Welcome, subscribers!
We’re grateful for the enthusiastic support you’ve shown during our shift to a paid model. It’s heartening to see so many of you embarking with us on this exciting new phase.
As always, we’re committed to delivering you high-quality, time-saving investment pitches from seasoned investment professionals.
What’s new this week?
We’re pleased to share more new ideas in this issue, including:
A dynamic company specializing in mining royalties, offering exposure to the sector without direct operational risk.
A founder-led fragrance and beauty products company.
A fast-growing digital banking platform with direct exposure to growing emerging markets.
Disclaimer: Nothing here constitutes professional and/or financial advice. You alone assume any risk with the use of any information contained herein. We may own positions in the securities listed. Please do your own due diligence.
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Let’s get to it.
Ace River Capital started a position in a Canadian microcap mining company, Vox Royalty Corp (VOXR). “Canadian,” “microcap,” and “mining” typically spark fear in an investor, but Ace likes the company’s business model, as a provider of alternative financing to the mining industry. They walk through their thesis below.
I have been exploring companies involved in metals and mining, hoping to find an opportunity. I believe I found a company that fits with the strategy and looks to be a perfect fit for the fund in Vox Royalty Corp (VOXR).
Vox Royalty Corp operates in the alternative financing space of mining royalties. Mining royalties are flexible agreements where a company like Vox will provide a one-time payment for a share of future revenue produced. These are normally long-term projects and royalty contracts can change hands before the contract begins producing revenue.
This is attractive as an asymmetric risk/reward tied to commodity prices since Vox has a fixed cost and initial investment but will profit more as prices rise or operations become increasingly efficient with many of the contracts.
Vox has a proprietary database of information on 8500+ existing royalties.
Vox Database (Company Presentation)
This asset has already shown to be valuable with an IP licensing agreement recently announced.
"TORONTO, CANADA – October 25, 2023 – Vox Royalty Corp. (TSX: VOXR) (NASDAQ: VOXR) (“Vox” or the “Company”), a returns focused mining royalty company, is pleased to announce that it has entered into an Intellectual Property (“IP”) Licensing Agreement (the “IP Licensing Agreement”) with private investment group, Perpetual Royalty IP Holdings LLC (“Perpetual RoyaltyCo”), to potentially unlock value from a non-core subset of royalties within Vox’s proprietary global royalty database. Under the IP Licensing Agreement, Vox grants Perpetual RoyaltyCo access to the coal royalties in Vox’s proprietary royalty database (but not any other commodities), "
"On the successful closing of relevant coal royalty transactions, Perpetual RoyaltyCo will pay Vox a cash transaction fee of up to 3.0% of the asset acquisition price, including any future earn out payments or contingent payments associated with any applicable coal royalty assets acquired. "
This provides an additional source of revenue and upside with no capital requirement. This database should allow Vox to cherry pick opportunities. I also expect Vox to grow relationships within the space and assist companies with structure/creation of royalty contracts for financing and be in a position to take action and efficiently allocate capital long term.
A look at the stages and locations of each royalty.
2023 Guidance
I have initiated a position and like this business model. I believe mining royalty contracts offer an opportunity to capture upside in commodity prices with less risk than attempting to identify or pick a specific mining company. These contracts and the mining industry/commodity prices in general should benefit from the push towards electric vehicles in addition to inflation or economic expansion. Investing in Vox may also provide some recession protection with its exposure to gold prices. With the company currently paying a 2.65% dividend, I am happy to start building a position as new mines come online.