Silver Royalty Co. Lists Warrants on Cboe Canada

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Silver Crown Royalties Inc. (SCRI:CBOE; SLCRF:OTCQX) announced it has listed 1,104,668 of its common share purchase warrants for trading on Cboe Canada.

The company said 405,261 of the warrants are exercisable for one common share in the capital of the company at an exercise price of CA$8 until June 16, 2025, and are listed under the symbol "SCRI.WT.B."

An additional 699,407 of the warrants are exercisable at an exercise price of CA$16 until June 28, 2027, and are listed under the symbol "SCRI.WT.A."

"The listing of the warrants provides investors with another avenue to derive value from their securities," Chief Executive Officer Peter Bures said. "We believe Silver Crown is well-positioned to create and deliver significant long-term value to its securityholders."

The company also recently announced that its common shares are now trading on the OTCQX Market, the highest tier of OTC Markets, under the symbol "SLCRF."

"We are excited to share our story with a broader set of shareholders, which should enhance trading liquidity," Bures said of the move.

Couloir Capital also recently announced it had initiated research coverage on the company, which analyst Tim Wright noted in his report on August 29 is the only currently listed royalty company to focus on silver, "giving it a first-mover advantage."

"Listed in July 2024, the company already boasts cash flow generating silver royalties," Wright wrote. "It is likely to add new acquisitions in the near future, growing its cash flow base."

First-Mover Advantage

Couloir issued a Buy rating with a CA$31.20 per share fair value, implying a 285% upside from the time from the share price at the time of the report, which was about CA$8.10 per share.

"Based on the large opportunity set of silver royalties available and Silver Crown's first mover advantage, we believe the company is well-positioned to grow rapidly and become a household name in the silver royalty space," Wright wrote.

Wright noted the advantage of Silver Crown's strategy for expanding its royalty portfolio, in which it looks to make royalty deals tied to projects and operations where silver contributes to overall revenue but in a small way, typically less than 2%. As such, it has identified 2,200 operating mines and 33,000 exploration projects meeting this criterium.

"This is important because it allows operators to derive value for a byproduct or co-product of an asset without having a hefty royalty or streaming agreement reducing the profits from the main economic driver of a mine," the analyst added.

When negotiating royalty deals, Silver Crown aims for a mutually beneficial arrangement, noted Wright. It ensures all royalties are registered on title, a minimum delivery obligation is tied to funding, and investments are divided into tranches that are contingent on milestones being achieved.

Silver Crown is the only publicly listed royalty company focused on silver, differentiating it in the royalty space. Wright cited three benefits to being the first.

One, as Silver Crown develops a track record and reputation in the industry, it will become a well-known name in the mining sector and a credible funding source for mining operations. This, in turn, will lead to more potential royalty opportunities from which to choose.

Two, as Silver Crown builds its portfolio of cash flow-returning investments, its access to capital will improve. Three, as Silver Crown grows, it will become an increasingly popular investment for those seeking exposure to silver.

Market 'Extraordinarily Well-Supported'

After the Federal Reserve made its first interest-rate cut in four years, expectations of additional future cuts have boosted silver and other precious metals. On Thursday, silver hit its highest level since 2012, Bloomberg reported, climbed as high as US$32.71 an ounce, extending this year's gains to 37%.

"Silver is one of the year's best-performing major commodities as the Fed's pivot toward easier monetary policy last week, and the prospect of further rate cuts, benefit the non-yielding metals," authors Mark Burton and William Clowes wrote. "Gains have been supported by the possibility of increased industrial use as China moves to boost its economy, while flows into silver-backed exchange-traded funds have shown signs of picking up."

Christopher Lewis of FX Empire wrote on Friday that silver is strong but stretched.

"Note that the Thursday candlestick, of course, was a major shooting star, and it does suggest that it is going to be difficult to continue going higher," he wrote. "However, this is also a market that is extraordinarily well-supported, so it’s very difficult to start shorting it."

Silver is the most conductive element in nature, and coats electrical contacts in computers, phones, cars, and appliances. It's also an important element in solar technology.

Mordor Intelligence noted that the white metal is expected to register a compound annual growth rate (CAGR) of more than 5% between 2024 and 2029.

"Silver is viewed as the relatively cheap sibling to gold, and as gold continues to reach fresh record highs and copper hits a 2 ½-month high, traders took it through resistance at US$32.50," said Ole Hansen, head of commodities strategy at Saxo Bank A/S, Bloomberg reported.

Ownership and Share Structure

Insiders and management hold a total of 21% of the company, institutions own 16%, and private corporations have 6%, noted Wright with Couloir.

"Insider ownership by management aligns management's interests with those of shareholders, which is a desirable attribute," he added.

Regarding share structure, the royalty company has 2.35 million outstanding shares and a market cap of CA$17.78 million.