Evolve Royalties

My name is Joseph de la Plante, President and CEO of Evolve Royalties. Evolve is a copper-focused royalty company. We started the company in 2024. We’ve been building it out privately. We listed in December of last year, so we haven’t been trading for even a year yet. So it’s just the beginning of us building out this portfolio. But a lot of our team, we’ve been in the royalty space for over fifteen years. I started my career out of Cisco, was part of the team that started OR Royalties before moving on and creating Nomad Royalty with some of my partners. Nomad was acquired by Sandstorm in 2022.

And so I’ve spent a lot of my career looking at gold opportunities, particularly in the royalty sector. And after selling our last business, we decided to shift our focus into base metals, battery metals, and the reason being that the royalty model is a model we know extremely well. We’ve done lots of transactions from M&A to acquiring portfolios to streaming, and I really do believe it is a fantastic business model that has much more potential that can be applied outside of precious metals. And so we are applying ourselves to develop what we think is going to be a big opportunity to consolidate outside of the gold royalty sector. So copper is a really unique commodity right now. There’s a lot of attention on copper and base metals generally, so we think it’s the perfect time to be doing this type of strategy, and we see lots of opportunity to grow the business.

So Evolve is a $150 million market cap. We’ve amassed so far a portfolio of fifteen royalties. We started the year with one cash flowing royalty. By the end of the year, we expect to have four producing royalties in the portfolio. Three of those are copper royalties on high-quality Canadian copper mines. So in a short amount of time, we’ve amassed a good high-quality portfolio. We’ve been fortunate to do so with the support of some very substantial shareholders, Orion Resource Partners being one of our largest shareholders at about 9% of the capital structure, and we have a long-standing relationship with Orion.

Every royalty company needs to have an edge in terms of how they find transactions and new opportunities. Our relationship with Orion goes back many, many years, and we continue to look at new opportunities together, and I expect that we will continue to do so. And the latest development, we’ve been able to secure a $75 million revolving credit facility with BMO. It’s fully undrawn. So the best way to describe Evolve today, in a short amount of time, we’ve gotten ourselves to a position where we have good cash flow in the portfolio. We expect 2026 will be somewhere between seven and nine million in free cash flow, growing to twelve to fifteen next year, and we are ready to add more assets into the portfolio with this credit facility that we’ve put in place.

Talked a little bit about our background. Nomad was the first company that our team essentially created and brought to market. It was a short-lived experience. We listed the company in May of 2020. It was acquired in August of 2022. During that period of time, we took a portfolio, IPO’d it, listed on the TSX New York Stock Exchange, developed a fully-fledged royalty platform with eleven analysts covering the stock, dividend-paying company, and did two significant streaming transactions that were meaningful for the sector at that period of time. So that really proved what our team could do and ultimately led to a successful outcome with Sandstorm acquiring us.

And even today, when we look at the Royal Gold portfolio, some of the streams that we had structured, for example, Platreef, Greenstone, still figure among the top assets within Royal Gold. So the point is to say that even if we’re a small company, we can still do transactions that matter to the sector, that matter to investors, and that’s really what we’re trying to do, replicate the same playbook here, just a different focus on the commodity side.

As I mentioned, we started Evolve in early 2024. We were private until late last year. Over that period of time, we’ve raised about $70 million, most of which have been deployed across transactions that we’ve put together. What really started the company is the acquisition of a portfolio of non-core copper royalties from Sandstorm. The main asset in that transaction was a royalty on Howland Valley Copper. It’s a wonderful mine owned by Teck in British Columbia. Still serves as the cornerstone in our portfolio today. But we’ve been very active over the last two years, leading to the listing in December of last year, and really the way we think of ourselves is just the beginning. We are one of the newer players in this space. The sector’s constantly changing, but yeah, we’re very proud of what we’ve achieved so far.

From a strategy point of view, we are focused on copper. We’re not looking exclusively at copper. We have other commodities in the portfolio today. We have lithium. We have tin. We are generally looking at a large basket of commodities. The way we’ve messaged our strategy is we wanna dominantly be focused on copper with a target of 75% of our NAV from copper as we grow. Copper is generally the most exciting commodity that we see in the market today, outside of precious metals. And so we think there’s a big opportunity here to create a larger platform that can have that generalist appeal when they want exposure to base metals and primarily copper.

The base metal royalty space has very few players. All of them have different strategies and one of the exciting things about doing what we’re doing is we find that we see higher returns on the transactions that we’re looking at. A lot of royalty investors are familiar with the gold royalty space. It’s become quite competitive. Naturally, there are niches there for companies to build out their platforms and do good deals. But across the board, when we’re looking at the bigger transactions, the returns have generally come down over the years and the transaction structures have materially changed to have step-downs and features that take away some of the optionality in streams and royalties.

