Electric Royalties (TSXV:ELEC) - Charges Up Portfolio with Clean Energy Metals

Company Interviews

English - March 09, 2024 12:19 - 16 minutes - 22.3 MB - ★★★★★ - 6 ratings
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Interview with Brendan Yurik, CEO of Electric Royalties Ltd.

Our previous interview: https://www.cruxinvestor.com/posts/electric-royalties-tsxvelec-acquisition-of-1-million-acre-lithium-portfolio-4446

Recording date: 5th March 2024

Electric Royalties is a unique royalty company offering investors a diversified way to gain exposure to the clean energy transition. With a focus on metals critical to the electrification megatrend like lithium, manganese, tin, zinc, and graphite, Electric Royalties aims to build a portfolio of royalties on high-quality deposits in top-tier mining jurisdictions.

The company already holds 22 royalties and is in the process of acquiring 22 more, which would double its portfolio to 44 royalties. The additional royalties are part of a broader package of hardrock lithium properties in Ontario that Electric Royalties is restructuring to reduce near-term cash outlay while preserving long-term optionality. CEO Brendan Yurik believes this region has significant potential. "We love hard rock lithium in eastern Canada and it was a great way to increase exposure."

In the near term, several of Electric Royalties' assets are close to reaching production and could begin generating cash flow. The Penouta Tin-Tantalum Mine in Spain and the Middle Tennessee Mine Zinc property in the US, which both temporarily suspended operations, are expected to resume production once permitting and pricing issues are resolved. The Authier Lithium project in Quebec is in the final permitting stage, while the Seymour Lake lithium project in Ontario is undergoing a definitive feasibility study.

Longer-term, Electric Royalties holds royalties on large, scalable assets like the Bissett Creek graphite project in Ontario, which has a mine life of over 70 years and could generate $5 million per year in royalties once production starts in 2025. The company also has royalties on the Battery Hill manganese project and Mont Sorcier vanadium project, both of which have the potential for decades of production.

To fund further growth, Electric Royalties has a $10 million convertible debt facility from its largest shareholder, of which only $4.5 million has been drawn so far. This gives the company ample dry powder to continue acquiring royalties opportunistically. Management is taking a disciplined approach, targeting assets at an inflection point in their development where a capital injection can help bring them into production and generate near-term cash flow for Electric Royalties.

The investment case for Electric Royalties is compelling. Demand for clean energy metals is projected to soar in the coming decades as the world electrifies and decarbonizes. However, supply is constrained and new projects face challenges ranging from funding to permitting to geopolitical risks. Electric Royalties offers a way to sidestep these challenges and gain exposure to a diversified basket of metals critical to the energy transition. If management can deliver on its growth objectives, the stock could have significant royalty potential.

View Electric Royalties' company profile: https://www.cruxinvestor.com/companies/electric-royalties