Latest / Kitco MINING / Summit Royalties Targets the Deal Sizes Bigger Players Overlook | Drew Clark

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Summit Royalties Targets the Deal Sizes Bigger Players Overlook | Drew Clark · Kitco MINING

• 0:07
  SPEAKER_01: A new royalty company and growing fast.
• 0:09
  SPEAKER_01: Hello and welcome to Kitco Mining with me, Paul Harris, here at the 2026 Precious Metal Summit in Beaver Creek, Colorado.
• 0:15
  SPEAKER_01: Joining me today is Drew Clark, president and CEO of Summit Royalties to tell me all about it.
• 0:20
  SPEAKER_01: Drew, welcome to Kitco.
• 0:22
  SPEAKER_00: Thanks for having us.
• 0:23
  SPEAKER_01: Now Summit Royalties is perhaps uh one of the most recently created royalty companies.
• 0:29
  SPEAKER_01: Uh I want to start off talking about the genesis uh of the company, how it came together.
• 0:35
  SPEAKER_01: You started off with uh uh you publicly listed in November 2025.
• 0:40
  SPEAKER_01: Um your initial portfolio included uh royalties from I am Gold, a package uh including West Red Lakes, Madsen Mine, Newmont Saddle North project, and some others.
• 0:51
  SPEAKER_01: Um you've added to that uh a couple of times since most recently with the acquisition of Star Royalties, and you've just put together a 50 million credit facility which suggests that uh you're hungry for more.
• 1:03
  SPEAKER_01: Um let's start there.
• 1:05
  SPEAKER_01: Um talk me through the genesis of the company, how it came about, why you're now heading a royalty company.
• 1:11
  SPEAKER_00: Um if we go really far back, so about three years ago this time, I was still working at a company called Metalla.
• 1:17
  SPEAKER_00: Uh, I left the company to start my own business.
• 1:19
  SPEAKER_00: And starting from scratch, when you start a royalty business, there's a couple of things you want to check off.
• 1:24
  SPEAKER_00: But one of them is you want cash flow at the beginning and you need a little bit of scale just to have something to build up around.
• 1:30
  SPEAKER_00: And that is what led us to the transaction with Ion Gold that brought in nine assets.
• 1:35
  SPEAKER_00: Um, and we'll touch on some of them in a little bit.
• 1:37
  SPEAKER_00: We immediately on the back of that uh announced an RTO in a company called Eagle, where we got a most of our royalty count of the 46 we have today.
• 1:44
  SPEAKER_00: But more importantly, we have a royalty on Banyan that comes from them that we think is tremendously undervalued in our shares.
• 1:50
  SPEAKER_00: Uh, while we were doing that process, before we did the RTO, we then bought for cash from Spot Resource Lending a royalty on West Red Lake.
• 1:56
  SPEAKER_00: So in about four or five months, we went from you know a private idea to publicly traded.
• 2:02
  SPEAKER_00: We raised 23 million US in the process without any warrants.
• 2:05
  SPEAKER_00: And that's kind of how the genesis of where we got it to uh to start November 10th last year.
• 2:10
  SPEAKER_00: So that's less than a year ago.
• 2:11
  SPEAKER_00: On the back of that, this year we you know haven't taken our foot off the gas, and we we bought a 1% royalty on Newmont Saddle North deposit for$5 million Canadian.
• 2:20
  SPEAKER_00: We then turned around and bought um the star uh asset portfolio.
• 2:24
  SPEAKER_00: Well, sorry, we bought the entire company of Star, which really brought in uh an amazing stream on Copperstone, which we're really, really excited about.
• 2:32
  SPEAKER_00: And on the back of that, we were able to get a facility from RCF for$50 million US, which is just a tremendous amount of firepower for us to keep deploying capital.
• 2:40
  SPEAKER_00: So that's that's kind of it.
• 2:42
  SPEAKER_00: We built the team, we built the website, we did all those boring things along the way.
• 2:45
  SPEAKER_01: Now, Drew, um that's a very impressive sort of startup for a company.
• 2:49
  SPEAKER_01: And that first year, um, well, it's been hasn't even been a year yet, has it that you've been a public company?
• 2:54
  SPEAKER_01: So you've achieved a lot.
• 2:55
  SPEAKER_01: And so I have to ask this question.
• 2:57
  SPEAKER_01: You've you've got some very good royalties in your portfolio, you've got some cash-flowing royalties in your portfolio.
