Join me now for a conversation with David Cole, the president and CEO of EMX Royalty Corp, trading on the TSX Venture Exchange and on the New York Stock Exchange as EMX.
Click this link (https://youtu.be/6FRM0M9G7GA) to join Ellis Martin and listen to the interview with EMX Royalty’s David Cole or continue to read the transcript below.
Ellis Martin: EMX is a precious and base metals, royalty company, whose investors are provided with discovery, development and commodity price optionality while limiting exposure to the risk inherent to operating companies. EMX has a sizeable global portfolio of assets and has currently over $70 million in the treasury and no debt. Dave, welcome to the program.
David Cole: Ellis, always my pleasure.
Ellis Martin: If you don’t mind, sir, since we haven’t spoken in a while, give our audience an overview of your company.
David Cole: Happy to, EMX Royalty Corporation, ticker symbol EMX on the New York Stock Exchange, ticker symbol EMX on the Toronto Stock Exchange. I founded the company 16 years ago after I left Newmont Mining Corporation. And so what we do is we execute the prospect generation business model where we acquire large tracks of prospective mineral rights, at value and then sell them to a market that’s hungry for prospective mineral rights to advance. And we keep royalties, we also get shares and other payments. And so we’ve been building a royalty portfolio for 16 years executing this business model. In addition to the organic growth development portfolio, through the execution of that model, we also buy royalties and we have a couple key assets in the portfolio we have purchased. And we also make strategic investments, and our strategic investing has been phenomenally successful. We had a 40% internal rate of return on invested capital after tax, during the history of the company, which is an amazing number.
That’s driven by a couple of big wins, one of which was recently consummated; where we sold a large copper gold discovery that we were a shareholder in Russia, far Eastern Russia for a tidy sum. And that puts us in a situation where we have over US $55 million in the bank in cash.
In addition to some credible securities and whatnot, and that is interestingly about the same amount of cash that I’ve raised to build this company over its entire history.
We have, of course, no debt, and 64 royalties around the world, and a mineral property footprint associated with those royalties and other properties that we’re advancing and marketing, that totals up to around 2 million acres worldwide. We’re in great shape.
Ellis Martin: Now, you did say 64 properties around the world that you’re obtaining royalties on. Is that what I heard?
David Cole: We have 64 royalties, that’s correct. We have over 120 mineral property footprints or projects.
Ellis Martin: You mentioned Russia and it’s been very good for the company. Are you pretty much jurisdiction agnostic as long as they’re all supportive?
David Cole: Well, that’s a great question. If you look at our history, we’ve worked in all kinds of different venues including Haiti. Of all places, that was a favorable transaction for our shareholders. We sold our Haitian assets off to Newmont Mining Corporation. They are advancing those. We kept a royalty, as we always do in these assets. But we do most, like right now, where we’re working in Northern Europe, Norway, Sweden and also the Western United States, Arizona and Nevada. In Arizona, we’re the third largest mineral right’s holder in this state. We have 9,000 mining claims in the Western United States, and we just love to acquire more prospective mineral rights. That puts us as the third largest mineral right’s holder in the state of Arizona.
In Northern Europe, in Sweden, we’re the second largest mineral rights holder after Boliden. I believe we’re catching up to them and soon, I believe, we’ll become the largest mineral right’s holder in Sweden, where we’re pursuing polymetallic systems, nickel, copper, lead, zinc, silver, as well as a whole host of great gold projects on what’s called the Swedish Gold Line. We’ve just executed a deal there where we sold off those properties to a new company backed by PI Financial for a combination of cash, shares and royalties, right down the heart of our business model, and they’re doing a good job of advancing those.
We just came out with a press release, that gave folks an update with respect to the advances of those projects. We just love that type of method to advance our properties, sell them off to somebody else, they advanced them.
We can win twice from ownership in the company as well as the royalty on the projects. We’re also really active Ellis in Norway, where we’re the largest mineral right’s holder in the country. Once again, pursuing a myriad of different metals. The nickel belt that extends up through Eastern Canada actually jumps across Labrador and Newfoundland into Norway and Sweden in pursuing that belt of acquiring nickel projects. Those have bi-product cobalt as well as copper. Those are in big demand right now because of the interest in battery metals. Of course. We also have led zinc silver projects there and we’re looking at some exciting new grade properties in Norway as well.
So with respect to your initial question about being agnostic with respect to what country we work in, it’s really a function of understanding what the mineral potential of these regions of the world is and the amenability to be able to invest and work in those parts of the world.
We’ve had a long history of working in very interesting venues, Russia, Turkey, Haiti, Serbia. We came into Serbia and help them rewrite their mining laws after the Balkan Wars and acquired some very prospective mineral rights and built Reservoir Capital with those mineral rights that we vetted into Reservoir and they did a fantastic job at advancing those assets and now we have royalties on the big discovery and the Timok Magmatic Complex in Serbia, which is the largest copper gold discovery in the history of Europe. It’s now being advanced by Zijin and we’re sitting here with a one half of 1% royalty over that and we’re very, very, very pleased with that. Just another example of country diversity and execution of that business model.
