Junior Royalty Firm Going Green & Hitting Big

The Globex agreement comprises:

• MTM Royalty: A sliding-scale, gross metal royalty on zinc production at the operating Middle Tennessee Mine (MTM) operated by a subsidiary of the Trafigura Group.
   
• Glassville Royalty: A new 1% gross revenue royalty on the Glassville Manganese Project — strategically located near the company’s existing Battery Hill manganese royalty — in New Brunswick, Canada.

Importantly — with the current boom in electric vehicle (EV) sales and the electrification of everything — the MTM Royalty makes Electric Royalties the only cash-flowing royalty company solely focused on the battery metals sector.

Electric Royalties CEO, Brendan Yurik — whom you’ll be hearing more from in a moment — commented via press release:

A Brilliant Growth Model

For those who may be new to the royalty space, a royalty is a contract that gives the owner [a royalty company such as Electric Royalties Ltd.] the right to a percentage of production revenues from a mineral producer in exchange for an upfront payment.

Royalty companies use these contracts as a way of financing mining companies in need of capital. For mining companies, this alternative form of financing is often more attractive than traditional debt or equity financings.

The model offers a number of key advantages to the royalty company including:

• Leverage to commodity prices
• Fixed operating & cash costs and strong margins
• Exploration & mine expansion upside
• No capex or cost overrun exposure
• No limit to growth as execution of risk does not rise with each acquisition

And because royalties typically cover the full life of a mine, a company like Electric Royalties stands to benefit from any exploration upside that results in an extension of the mine-life — thereby, increasing the amount and duration of revenue received from the mining company at no additional cost or risk.

Green Energy Focus

With its sole focus on the battery metals sector, Electric Royalties is strategically positioned to take full advantage of rising demand across a wide swath of green energy commodities including zinc and manganese, as described above, plus lithium, vanadium, tin, graphite, cobalt, nickel, and copper.

                        

Today’s electrification of everything spans a number of important consumer categories and green energy industries including EVs, rechargeable batteries, large scale energy storage, renewable energy generation and other advanced applications.

Looking at the global EV market alone, the number of electric vehicles is set to rise from approximately 2 million today to over 140 million by 2030 — an increase of 7,000%. That number is expected to rise to 900 million by 2050!

US$300 billion has been earmarked over the next 5-10 years for electric vehicle and battery production capacity, including a US$91 billion commitment from Volkswagen.

Additionally, over 70 “Gigafactories” — a term coined by Elon Musk to describe Tesla’s massive lithium-ion battery and EV component factory in the Nevadan desert — are currently under construction globally with a combined projected increase in GWh (Gigawatt hour) energy capacity of 1,000% by 2040.

                            

Year after year, as major advancements are made in battery production capacity and renewable energy generation and storage, a robust growth opportunity is being presented whereby Electric Royalties can acquire royalties in the mines and projects that will be the suppliers of the raw materials required to feed the clean energy revolution.

Hence, not only is Electric Royalties assisting mining companies who otherwise might not be able to finance their projects, the company is also helping to perpetuate the green energy movement.

By joining in the effort to produce more electric vehicles, rechargeable batteries, and other renewable energy generation technologies — Electric Royalties is ultimately fostering a safer and cleaner environment for future generations to enjoy.

A Growing Portfolio of Clean Energy Royalties

Already, in less than one year of public trading, Electric Royalties has acquired a total of 14 royalties in the green energy commodities space — a true testament to the highly-adept team Brendan Yurik, CEO, has helped put together.

That includes company chairman, Marchand Snyman, who’s also the co-founder and chairman of RE Royalties Ltd. where he’s been instrumental in the acquisition of more than 80 renewable-energy royalties to-date.

The company currently has about C$2.2 million in cash which would normally signal the need for a near-term capital raise. Yet, as alluded to earlier, the company’s newly-acquired MTM Royalty — its first cash-flowing royalty — has a recent record of paying about C$1.2 to C$2 million per year.

The company expects revenues from that one royalty alone to be sufficient to not only cover its G&A expenses as a foundational “long-life” cash-flowing royalty but also to provide additional funds for allocation toward new royalties with which to grow the portfolio.

With a total of 14 royalties, and growing, spread across multiple Tier-1 jurisdictions including the United States, Canada, and Australia — plus a mandate for additional accretive future and current cash-producing royalty acquisitions this year and into the future — Electric Royalties is absolutely one-to-watch in the junior royalty space.

Our own Gerardo Del Real of Junior Resource Monthly caught up with CEO, Brendan Yurik, for an in-depth discussion on all-things Electric Royalties.You can listen to that here (or read the transcript). Enjoy!

You can also find more information on Electric Royalties here.
 
Yours in profits,

Mike Fagan
Editor, Resource Stock Digest
   

Mike Fagan has mining in his blood. As a teenager he staked countless gold and silver properties in Nevada alongside his dad, Brian Fagan, who created the Prospect Generator model that’s still widely used today in the resource space. One of those staking projects was put into production by a major Canadian mining company — a truly rare and profitable experience. That background uniquely qualifies him as a mining stock speculator. One of the most well-known names in the business, Mike is now putting that experience to use for the benefit of Resource Stock Digest and Hard Asset Digest readers.