• 3:03
  SPEAKER_01: It's a very competitive space.
• 3:05
  SPEAKER_01: So imagine there was perhaps a lot of competition for some of those.
• 3:08
  SPEAKER_01: How were you able to bring these deals across the line and get them into summit royalties?
• 3:14
  SPEAKER_00: It's kind of hard to answer that without sounding a little bit arrogant, but to be honest, we we work really hard and we have a network and we have the ability to source deals on a one on a one-off basis when we can.
• 3:24
  SPEAKER_00: All of this stuff has been out of a process, but in some instances, and I'll I'll use the Madison royalty as an example.
• 3:29
  SPEAKER_00: We knew a process was coming and we front ran it.
• 3:32
  SPEAKER_00: So it's professional aggression, it's it's working hard and just relying on our on our network and and what we're known for doing, using our experience to do it.
• 3:40
  SPEAKER_00: It is extremely competitive, though.
• 3:41
  SPEAKER_00: I don't want to dismiss that comment because it true it truly is.
• 3:45
  SPEAKER_01: Absolutely.
• 3:46
  SPEAKER_01: Now you you've got the uh you've stated the ambition to be one of the or the fastest growing raw chain streaming companies.
• 3:52
  SPEAKER_01: Um, how do you plan to sort of measure that and determine your success going forward?
• 3:57
  SPEAKER_01: What will be success for you?
• 3:59
  SPEAKER_00: Uh growing the cash flow per share and the net asset value per share is probably the easiest deliverable that we control.
• 4:04
  SPEAKER_00: So the gold price, the sentiment in the market, we don't.
• 4:07
  SPEAKER_00: But if we make the company worth more every time we transact, that's a goal for me that it sounds very simplistic, but it's kind of a guiding principle for us.
• 4:14
  SPEAKER_00: Um, from the fastest growing standpoint, I mean, we've gone from zero to nearly 50 royalties in in 18 months.
• 4:20
  SPEAKER_00: So that's you know a clip that you know maybe one can't expect, but we want to keep buying more uh cash flowing or near-term cash flowing assets to sort of drive that value.
• 4:29
  SPEAKER_01: And as you're acquiring assets, how do you typically pay for those assets?
• 4:33
  SPEAKER_01: You're using cash, stock, combination of the both.
• 4:36
  SPEAKER_01: Um part of the it's part of the the the deal price, you're giving the opportunity to the vendors to participate in your share price appreciation.
• 4:45
  SPEAKER_00: It really depends what they want.
• 4:47
  SPEAKER_00: At the end of the day, so uh I'll use the Madset example again.
• 4:50
  SPEAKER_00: Um, this is a private equity firm, it's a$2 billion fund.
• 4:54
  SPEAKER_00: They they're not really good equity holders.
• 4:55
  SPEAKER_00: Or no, they're they're sorry, the equity is not part of their business.
• 4:58
  SPEAKER_00: I wouldn't suggest they're not good equity holders.
• 5:00
  SPEAKER_00: So at the end of the day, we went out and raised the money.
• 5:02
  SPEAKER_00: But in the case of other transactions coming down the road, another IM gold transaction, if you will, um, a lot of the balance sheets of these big companies that have these portfolios are not looking for cash.
• 5:12
  SPEAKER_00: They are cash flow positive, the the margins these days and all of the large and mid-cap guys that are are, you know, it's astounding how much revenue they're creating.
• 5:21
  SPEAKER_00: Um, so that that would potentially be an equity deal.
• 5:24
  SPEAKER_00: But I think more importantly, for cash deployment going forward, we have non-dilutive sources of capital at what is a much lower rate than what our equity cost of capital is.
• 5:33
  SPEAKER_00: So that debt piece is something we want to put to work.
• 5:35
  SPEAKER_01: How would you see that sort of dynamic going forward?
• 5:38
  SPEAKER_01: Because I I think it would be fair to say that some of the bigger companies, the ones that would be holding royalties, they're increasingly seeing the the value to them of taking stock in a smaller company and writing that up.
• 5:49
  SPEAKER_01: Um I did a a site visit to Coffee in uh Yukon a a couple of weeks ago, Talamore Resources, they their initial purchase price there from Newmont was 40 million um in stock, and that 40 million is now worth 400 million.
• 6:02
  SPEAKER_01: So Newmont has done very well of that deal by having the confidence to take the stock in the smaller company.
• 6:07
  SPEAKER_01: So presumably that's uh um something you can deploy and leverage.
