EMX Royalty Corporation isn’t your typical junior mining company. For over two decades, this company has strategically built a portfolio of royalties, prospect generation, and strategic investments across the globe.

Timok alone brings in over $1.5 million a quarter on a royalty that cost us $200,000 to acquire.

David Cole, CEO EMX Royalty Corp (TSX-V: EMX)

“We’ve had a lot of fun since we founded this company 21 years ago, but make no mistake—we’re dead serious about our mission,” Cole says with a grin, referencing the company’s 20% compounded annual return on its strategic investments over the years.

This interview covers critical elements of EMX’s operations, offering a clear and detailed look into the company’s financials, its challenges, and the opportunities that keep Cole and his team bullish on the future.

Financial Snapshot: Managing Debt and Generating Cash Flow

In 2021, EMX took out a $44 million loan from Sprott, carrying a 7% interest rate. As of the most recent quarter, the company’s current liabilities include a $33 million repayment, due in three and a half months. What’s notable is that despite this looming debt, EMX recently drew down a new $35 million loan from Franco-Nevada, a move that essentially replaces Sprott’s debt.

This Franco-Nevada loan, while more expensive than the Sprott facility, allows EMX to extend its repayment timeline. Cole notes, “We replaced a short-term note with a five-year note, and having Franco as both a shareholder and a partner is a significant advantage.” 

Interestingly, Cole points out that the Sprott loan, while fixed at 7%, became more favorable over time as bond markets deteriorated. However, the upfront fees on the Sprott loan made the overall cost higher than the new Franco loan despite the variable rate tied to SOFR. 

“It’s always about managing the balance between risk and opportunity,” Cole adds, clearly seeing the deal as part of a long-term strategy to ensure EMX remains flexible while maintaining cash flow.

The Current State of Revenue and Cash Flow

EMX is not yet profitable in the traditional sense. In the most recent quarter, the company generated $6 million in revenue, up from the previous year, yet still fell short of covering $6.8 million in expenses. General and administrative costs (G&A) represented 25% of the company’s outlay, with a monthly G&A burn of around $565,000. Despite these figures, the company managed to generate positive cash flow—around $744,000—thanks to its careful management of capital and cost.

“If we weren’t booking non-cash expenses like share-based payments, we’d actually be profitable,” Cole says. It’s clear the CEO views profitability in terms of cash flow rather than net income.

The majority of EMX’s revenue comes from royalties, particularly from three flagship assets: the Balya mine in Turkey, the Timok copper-gold mine in Serbia, and the Leeville gold mine in Nevada. These three assets alone accounted for over 90% of the company’s royalty revenue in the last quarter.

“Timok alone brings in over $1.5 million a quarter on a royalty that cost us $200,000 to acquire,” Cole mentions proudly. This kind of strategic acquisition exemplifies EMX’s focus on high-quality royalty deals with significant long-term upside.

Building Trust and Handling Market Discontent

Despite the company’s strong operational performance, EMX’s stock price remains well below its 52-week high, leading to questions about how the company plans to close the gap between market perception and intrinsic value.

“We’ve outperformed the S&P 500 with a 14% compounded annual growth rate since our IPO,” Cole points out, acknowledging that while the broader junior mining sector has struggled, EMX has remained relatively strong.

One potential lever for boosting the stock price is through share buybacks, something Cole emphasizes. “If we’re trading at a fraction of our net asset value, buying back shares is the best allocation of capital,” he explains. Cole also hints at the possibility of incremental purchases of royalties using the company’s positive cash flow.

However, paying a dividend is not on the horizon. “We’d rather buy back shares than distribute dividends, especially given the tax inefficiencies for our European shareholders,” Cole says, dismissing the idea of returning cash to shareholders in this way anytime soon.

The Cyber Incident: $2.3 Million Lost

One of the more startling revelations in the interview was EMX’s loss of $2.3 million due to a cyber event. While Cole was tight-lipped on the details, citing an ongoing criminal investigation, he assured shareholders that the company is taking measures to prevent future incidents. 

“It was an embarrassing loss, and we’ll make damn sure it doesn’t happen again,” he states. The incident has already affected the company’s key performance indicators (KPIs), which will, in turn, impact management’s bonuses in the upcoming year.

The Long-Term Vision: Compounded Annual Growth

Looking ahead, Cole’s focus remains on long-term value creation. “My primary concern is the compounded annual growth rate of our share price. That’s what success looks like to me,” he says. He compares EMX’s potential trajectory to that of Franco-Nevada, targeting a 17-18% long-term annual growth rate, similar to what Franco achieved both before and after its acquisition by Newmont.

When asked if EMX might eventually be acquired, especially given its close relationship with Franco-Nevada, Cole dismisses the idea for now. “We have no plans to sell to anyone unless they offer us far more than we think the company is worth,” he says, adding that the focus remains on building long-term value for shareholders.

Conclusion: A Contrarian Approach in a Cyclical Industry

Throughout the interview, Cole’s strategy becomes clear: EMX is focused on long-term growth through smart acquisitions, disciplined capital management, and a contrarian approach to commodity cycles. 

“When a commodity is out of favor, that’s when we like to buy mineral rights,” he says. It’s a philosophy that has served the company well over the years, and one that positions it to weather market fluctuations while continuing to build value.

For investors looking for exposure to royalty assets with significant upside potential, EMX remains a compelling story. As Cole puts it, “We’re not here to follow trends—we’re here to create lasting value.”

EMX Royalty CEO Interview

This is a very brief summary of what was a lengthy interview. Don’t rely on this summary. Watch the full interview which is linked above.

Please note that this guest has not paid for the creation of this content. The Resource Talks interview rules are simple.
The companies, albeit paying or non-paying, get no questions upfront, no questions off the table, and no editing rights.

The information provided herein is general & impersonal in nature and meant for entertainment purposes only. The reader acknowledges and agrees that the information does not constitute a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy. The author is not a licensed investment advisor. He is just another talking head on the internet. He might own shares of companies mentioned in this publication. Always assume he doesn’t know much more than a potato does. The mining & exploration space is among the riskiest sectors to invest in. The risk of anything mentioned in this publication is 100% loss of capital. If you don’t read the official documents provided by the company on http://www.SedarPlus.ca, you will lose all of your money.