Empress Royalty's Investment Strategy on Pure-Play Gold & Silver Royalty Growth

• Empress Royalty is a precious metals royalty and streaming company focused on gold and silver
• The company provide $5-10M financing to near-production or producing mines to help with expansion/development
• Portfolio includes 4 cash-flowing investments in Peru, Mozambique, South Africa and Mexico
• The Empress team has extensive mining finance experience; directly structures deals with operators
• Empress Royalty is targeting $7-8M in revenue this year, and expects $60M revenue over 5 years while looking for 3-4 more investments to add

Empress Royalty offers investors an attractive way to gain exposure to precious metals through a portfolio of gold and silver royalty and streaming investments. The company focuses on providing $5-10 million in financing to mining companies with near-term production or already in production to fund mine expansions, development, and equipment. This unique strategy allows Empress to generate revenue quickly and aligns them with proven operators and assets.

Targeted Investment Strategy

Empress has zeroed in on a market gap in the $5-10 million financing range, which is too small for the major streamers and royalty companies but often an awkward amount for banks or equity markets. They work directly with carefully vetted mining operators to buy precious metals through royalty and stream agreements.

As Chairman David Rhodes explains, "These are near producing or production companies looking for that little bit of capital just to expand the mill, do a bit more underground development work to feed the mill. It's that sort of $5-10 million size"

By focusing on this niche, Empress can be highly selective and structure favorable deals.

The company targets investments in jurisdictions where the team has deep experience so they can appropriately assess country risk. While some investors may perceive certain countries as higher risk, President & CEO Alexandra Woodyer Sherron emphasizes, "It's an educated risk. We've got the expertise to say, okay, that is a reasonable structure for that transaction."

Interview with Executive Chairman David Rhodes, and President & CEO, Alexandra Woodyer Sherron

Experienced Management Team

A key differentiator for Empress is the strength and experience of its management team. Executive Chairman David Rhodes and President & CEO Alexandra Woodyer Sherron reassembled a team of veterans from Endeavour Financial, a leading mining financial advisory firm, leveraging their expertise to source, structure and execute royalty and streaming transactions. This experience allows Empress to conduct rigorous due diligence, navigate complex jurisdictions, and create win-win financing solutions for mining companies.

This industry expertise allows Empress to conduct extensive due diligence, structure creative financing solutions, and partner with the right projects and management teams. Unlike many competitors, they focus exclusively on gold and silver investments and are not diluting their portfolio with industrial metals or other commodities.

Portfolio & Pipeline

Empress currently has four cash-flowing precious metals investments, providing commodity and geographic diversification:

• Sierra Sun's Sierra Antapite Mine, Peru - 4.5% gold stream
• Mutapa Mining & Processing's (MMP) Manica, Mozambique - 3.375% gold royalty
• Golconda Gold's Galaxy, South Africa - funding for underground mine expansion, 3.5% gold stream
• Luca Mining's Tahuehueto silver project, Mexico - 100% silver stream

These assets generated about $4 million in revenue last year, which is expected to roughly double to $7-8 million in 2024. Empress projects the existing portfolio can generate $60 million in revenue over the next five years, excluding any additional investments.

However, the company is actively looking to deploy capital and expand the portfolio. It is conducting due diligence on several opportunities, with term sheets outstanding on three potential deals. Empress is aiming to add 3-4 investments in the $5-10 million range this year but remains disciplined.

As Sherron notes, "There's no shortage of opportunities to invest in. For us, it's just choosing the right ones on timing and how we build out that mix in the portfolio."

The company has already turned down six deals in the past 18 months after extensive technical and economic analysis determined they did not meet Empress' investment criteria.

Commodity Outlook & Unique Strategy

Empress' management has a bullish outlook on precious metals, particularly gold. Rhodes sees a strong future for gold "due to various factors" while noting silver is already up about 33% this year. The company's commodity price assumptions are not outlandish but reflect the view that the macro environment will remain supportive of precious metals.

Importantly, Empress is the only sizable royalty and streaming company solely focused on gold and silver after its peers added other metals like cobalt and copper to their portfolios.

"We're becoming quite unique now because we are the only precious metals creation company," Sherron emphasizes.  "Gold and silver are very much financial instruments. We believe having a pure dedicated strategy - not blending it with industrial metals which are obviously very much GDP growth-related - makes us a unique proposition for people looking to invest in gold and silver."

Conclusion

For investors seeking exposure to precious metals without direct exposure to mining operations, Empress Royalty offers a compelling opportunity. The company's unique focus on gold and silver royalties and streams in the $5-10 million range, proven management team, rigorous due diligence process, and attractive existing portfolio with a robust growth pipeline make it stand out.

With additional royalties and streams expected to be added in the near-term, Empress is well-positioned to scale its portfolio and cash flow per share. While the company is still in the relatively early stages, it has a clear strategy and the financial and technical capabilities to execute. As the precious metals bull market gains momentum, Empress Royalty provides a differentiated way for investors to participate.

The Investment Thesis for Empress Royalty

• Pure-play precious metals royalty and streaming company focused exclusively on gold and silver
• Unique niche providing $5-10M financing to near-production and producing mines
• Strong management team with mining finance expertise and proven track record
• Four royalties and streams already generating ~$8M in revenue with $60M expected over 5 years
• Actively adding new cash-flowing investments to the portfolio with 3-4 expected in 2024
• Only significant royalty company with a pure gold and silver strategy providing key differentation
• Compelling valuation with strong revenue and cash flow growth as portfolio expands
• Offers investors lower risk precious metals exposure without direct exposure to mining operations
• Consider building a position in Empress Royalty to gain portfolio exposure to gold and silver

Empress Royalty offers investors a differentiated precious metals investment opportunity through its focus on gold and silver royalties and streams. The company has identified an attractive niche providing $5-10 million in financing to near-production and producing mines. Its experienced management team, disciplined due diligence approach, and growing portfolio of cash-flowing investments positions Empress to deliver attractive returns in a rising gold and silver price environment. The company stands out among its royalty and streaming peers with a robust pipeline of opportunities and a pure precious metals strategy.

Macro Thematic Analysis

The current macroeconomic backdrop of high inflation, growing geopolitical tensions, ballooning government debt levels and the specter of slower economic growth has created an attractive environment for gold and silver. Investor demand for precious metals exposure is rising as they seek safe-haven assets and inflation protection.

However, investing in mining companies directly introduces operational, development, financing, and other risks. Royalty and streaming companies offer a lower risk way to gain precious metals exposure, but most have diversified into other commodities in recent years. Empress Royalty stands out as the only significant pure-play precious metals company in the royalty space.

The company's focus on near-term cash flowing investments and its ability to structure customized financing solutions for mining companies in the $5-10 million range should enable it to build an attractive, diversified portfolio that can generate strong returns and cash flow growth, particularly if gold and silver prices cooperate. In a market where investors are eager for precious metals exposure but wary of mining risk, Empress offers a compelling investment proposition well-suited to the current macro backdrop.