Dissecting just one "insignificant" EMX press release out of dozens

EMX Sells its Moroccan Portfolio and Forms Exploration Alliance with Avesoro

July 8, 2025

Strategic rationale: The sale of EMX’s Moroccan business unit is the latest example of efficient execution of our Royalty Generation business.

It’s a simple headline, nothing out of the ordinary. This happens often in EMX. The details are as always very interesting:

Is it worth 640 thousand USD or 64 million USD? 100x Schrödinger cat uncertainty. Typical. We’ll know 5-10 years from now...

DETAILS

Alliance stage:

Avesoro has made an execution payment to EMX of $650,000.
Avesoro will provide an initial pool of capital of at least $1.5 million/year to advance the alliance projects and to make new acquisitions within the country of Morocco. The initial term of the alliance will be two years.
Avesoro has agreed to provide the necessary funding to keep the projects in good standing during the term of the alliance.
At any time, Avesoro can elect to deem any of the projects a Designated Project (DP).
Any project that has not been converted to a DP by the end of the alliance term will be returned to EMX.

Designated project stage:

Avesoro will retain a 100% ownership in each of the DPs, with EMX retaining a 2% NSR royalty that is uncapped and cannot be repurchased or reduced.
Each DP will have a minimum $2,500,000 work commitment for the first five years and each DP will be funded from an independent pool of capital.
Commencing on the first anniversary of the nomination of the first DP, EMX will receive a $50,000 advance royalty payment, escalating by 15% per year until the advance royalty payment reaches $100,000.
EMX will also receive additional advance royalty payments for each subsequent project for which a positive feasibility study is delivered. These will begin at $50,000, escalating by 15% per year until the project reaches production or the advance royalty payment reaches $100,000.
EMX will also receive milestone payments of $500,000 for each project for which a feasibility study is delivered, and $1,000,000 for each project that reaches production.

MY ANALYSIS

This is what it might mean in terms of potential value for EMX:

Avesoro has made an execution payment to EMX of $650,000
Commencing on the first anniversary of the nomination of the first DP, EMX will receive a $50,000 advance royalty payment, escalating by 15% per year until the advance royalty payment reaches $100,000.
EMX will also receive additional advance royalty payments for each subsequent project for which a positive feasibility study is delivered. These will begin at $50,000, escalating by 15% per year until the project reaches production or the advance royalty payment reaches $100,000.
EMX will also receive milestone payments of $500,000 for each project for which a feasibility study is delivered
…and $1,000,000 for each project that reaches production
EMX retaining a 2% NSR royalty

EMX’s market cap on July 31, 2025, is $320m (USD, at USD 2.95/share). This anonymous portfolio of projects has just been sold against $0.65m + potential ARPs of $8m, + FS milestone payments of $9m, +$18m, and an uncapped 2% NSR (after catching up to paid ARPs I think)

EMX might never get more than the 650k, and get the projects back in two years. But if things go according to plan for all projects, Avesoro will invest $50m, and EMX could get ca $17.5m in ARP and milestone payments, plus $18m in production start payment => $35m, and perhaps just as much again in future royalties (2% of what Avesoro hopes to make from its potential $50m investment if all projects are completed, meaning they expect to make many hundreds of millions.)

As usual, this could turn out to be a dud, just worth the initial 0.65m, or it could be worth about $35m (arp+fs milestone+production milestone), or $35m plus a few million a year from the 2% NSR if the projects are a success for Avesoro.

At $35m it would be a 10% of current market cap “surprise”, so it’s one of its least significant sales. Adding about as much, $29m, as a NSR value guess, takes us to $64m and a 20% market cap addition. But the market of course doesn’t care, as usual. It could still be worth just the $650k

This is just one PM of dozens over the last few years.

Note:

Avesoro will provide an initial pool of capital of at least $1.5 million/year
Each DP will have a minimum $2,500,000 work commitment for the first five years
Any project that has not been converted to a DP by the end of the alliance term [2 years + extension] will be returned to EMX
It takes at least two years until we know what happens

P.S. I personally own shares in EMX, and it's a coming deep dive with about an hour of video.

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