: It is fantastic to have you on! I don't think it's a coincidence that — despite this 14-month-long gold consolidation — Vox has done such a great job performance-wise in the market. You've executed brilliantly. So you should be complimented on building a phenomenal business thus far. 

I want to get into the team, and I want to get into the 50-plus royalties that you've been able to amass here over the past several years. But before that, I would love for you to provide us a brief background on yourself and what got you to build this business that is structured well, is capitalized well, and, as I mentioned, obviously performing well.

Kyle Floyd: Yeah, absolutely. So Vox Royalty Corp. was created to be an outlet for our investors to get exposure to the best risk-adjusted way to play commodities — and that's royalties. 

When we were really evaluating the space and entrenching ourselves in the space — this is back in 2010, ‘11 and ‘12 — when you looked at the data, there was no better way to get commodity exposure than third-party royalties. And so we built a business model; we started slowly building it.

The company was formally incorporated in 2014. And we really built around generating competitive advantages of being able to find third-party royalties in what we believe, and what data fully supports, is the best way to generate commodity exposure and building up competitive advantages that would allow us to do that at great value, at better risk-adjusted plays, for investors. And we've delivered on that. 

And so our portfolio is continuing to grow ahead of expectations… ahead of anybody else in the industry. But it was from those early days of trying to figure out how we could offer — typically, the generalist investor — an opportunity to invest in a better risk-adjusted format into commodities. And that's why Vox was built… and that's what we're doing today.

Gerardo Del Real: Let's talk about the commodity exposure that shareholders can expect. And then, let's talk about jurisdiction, right? We know that it seems, every day, the jurisdiction risk kind of goes up for most countries, right? And so I think one of the things that you should be commended on is the fact that you've been able to diversify these royalties across, frankly, Tier-1 jurisdictions. Can you speak to that a little bit?

Kyle Floyd: Yeah, Gerardo; absolutely agree. The world economy and the macroeconomic backdrop of what's going on — especially in some of the mining jurisdictions that used to be okay — is rapidly shifting. So we really targeted where we could find really good value in jurisdictions that we believe would be very good for us over the long-term. 

So we really had a focus on Western Australia. We have an IP, Intellectual Property, advantage there. We also understood the terrain better, the geology better, and the people on the ground there as well. And so Western Australia, it changes every year, but last year, the Fraser Institute ranked it as the best mining jurisdiction from a practical perspective.

I would tell you, over the last decade, it has absolutely been the best mining jurisdiction to be in and projects to be that way for the coming decades. So we have the second largest holding in hard rock mining royalties in Australia. Over 80% of all of our assets are linked to royalties in either Australia, Canada, or the US. 

So I think we have a portfolio that's really positioned to give investors better risk-adjusted exposure and not be taking on that political and macroeconomic risk that we're seeing effect so many of what used to be good mining jurisdictions now becoming bad mining jurisdictions.

Gerardo Del Real: Tell me about the team that you've managed to put together. It's really interesting to me that you've been able to blend technical expertise with capital markets experience. 

Oftentimes, with companies — particularly companies that aren't at that billion dollar stage yet — you have either really strong technical teams or really strong capital markets teams but you rarely get that combination of both. You've been able to do that pretty effectively. Can you speak to that a bit?

Kyle Floyd: Yeah, you’ve hit the nail on the head. My background is heavily finance but also meaningful time spent at the Colorado School of Mines. So I kind of bridge that gap a little bit for us in terms of finance and also a background in mining. 

We also have two mining engineers and two geologists. And so that's the front lines of our business — is really our technical team. We believe that our business model was created to offer better diligence and better understanding to the generalist investor. And we do that with our technical team. 

So they're constantly scouring the world for interesting developments over projects and understanding at a technical level and then looking into our database for royalties that exist over those projects. 

In an ideal world, we're able to connect that dot between the royalties that are in existence and the owner of that and, hopefully, transact on those royalties at great value. But it's really driven, in the first instance, by our technical team really understanding these assets and cherry-picking the best ones for our investors.

