EMX Royalty's Eric Jensen on the Recent Developments from the Royalty Generator

Trevor Hall [00:00:04] This is Trevor Hall reporting from the Association for Mineral Exploration Round Up Conference 2020. Joined by my good friend and as far as geologists go, he is the goat in my mind. Greatest of all time. Mr. Erik Jensen, a EMX royalty. Erik, good to see you, buddy.

Eric Jensen [00:00:20] Thanks, Trevor. Thanks for having me.

Trevor Hall [00:00:21] It's really the timing of this interview. We've had this thing on this calendar, just happens to be the same day where he and Max is realizing the share price.

Eric Jensen [00:00:31] Yeah. We had a nice, nice run in the market lately. And I think we're starting to see the market recognition and support that we've been waiting for for some time. I think internally we've been watching this. The value we've created inside this portfolio, we're kind of wondering when the market was going to start recognizing this. And I think we're starting to see it now, which is great. It's a nice reward.

Trevor Hall [00:00:47] You spend a lot of 2019 just hammering home the the the potential cash flow that could be coming down the next three years from now, you know. There's a hundred twenty different projects in the portfolio, if not more, but three specific projects by 2021, things really could be moving very well.

Eric Jensen [00:01:05] Yeah. That includes both organic and inorganically created assets for the company and our cash flow in the coming years is going to be superb. So we're really excited about that.

Trevor Hall [00:01:15] So what are the things I mean, you're rarely home, you're always traveling out doing something, what's been on your list of things where you've been at these days?

Eric Jensen [00:01:22] Yeah, I spend a lot of my time in northern Europe. We have a substantial presence. There were the largest mineral rights holder in Norway. Second largest in Sweden, if you put all of our subsidiary companies together and partnerships. And so collectively, yeah, we have quite a presence in northern Europe. We love working there. Great fiscal regimes, great regulatory frameworks, great access. Infrastructure is wonderful. And yeah, we have a lot of projects there and these things are pretty diversified. They include a lot of gold exposure, polymetallic square nickel-sulfides up there. We have quite a quite a number of our nickel assets in our portfolio, which are starting to gain a lot of attention from the market in general. So lots to do.

Trevor Hall [00:01:59] The leave the Leeville royalty, as has been well paying the bills every month, which has been good. But there seems to be a lot more exploration potential Newmont has shared the last few months.

Eric Jensen [00:02:09] Oh, gosh yeah, with the merge with Barrick, you know, they've come out with some of their promotional materials for Nevada gold mines. And they include some interesting, suggestions to what's possible in our royalty footprint. So, yeah, we're the future years that, you know we bought that royalty and it had a declining profile and we knew that because of the way that they were gonna schedule their assets. But if you look at some of the recent disclosures by that group now with them with the merger of the J.V. and Nevada, yeah, they've made some clear statements about the potential of our ground showing new resources and our royalty footprint and their development plans for that. So for future years, in future decades, that's gonna be an outstanding asset for our company.

Trevor Hall [00:02:47] And a lot of these projects that you have royalty interest in and two of them had potential to be expedited into production.

Eric Jensen [00:02:55] Oh, yeah.

Trevor Hall [00:02:55] I say that because the team up with Magmatic Complex, obviously we saw a vision come out and in and purchase Freeport's position in the lower zone.

Eric Jensen [00:03:05] Yep.

Trevor Hall [00:03:05] Which all eyes, assuming that decision is just really going to fast track that thing as quickly as possible because that's what we do. But also with the Bollea project in Turkey.

Eric Jensen [00:03:15] Oh yeah.

Trevor Hall [00:03:15] That, you know, that royalty property got sold to another company that has the mill.