And so when we focus outside of precious metals, we find a much better ability to structure deals that have all of those features that really allow that organic growth in some of the investments in the portfolio and that’s really what drives a lot of value in these platforms. Yes, the team is out deploying capital into new deals, but what’s great about royalty portfolios is there’s an organic growth embedded in the portfolio when the operators spend money on the properties, expand their resource and expand the processing facilities.

Most of our portfolio right now is focused in North America. We have one investment in Argentina, one investment in Namibia. Generally speaking, we are open in terms of the jurisdictions we’re looking at. We’re not looking for high-risk jurisdictions in the portfolio, but what we’re building is a portfolio of relationships with operating companies and different companies have a different ability to operate in different jurisdictions, so that’s the main risk we try to assess when we invest is who are the partners and can we mitigate some of the risks, whether they’re jurisdictional or operating risk within those partnerships. Speaking of which, we have wonderful counterparties on our royalties already, from Teck to Eldorado to Hudbay. A lot of really great names in our portfolio and obviously that’s something that we continue to look for as we seek new opportunities.

So if we take a look at the portfolio we have so far, within those fifteen royalties, five of them have the bulk of the value in our portfolio. This is a cash flow timeline of the assets in our portfolio. So it demonstrates how we think about building the company and building the platform. We are really looking to add assets that have a tangible value, that have a defined timeline to cash flow and that’s represented here at the bottom. Most of our assets will be producing by the end of the year.

Highland Valley is a long-standing mine, has a long history operated by Teck, will continue to do so. It’s the cornerstone in our portfolio. We have two other copper royalties in the portfolio, one on the North Pit area of Copper Mountain owned by Hudbay. We will receive our first royalty check later this year from that royalty. Makuvana Bay, a brand-new mine being brought online, expected to reach commercial production later this year. This one’s owned by Eldorado. So these are really wonderful assets in the portfolio.

We acquired also earlier this year a royalty on a tin mine in Namibia called Reis. This is a new mine brought online with the backing of Orion, very long mine life over a hundred years. So all that to say, by the end of the year, we’ll have four cash flowing royalties. We expect about $8 million this year from just Highland Valley and Reis, and that’ll grow next year as Copper Mountain and Makuvana Bay come online. We also have another asset in the portfolio on a lithium mine in Argentina, which is permitted and expected to start construction later this year, earlier next year.

So our royalty on Highland Valley, it’s a half percent NPI royalty. It’s been paying for a long time. HVC has recently sanctioned a new mine life extension that’s gonna take the mine life beyond 2045. So another long life asset in the portfolio. There’s about a billion tons in the reserves, almost another billion tons in the M&I category so this is a royalty that can keep going well beyond that and this is already the fourth mine life extension at Highland Valley Copper. So really what we’re talking about is just a big pit pushback that’ll be done by 2028 and have access to a very important mineral inventory for the many decades to come.

Makuvana Bay, this mine was financed and built by Foren Mining, which most of you will know Foren was acquired last year by Eldorado Gold. Our royalty is a seventy-five cent per ton tonnage royalty. We have begun receiving our first payments here already, and those payments will ramp up as the mine reaches commercial production, which is guided for by the end of the year. A great example of why royalties are such wonderful investments, Mak Bay currently has a 38 million ton resource. The operator’s currently drilling out Tesla. Tesla’s largely expected to be of the same size as Mak Bay, so significant resource growth coming here on this royalty. We are obviously following closely and that will add a lot of value to the royalty that we already own.

But more importantly, we have royalty coverage on the entire land package, so there’s a geological trend here. And one of the great things when an asset changes hands like this into a bigger company, what we see is more exploration budgets and so they have now started drilling on some of the south trend on the Balsam claim where we have a 2% NSR and on the Hanson Lake claim where we also have a 2% NSR. So much more to come I think on this property. What we see now is really we think just the beginning and we expect within a few years the portrait here will be quite different. And we’re now seeing Eldorado has begun a study to expand the mill. So lots of value drivers on this asset.

Wiss is a brand new mine, tin-tantalum mine, that was started in 2022. Very interesting asset. These are tin-tantalum pegmatite swarms. There’s already an 80 million ton of resource that’s currently being drilled out. We expect that’s gonna grow substantially, and that news will come likely later this fall. Just with the existing resource, there’s over fifty years of mine life here. So when I talk about the types of opportunities that you see outside of precious metals, this is a great example. We acquired this royalty for $32 million. This year, when we acquired the royalty, we were forecasting about $4 million in royalty payments to Evolve. That is likely going to be over $6 million just based on the current tin price. And so we expect to recoup our capital quite rapidly here and then have exposure here for many, many, many decades to come. So if you look at the return on this type of transaction versus what we see in precious metals, substantially higher, and these are the deals that really drive value and allow us to grow the portfolio quickly.

