By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, USA
Interview with David Cole, President and CEO of Eurasian Minerals (NYSE MKT: EMX, TSX-V: EMX) Update on Eurasian’s Royalty Generation Model (PDAC Booth # 2651)
David Cole, President and CEO of Eurasian Minerals TSX-V: EMX updates us on the Eurasian royalty
generation business model. Eurasian acquires prospective mineral rights around the world and adds
value through the geological process, and then sells those properties keeping a royalty. They have
promising portfolios in Russia, Arizona and Northern Europe. Eurasian has a strong management team,
with excellent technical backgrounds that are perfectly suited to identify highly prospective
properties worldwide. During the downturn in the mining market, EMX management and other insiders
showed their commitment to and confidence in the company by increasing their share in EMX.
Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-chief of Metals News, interviewing David
Cole, who is president and CEO of Eurasian Minerals. I was wondering if you could tell our readers
what your business model is.
David Cole: Happy to do that, Al. You know I'm quite passionate about the business model,
and it's oftentimes what I talk about the most, when I talk about Eurasian Minerals. Our bread and
butter is the execution of the prospect generation business model. This model is where we acquire
prospective mineral rights around the world, add value through a variety of geologic investigations,
then sell those properties and keep royalties on them. That is the way we organically grow a royalty
portfolio in a decidedly accretive manner, Al.
To augment our organic growth of royalties, we also purchase them when we can find them for
sale at favorable pricing levels. Thirdly, utilizing the same team that we have globally executing
our organic growth, we occasionally come across compelling investment opportunities, where we make a
strategic investment in a company within our sector.
One of the most important assets we have in the portfolio is a strategic investment in the IG Copper
Company of which we own 35% of. It's a private company that is advancing a very large copper-gold
discovery in Far East Russia called Malmyzh. This three-pronged approach of organic growth of
royalties, purchasing royalties, and making strategic investments is a very powerful way to approach
Dr. Allen Alper: That sounds great. That's an excellent approach. That allows you to give your
investors more value and protection.
David Cole: We have a diversified portfolio and increasing royalty income flow in addition
to solid growth prospects, I believe.
Dr. Allen Alper: That's great. Maybe you could elaborate a little bit on your portfolio, and
the royalties you're receiving, and some of the properties you own.
David Cole: I'd be happy to. Our most advanced asset is a royalty on a number of Newmont
Mining Corporation's assets in the northern portion of the Carlin Trend. Newmont just recently
completed a new $300+ million shaft at the Leeville complex to augment the two previous shafts. We
receive a 1% gross royalty from that operation. Our 1% royalty covers the Leeville deposit, a portion
of the Turf deposit, the Four Corners deposit, and other deposits that they have within the region.
Very importantly they continue to announce new discoveries within our royalty footprint. Those cash
flows contribute nicely to our treasury, providing us with capital to advance our global organic
Also within the United States, Al, we're the third largest mineral rights landholder in
Arizona. We've joint ventured and sold a large number of those properties to major mining companies,
who are advancing those projects from which we hold back a royalty. They are dominantly targeting
copper deposits, within the copper belts, within the state. We're utilizing our considerable
geological knowledge, generated by a host of our PhDs from the University of Arizona. That model is
working very, very well.
Dr. Allen Alper: That sounds excellent.
David Cole: It is an excellent illustration of the execution of the business model.
Another example is our portfolio of projects in Sweden and Norway. We have recently executed the sale
of a number of properties to a new exploration company, where we receive shares in the soon to be
publicly traded company, coupled with royalties on the projects. We think that's a smart way to
execute the model and take advantage of the leverage that we've created through asset ownership and
geological expertise. The systems that we have there are polymetallic, copper, gold, lead, zinc and
silver. This is a very prospective part of the world to work in.
Another prospective region of the world that we've worked in for years is Turkey. In the
history of our operations in the country, we've cycled through over 200 different exploration assets,
and along the way we've made a few discoveries. We're quite pleased to see the business model mature
into advancing royalty income flow. We have a couple of quite interesting gold projects that are being
advanced by capable companies, in addition to a lead-zinc-silver deposit, which has recently commenced
production. We are looking forward to some good production increases on that property in the future.
Dr. Allen Alper: That sounds excellent.
David Cole: Very importantly, we hold a piece of a huge discovery ongoing in Serbia called
Cukaru Peki. It's within the Timok Magmatic Complex of Serbia, which is the largest historic copper
and gold producing region in Europe. We were involved in advancing some of those prospects early on
after the cessation of the Balkan Wars. We worked closely with the Serbian government on the drafting
of their concession legislation and became one of the first investors within the mineral business in
Serbia. Part and parcel to our business model, we sold off the assets while keeping royalties. We've
also purchased some royalties to augment that portfolio. It's a good example of a combination of
purchasing royalties and growing them organically. We are exceedingly happy with the extraordinary
discovery being advanced on our royalty grounds. This is a key asset for Eurasian Minerals.
Al, we have discussed this previously, but the project in Russia is incredibly exciting for
us. The company of which we own over a third, announced an inferred resource on that project last year
of 1.66 billion tons of .34% copper and .17 grams per ton gold. This is a massive ongoing copper-gold
discovery. We fully expect that to continue to grow by leaps and bounds as the property is advanced
with additional drilling.
