Co. Provides Update on Its Silver Royalties

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Silver Crown Royalties Inc. (SCRI:CBOE; SLCRF:OTCQX; QS0:FSE) provided updates on several of its royalty deals in a news release.

"Based on minimum silver payment obligations, [Silver Crown] anticipates receipt of cash payments on 15,180 ounces of silver for 2024 and 36,063 ounces of silver in 2025 on its royalty portfolio," the Canadian silver royalty company noted in the release.

Royalty with PPX Mining Corp.

Most recently, in mid-December 2024, Silver Crown signed a definitive royalty agreement for up to 15% of the cash equivalent of silver produced from PPX Mining Corp.'s Igor 4 project in Peru for US$2.5 million (US$2.5M) in cash. PPX Mining Corp. (PPX:TSXV; PPX:BVL) intends to use the proceeds, with financing from other sources, to finish construction tied to the beneficiation plan.

PPX is to pay the first tranche, US$1M, on closing, expected in early 2025, and the second and final tranche, US$1.5M, within six months of closing. Based on the 250 ton per day carbon-in-leach and flotation plant, under construction, PPX will pay Silver Crown the cash equivalent of 14,062.5 ounces of silver per quarter until it reaches 225,000 ounces (225 Koz). Once it does and the second tranche has closed, the royalty will end automatically.

"We have great faith in the company as skilled operators and are happy to support them in achieving their production milestones," Silver Crown Chief Executive Officer Peter Bures said in the release.

Royalty with BacTech Environmental Corp.

Silver Crown closed its first all-equity royalty purchase in early Q4/24, reported Streetwise. This was on BacTech Environmental Corp.'s (BAC:CSE; BCCEF:OTC; OBT1:FSE) future bioleaching facility in Tenguel, Ecuador. At closing, Silver Crown issued US$1M of units of the company at US$10 apiece. Silver Crown has another US$3M in common shares at US$10 each to pay.

Once all payments are made, BacTech is to deliver to Silver Crown either 90% of silver produced or 35 Koz ounces per year, whichever is higher, for at least 10 years.

"The royalty has the potential to more than double our current revenues at less than 25% dilution," according to Bures.

Bactech anticipates first production within the next two years and continues progressing toward this goal. Full-scale testing of the pilot plant in Sudbury, Ontario, commissioned with MIRARCO Mining Innovation, is to start soon. BacTech continues to search for historic mine tailings in northern Peru to potentially supply feed for the Ecuador project or to establish a base for a new plant near Trujillo in northern Peru.

Royalty with Gold Mountain Mining Corp. 

Gold Mountain Mining Corp. (GMTN:TSX) paid Silver Crown the minimum US$124,299 in cash royalty payment in Q3/24, taking the total paid so far to US$216,296. However, in 2024, Gold Mountain's financial problems hindered progress and production at its Elk gold mine in British Columbia. Since and to improve its financial status, the company implemented several financial restructuring initiatives, including issuing more common shares, converting secured debt, and raising additional capital.

The company launched winter work in late November 2024 and plans to return to normal operations by late February. Phase one of infill drilling of the east bench is now done. Gold Mountain is mining the 1300 series vein system at surface in the east face of Pit 1. By the end of this month, construction is slated to start of a new crushing and ore sorting system, the latter expected to greatly improve grades.

"We continue to be encouraged with progress at GMTN," Bures said in the release.

Royalty with Pilar Gold Inc.

Pilar defaulted on its minimum Q3/24 payment of US$81,536.41 to Silver Crown and delayed the restart of commercial production at the PDGM mine in Goias, Brazil, to Q1/25 from Q3/24. Silver Crown will work with Pilar to resolve the continuing default and will update the market accordingly.

"Although we are disappointed by the nonpayment of the PDGM royalty, we note the minimal impact (approximately US$14,000) to Silver Crown's revenues to date as we have set up internal protection against such an eventuality," said Bures.

In a League of Its Own

Founded by industry veterans and headquartered in Toronto, Ontario, Canada, Silver Crown Royalties offers investors exposure to precious metals. Its business model allows for a natural hedge against currency devaluation and seeks to lessen economic effects, such as inflation, on mining projects, all while maximizing shareholder returns, according to its Q1/25 Corporate Presentation.

Silver Crown differentiates itself in the royalty space by being the only publicly listed royalty company focused on silver, wrote Couloir Capital Analyst Tim Wright in his August 2024 initiation report. He rated the company Buy and assigned it a fair value that implies a 356% uplift from the current share price.

Silver Crown being a first mover affords it advantages, Wright pointed out. As the company 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 a greater pool of potential royalty opportunities from which to choose. As Silver Crown builds its portfolio of cash flow-returning investments, its access to capital will improve. As Silver Crown grows, it will become an increasingly popular investment for those wanting exposure to silver.