Quickly on Copper Mountain, this royalty covers the north pit area of the pit. It’s a 5% NSR. The royalty’s paying about $1 million a quarter currently. There’s a $10 million earn-out that was left for Sandstorm. We expect to reach that point sometime in Q4, at which point the payments will accrue to Evolve. So that will be another good catalyst within the portfolio.

And lastly, on the lithium royalty, this is an asset that I think is quite underappreciated within our portfolio. We have a 2% NSR on a brine that’s in Salta, located right next to Abra Silver’s Diablillos project. The operator’s permitted to build a 30,000 ton carbonate operation. They’ve begun early works on phase one. They expect to start construction once they receive the approval. We paid $5 million for this royalty. Phase one of this mine will pay $5 million per year. And so again, a really good find. We’re not looking to have a lot of lithium in the portfolio, but brines are a great place for us to park our capital, and we think we’ll have a very significant return on the investment that we’ve made here.

So moving along, perhaps to some of the catalysts in the portfolio. As I mentioned, cash flow is really the focus of our business, and our cash flow will be growing over the coming years as Macovaña Bay begins paying its first royalty payments. Similar thing with Copper Mountain. Also we’re following closely the developments at Macovaña Bay with a new resource at Tesla, news on an expansion, and commencement of construction at Salto Los Angeles, our lithium royalty. So within the portfolio, there’s lots of organic growth coming.

Obviously, we are active looking at new acquisitions also. We are a team that does a lot of transactions. We’re very focused on M&A. We have the financial capability to continue and drive M&A and acquisitions. So that will be, together with organic growth in the portfolio, the main way that we grow, and we currently in the market see lots of opportunity to do so.

From a capital structure point of view, it’s a very simple structure. About 50 million shares outstanding. We have just about $10 million in cash and liquid investments. So basic market cap about $150 million. One of the things we focused on building out the platform has been bringing in institutional shareholders early on. So we have about 40% of our register with institutions. Orion owns 9% of our shares, and the board of management about 15% of the company. So it’s a tightly held structure, but most importantly, as we grow, we have a lot of really great shareholders behind us to continue and help to fund that growth.

We have a very lean team, just three people on the team right now. Myself, our COO is a resource estimation specialist, so we can do a lot of our technical diligence or our early technical diligence in-house. Our CFO was a twenty-year partner at PwC, so lots of expertise within the team. On our board, my business partner, Vince Metcalfe, was my partner in building out Nomad. So together we have a lot of experience in the royalty space. Matt Gignac, the CEO of G Mining Services, also is on our board, a wonderful resource when we’re looking at assets and thinking about due diligence. G Mining has about four hundred mining engineers spread throughout the globe. So this is a really deep network that we can rely on if we need it. Elie Levesque, a financial background, used to be the CFO of OR Royalties and the CFO of Nomad. And Fraser Lastinger was a portfolio manager out of Toronto that was the previous CEO of Voyager, who we merged with to go public.

Just a couple of minutes left. From a valuation point of view, we do think that we’re discounted versus the peer set. We expect to be able to close that gap as we demonstrate the cash flow potential in the business and as we continue to deliver transactions. But mostly really, I think this is just the beginning for us. Copper is in a really unique time. I think there’s a lot of interest for this strategy. I think there’s huge opportunities for us to pursue in the market, and we’re really excited about where we are because we are ready to deploy into new acquisitions. We have everything that we need, and yeah, it’s a great time for us in the market right now. So on that note, I’ll end the presentation. If there’s any questions, we’ll be happy to take them.

Thank you, Joseph. You’ve got $75 million burning a hole in your pocket. How quickly are you expected to deploy that cash? And is the focus on growing the portfolio, or would you go back and reinvest into some of your existing operations?

So with the credit facility, naturally, we’re very busy. One thing that happens when you have that kind of financial capacity is the phone rings quite often, whether it’s bankers with clients that need capital or just existing relationships. Right now I think is the busiest I’ve ever seen the royalty space. There’s lots of big transactions on the gold side, and that has created a bit of a void for us to operate within our niche of, call it sub-$150-million transactions. So we do expect to deploy the capital quickly, and naturally, we look at lots of types of transactions. Some of my favorite transactions are reinvesting with our existing partners. These are relationships that are important, and some of the best opportunities come with people that we have already backed. So that’s a strategy that we like a lot.

Okay. Excellent. Thank you, Joseph. Please join me in thanking Joseph for his presentation. Thank you. And good luck with your acquisition.