News

Coverage Initiated on ‘A Different Kind of Royalty Company with Upside Potential’

July 12, 2021 (Investorideas.com Newswire) The factors making Empress Royalty an attractive investment are delineated in a Research Capital Corp. report.

image

In a July 5 research note, analyst Adam Schatzker reported that Research Capital Corp. initiated coverage on Empress Royalty Corp. (EMPR:TSX; EMPYF:OTCQB) with a Buy rating and a CA$0.70 per share target price. This compares to the current share price of about CA$0.37.

Schatzker presented the investment thesis for Empress Royalty, highlighting the company’s business model, its potential for high returns and its imminent turning point.

Empress’ strategy is to acquire small, often overlooked royalties and streams by leveraging existing partnerships, Schatzker indicated. Current partners are Terra Capital, in Australia; Accendo Banco, in Mexico; and Endeavour Financial, operating globally.

Since it debuted in March 2020, Empress has acquired two precious metals royalties (Pinos and Manica) and is in the process of adding a silver stream (Tahuehueto) to its portfolio.

Empress “has proven that its business model is achievable and differentiated from its peers such that it will try to avoid participating in the highly competitive segment of the royalty/streaming industry where investment returns are often very low,” Schatzker wrote.

He described Empress’ royalties.

Pinos is a 1% net smelter return (NSR) royalty on future gold and silver production from Candelaria Mining’s Pinos project, of which Accendo Banco owns 9%. Pinos, located in Mexico, is expected to produce at least 13,000 ounces (13 Koz) per year on average for seven years, and the project offers upside. According to Research Capital, the Pinos royalty has a CA$1.6 million (CA$1.6M) net present value discounted at 5% (NPV5%) and a 1% internal rate of return (IRR). Empress paid US$1.5M for this royalty.

Manica is a 2.25% NSR royalty on the Manica gold project in Mozambique expected to produce 30 Koz per year for seven years. It, too, offers regional upside potential. The Manica royalty has a CA$5.8M NPV5% and a 35% IRR, as calculated by Research Capital. Empress paid US$2M for this royalty.

Tahuehueto is a silver stream delivering 100% of the payable silver in concentrates up to 1.25 million ounces (1.25 Moz) then 20% afterward from the Tahuehueto project in Mexico. Annual production is a projected 360 Koz on average. Of the US$5M purchase price, Empress has paid CA$2M. Research Capital estimates the Tahuehueto stream has a CA$27.9M NPV5% and a 105% IRR.

“Each of the royalty purchases has been relatively small … but the expected rates of return (as per [Empress] and our estimates) are generally quite high (with the exception of one where the exploration potential is expected to provide incremental value over the long-term),” Schatzker wrote.

Schatzker noted that Empress should begin garnering cash flow in the near term, as all three of its royalty assets are slated to start production between Q3/21 and mid-year 2022. Manica is expected to be the first to go online, in Q3/21, followed by Tahuehueto in Q4/21 or Q1/22 and then Pinos in Q1/22 or Q2/22.

For Empress in 2021, Research Capital forecasts revenue of CA$389,000 and an EBITDA of -CA$2.4M, and for 2022, CA$6.6M and CA$3.8M, respectively.

“We believe 2021 and 2022 will be important years for” Empress, Schatzker wrote.

Disclosure:

1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Empress Royalty. Click here for important disclosures about sponsor fees.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from Research Capital Corp., Empress Royalty Corp., Initiating Coverage, July 5, 2021

RELEVANT DISCLOSURES APPLICABLE TO COMPANIES UNDER COVERAGE

1. Relevant disclosures required under Rule 3400 applicable to companies under coverage discussed in this research report are available on our web site at www.researchcapital.ca.

2. This Issuer has generated investment banking revenue for Research Capital Corp.

ANALYST CERTIFICATION

I, Adam Schatzker, certify the views expressed in this report were formed by my review of relevant company data and industry
investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report.

Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.

Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein.

More Info:

Investorideas.com Newswire

This news is published on the Investorideas.com Newswire – a global digital news source for investors and business leaders

Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investing involves risk and possible losses. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. Contact management and IR of each company directly regarding specific questions.

More disclaimer info: https://www.investorideas.com/About/Disclaimer.asp Learn more about publishing your news release and our other news services on the Investorideas.com newswire https://www.investorideas.com/News-Upload/ and tickertagstocknews.com

Global investors must adhere to regulations of each country. Please read Investorideas.com privacy policy: https://www.investorideas.com/About/Private_Policy.asp

Gold Mining Stocks - Gold Mining Stocks Directory, Gold Stocks News, Research and Resources

Gold-MiningStocks.com – investing ideas in gold and mining stocks

Like Gold Stocks? View our Gold / Mining Stocks Directory

What's your reaction?

Excited
0
Happy
0
In Love
0
Not Sure
0
Silly
0

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in:News