One of the biggest issues in the news these days besides covid is the environment and climate change. About a decade or so ago it was a global warming crisis which in turn changed to just climate change which led to words like CO2, Carbon emmisions, carbon neutral, carbon credits, the green new deal and the list goes on. So what does this all have to do with mining? Well firstly with what is happening at all these global climate summits is new legislation being brought forward and how it will effect industries around the world. Everyone sooner or later will have to kind of comply with these regulations in one way or another. Basically it’s more legislation and taxes the way I see it. But it is what it is.
So what does all this have to do with junior mining companies? Well the one issue that stands out first and foremost is financing. Junior companies always need money for exploration and that money is usually harder to aquire due to the risk that exploration brings. A lot of these companies either go to public offerings for money or if able will get money from private placements. Private placement money is the better way to go as this money is from institutions or funds and a lot of funds tend to have a certain criteria for lending. This criteria could be things like the stock price has to be a certain price with X amount of earnings etc. etc. and what what is going to happen in the not to distant future will be companies looking to raise money will most likely have to have a green policy of some kind in place.
While looking for something along this line to invest in I came across a company that is involved in mining and has already gotten istself established in the green way via carbon credits. Star Royalties TSX-V:STRR is a precious metals and green royalty and streaming investment company. This company has created the world’s first carbon negative gold royalty platform and offers investors gold exposure with an increasingly negative carbon footprint. For those not familiar with royalty or streams it goes like this. Royalties are tied to to a company’s earnings or revenue where the royalty company gets a percentage of that revenue or earnings. Streams on the other hand are where the royalty company makes an initial payment, it is then given the right to purchase all or a predetermined amount or percentage of future metal production generated from a mining operation, at a predetermined below-market price.
So without getting into all the nitty gritty details about these royalties and streams, the company has percentages in several mining operations throughout the world. Here in Canada, Star Royalties has a 2% NSR Royalty, covering all 16,716 hectares of mining leases and mineral claims outlined in Gold Mountain. Elk Mountain is owned by Gold Mountain Mining TSX-V:GMTN. The Elk Mountain operation is in BC. The company has the Copperstone Gold stream in Arizona that slides from 9.9% down to 1.2% dependent on gold produced with Sabre Gold Mines Corp. TSX:SGLD.
In Australia, the company holds a 2% royalty on the Keysbrook Mine. This is an open pit operation that produces zircon and titanium. In Mongolia the company holds royalties from two companies that have yet to put mines in opertions. There is the Bayan Undur mine owned by Aranjin Resources which is a copper and silver deposit. The Baavhai Uul in Mongolia is a lithium brine project where Star Roylaties will receive 1.5% gross revenue. This prospect is one of Mongolia’s largest exploration licenses being over 80,000 hectares.
When it comes ot carbon capture and carbon credits, the company has a 16% Gross Revenue Royalty on AurCrest Gold,s forest revenue share in Ontario and 13.5% gross revenue royalty on Elizabeth Metis Settlement’s forest revenue which is in Alberta.
This kind of gives an overall look at Star Royalties. I’m a fan of royalty companies in general because of the limited risk in the junior mining space. In my mind I refer these to mini ETF’s that if the price of commodities goes up the stocks in theory should do quite well. This stock being also getting involved in the green agenda should find itself in favour of a more wider audience of investors.
The company has 72 million shares and also has tradeable warrants.
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Added note: The author of this article holds postions in the above company at the time of this writing. The author may buy or sell any time going forward