Host Cyndi Edwards began by introducing Vox Royalty Corp. (VOX:TSX.V), represented on the broadcast by its CEO Kyle Floyd and its Vice President of Corporate Development Simon Cooper. Edwards noted that Cantor Fitzgerald, Red Cloud Securities and Paradigm Capital are among the brokerage firms with a Buy recommendation and a one-year target price between $4.25 and $5 per share on this royalty company.
Edwards said that commodities are the top investment for 2021, according to Forbes, and investing in a royalty company is one way to "get the most bang for your buck" in that market. For longer than the past decade, these companies have outperformed the physical metals, mining companies and the Standard & Poor's 500.
Next, Floyd and Cooper answered questions about the benefits Vox offers investors. For one, Floyd said, his royalty company captures value in the commodities sector and passes if on to shareholders. Vox cherry picks and adds to its portfolio only what it deems to be the best royalty assets. To find those, the company's technical team, composed of experienced mining engineers and geologists, evaluates thousands of royalty projects.
Two, Vox does not experience two significant inflation effects that mining companies do: increased costs and asset-level dilution when raising capital. Yet, the royalty company still benefits from the growth of its royalty asset companies.
Three, Vox's diverse portfolio of 50-plus global royalties helps mitigate against single-asset risk, Cooper said. The royalty company's technical team is sure to identify and consider the level of risk mitigation each prospective royalty project offers when considering them as acquisitions.
Also, Vox offers investors potential upside with every stock-moving catalyst tied to each of its royalty project. One such catalyst is resource expansion, and today, more than 100,000 meters are being drilling at some of Vox's key gold assets. Other catalysts are development milestones, such as a first gold pour, imminent at Vox's Segilola royalty, and a production increase, under consideration by one of Vox's producing iron ore asset operators.
"All of that adds value to our shareholders at no extra cost to Vox, and it really just highlights the benefits of the royalty model in action," Cooper said.
Edwards moved to the topic of commodities and asked Floyd how much of their portfolio investors should devote to commodities. His answer was 2–5%, based on the longstanding recommendation of leading analysts and wealth managers. He said that because investors, small and large, generally have not followed that advice, he expects an uptick in investors moving into commodity-linked stocks as "consumers and investors wake up to inflation."
As for the commodities that Vox's royalties cover, Cooper said they include many metals but primarily precious metals. This precious metals weighting of about 75–80% is intentional, and management intends to maintain it. Vox offers investors exposure to silver, for example, through the large, undeveloped Bowdens project in Australia and exposure to platinum group metals through the Pedra Branca project in Brazil. Other metals in Vox's royalty portfolio are copper, zinc, cobalt, graphite, vanadium, titanium and more.
In a higher price environment for commodities, Vox's producing, and therefore, paying royalty assets, a better price means immediately greater revenue, Cooper noted. Also with a higher price, producers may increase production, one of the catalysts offering upside. As for Vox's development royalty assets, a better price allows the operating companies to put more capital into their project, say, to drill for resource expansion, another catalyst.
"We're seeing those catalysts play out now, particularly in places like Western Australia where we have a big part of our portfolio," Cooper said. "In relative terms, the Australian dollar gold environment is still very healthy and very buoyant."
Lastly, Edwards asked Floyd why investors should buy Vox now.
"Vox is trading at a discount to its peers lacking the growth that Vox has, and we've never had more delineated growth in front of us in all capacities that matter for a royalty company—royalties acquired, resources and reserves increasing, production increasing and that resulting in cash flow increasing," he said. "So we're on an exponential ramp in terms of revenue and cash flow, and that's very, very significant for investors."
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- Kyle Floyd - CEO and chairman of Vox Royalty Corp. owns securities of the company
- Simon Cooper - Vice President of Corporate Development, Vox Royalty Corp. owns securities of the company
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