EMX Royalty – Royalty Generation, Organic Growth, Cashflow Neutrality

In this episode, David Cole the President, CEO, and Director of EMX Royalty Corp. sits down with Maurice Jackson of Proven and Probable to discuss the 3% NSR at the Koonenberry Project in Australia and Cukaru Peki Project in Serbia, and we will address the prospects of EMX Royalty Corp. becoming Cash Flow Neutral. Quick, concise rich content interview. Symbol: TSX: EMX NYSE: EMX

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Welcome to Proven and Probable where we focus on medals, mining, and more. I’m your host Maurice Jackson, where today we will discuss the Royalty Generator.

I’m speaking of, ‘‘EMX Royalty Corp.’.’ Trading on the TSX-V symbol EMX and on the New York Stock Exchange, symbol EMX. Joining us today is the President, CEO, and Director of ‘EMX Royalty Corp.’, Mr. David Cole.

Before we begin, allow me to convey to our listeners that ‘EMX Royalty Corp.’ is a sponsor of Proven and Probable and that we are proud shareholders of ‘EMX Royalty Corp.’ for the virtues we will convey in today’s message. Mr. Cole, welcome to the show.

David Cole: 

Oh, thank you, Maurice. Always good to be here.

Speaker 1:

Mr. Cole, let’s get current and prospective shareholders up to date on recent company developments. You know, we alluded to the Royalty Generator in the introduction, so let’s begin with the exciting details coming out of Australia. What can you share with us?

David Cole:  

Well, the Koonenberry Project in Australia recently completed the sale to the counterparty on that asset and that’s just a good example of us executing our organic growth of royalties around the world and we have a number of examples like that ongoing as part of our deal flow and we see good deal flow in the rearview mirror, as well as looking forward.

 

Koonenberry is an example. That was an asset that we acquired in Australia, added value by doing good baseline geology, and in that particular example, they found a bunch of nuggets of gold at the surface. It was a fascinating project, or is a fascinating project, and we sold that on to an astute local company that is looking forward to advancing the project with additional drilling and geological studies, etc.

Speaker 1: 

Mr. Cole, for our listeners, let’s give them a visual of where the location was and then let’s discuss a little bit about the royalty as well.

David Cole:  

Sure, happy to. By the way, Maurice, this is the map here showing the location of Koonenberry in Australia. One of many projects, of course, that we have around the world. We have exposure now to 1.5 million acres of mineral rights across the planet and Australia is one of the jurisdictions that we have chosen to execute in and Koonenberry is a good example of that organic growth of royalty portfolio through our business model. By the way, the royalty at Koonenberry is 3%, which is a nice fat royalty.

Speaker 1:  

Indeed, it is, and by the way, is that NSR?

David Cole: 

That is. That is Net Smelter Return royalty and nearly all of our royalties are Net Smelter Return royalties, which is actually a gross royalty on the receipts from the smelter to the mining company.

Speaker 1:

You know, that’s quite an accomplishment, David, because most of the royalties that we tend to see tend to be roughly around 1.5% so this is double. Congratulations to you and the shareholders.

David Cole: 

Yeah, thank you. Thank you. We’re always trying hard and the other examples within the Australian business unit would include the new project Queensland, Queensland Gold and the Queensland Province of Australia, and that’s a new product acquisition that we have made and we’re seeing a lot of customer interest in that. We’ll get that project sold here within the year, and then Menuairs is a new application that we have filed for a sediment homestead copper system in northern Australia. We’re looking forward to working on that one as well. The folks at Neavesville within the north island of New Zealand are currently drilling.

Speaker 1:

Well, this is quite exciting. David, let me ask you this now, can we transition from Australia to Serbia and discuss another royalty proposition that ‘‘EMX Royalty Corp.’ is focusing on at the Cukaru-Peki. What can you share with us?

David Cole: 

Yeah, this is the real deal, Maurice. This is one of the largest ongoing and exciting copper/gold discoveries on the planet that happened during the last cycle. The history here is quite interesting, so ‘EMX’ previously known as ‘Eurasian Minerals’, came into Serbia. We were the first foreign company to get into Serbia and start to prospect after the Balkan Wars. We were the first company to be granted an exploration permit.

 

We advised the Serbian government on the advancement of their mining legislation and their concession legislation that opened the door for foreign investment in Serbia after the Balkan Wars. That has resulted in a huge discovery there and we’re fortunate that we have a royalty on that discovery. This particular example speaks to the integrated approach that ‘EMX’ has where we grow royalties organically through the prospect generation process where we acquire mineral rights, add value, sell the projects, keep royalties.

 

In addition to buying royalties, if and when we can find good royalties to buy, and this is a case where the actual discovery occurred just off of one of our original licenses, so we did not have a royalty on it but we quickly, with our ear to the railroad track, understanding what was going on, went out and bought the royalty over the discovery so the shareholders are participating in that fantastic discovery.

Speaker 1: 

Quite a strategic move and I know shareholders are delighted to hear that as well. Transitioning out of here, in our most recent interview in July with Eric Jensen, who is the General Manager of Exploration. He conveyed the opportunity of becoming cash flow neutral. Please provide us with an update and why is becoming cash flow neutral important for shareholders.

David Cole:  

That’s reflective of the name change as well, Maurice, and so we’ve evolved the name from ‘Eurasian Minerals’, which has more of an exploration connotation that was reflective of us investing moneys around the world to grow our mineral property portfolio to ‘EMX Royalty Corporation’ in recognition of the fact that more and more of our assets are starting to cash flow.

 

We’re at that very important inflection point where we’re moving towards a company that has a net amount of money going out the door, growing the portfolio, to one which is reaching cash flow neutrality and I believe we’ll be cash flow positive this year or next year. That’s fantastic. It should be a catalyst for a re-pricing of the entire enterprise. We’ve been working for this for many years.

Speaker 1:

We’re looking forward to it as well, and again, congratulations. It just shows the keen business acumen that you have in your entire staff, so again, on behalf of all the shareholders, and again, myself, thank you. Now, last question for you here, David. What did I forget to ask?

David Cole: 

Well, you know that we love the Malmyzh Project in Russia and we hope to have that project sold here shortly and crystallize our gains that we have in that investment. It’s always good to remind the shareholders that important deposit that we have exposure to as strategic investors in ‘IG Copper’.

Speaker 1:   

Looking forward to that as well. Now David, if investors wish to get more information regarding ‘EMX Royalty Corp.’, please provide the contact information.

David Cole:

Sure, happy to. Scott Close, our Manager of Investor Relations, is always available and that’s [email protected], and his direct phone number here at the office, 303-973-8585.

Speaker 1:  

Last, but not least, please visit our website www.ProvenandProbable.com, where we interview the most respected names in the natural resource space. You may reach us at [email protected]. David Cole of EMS Royalty Corp. Thank you for joining us today on ‘Proven and Probable’.

David Cole: 

Thank you, Maurice.

Speaker 1:

All the best, sir.

 

Proven & Probable

Maurice Jackson

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