It’s been listed barely two months, but already the share price of Empress Royalty Corp (CVE:EMPR) has more than doubled.
To be sure, it’s a favourable market right now, and commodities prices have been strong, but it takes more than that to put such a significant gain on the board in such a short time.
Two additional and crucial factors are at play here: the assets, and the people involved.
Chief executive Alexandra Woodyer Sherron has a strong pedigree in mining.
She started out her career at PriceWaterhouseCoopers, and then moved over to Endeavour Financial as Director Structured Finance, where she helped the team fund and develop countless junior and not-so-junior mining companies during the mining boom of the 2000s.
The link with Endeavour Financial remains strong, and David Rhodes, the managing director of Endeavour is also the chairman of Empress. Accordingly, Endeavour is one source of the many deals that have come, and are likely to continue to come, Empress’ way.
But it’s not the only one.
The company has a solid relationship with Terra Capital out of Sydney, run by former RAB Capital man Jeremy Bond, who also sits on the board of Empress.
And for access to strong anticipated dealflow from Mexico, there’s a strategic relationship with Accendo Banco, driven by chairman Javier Reyes. This alliance provides the company with exclusive access to Mexican royalty and stream opportunities.
Between them, these three groups also speak for a significant portion of the company: Endeavour holds 15% of Empress, while Terra and Accendo each own 18%.
So the know-how’s in place, backed by hard cash.
Now it’s a question of building up the asset base.
Empress began its life as a listed entity late in December 2020, with 14 royalties already in the portfolio and C$7.5mln of cash in the bank.
That, as they say, is one way to hit the ground running - and it’s a combination that in large part accounts for the surge in the share price. Of course, it’s to be expected that a team of ex and current investment bankers would get a new listing away strong, but even so it’s nice to see it actually happen.
What’s particularly notable about Empress is its focus on the creation of royalties over their simple acquisition. Woodyer Sherron doesn’t rule out a straight acquisition altogether, if a compelling deal came along, but the primary goal of Empress is to put together new royalties on its own terms. This will allow the company to cut out third-party costs, as well as ensuring that assets inside the portfolio are almost exclusively bespoke.
The key now, is what happens next.
Of the fourteen royalties, thirteen are on precious metals ground in Canada, so although highly promising for the medium and longer-term are unlikely to be generating cash any time soon.
But Empress also has a 1% net smelter royalty on the advanced-stage Pinos gold and silver project in Mexico, operated by Candelaria Mining (CVE:CAND). Pinos has already been the subject of a preliminary economic assessment and, with new management recently installed at the top of Candelaria, is on its way to production.
Meanwhile, Woodyer Sherron is on the hunt for more further deals.
“The focus is on production,” she says.
Two significant deals are well advanced, one involving gold in Africa, the other silver in Mexico, and in total there’s currently around US$50mln worth of investments in the pipeline.
The money already in the bank provides a certain level of security, so all told this looks like a company that’s going places, and fast.
Woodyer Sherron’s already talking about paying a dividend in the medium term.
“Royalty companies have outperformed gold over the medium and long term,” she points out, and if the first few months of Empress Royalty’s short life are anything to go by, this company is not going to be the exception to that rule.