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Electric Royalties is putting a charge into helping finance the electric revolution

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  • Well diversified clean energy metals royalties portfolio
  • Robust market potential
  • Experience management team

What Electric Royalties does:

Electric Royalties Ltd (CVE:ELEC) is a royalty company established so investors can participate in the demand for commodities, such as lithium, vanadium, manganese, tin, graphite, cobalt, nickel and copper, which will benefit from the global drive toward electrification of a variety of consumer products, including cars, rechargeable batteries, large scale energy storage, and renewable energy generation.    

The Vancouver, British Columbia-based company currently has a portfolio of 12 royalties and plans to focus predominantly on acquiring royalties on advanced stage and operating projects to build a diversified portfolio located in jurisdictions with low geopolitical risk.

Electric Royalties’ portfolio includes:

  • 0.5% gross revenue royalty on the Authier Lithium project in Quebec. The project, which is operated by Australia-listed Sayona Lithium and includes a strategic investment and off-take agreement with Piedmont Lithium, could begin construction as early as 2021
  • 2% gross revenue royalty on the exploration claims surrounding the Authier Lithium project
  • 2% gross revenue royalty on the Bouvier and Chubb lithium projects in Quebec
  • 1% gross revenue royalty on the Mont Sorcier vanadium and iron ore property in Quebec, which is estimated to produce 5 million tonnes of concentrate annually grading 65% iron and 0.6% vanadium based on a Preliminary Economic Assessment (PEA)
  • 2% gross royalty on the Battery Hill manganese property in New Brunswick, which has an Inferred Mineral Resource of 44.8 million tonnes with an average grade of 9.85% manganese and 14.15% iron
  • 0.5% gross revenue royalty on the Millennium cobalt, Mt Dorothy cobalt, and Cobalt Ridge properties in Australia
  • 1% gross royalty, with an option to acquire an additional 0.5% gross revenue royalty within two years, on the feasibility-stage Bissett Creek graphite property in Ontario

Electric Royalties is led by CEO Brendan Yurik, who has previous experience as a research analyst as well as business development and mining financial advisory roles with companies such as Endeavour Financial and Northern Vertex Mining Corp.

Electric Royalties management and board of directors collectively own about 20% of the company’s outstanding shares.  

How is it doing:

In May, Electric Royalties said it had restructured its previously-announced letter of intent (LOI) with Sprott Resource Streaming and Royalty Corp with regards to the acquisition of the Middle Tennessee Mine (MTM) Royalty from Globex Mining Enterprises Inc (TSE:GMX) (OTCMKTS:GLBXF) (FRA:G1MN).

Under the revised terms, Sprott Streaming will acquire 75% of the MTM Royalty by paying C$13.5 million in cash with Electric Royalties retaining 25% of the MTM Royalty. The original agreement, announced in April, would have had Sprott Streaming pay C$9.15 million in cash in return for 50% of the MTM royalty with Electric Royalties retaining the remaining 50%. 

As a result of its revised agreement with Sprott Streaming, Electric Royalties will no longer need to complete a C$10 million minimum equity financing in order to close its deal with Globex, in which Electric Royalties will also acquire a 1% Gross Revenue Royalty on the Glassville Manganese Project in New Brunswick.   

The MTM Royalty is a sliding scale gross metals royalty, with no royalty payable if the zinc price is below US$0.90 per pound, 1.0% between US$0.90 and US$1.10 and 1.4% at zinc prices above US$1.10 per pound. The Mid Tennessee Zinc Mines have been in intermittent operation for over 50 years and have produced over 2.7 billion pounds of zinc.  

The company noted that the MTM royalty has generated royalties of about C$4.7 million since production re-started in 2Q 2017. 

Also in May, Electric Royalties outlined highlights from what it called an “incredible quarter of growth” for its asset portfolio, which included commodities titan Glencore PLC agreeing to support the development of Mont Sorcier iron and vanadium project in Quebec and a near 100% increase to the resource there.

At Mont Sorcier, Electric Royalties holds a 1% gross revenue royalty (GRR) on the vanadium.

The operator Vanadium One recently announced an updated resource estimate, showing the North Zone inferred resource increased from 376 million tonnes (Mt) to 809.1 Mt at 34.2% magnetite, an addition of 433 Mt, or a 115% increase.

In addition, Vanadium One and a subsidiary of Glencore struck an agreement, which will see the latter raise not less than US$10 million, either directly or indirectly, in project financing to support the completion of a bankable feasibility study (BFS) on the project. Such funding is to be secured no later than year-end 2021.

As well, Electric Royalties reported plans to complete a private placement of up to 25 million units of the company at a price of $0.40 each for proceeds of up to $10 million. The company said the proceeds will be used to fund royalty acquisitions as well as for general corporate working capital purposes.

Meanwhile in Februray, Electric Royalties announced an agreement to acquire a 1.5% Net Smelter Royalty (NSR) on the Seymour Lake lithium deposit in Ontario, a 16,654 hectare (ha) property containing lithium mineralization hosted in spodumene-bearing pegmatite sills with thicknesses of more than 26 metres.

The company said these near-surface pegmatite sills have been defined over a 5 kilometre (km) strike length and comprise multiple prospective targets, including North Aubry, Central Aubry, South Aubry and Pye.

It added that the proximity of the pegmatites to surface at the North Aubry prospect is considered to be a strategic advantage, potentially allowing easier access to high-quality mineralization in a future mining scenario, reducing the required pre-strip and resulting in a lower extraction cost and improved project economics.

In Seymour Lake, Electric Royalties sees similar potential to the Authier project in Quebec. The company said it will issue 3 million of its common shares to pay for the Seymour Lake NSR.

In July 2020, the company agreed to acquire a portfolio of three Australian cobalt property royalties from Global Energy Metals Corp (CVE:GEMC) in consideration for 1.15 million Electric Royalties shares and C$150,000 in cash.   

Inflection points:

  • Potential to acquire more producing/cash-flowing royalties  
  • Creating new royalties with exposure to electricity metals
  • Additional Merger & Acquisition opportunities

What the boss says:

Commenting on the company’s royalty portfolio, Electric Royalties CEO Brendan Yurik said in a recent statement: “The operators of our royalty assets have made significant progress over the past year and are moving their projects steadily onwards to production. The advancement of the projects increases the value of our royalties without requiring us to outlay additional capital and is one of the most overlooked benefits of the royalty business model.”

Yurik added: “I look forward to adding more royalties to our portfolio over the next few months and what 2021 will bring for our current portfolio.”

Contact Sean at [email protected]

Story by ProactiveInvestors


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