EMX Royalty - Proven Business Model & Strong Cash Flow

• EMX Royalty has accumulated a global portfolio of 170 royalties across nearly 5 million acres over 20 years
• The company's key cash-flowing assets like Caserones and Timok each have potential to pay $1 billion in royalties over their lifetime
• The company has reached positive cash flow, allowing them to pay down debt and buy back shares
• EMX will continue its business model of royalty generation by acquiring and adding value to early-stage assets
• Upcoming catalysts include Viscaria copper-iron asset coming into production and the Peake discovery by South32 in Arizona

EMX Royalty Corporation, a well-established player in the global mining royalty space, presents a compelling investment opportunity for those seeking exposure to a diversified portfolio of cash-flowing and development-stage royalty assets. With a proven track record of astute capital allocation and value creation spanning two decades, EMX has amassed an impressive portfolio of 170 royalties across nearly 5 million acres worldwide. As the company reaches an inflection point of positive cash flow generation, investors can anticipate a strategic deployment of capital to further enhance shareholder value.

Robust Portfolio of Cash-Flowing Assets

Central to EMX's investment thesis is its robust portfolio of cash-flowing royalty assets, headlined by the Caserones and Timok projects. According to President & CEO David Cole, each of these key assets has the potential to generate royalty payments exceeding $1 billion over their respective lifetimes. The Leeville royalty, situated on the prolific Carlin Trend and operated by mining giant Barrick (under the name Nevada Gold Mines), is another notable contributor, consistently delivering strong monthly royalty payments to EMX. The Gediktepe mine in Turkey is also a significant contributor to cash flow:

"The Gediktepe mine, which right now is setting records for us on a monthly basis, has had months that paid over a million dollars." as Cole highlighted the significance of Gediktepe.

Interview with President & CEO David Cole

Positive Cash Flow & Capital Allocation Strategy

The culmination of these high-quality assets has propelled EMX to a pivotal milestone – demonstrable positive cash flow. This achievement grants the company the flexibility to optimize its capital structure and create additional value for shareholders. In the near term, EMX plans to refinance its existing debt of $34 million, currently with Sprott Private Resource Lending at a 7% coupon rate.

Cole hinted at an impending announcement that the market will favorably receive, stating

"I'm going to do something that the market's going to like with the refinance of that debt. It'll be announced within a month or so."

Share Buybacks & Debt Reduction

Concurrent with the debt refinancing, EMX is poised to embark on a substantial share buyback program. The company has partnered with National Bank to execute an algorithm-based buyback strategy, with bids intensifying as the share price decreases. Cole emphasized the prudence of this approach over paying dividends, as it effectively capitalizes on market inefficiencies to create value. By judiciously allocating capital between debt reduction, share repurchases, and strategic acquisitions, EMX is well-positioned to navigate the current market environment and deliver attractive returns to shareholders.

Continued Focus on Royalty Generation

Looking ahead, EMX remains steadfast in its commitment to its proven business model of royalty generation. The company will continue to acquire early-stage assets, add value through geological derisking, and subsequently monetize these assets for royalties and other cash payments. This approach has served EMX well for many years, allowing the company to build a robust pipeline of future cash-flowing royalties. Furthermore, EMX will selectively pursue accretive royalty acquisitions when opportunities arise at attractive valuations, leveraging its strengthened balance sheet and cash flow profile.

Upcoming Catalysts & Optionality

Investors can look forward to several potential catalysts within EMX's existing portfolio. The Viscaria project is expected to advance into production, while the Peak discovery by South32 in Arizona showcases the significant optionality embedded within EMX's royalty portfolio. These developments underscore the potential for EMX's asset base to drive incremental value in the near to medium term.

Conclusion

EMX Royalty Corporation presents a unique opportunity for investors to gain exposure to a high-quality, diversified portfolio of cash-flowing and development-stage royalty assets. With a proven track record of value creation, a strengthened balance sheet, and a disciplined capital allocation strategy, EMX is well-positioned to deliver attractive returns in the current market environment. As the company continues to execute its royalty generation business model and advance its existing portfolio, investors can anticipate a steady stream of catalysts and value-enhancing initiatives in the years to come.

The Investment Thesis for EMX Royalty

• Diversified portfolio of 170 royalties across nearly 5 million acres worldwide
• Key cash-flowing assets like Caserones and Timok with $1 billion+ lifetime royalty potential
• Positive cash flow enabling debt reduction and substantial share buybacks
• Proven royalty generation business model to continue driving future growth
• Upcoming catalysts include Viscaria production and Peak discovery by South32
• Attractive entry point for investors seeking exposure to a high-quality royalty portfolio
• Management team with strong track record of value creation and capital allocation
• Potential for significant value appreciation as portfolio matures and new royalties are added

Macro Thematic Analysis

The global mining industry is at a critical juncture, with the increasing demand for copper and other essential metals driven by the transition to a low-carbon economy.

As David Cole, CEO of EMX Royalty, aptly stated, "The world consumes more copper every year. That copper needs to come from somewhere. The most likely place for it to come from is from brownfields exploration, in addition to greenfield exploration."

This fundamental backdrop presents a compelling opportunity for investors to gain exposure to the sector through high-quality royalty companies like EMX.

However, the mining industry faces several challenges, including the need for substantial capital investment to meet growing demand and the historical lack of strong returns on invested capital.

As Cole pointed out, "The majors need to be very careful about their capital allocation. They need to demonstrate that they're getting a strong return on capital."

This underscores the importance of investing in companies with a proven track record of value creation and disciplined capital allocation, such as EMX Royalty.

The current market environment, characterized by rising copper prices and the increasing recognition of the critical role that metals will play in the low-carbon transition, presents a favorable backdrop for EMX Royalty. As the company continues to execute its royalty generation business model and deliver strong cash flow from its existing portfolio, investors can anticipate a re-rating of the stock as the broader market recognizes the inherent value in EMX's asset base.