Royalty Deal Secures 15% Silver Stake in Peru, Surpassing Initial Targets

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Silver Crown Royalties Inc. (SCRI:CBOE; SLCRF:OTCQX; QS0:FSE) has successfully closed the first tranche of its previously announced royalty agreement with PPX Mining Corp., securing up to 15% of the cash equivalent of silver produced from the Igor 4 project in Peru. This initial tranche involved a payment of US$1 million to PPX, granting Silver Crown a royalty equal to 6% of the cash equivalent of the silver output. A second tranche, amounting to US$1.47 million, is due within six months and will increase Silver Crown's royalty interest to 15%.

This transaction marks the company's third producing royalty since going public six months ago, underscoring its rapid growth in top-tier jurisdictions. The royalty agreement includes minimum payment obligations equivalent to 14,062.5 ounces of silver per quarter, commencing no later than October 1, 2025, and continuing until a cumulative total of 225,000 ounces has been paid.

In tandem with this development, Silver Crown Royalties has announced a non-brokered private placement of up to 400,000 units priced at CA$7.50 each, targeting gross proceeds of up to CA$3 million. Each unit comprises one common share and one purchase warrant, with warrants exercisable at CA$16 per share for three years from the closing date. The proceeds will primarily fund the second tranche of the Igor 4 royalty and cover general administrative expenses. All securities issued will be subject to a statutory hold period of four months plus one day from issuance, in line with applicable securities laws.

Peter Bures, CEO of Silver Crown, stated in the news release, "The tranche 1 closing of the PPX royalty marks our third successful transaction since we went public six months ago. We are growing our footprint in top-tier jurisdictions and targeting positive free cash flow later this year, and as such, our reliance on capital markets as a going concern should be greatly diminished."

Additionally, due to winter conditions affecting operations at the Elk Gold Mine in Q4 2024, SCRi has agreed to allow Elk Gold Mining Corp. to fulfill its minimum royalty payment of US$59,144.66, originally due January 30, 2025, in two equal installments on February 28 and March 31, 2025. Commercial production at the PGDM complex has not resumed, and the company has not received the Q4 2024 minimum royalty payment from Pilar de Goias Desenvolvimento Mineral Ltda.

On January 10, Crux Investor highlighted silver's critical role in the global energy transition. Michael DiRienzo, Chief Executive of the Silver Institute, noted, "The electrification of the world is really providing a boon to silver," emphasizing its importance in decarbonization technologies like solar panels and electric vehicles.

Despite rising demand, silver supply remained stagnant, leading to depleting inventories and increasing interest from investors seeking diversification and growth opportunities.

According to Couloir Capital's report dated January 21, Silver Crown Royalties demonstrated strong growth and strategic execution in the silver royalty sector.

By January 14, Citizen Watch reported a significant uptick in silver demand driven by advancements in solid-state battery technology. The article pointed out that "solid-state batteries, which replace the liquid or gel electrolyte with a solid one, require silver for their construction," particularly in electric vehicles and renewable energy storage.

Estimates suggested that if just 20% of global car production adopted this technology, annual silver demand could surge by up to 16,000 metric tons.

FX Empire discussed silver's price dynamics in relation to gold on January 22. The article noted that while silver prices were "supported by its bullish technical structure," concerns about weak industrial demand from China and potential U.S. policy shifts affecting renewable energy funding posed challenges. Despite these factors, silver maintained key technical support levels, indicating resilience amid macroeconomic uncertainties.

In their January 23 report, Kitco News noted that silver was positioned to outperform other metals, driven by strong industrial demand and its monetary status. StoneX Financial analysts stated, "Silver investment is expected to remain buoyant," with projections of a 14% annual gain. The report highlighted silver's growing role in the solar industry, AI, and transport electrification, shifting the metal into a long-term supply deficit as demand outpaced available resources.

On January 27, Zero Hedge analyzed silver's historical price patterns, noting the development of a "textbook Cup & Handle formation." AJ Monte, CMT, explained that such patterns often precede significant price movements, suggesting that silver was attracting renewed investor interest. Monte emphasized that the market's focus on technical trends, combined with supply constraints, created conditions for potential price volatility and increased demand.

Expert Analysis Highlights Strong Growth and Buy Rating for Silver Crown Royalties

According to Couloir Capital's report dated January 21, Silver Crown Royalties demonstrated strong growth and strategic execution in the silver royalty sector. The report highlighted that SCRI was the only pure-play silver royalty company on the market, positioning it as an attractive option for investors seeking diversified exposure to silver. Couloir Capital noted that the company's revenues had grown by 286% from Q3 2023 to Q4 2024, with expectations for continued strong growth.

The report praised SCRI's effective strategy for selecting and acquiring royalties, emphasizing that the company's experienced team had successfully added value-accretive royalties to its portfolio. Couloir Capital maintained a "BUY" rating on the company, assigning a target price of CA$32.34 per share over a 12-month period, reflecting a projected upside of 470% from the current valuation.

Couloir Capital highlighted SCRI's approach to risk management, noting that the company acquires royalties in stages, tying payments to project milestones. This strategy was seen as beneficial for maintaining deal valuations and providing flexibility if projects do not meet performance expectations. Additionally, the company's expanding portfolio of producing royalties contributed to its rapidly increasing revenue streams, further reinforcing its growth trajectory. 

Strategic Growth Drivers for Silver Crown Royalties

According to the Q1 2025 Silver Crown investor presentation, the Igor 4 royalty significantly strengthens the company's portfolio, enhancing its revenue base and reducing reliance on capital markets.

The anticipated second tranche payment will boost SCRi's royalty to 15%, increasing the company's exposure to the project's silver output.

The funds raised from the private placement will support the timely execution of this second tranche, positioning SCRi to capitalize on the projected growth in silver production. The company is focused on expanding its footprint in high-potential jurisdictions, with a strategic emphasis on projects that offer strong free cash flow potential.

Silver Crown Royalties Inc.'s approach to royalty agreements includes the use of staggered contingent payments, which are tied to specific operational milestones. This structure reduces the need for large upfront payments and aligns the timing of investments with project developments. The company's portfolio includes multiple producing royalties, contributing to its current revenue stream.

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.