The company landed its first royalty deal in May 2023, added three more royalties to its portfolio since and has a clear strategy for further expansion. The company seeks out royalty transactions tied to projects and operations where silver contributes in a small way, usually less than 2%, to overall revenue. This lets project operators derive value from their asset's byproduct or co-product without significantly reducing profits from their main cash generator. So far, Silver Crown has identified about 2,200 operating mines and 33,000 exploration projects that meet its criteria.

The analyst pointed out that when Silver Crown negotiates royalty deals, its goal is a mutually beneficial arrangement. For instance, the company ensures all royalties are registered on title, ensures a minimum delivery obligation is tied to funding and ensures investments are divided into tranches and contingent on milestone achievement.

"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. "Silver Crown is likely to start generating significant cash flows in the coming years and having free cash flow available for reinvestment."

The analyst also highlighted Silver Crown's management team members, commenting that they have "the relevant industry experience to drive the company's growth and success." Bures, at the helm, is a geological and mineral engineer with 25-plus years of experience in mining and metals capital markets and past executive roles at C2C Gold, Star Royalties, and BMO Capital Markets.

Zac Kotowych, Silver Crown's vice president of corporate development, also has years of experience in the same capital markets. He has worked in equity research at Haywood Securities and Red Cloud Securities and in geological exploration at Solstice Gold, Great Bear Resources Ltd. (GBR:TSX.V; GTBDF:OTCQX), and Carlisle Goldfields Ltd. (CGJ:TSX; CGJCF:OTCQX).

Silver Outlook "Strong"

A bullish silver market will continue in 2025, experts said. This is due to the metal's "critical role in the energy transition, constrained supply picture and monetary properties as a hard asset," Austin Meadows wrote in a Jan. 10 Crux Investor article.

"For investors, silver's compelling supply-demand story and strong price momentum may offer an attractive opportunity for diversification and growth," added Meadows. "Silver mining stocks provide operational leverage to rising silver prices for investors seeking higher returns."

VSA Capital analysts shared their optimistic view in a Jan. 10 report. "We believe the outlook for silver remains strong, with industrial demand continuing to grow whilst the impact of higher gold prices on jewelry consumption is likely to benefit silver jewelry demand in 2025," they wrote.

Decarbonization, and the related need for silver in solar panels, electric vehicles, electronics, energy storage systems and the like, is driving industrial demand for the metal, as is its resilience as a store of value. About half of the silver used today goes toward industrial applications today, Peter Krauth, editor of Silver Stock Investor, said in a December 2024 interview.

Investment in silver as a safe haven, Red Cloud Securities wrote in a Jan. 7 report, has decreased in recent years. This is evidenced by the nearly doubling of the silver:gold price ratio, to 90:1 from about 50:1 since about 2010. The ratio also suggests that silver is undervalued relative to gold, based on historical averages, according to Meadows.

The silver supply has been unable to keep pace with surging demand. Instead, it has stayed stagnant and caused inventory drawdowns. According to Ahead of the Herd's Richard Mills, the final silver supply total for 2024 should reflect another 1%, or 215,300,000-ounce, deficit, "the second-largest in more than 20 years." This would make 2024 the fourth consecutive year the silver market was in a structural undersupply. Mining output in 2025 is expected to remain constrained, Julian Wee, UBS financial markets strategist, told Kitco News.

Against this backdrop, the silver price, now US$30.14 per ounce (US$30.14/oz), is likely to appreciate. Silver (and gold) have faced various headwinds recently, Brien Lundin wrote in his Jan. 10 Gold Newsletter edition. "The upshot is that gold, and silver, want to go higher."

On the lower end of estimates, Red Cloud analysts predicted US$29/oz silver this year and US$28/oz silver in 2027.

Wee said he expects the silver price will reach US$36–38/oz in 2025, and recommended that investors "stay long the metal or use it for yield pick-up opportunities." A spillover effect of gold continuing to rise could push the silver price higher, the strategist said. Stronger industrial demand should boost it, too, particularly if China lowers interest rates and the change sparks a recovery in global manufacturing.

As for Krauth, his forecast calls for silver reaching US$35/oz this quarter, US$40/oz shortly afterward and then US$50/oz maybe this year but probably in 2026.

"When it surpasses US$50, all bets are off after that, where it's going to go," he said. "Triple-digit silver, I think, is in the cards, and honestly, my ultimate price target is $300."

The Catalyst: Portfolio Growth

According to its Corporate Presentation, the company could finalize two outstanding agreements in the near term, the one with PPX, due to close this quarter, and the other with Tucano.

In the royalty deal with Tucano, Wright explained that Silver Crown is to receive 90% of payable silver, at least 7 Koz, produced annually at the Mina Tucano project in Guyana for 10 years in exchange for CA$1M in units.

As for new royalty transactions, Silver Crown has numerous prospects in the pipeline and is in active discussions regarding 10-plus potential royalty deals.

"We have been able to identify numerous opportunities to grow our revenue and will continue to advance such opportunities," Bures said in the release.

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.

As for share structure, Silver Crown has 2.49M outstanding shares and 2.1M free float traded shares. Its market cap is US$10.6 million. Its 52-week trading range is CA$6.50–9.85 per share.