New Type of Royalty Company, But Can They Really Scale the Model? | Nations Royalty CEO Interview

Antonio (0:00)

This video is sponsored by Terrahutton, who makes the invisible, investible. Today in the CEO BBQ, a different view on the royalty sector, this time specifically from the First Nations perspective, together with Nations Royalty. But if you're short on time, subscribe to our free newsletter, and once a week, we'll send you a five-minute summary of all interviews we put out, resourcetalks.com for a free weekly newsletter. Now, although this company has not paid us for the production of this video, you should still understand that we are not financial advisors, and this is not intended as financial advice. It is a broad, general, and impersonal piece of information intended only for those who know and understand the risks of junior mining, of which there are many. Before moving on, read the company's official filings on Sitterplus.ca and do your own due diligence. Pause the screen and read all the disclaimers I've shown you because your capital is at risk. If this isn't clear, go to the last section of this video for a longer explanation of the risks and biases and do not consume this content if you don't agree with everything said therein. Moving on, Nations Royalty is a royalty company built around something that has largely set outside of the public market so far, and that's mining royalties and benefit payments. That's an important part that we'll talk about, but this is specifically owned by First Nations. Typically that's something that's typically not accessible to the public markets. The company has created around five payment interests that are contributed by the Nisga Nation, and they're right away now also the controlling shareholder, and the broader strategy is to bring other indigenous groups into the company as well by exchanging qualifying mining royalty interests for equity in Nations Royalty. As far as I understand, and I'm trying to translate this whole thing to practical terms, the idea that got this thing started in the first place was to pull a collection of individually held indigenous mining payments and royalties into one vehicle, specifically a publicly traded vehicle, which obviously gives the contributing nations liquidity as well as diversification, while it also gives the public access to assets that they normally couldn't buy on the open market. They've got multiple assets, which of course we'll touch upon or we'll ask some more in-depth questions about later on. But four of the five founding interests are actually not your typical royalties. They're mineral tax linked annual payments rather than your NSRs, for example. Their cash flow depends on the underlying mine's taxable economics, not simply the gross revenue. Again, more clarity on that hopefully later on. The exception, so one of the five, Kitsault, that's a more traditional NSR structure. The foundation mineral tax, so it's not royalty against the mineral tax, is the Brucejack mine, so it's Newmont's high-grade underground gold and silver mine, that's in BC, in the Golden Triangle.

This is the asset that's paying the bills right now, and Nations Royalty reported $2.2 million of royalty revenue in the June quarter, with $1.16 million of cash subsequently received relating to the 2025 calendar year. Something that's not paying but is expected to be part of the growth story or a big part of the growth story here is KSM, which is owned by Seabridge Gold, also an asset in BC, also in the Golden Triangle. KSM is actually one of the largest underdeveloped copper gold projects in the entire world. There's 47.3 million ounces of gold. That's not a typo.

I've talked about that, or I've talked to other people about that as well, but it's pretty big. Also 7.3 billion pounds of copper, improved and improbable reserves, which as you can imagine, at that scale, it's a lot, but it also means it's a multi-billion dollar construction project and Seabridge is still working toward bringing in a major mining partner capable of financing and operating that.

There's a couple of other things going on as well that hopefully we can touch upon later on. Then there are Premier and Red Mountain. They're both controlled by Cambry Gold Mines and effectively being developed as one operating system. If you want to know more about that company, we're not going to go super into depth on it here. I did interview Rob, the CEO of that company, about three or so months ago, but the nutshell here is that Cambry's current plan is to be ready to restart by 2028, subject to a bunch of things like the road and mine development, updated feasibility work, mill modification, stuff like that that we'll touch upon as well.

With all of those assets that I mentioned so far, there's no actual royalty. Again, I'll repeat that. It's a mine tax credit, the size of which is sometimes undisclosed, but maybe I can try to better understand that later on in the conversation as well. Then lastly, there's what is an NSR, so an actual royalty. It's a 2% sliding scale royalty is Kitsault, which is a large brownfield molybdenum project that's owned by New Mali. They have a large historical reserve on it. There's existing permits there. There's a lot of past work that's been done, but compared with the other assets, there's much less current public detail around updated economics, stuff like financing and construction timing and so on. I'll definitely be asking some questions about Kitsault later on as well. As well as of course, how do you take that whole, the initial NISQA portfolio and turn the First Nations Royalty Consolidation Model into a repeatable business model rather than a one-off transaction? That will be a big part of the conversation as well. For some of the numbers and more details, Nations is listed as NRC on the TSX Venture Exchange in Canada, where the average daily volume over the last three months has been about 65,000 units. The 52-week high is $1.98 and the 52-week low is $0.66.