Gerardo Del Real: Kyle, walk me through the share structure. I think you have approximately just under 40 million shares outstanding, and I want to say just under 47 million [shares] fully diluted. Is that accurate?

Kyle Floyd: Gerardo, absolutely. We have 39.5 million shares outstanding. We actually forward-split the stock when we went public in just May of last year. We have approximately 5 million warrants, on average striking about C$4.50 [per share], and no debt. And approximately C$9 million in working capital that could be deployed into new opportunities. 

And we're at that inflection point where we're essentially cash flow break even. So a lot of developments in the business; very tight cap structure; very well-positioned to continue executing on our growth strategy. 

And we'll be able to use a little bit of leverage, too, as we continue growing the business. And no plans to go back to the equity market. So in terms of positioning a cap structure for success and for our shareholders, I would tell you we're in very, very good shape on that front. 

Gerardo Del Real: I don't think it's a coincidence the stock has performed well. And you've also been able to garner some pretty good institutional interest. I know that Adrian Day is involved, US Global. I believe management has got pretty significant skin-in-the-game. What does that look like?

Kyle Floyd: Yeah, so management owns approximately 15% of the business. So we're very aligned with our shareholders. Our objective is, in every way, to maximize long-term shareholder value. We continue to execute well on that mission. 

We've been able to bring in some of the who's-who of well-known gold investors. The last transaction we did back in March of this year, Gold 2000, came in in a very significant way and has become one of our largest shareholders. We've had numerous institutions that've been really responsible for the increase in share price here over the last couple of months… various significant institutions starting to take positions in our stock. 

So I think that's a testament and a lot of validation to our business model being able to find deep value in the royalty sector which is not notoriously known as a sector for finding value. And that's why a lot of the institutions have taken positions in us… so happy to report that to your audience.

Gerardo Del Real: What can shareholders and potential shareholders expect here in the next several quarters as far as catalysts go? You mentioned that pretty deep database of royalties that you have in-house. And then, you also mentioned the technical expertise and the capital markets experience. But walk me through the next several quarters as far as catalysts go.

Kyle Floyd: Absolutely. Our business continues to build ahead of expectations. And I think what separates Vox from everybody else in our market cap range right now is the growth in producing asset count. 

We went public with just one producing asset back in May of last year. We now sit at five producing assets. We expect that to be 10 as we exit 2023. And that, obviously, translates to the top line and bottom line of our business. 

And it's really unprecedented growth in the royalty sector that a royalty company has been able to come in and find such great value on these assets just prior to production and then choosing the right assets and actually having those assets come into production and deliver, in most cases, beyond expectations for us and for our shareholders. 

And so when you look at Vox over the coming quarters, it's this continued growth in producing asset count, which will also drive revenue. And then, complementing that is we have the deepest pipeline in the industry. We cherry-pick the best assets at the best valuation for our shareholders. That is our focus; that is our discipline. 

We don't run around and do deals for the sake of doing deals. If something just looks shiny — we don't do it. We are absolutely measuring deals on three key criteria: Is it accretive, and is that accretive across both cash flow and Net Asset Value multiples? Most companies cannot deliver on that basis. And then, also, an expected across-the-board return on investment. And so we're very picky about what deals we bring in. We pass on more deals than probably anybody else in the space. 

And so when we bring deals into the portfolio, execute on those, flow those into the market — those are typically very material in terms of their expected return for our shareholders. And we've got a lot queuing up that I'm excited about to bring forward over the coming months.

Gerardo Del Real: Kyle, I'm looking forward to seeing you continue to execute. It's been fun to watch from a distance. I'm glad to help tell this story now. Anything else to add to that?

Kyle Floyd: No, Gerardo. Thank you for the opportunity to bring our story to your viewership and listeners. We're really excited about what Vox is presenting right now for investors looking for commodity exposure. We think we do it in the best risk-adjusted way… and we're going to continue delivering.

Gerardo Del Real: Awesome! Thanks again for your time. Appreciate it!

Kyle Floyd: Thanks, Gerardo. Absolutely!