• 6:12
  SPEAKER_00: That would be part of the pitch for sure.
• 6:13
  SPEAKER_00: And look, I am gold has done well on on their share position and us, but my previous employer, we did, you know, two transactions with Alamos Gold.
• 6:21
  SPEAKER_00: Um, it's a tried and tested uh method.
• 6:23
  SPEAKER_00: No, it's not really a thesis of ours.
• 6:24
  SPEAKER_00: A lot of people have seen it work.
• 6:26
  SPEAKER_00: And you know, there's been other companies of recent, you know, Mavericks Metals would be one that's done a couple portfolio for other transactions as well.
• 6:32
  SPEAKER_00: Um, so helping us unlock that that multiple re-rate through vending in these assets is is something that is quite appealing to a lot of the major companies that we're talking to.
• 6:42
  SPEAKER_01: Okay, you seem to have a bit of a focus on North America.
• 6:46
  SPEAKER_01: Saddle North, you mentioned Madison Mine, you mentioned.
• 6:49
  SPEAKER_01: Um is it correct to say that's your area of expertise or where you're focusing?
• 6:53
  SPEAKER_00: I don't know if it's an area of expertise.
• 6:55
  SPEAKER_00: So we do have a silver stream in Burkina Faso that's that's paying us monthly right now.
• 6:59
  SPEAKER_00: Um we do have a development asset that'll start production sort sometime in 2027 uh with Jaguar mining in Brazil.
• 7:06
  SPEAKER_00: But I would suggest it may just be a um more of a symptom of what our network does and what we what we are able to uncover than it is a pure focus.
• 7:15
  SPEAKER_00: But having tenure of good legal documents, having operators and jurisdictions with known geological um systems is kind of the name of the game.
• 7:25
  SPEAKER_01: Now you mentioned you've got uh a combination of cash flowing assets and non-cash flowing assets.
• 7:29
  SPEAKER_01: Obviously, having cash flow, you said that was an important part of the strategy from the get-go.
• 7:33
  SPEAKER_01: I imagine the competition for cash flow mortgage is even more so than uh for the non-cash flowing.
• 7:38
  SPEAKER_01: So, how how do you sort of position yourself to be able to get those kind of assets that are going contribute to your your cash position going forward?
• 7:46
  SPEAKER_00: Well, I think you we highlighted a little bit earlier.
• 7:48
  SPEAKER_00: I think part of the cash flowing businesses that we've been or assets we've been bidding on have had an equity component to it.
• 7:55
  SPEAKER_00: People look at us trading at arguably the close uh the the lowest price to nab and the price to cash flow multiples on a on a four-logging basis in the space.
• 8:03
  SPEAKER_00: So I think our equity is quite appealing, but at the end of the day, uh no one's gonna sell something that they think is worth a dollar to 80 cents because they like your equity.
• 8:10
  SPEAKER_00: You still have to be competitive on pricing.
• 8:12
  SPEAKER_01: Okay.
• 8:13
  SPEAKER_01: Now let's go back to the 50 million credit facility that you've arranged.
• 8:17
  SPEAKER_01: Um what do you see as being the the use of those proceeds?
• 8:21
  SPEAKER_01: What are you sort of building your treasury for to be able to do?
• 8:25
  SPEAKER_00: To buy more cash flowing assets, drive that cash flow per share growth.
• 8:28
  SPEAKER_00: I can't give you a specific uh answer, obviously, but um look, just just last night we saw Elemental buy a portfolio from Orion uh that's that's cash flowing immediately.
• 8:38
  SPEAKER_00: So we want to put that to work in a manner that will grow the cash flow per share.
• 8:42
  SPEAKER_00: And you know, to use a simple example, if you could buy a portfolio or an asset that generates$5 million a year in revenue and your interest costs on that are somewhere to between between two and three, it grows your cash flow per share right away.
• 8:53
  SPEAKER_00: And the reason we we would we would endeavor to use debt in that scenario is we believe our equity is so fundamentally undervalued that we want to do this in a way that's accretive to existing shareholders.
• 9:01
  SPEAKER_00: Management and directors own 12% of this business.
• 9:04
  SPEAKER_00: So we're very cognizant of uh when we dilute our shares.
• 9:07
  SPEAKER_01: Cost of capital is a fundamental thing in the royalty streaming space.
• 9:11
  SPEAKER_01: So how how do you see your competitive position vis-a-vis um similar-sized companies?
