In the 1980s, Franco Nevada (“Franco”) started buying gold royalties before the sector became a $100 billion industry in North America.
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In 1986 Franco Nevada paid $2 million for a gold royalty that, by 2002, had generated $23 million in annual cash flow for the company and its shareholders.
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Franco Nevada is now a $25 billion company with annual revenues approaching $1 billion.
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According to industry titan and co-founder Pierre Lassonde, the company has generated a 1,485% return over the last 12-and-a-half years for shareholders.
Vox Royalty (VOX.V; VOXCF.OTC) believes Franco is the model to follow to create maximum return for shareholders in the royalty business.
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Inspired By Franco, Vox Charts Its Own Course
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The question though is how Vox, formed in 2014 — much later than Franco — can reset the clock and create similar returns for shareholders.
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“The ability to create its own market is the strategic, the dominating, and the single most distinguishing characteristic of a true growth company.”
— Peter Bernstein
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Vox has answered the question by creating a new market…and becoming the sector’s fastest growing royalty company.
Founder Kyle Floyd and Vox’s team of industry innovators (Riaan Esterhuizen, Simon Cooper and Spencer Cole) have led this growth by employing a targeted strategy.
That strategy involves building and buying intellectual property and focusing on markets that have not yet appreciated or fully understood the value of royalties.
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Franco had the benefit of understanding where to find and how to buy gold royalties long before competition developed.
It’s a tougher market today, with royalty companies springing up like mushrooms after a rain storm over the past couple of years.
But the Vox team studied the disciplined capital allocation and strategic advantages Franco used in the Americas to build the world’s most valuable portfolio of royalty interests.
They determined Vox would not win the game overnight and in 2015, before the historic boom in royalty value, began building competitive advantages via intellectual property.
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Working From A Databank Of Over 7,000 Royalties
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That IP details more than 7,000 royalties in the hands of disparate owners around the world.
Vox combines this extraordinary asset with an extensive deal-sourcing apparatus that has tentacles around the globe.
These advantages have helped management secure royalties that leaves their competition scratching their head at how they find such valuable opportunities.
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Vox has purchased royalties from an eclectic group of holders, including hearing aid businesses, telecommunications firms and automotive parts companies the world over.
If you or your grandparents were prospectors in Australia (or anywhere in the world) and you own a royalty for a gold discovery, Vox likely has you on their list to contact.
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A Focus On Third-Party Royalties
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Vox specializes in finding royalties that are in the hands of third parties (i.e., royalties not held by the actual operating company running the mine. )
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These third-party royalties are amazing financial assets.
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Royalties’ inherent structure and security significantly reduce the risk typical of commodity investments…while also offering the upside potential similar to that of junior miners.
They also eliminate dilution risk and are not exposed to capital calls or margin contraction. These advantages have resulted in royalty companies vastly outperforming relevant commodity benchmarks and also the S&P 500 — by orders of magnitude.
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In fact, royalty companies realize their most aggressive price appreciation in their first three years as publicly traded businesses.
Having only been public for approximately six months, Vox Royalty finds itself at the steep and most-rewarding end of that curve.
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First-Mover Advantage In Western Australia
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Vox caught fire in 2019 as its investments in its IP and deal sourcing took root.
Since then, the company has been the fastest growing royalty company globally by number of royalty acquisition transactions. Over that time period, the Vox has acquired nearly 50 royalties across 18 separate transactions.
Vox has targeted Western Australia as the next “Nevada” in its royalty hunt and, in doing so, now owns the second most hard rock royalties in the country after Franco Nevada.
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According to the Fraser Institute, Western Australia is the most attractive jurisdiction in the world for mining investment, followed by Finland (2nd) and Nevada (3rd).
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Franco Nevada has benefited from the world-class mineral endowments and geopolitical stability of Nevada. Vox believes its first mover advantage in Western Australia will produce similar results.
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The region is just waiting for investors to wake up to the fact that Western Australia has many similar qualities as a royalty jurisdiction as Nevada did in the late ’80s and early ’90s.
Balanced by a global portfolio of royalties in safe jurisdictions, Vox’s Western Australia holdings give it a clear advantage over its peers in the sector.
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Analysts expect Vox to grow significantly in key metrics such as number of royalties, portfolio size and number of exploration-to-development and production-ready development assets.
Along with development growth, more than 120,000 meters are currently being drilled on its royalty linked assets.
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This exploration work provides significant catalysts for Vox — and at no cost to the company or its shareholders.
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In describing the Vox opportunity, the iceberg metaphor fits its strategy to a tee.
Like an iceberg, almost all of Vox’s potential remains below the surface — this company is just at the very beginning in its growth curve and momentum is building.
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A full royalty pipeline and a track record of consistent deal-making make now the perfect time for investors to build a position in Vox Royalty.
Factor in its significant organic growth potential and Vox is as well positioned as a growth company can be.
With 2021 shaping up to be the next big growth period for the metals bull market, those who invest in Vox Royalty (VOX.V; VOXCF.OTC) at or near current levels are likely to be well rewarded.
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