Ellis Martin: When I find interesting and in addition to country diversity, you’re almost agnostic with regard to polymetallic structure of the world. In the junior space the base metals really aren’t moving right now, copper as well. Battery metals are slugging along, but all this is irrelevant as is the sector in general. With regard to EMX you pretty much, I’m saying this in a forward looking way, you’ve pretty much de-risked the mining.
David Cole: Yes, through the execution of the model, short term aggravations in metal prices. It doesn’t have much of an impact on us looking out decades when metals are going to be good to own and we’re passionate gold. We’ve always loved gold, passionate about copper. We take the long term trend and copper is the middle economists that we follow believes that the global consume up this much copper in the next 25 years as has been concerned throughout all of history, which is rather astonished and that just how important it is to own more and mineral rights, have more royalties, have other people advancing more assets and some coppers down right now because of trade war concerns, etc. Long term we are very bullish copper. We think it’s very good to be exposed to that metal zinc and nickel and cobalt, all great assets, asset classes to be exposed to.
Ellis Martin: What do you think is the strongest part of your company? Is that the geological team?
David Cole: Oh, it’s the team. Our alpha is economic geology, has been from the beginning and it’s the application of that economic geologic talent around the world to acquire prospective mineral rights, add value, sell it onto an industry hungry for prospective projects and keep royalties, and so our alpha is our economic geology talent.
Ellis Martin: I don’t see a great amount of volatility in your stock. It’s steady as she goes with gradual movement upward. We think that’s going to continue to increase. We don’t know for a fact, for you being a junior mining company, I think I want to think of you more as a royalty company. It’s sort of unusual and that volatility feels safer than a lot of other things you might want to risk on in the micro-cap space and the junior space in this realm to begin with.
David Cole: Yeah, happy to talk about that. That the stock price is representing the de-risking aspect of the business model, so we get less aggravations. I will point out that we’re up three and a half times in the last three and a half years. We’re sitting here with 55 million us dollars in the bank and about $110 million market capitalization’s who are enterprise value is only around 50-$55 million. I believe that underestimates the value of the whole portfolio for sure. The best way to see that, I believe is by looking at my trades, which are all filed, and I’ve been a consistent buyer of EMX stock over the course of the last four years. My intent is to continue that.
Ellis Martin: Let’s talk about the Carlin trend in Nevada and the Leeville royalty.
David Cole: There’s some exciting news coming out there. As you know, the Carlin Trend is one of the most prolific gold mineralized regions in the world and certainly in the United States, and we’re very pleased to have a royalty previously operated by Newmont Mining Corporation on the Carlin Trend. Newmont and Barrick formed a big joint venture company called Nevada Gold Mines, that’s now the largest gold mining complex in the world, quite interestingly enough. Speaking to the endowment of Nevada copper gold deposits and we’ve got a nice chunk of the royalty there on the Northern portion of the Carlin trend covering the Leeville mine in a portion of Turf and a portion of the Carlin East mine and other advancing discoveries there and after the Denver Gold Group Forum. That’s an annual forum conference, that happened here in Denver just a couple of weeks ago, they had an analyst tour and that analyst tour went out on site to visit the various mines that Barrick, who’s the operator of the joint venture, is proud of and they came out with a PowerPoint presentation that is a publicly available document and in that PowerPoint presentation they specifically highlighted the resource and reserve growth and the resource and reserve potential within our royalty footprint there at Leeville and in the greater Leeville area.
So we’re really excited about that. That’s a key value driver for us, that’s paid to us about $13 million US since we’ve owned the royalty there and we believe it will be a very long lived royalty and apparently Barrick feels that way as well part and parcel to the information that they disclosed at the analyst tour.
Ellis Martin: So what do we look forward to with EMX for 2020?
David Cole: More of the same. We are going to continue our organic growth. We’re going to continue to acquire prospective mineral rights around the world. I think we’re going to see continued deal flow. That’s one of the things that EMX has always done well is to get our project sold even in bad markets. And that continued deal flow is just building our asset base and as we continue to build that asset base over the long haul, the stock will respond accordingly and I believe that the stock price has a long ways to go. That’s why I’ve personally been buying.
Ellis Martin: David’s always a pleasure to speak with you. I look forward to seeing you soon, somewhere on the planet. Thanks so much for joining me today on the program.
David Cole: Ellis. Thank you. Always. My pleasure.
Ellis Martin: I’ve been speaking with David Cole, the president and CEO of EMX Royalty Corp. Trading on the TSX Venture Exchange and on the New York Stock Exchange as EMX go to the company’s website, emxroyalty.com. I’m Ellis Martin.
About: Talk show host and motivational speaker Ellis Martin interviews financial analysts and entrepreneurs featuring potential opportunities for a diversified audience. EMX Royalty Corporation is a sponsor of www.ellismartinreport.com
The Ellis Martin Report is a global radio program showcasing potentially undervalued public companies for consideration by discerning investors. Additionally, analysts and experts in a variety of sectors covered offer their opinions on their respective markets. We offer access not only to equities, but to opportunities that may exist by adding precious metals to the portfolios of our global listening audience.