Categories: Base Metals / Precious Metals
Topics: General Base Metals / General Precious Metals

Vox Royalty (TSX-V: VOX)(OTC: VOXCF) CEO Kyle Floyd on Game-Changing Royalty on Sibanye-Stillwater’s World-Class PGM Asset

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?

Kyle Floyd: Gerardo, fantastic! Good to be with you today, and thanks for having me on.

Gerardo Del Real: No, look, it's great to have you back on. The more that I get to know Vox's management, the more that it's very clear what the strategy of the company is, which is to find world-class royalties on de-risked operations and — as you phrase it in the press release here — with meaningful near-term catalysts. 

The announcement that you just put out checks every single one of those boxes in spades. So congratulations, first off. I'll let you provide the context, and then let's get into how this came about.

Kyle Floyd: Yeah, I appreciate that. It's one of the things that we've been focused on — communicating to the street and to our investors — is that we have a systematic capability of finding value. And how we define value is great assets; great royalties that overlay those assets at terrific value in terms of where we're acquiring them. 

And it's not just good value for where they sit now but it's great value in terms of how you project these catalysts to unfold. And that's us relying on our database to provide that systematic advantage. And then, our team of mining engineers and geologists to understand what's going on with these assets, understand the technical risks, understand the technical upsides. And then, putting that into an evaluation matrix and being able to find really good value all across the globe.

A lot of these are forgotten royalties… and we'll get into, how do we find it… how do we get it… but really, just a tremendous acquisition for our company and for our stakeholders: 50 million gold equivalent ounces under resource. 

Our royalty covers the entire project; past producer, operated by Sibanye-Stillwater, which is a US$10 billion PGM producer in South Africa and in Montana. So world-class operator; world-class ore body that we believe has the potential to be brought back into production over the next two to five years based on Sibanye's disclosure.

Gerardo Del Real: Let's talk about the due diligence that goes into being able to even make a bid on a royalty like this, let alone actually execute it. We joked off air that it's a once-in-a-lifetime royalty but that you and the team keep finding these things, right? Walk me through that due diligence process and just how tedious that must have been.

Kyle Floyd: Yeah, well, it starts with our royalty database. We have 8,500 royalties, most of which are proprietary in terms of knowledge to us. We assembled that database, as we talked about previously, from grassroots primary data sources. And so this is a royalty and a project that's been obscured, really, for decades now. 

So it was originally a company called SouthernEra that held the project. Then, it changed hands and produced while a company called Lonmin held it after they bought it from SouthernEra, which was bought by Sibanye. And then, Sibanye went and bought Stillwater.

So you see how just the ownership of a mine kind of gets lost as transaction on transaction unfolds. And this was a royalty that was just kind of sitting there quietly that most people, I think, had completely forgotten about. But it was in our database. We were able to get in touch with the royalty holder. And then, we started working on the constructs of the deal. 

And it's really attractive because we're getting this for C$1.5 million upfront. The total purchase price is C$10.4 million. The remainder of that purchase price, really, only comes into play when meaningful production has been achieved.

So we've really de-risked it from our standpoint. And the seller has also de-risked it. So they get some upside right now. They’re long-term believers in Vox Royalty Corp. They've agreed to be locked up for two years. So they saw an opportunity to lower the risk a little bit but maintain most of the upside. So it was a really exciting deal for all parties. That's what we aim to achieve. We got it at great value but that should work out well for all involved.

And so the diligence around that is really understanding what are the technicals of this project… looking at the engineering reports that are public on it. Riaan Esterhuizen, who's in Perth, Australia, for us is South African by birth and spent 30-plus years there working through the geology on the ground in projects like this. So we really are able to better understand these assets, what it looks like, what it can be, and making sure that we're putting our dollars for our investors in the right places.

So something to note is this basket of metal… so it's PGM — Platinum Group Metals — platinum, palladium, rhodium, and gold with very, very significant nickel and copper byproduct credits. So this was producing as of 2008; went into care and maintenance 2008-2009. The metal price basket that comprises this asset was one-seventh of what it is today. So those prices on aggregate have increased seven times. 

So what was a project that was worthy of being brought in production then, now looks to be a project that should be a real winner for Sibanye-Stillwater at some stage over the near-term — that 2- to 5-year time horizon — and an asset that I would call, as we talked about offline, really a generational-type asset. 

It's very, very rare for a royalty company to find 50 million gold equivalent ounces under resource held by a senior operator that is making all the right noises in terms of bringing this project back online at some point in the near future.

Gerardo Del Real: Kyle, heck of a way to start 2022. What can we expect here in the next coming quarters?

Kyle Floyd: Well, I would say we're off to a white-hot start. We are very, very pragmatic and systematic in terms of what acquisitions we do for our shareholders. We are looking to get the most torque that we possibly can; return on invested capital, return on assets. Not terminology usually here in the royalty space, to be honest, but metrics that we're really focused on in our company. 

We were the top performing royalty company in 2021 in terms of share price performance. I would say 2022 is shaping up to be a better year.

So fundamentally, we're doing all the right things. I think, in terms of managing our stock, as well, and all of the things that go into doing that successfully for your shareholders, I think we're doing well in that respect to complement everything that's happening fundamentally for the business. 

So really excited about 2022. Excited that this could be our first deal out of the box. And I think it's one that's going to be really, really rewarding for our shareholders.

Gerardo Del Real: Congrats again! Great work. Excited for 2022. Thank you again for that update, Kyle.

Kyle Floyd: Thanks, Gerardo.

Gerardo Del Real: Alright, chat soon.

Kyle Floyd: Alright, bye.