• 9:17
  SPEAKER_00: Well, there's not a lot of guys our size, to be blunt.
• 9:20
  SPEAKER_00: Um, there's sort of the way I look at it in the royalty space.
• 9:23
  SPEAKER_00: There's the big three, you know, Franco, Royal, Wheaton, and then you've got the middle two.
• 9:26
  SPEAKER_00: There used to be three, but Sandstorm obviously went to Royal.
• 9:29
  SPEAKER_00: And there seems to be like a senior junior, if you will.
• 9:33
  SPEAKER_00: I don't have an expression for this.
• 9:34
  SPEAKER_00: I probably should prepare something better, but uh, where you've got the G-Roys, you've got the Elementals, you've got the Metallas that are there.
• 9:40
  SPEAKER_00: So from a competitive positioning standpoint, the$20 to$50 million deals are entirely not being overlooked, but I think we have an edge on those because quite frankly, these larger companies are trying to do much larger deals.
• 9:52
  SPEAKER_00: And the rates of return can sometimes be uh superior to what you see in a larger transaction.
• 9:57
  SPEAKER_00: And uh that's what we're really focused on.
• 9:59
  SPEAKER_00: But we're not afraid to take big swings at the same time.
• 10:01
  SPEAKER_01: Okay.
• 10:02
  SPEAKER_01: One of the other wonderful things about the royalty and streaming space is that the companies can enjoy large market caps, um, large income streams, but with a relatively modest um staffing level.
• 10:13
  SPEAKER_01: I think Weed and Precious Metals put out a graphic uh a couple of weeks ago about how much revenue they generate per employee, which is in the tens of millions of dollars and the amount of profitability they generate per employee.
• 10:26
  SPEAKER_01: So it's a very, very efficient business model.
• 10:28
  SPEAKER_01: Um what's some of the expertise that uh gives you an edge in the type of deals you're going after?
• 10:34
  SPEAKER_00: Well, I mean, so just speaking to the people specifically and some of the members of the board, I don't want to go through everyone.
• 10:39
  SPEAKER_00: Uh I've done$400 million worth of deals, probably a little more than that now, with the latest ones.
• 10:44
  SPEAKER_00: I haven't tallied it up.
• 10:45
  SPEAKER_00: Um, my right-hand man, Connor Poglisi, comes from Triple Flag.
• 10:48
  SPEAKER_00: He's he's done roughly a billion and a half dollars.
• 10:50
  SPEAKER_00: So we have the ability to find, finance, and promote royalty deals.
• 10:54
  SPEAKER_00: And I think that's been clearly demonstrated with the cadence that we built this company.
• 10:58
  SPEAKER_00: And then on the board itself, we've got, you know, a former head of mining sales at Scotia, a guy named Gerald Linnette.
• 11:03
  SPEAKER_00: We've got uh an individual that came from Star that did technical service at Newmont.
• 11:07
  SPEAKER_00: So it's a good complement of guys that know how to find and and and fund these royalties, but also guys that know how to diligence the technical side of things as well when we find these things.
• 11:16
  SPEAKER_00: But our team is extremely strong.
• 11:18
  SPEAKER_01: Okay.
• 11:19
  SPEAKER_01: If you could uh encapsulate in a phrase what differentiates uh summit royalties from other companies, what would that be?
• 11:27
  SPEAKER_00: Uh professional aggression, I guess would be it.
• 11:29
  SPEAKER_00: I I don't have a canned answer for you.
• 11:31
  SPEAKER_00: I didn't expect that one.
• 11:32
  SPEAKER_00: Yeah.
• 11:32
  SPEAKER_01: Professional aggression, I like that.
• 11:34
  SPEAKER_01: Okay, is it's a rapidly moving business.
• 11:36
  SPEAKER_01: You've had a very dynamic initial 12 months or not even 12 months.
• 11:40
  SPEAKER_01: What can some of our viewers expect to see from summit royalties over the next one or two years?
• 11:45
  SPEAKER_00: Well, let's just talk about the next six months because I think that's probably more informative of what happens.
• 11:50
  SPEAKER_00: So let's talk uh at a high level what the portfolio is going to do.
• 11:54
  SPEAKER_00: I tally it up the other day.
• 11:55
  SPEAKER_00: About two-thirds of our net asset value will have a meaningful catalyst in the next call it four to six months.
• 12:01
  SPEAKER_00: That includes an open pit out of copper stone where we have a 4% stream, a PE out of Banyan is is due sometime in the next four months.
