Empress Royalty (EMPR) - Creating New Paying Royalties Works Better

Empress Royalty Corp. is a new Royalty and Streaming company focused on providing investors with a diversified portfolio of gold and silver investments. The company has a current portfolio of 17 investments and is actively investing in mining companies with development and production stage projects that require additional non-dilutive capital. 

We met with Alexandra Woodyer Sherron, Director, President, and CEO, Empress Royalty. Alexandra has over 2 decades of experience in the mining industry. During her career as an investment banker in London, she served as the Director of Structured Financing and was involved in the successful completion of over $1.5Bn in financings. 

We were also joined by David Rhodes, Executive Chairman, Director and Investment Committee Chairman, Empress Royalty. David has over 25 years of experience in the finance industry. He is also the Managing Director at Endeavour Financial, one of the top mining financial advisory firms. He has previously worked with Standard Bank London Limited, Barclays Capital, and Royal Bank of Scotland. 

Company Overview

Empress Royalty is a Canadian streaming and royalty company founded in 2020. The company is listed on the Toronto Stock Exchange (TSX-V: EMPR), and the OTC markets (OTCQB: EMPYF). The company has strategic partnerships with Endeavour Financial, Terra Capital, and Accendo, allowing them to access global investment opportunities along with bringing unique mining finance expertise, deal structuring and access to capital markets.

Empress Royalty is currently working on 3 transactions that include the Tahuehueto Silver Steam, the Manica Gold Royalty, and the Sierra Antapite Gold Project in Peru that is now an active producing asset. 

Empress Royalty has a simple and SAS strategy that consists of investing in new Streaming and Royalty investments, negotiating agreements and availing good returns. The company is looking for additional investment opportunities with Sierra Antapite and its parent company as they have a lot of opportunities through their numerous mining projects. The initial investment in the project will open the door to larger opportunities. The Sierra Sun Group is the owner of the Sierra Antapite asset. 

Strategic Partners

Empress Royalty has 3 strategic partners, namely Endeavour Financial, Terra Capital in Australia, and Accendo Banco in Mexico. All three partners are a part of the management and the board. The strategic partners, along with the management, and the board collectively owns 38% of Empress Royalty. 

Endeavour Financial

Endeavour Financial has been in the junior major sector for the past 30 years. They served as the founding fathers at Empress Royalty after identifying an absence of smaller players in the market. The company's strategy is to focus on sub-$50M streams, along with creating new streams and investments. The Manica Gold Royalty in Mozambique was brought to the company through Endeavour Financial. 

Terra Capital

Terra Capital, Australia is an investment fund for the mining industry that provides Empress Royalty access to the Australian-listed projects. The company has also been an active investor in Canadian natural resources. This has allowed Empress Royalty to gain access to the capital market network in Canada. 

Accendo Banco

Empress Royalty also has a strategic alliance with Accendo Banco, which was signed in 2020. This deal gives Empress Royalty exclusive access to Mexican Royalty and Streaming opportunities. Javier Reyes, Chairman and CEO, Accendo Banco is a strategic investor in Empress Royalty. 

Accendo Banco has over 250 employees across 13 offices. The company has a specific charter with the Mexican banking regulations, enabling them to invest in mining companies. Additionally, they also provide day banking and deck facilities. This has enabled Empress Royalty to gain a deeper insight into the opportunities in Mexico. 

The conglomeration of these three partnerships has enabled Empress Royalty to explore opportunities in Africa and South America through their combined networks and collaboration with management groups with past operations in the region.

The Sierra Antapite Deal

As per the recent press release, Empress Royalty entered a deal with Accendo Banco to invest in Sierra Antapite at an 11% interest rate. This move was received with negative feedback from the market, citing the high rate of interest. However, the company's IRR (Internal Rate of Return) for this project hovers above 17%. Additionally, the company's models were able to extend the mine's life. The company projects to gain significant ROI (Return on Investment) from this deal. 

The Sierra Antapite deal with Accendo Banco was acquired at an 11% interest rate along with $156,000 in fees and $6.5M in warrants. The deal will help the company establish its credit rating, portfolio and revenue. As the company continues to grow, they are anticipating significantly cheaper deals in the future along with improved deal terms. 

The Sierra Antapite project is a $10M Gold Stream. Empress Royalty has funded the first $5M which has enabled the project to increase production from 750t/day to 1000t/day. The deal was restructured to offer a 4.5% Gold Stream which after 11,000oz dropped to a 1% steam life of mine. 

As a result of the $5M funding, the company will receive revenue on the first 2.25% gold payable. This project will be further ramped up starting Q1, 2022, bringing in $2.2M in yearly revenue with a 17% IRR and 1,750 NAV (Net Asset Value) Gold, at a 5% discount of $14.8M. 

The Tahuehueto Silver Stream Deal

The Tahuehueto Silver Stream was acquired through Accendo Banco. The deal at the Altaley-Tahuehueto project consists of 100% security over a period of 2 years. The company is looking to fill in investments for Sierra Antapite and the second tranche. As Empress Royalty grows, this facility is expected to be replaced by new ones. This opportunity serves as a stepping stone for the company to grow their business. Empress Royalty plans to refinance the deal in the future. Currently, the company is looking at this asset to serve as a cash-generating tranche for increasing revenues. 

Empress Royalty owes $5M with 11% interest and $200,000 in additional costs, the 17% IRR offers an opportunity for a strong ROI (Return-on-Investment). The Tahuehueto Silver Stream in Durango, Mexico was concluded for $5M by Altaley Mining. This deal faced some hurdles due to the construction challenges. Empress Royalty worked with its strategic partners to push the project forward. The result was a $12M debt from Accendo Banco, a $5M Silver Stream by Empress and an $8M equity raise by Endeavour and Accendo. 

The asset is back into the construction phase and the mine is scheduled to begin production by Q1, 2022, with ramping up of operations throughout the year. This project offers an 84% IRR along with a 5% discount, bringing the NAV to $24.6M. This leads to an annual cash flow of $3M for the company. 

The Manica Gold Royalty

The Manica Gold Royalty is expected to finish construction and enter production by Q4, 2022 with projected revenue of $6M-$6.7M yearly. This revenue is expected to grow to $9-$12M by 2024. 

Financial Capabilities

Empress Royalty has a current market cap of CAD$38M. The NAV of the company's assets stands at $60M. The company has been listed for 8 months and is diligently looking to add new projects to its portfolio. They are currently in discussion with 13 management groups for new opportunities. What makes Empress Royalty stand out is the fact that they create new Royalties instead of picking up 3rd party assets. At the same time, the company is aiming for a diversified portfolio while maintaining the balance between the existing gold and silver assets. The company also has assets in Africa and South America.

Empress Royalty's strategy is focused on key assets to offer good returns for investor revenue. The company has invested in near-term assets which are entering production to generate a healthy revenue stream. 

The key drivers for Empress Royalty include a growing, consistent business model, with revenue generation to cover all costs and enable additional investments. The company has a strong focus on a dividend policy, functioning as a yielding asset class for investors.

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To find out more, go to the Empress Royalty Website