Eric Jensen [00:03:20] That's it. That was a big deal. That's something we've been waiting for a number of years for that transaction to take place. We had we have a very capable partner, Dedamon, in mining there, which is one of the was historically was one of the big chromite producers globally. And the operator Biscuit Pallet Scale operation in the lead-zinc-silver deposit we have in the Bollea district. But the key to that district is right next door to us, based at the edge of the resource boundary. You had the Esson Corporation, which had built a substantial mining complex for lead-zinc-silver, including a five thousand ton per day mill width capacity. So it was inevitable in an obvious synergistic play for those two to combine their interests. Dedamon sold the asset to Esson and we worked hard right through the Christmas holidays right up to December thirty first we had a deadline to beat to try to get a restated royalty agreement with Esson. We got it done, executed that at the end of the year last year and announced that. And so that press release came out early January, probably at a time in the market, wasn't paying a great deal of attention. But that's a big that was a big step for EMX because the Esson mill will capture the capacity for production from our side of the property boundary. We've got a nice resource sitting over there ready to go into production. A Dedamon was a private company so they never published a lot of data about this. Esson is a private company as well. But we're really excited about the fast track possibility to see production and royalty income, enhanced royalty, income streams from our volume in future years. And that's like a year or two out. They're going to do some definition drilling and then we expect that to ramp up production in a significant way on our side.

Trevor Hall [00:04:47] There was another news release that came out before Christmas that I don't know if the markets didn't quite understand the significance or timing. That was prior to the holiday hangover. But that was at the Rawhide, and I know you don't do a whole lot of stuff in the lower 48. You focus outside of that. But the more I'd a chatted with Dave and Scott about Rawhide. I mean, that has significant potential for you.

Eric Jensen [00:05:16] Yeah. I just got back from there, took a, I went out there to have a look at the asset and sit in and some meetings in terms of how they're operating in that area. This is an operating gold mine. We own a significant percentage of it, and we really like their production profile, what they're doing. They've got a very good technical team with another partnership that was announced with another group from Chile with a lot of mining experience. And so they've got a very capable operations team there, which is something I hadn't appreciated until I sat down the room with those guys. A great plan. And yeah, we're really excited about that. That's going to be a nice asset for EMX. It's not a royalty. it's a participating interest in that operation. But now they're in production.

Trevor Hall [00:05:51] So how does that move into cash flow for EMX?

Eric Jensen [00:05:54] Immediate.

Trevor Hall [00:05:54] Immediate?

Eric Jensen [00:05:56] Because they're in production, they're out there pouring dore in. There are, these guys will be ready to do, there are some really nice projections that will come from that property.

Trevor Hall [00:06:04] So could we see the bank account increase off of this pretty soon?

Eric Jensen [00:06:08] We hope. Yeah. Hopefully so. Yeah.

Trevor Hall [00:06:10] Cause you're still sitting on board about 80 million in the bank right now.

Eric Jensen [00:06:13] In Canadian. Yeah. So we've had the windfall from Amish of course. And we've been waiting to, we've been looking at a lot of possibilities for how to deploy portions of that capital and make very strategic and wise and measured investments. But one thing, we're not in a rush. We don't do anything foolish. You want to take our time, study the various opportunities, and they're plentiful right now. We see a lot of opportunities presented to us being in this position, but we're gonna be very selective and that affords us the luxury of making really good decisions. All of us in the company and the management team have significant ownership of the EMX shares ourselves. So we want to see this done correctly.

Trevor Hall [00:06:48]  But what, 680,000 shares in the last year or something like that?

Eric Jensen [00:06:53] Dave's been very aggressive. And I know that all of us have been accumulators for years now because we've seen, you know, we've had the advantage of seeing what we know, what the work we're doing inside the company. We've seen the portfolio grow from 30 companies a decade, 30 projects a decade ago to 120 now, but a substantial increase in the value and quality of individual assets in that average as well. So this company has been on a growth trend for a number of years. We've been watching that internally and we know we have a good sense of what the value is and the market's starting to see that now.

Trevor Hall [00:07:23] You could see the market kind of getting that sense in late fall and things started moving, right?

Eric Jensen [00:07:28] Yeah.

Trevor Hall [00:07:29] Like I said, it's just kind of interesting, you and I are chatting the day EMX makes an all-time high.

Eric Jensen [00:07:35] Yeah, we pretty excited about that. So yeah, it's yeah. Hopefully we've done the work to continue this trend and all of us are now starting to say, yeah, finally was getting the recognition that we felt that we deserved and that's gonna continue. We have a lot of good things happen. The company, a lot of good people working hard burning midnight oil right now to make this theme even better.

Trevor Hall [00:07:52] And I have to ask, because it's been brought up in conversation. You mentioned in presentations, but there has been discussion about a dividend.