• 12:08
  SPEAKER_00: And according to Canacord, that's about 50% of our nav.
• 12:11
  SPEAKER_00: So these are meaningful catalysts on assets that really matter to us and to our institutions.
• 12:15
  SPEAKER_00: And then on the on the corporate side, which you know we could control.
• 12:19
  SPEAKER_00: I mean, these are what the the portfolio itself is going to do.
• 12:21
  SPEAKER_00: We've got more research coverage coming out, we've got more institutional marketing coming.
• 12:25
  SPEAKER_00: So we're really trying to get the word out.
• 12:26
  SPEAKER_00: It's only been a year, not that many people know about Summit, and that awareness needs to be heightened, in my view, if we want to continue to enhance the liquidity, lower our cost of capital, and keep doing deals.
• 12:35
  SPEAKER_01: Now, um, very competitive space.
• 12:38
  SPEAKER_01: There's a lot of companies in there, but you also mentioned that uh the companies within the space buying and selling each other.
• 12:43
  SPEAKER_01: There's uh the the move for consolidation.
• 12:46
  SPEAKER_01: You you mentioned one of the key transactions, Sandstorm got gobbled up by it by a bigger company.
• 12:51
  SPEAKER_01: Um, to what extent do you see the pressures to consolidate being active and continuing?
• 12:57
  SPEAKER_00: I think they're they're there and they're present, and and the conversations are within sort of our ecosystem of so much smaller companies, is there.
• 13:04
  SPEAKER_00: Um we've been able to come out with this facility and come out with the scale and a market cap that's gonna enable us to keep growing.
• 13:12
  SPEAKER_00: But I think inevitably um the consolidation theme within the royalty space is here to stay.
• 13:17
  SPEAKER_00: I've acquired two companies in less than 12 months, so I like to remind people that I'm a net negative one in this space because everyone's complaining about there's too many royalty companies.
• 13:25
  SPEAKER_00: But there's for every two that gets taken out, three seem to pop up.
• 13:28
  SPEAKER_00: Um but going back to your question about does it is the consolidation theme going to continue to flourish?
• 13:33
  SPEAKER_00: I think it certainly will.
• 13:35
  SPEAKER_01: You've been running very fast, as you mentioned, you've been acquiring other companies.
• 13:39
  SPEAKER_01: Is running fast part of, let's say, a defensive strategy as well.
• 13:42
  SPEAKER_01: If if you're continuing to add, it makes more it more difficult for other people to pin a number on you to as a potential takeout target.
• 13:48
  SPEAKER_00: I never thought of it that way, to be honest with you.
• 13:50
  SPEAKER_00: Um look, the do we run out of runway and and and and someone comes after us one day?
• 13:57
  SPEAKER_00: Look, I don't want to be too foreshadowing, I don't expect to be here next year or any of that sort of salesy stuff.
• 14:01
  SPEAKER_00: But from my perspective, from any investor coming in here, there's really two doors you can walk through.
• 14:05
  SPEAKER_00: The first one is we continue to do our job well, we do get that rating, we do end up putting this company on the New York Stock Exchange or the NASDAQ, and that multiple will come.
• 14:14
  SPEAKER_00: We firmly believe in it, and and there's a uh a method of getting it there that's been tried and tested by others.
• 14:19
  SPEAKER_00: Or quite frankly, we're not as good at our job, and we continue to trade at a discount, and it's going to be appealing for someone else to come along.
• 14:24
  SPEAKER_00: As a big shareholder in the business, as a first-time CEO, we're very happy to take that and move on and go find another job.
• 14:31
  SPEAKER_01: Okay.
• 14:32
  SPEAKER_01: Um, well, congratulations on uh a wonderful initial 12 months as a public company.
• 14:37
  SPEAKER_01: Well, not yet 12 months as a public company, a lot of success.
• 14:39
  SPEAKER_01: I wish you a lot of success in the future.
• 14:41
  SPEAKER_01: Drew Clark, thank you very much for joining me today.
• 14:43
  SPEAKER_00: Thanks for having us.
• 14:44
  SPEAKER_01: And Summit Royalties trades on the TSX V under the ticket SUM.
• 14:49
  SPEAKER_01: We have a lot more to come for the 2026 Precious Metal Summit, so stay tuned and hit that subscribe button.
• 14:55
  SPEAKER_01: I'm Paul Harris and this is Kiko Mining.