Dr. Allen Alper: That sounds very, very exciting. That's excellent. How about Australia?
David Cole: We have been active in Australia and we do have prospects that we have sold
off and kept royalties on, but nothing that is a huge value driver within the portfolio. Of course we
keep our fingers crossed on those because one never really knows. All told, we have about 70 projects
worldwide covering 1.4 million acres or 566,000 hectares.
Dr. Allen Alper: That's amazing.
David Cole: It is. The great thing about it is that it's being advanced largely with other
people's money. In properties that we have partnered or sold, the partner or the operator continues to
invest in the asset and we ultimately reap the benefits via royalties. That is an enviable position to
be in, and it is a durable, long term business.
Dr. Allen Alper: That's very good. Could you refresh our readers on your background and your
David Cole: My pleasure to do so Al. My education is in economic geology. I went to work
for Newmont Mining Corporation and stayed there for 18 years before leaving to found Eurasian
Minerals. I left to pursue my passion of value creation through the discovery process. My belief is,
the best way to actuate value creation in the sector is through royalty ownership. The royalty holder
gets the benefit of work done by the operator, with no capital outlay themselves. We've seen that
reflected in the strong stock performance of major royalty companies, over time. Our objective is to
become one of those major royalty companies.
Dr. Allen Alper: That's excellent. I know you have a very large team of professional
geologists. Could you tell me a little about that?
David Cole: Of course. Dr. David Johnson manages the America's for us, is a PhD from the
University of Arizona. He is a fabulous guy and expert in porphyry copper deposits as well as various
aspects of gold deposits. He is one of our geo-savants. Dr. Eric Jensen, also a PhD from the
University of Arizona, manages the world outside of the Americas. He has a particularly strong
background in alkalic gold deposits as well as gold and copper porphyry systems.
The core aspect of our business model is to have very astute geologists. We leverage their expertise
into mineral property ownership and advancing geological models on those properties. We are then able
to sell those properties and keep royalties and carried positions on them. Those two guys are
consummate representations of pronounced laterally thinking.
To augment that, our people on the commercial side include Jan Steiert; our chief legal
officer. She does a fabulous job handling the business and legal side by insuring that our agreements
are well constructed and positioning us well into the future. She is a former president of the Rocky
Mountain Mineral Law Foundation.
Dr. Allen Alper: That's excellent, very strong team. Could you tell me a little bit about your
share and capital structure?
David Cole: We are quite proud of the fact that, with our sizable portfolio of assets, we
only have about 80 million shares issued and outstanding, including the modest, recently announced,
equity financing of $7 million Canadian, allowing the issuance of 5 million additional shares and 2.5
million warrants. This is the first time we have financed since March of 2011. We are fortunate to
have large shareholders that hold their shares very tightly. We have seen a lot of insider buying,
which you have mentioned to me previously. We have also seen a lot of insider buying over the last few
years, particularly when the stock prices in the sector got hammered as a result of flagging commodity
prices. Paul Stephens, a very astute investor in the mineral sector, has accumulated a large position
in Eurasian Minerals. He is a huge supporter of the company. He now owns over 18% of our shares, and
the vast majority of that he's purchased on the open market. We are very pleased to have such a
successful investor on board.
Dr. Allen Alper: You also have Sprott, I believe.
David Cole: Yes, and Sprott is a significant shareholder in the company as well, through
Exploration Capital 2000, which is a private fund managed by Rick Rule.
Dr. Allen Alper: Also, the management team has a significant ownership.
David Cole: Yes, and you'll see the management team, including myself, has had a fair
amount of insider buying over the last couple of years.
Dr. Allen Alper: That's excellent, shows you believe in your company, and also you have strong
support by very knowledgeable investors. Very good signs. Could you tell us where your stock is listed
for our readers?
David Cole: I am happy to. We are listed both in Canada and the United States. We trade on
the New York Stock Exchange MKT under the ticker symbol EMX, and the same ticker symbol on the TSX
Venture Exchange. It is noteworthy that our ticker symbol in New York recently changed from EMXX to
EMX, which is great, as now both our trading symbols are identical.
Dr. Allen Alper: That's very good. What are the primary reasons our high-net-worth
readers/investors should consider investing in your company?
David Cole: We employ a very well thought out; accretive, durable business model, largely
funded by our development and royalty partners. This is coupled with a strong track record of tweaking
and executing that model over the past 13 years.
Dr. Allen Alper: Sounds like excellent reasons to have our high-net-worth readers/investors
consider investing in your company! Is there anything else you'd like to add, David?
David Cole: Al, the one thing I'll add, is that I'm always available to talk to folks that
would like to learn more about the company. You can find my contact information by clicking on the
“Contact” tab on our website. I'm always delighted to talk with folks that would like to learn more
about the company, ask me hard questions about our various projects around the world, how we filter
our acquisitions, how we market our projects to ultimately grow our royalty portfolio and ways that we
positioning the company to take advantage of commodity price moves in the future.
Dr. Allen Alper: That's great.
Suite 501 - 543 Granville Street
Vancouver, British Columbia
Canada V6C 1X8
Phone: +1 (604) 688-6390