Eric Jensen [00:08:00] Yes, that's right.

Trevor Hall [00:08:01] And part of the reason is you have a lot of you have a good set of cash in the bank. And how do you redistribute that to shareholders for their participation? Is a dividend something? Is it just a conversation right now?

Eric Jensen [00:08:15] Yeah. It is.

Trevor Hall [00:08:16] OK.

Eric Jensen [00:08:16] Well, it's a conversation starter. But, you know, this is a clear focus of our management group in the next year or two. Yeah. We want to be paying a regular dividend to our shareholders. And so we, you know, we can look at people suggested with the Treasury that we have in some of their windfalls that we've seen through time to our strategic investments. We could see ad hoc individual distributions, but that's not really what we're what how we as a shareholder in the company, I want to see us deploy that money to build this regular cash flow stream that we're on the path to enjoy. And once we see that we have a couple assets, like you said, to mark the CapEx deposit is a gene mining, is putting in their, accelerating their development of that project and putting in shafts. Now, in addition to the declines that are going in there, I was in Serbia last fall. There's certainly a buzz that's taking place in that area and they expect that to have that in production in 2021, 2022.

Trevor Hall [00:09:05] Yeah.

Eric Jensen [00:09:05] And so you have the cash flow streams and that Bollea, the Rawhide investment we made in Nevada. Of course, the Leavo complex in Nevada. We're really well-positioned right now. And when those cash flow streams reach a certain level, of course, your regular dividend from the company is the expectation that all of us have internally and certainly a lot of our shareholders to that will come to fruition.

Trevor Hall [00:09:24] EMX has always muddied the waters between the prospect generator model and the royalty model. Obviously, the royalty generators, the tagline of the company, I mean, is, it feels it almost feels like the company is on the verge of not necessarily dropping the prospect generator because organically that's been.

Eric Jensen [00:09:44] Yeah. It's been a bread and butter.

Trevor Hall [00:09:45] It's been the bread and butter. But you know, in near term two or three years, I mean, it's almost going to be a bank royalty company.

Eric Jensen [00:09:53] Yeah. And that's what, you know, right now in the royalty space, if you're out there bidding for acquisitions, if you're buying up, paying royalties, especially on Tier 1 assets. That's very competitive. What we're really good at is we have all this technical talent. We can generate projects very effectively. We've got a good reputation in the industry for developing quality projects. We attract good partners. And so that combination of things allows us to organically build royalties in a way that no other company can do. Not the global scale. And a huge advantage we have is everyone's aware, it takes time for these things to come to fruition. So a project like Bollea, which will be will be accelerated to production now into enhanced production, I should say it's been in pilot-scale production. But, you know, that takes some time. So it takes time for the drill out, the discovery, the conversion to a production facility, building of a mill, all those sort of things. That takes a while. And so the advantage EMX has is we've been doing this for 10 or 15 years now. Products like Bollea, are coming to the production stage. So that pyramid that we always show in terms of project advancement. When you start, you know, two, three years ago, you only have the bottom level, that pyramid. We have the entire thing. So this has become a conveyor belt of value delivery from our assets. And it takes a decade to build that. So we've been doing this long enough now where our shareholders see the benefit of things that we've been working on a decade ago, which is the timeline you need to be successful at this. And so other companies that startup and want to do this business model, we look at that and say, well, they've got a ways to go before a lot of the seeds that they're planning are to come into it, are going to germinate and form foliage and product. Ours are already there.

Trevor Hall [00:11:23] And, you know, I will say, you know, I am a shareholder of the company and I do do some consulting work with EMX and it's just been just an incredible year and it's just been really fascinating to see all this come into fruition. I remember five years ago and you guys were treated like 20 cents.

Eric Jensen [00:11:41] We had tons of 30s at one point, which was pretty amazing. A lot of us were, I bought a lot of shares at that point.

Trevor Hall [00:11:46] Yes. Are you buying now?

Eric Jensen [00:11:48] Right now, my last purchase was in December.

Trevor Hall [00:11:51] Eric, thanks so much for your time. It's good to see you and be well the next couple of days and we'll see you back in Denver.

Eric Jensen [00:11:58] Great Trevor. Thanks a lot. Yeah. Thanks a lot. The interview today. Cheers.