A Uranium Expert, a Royalty Company, and the Largest Rutile Deposit in the World
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I spoke with Ben Finegold, EMX Royalty, and Sovereign Metals in this video.
Timestamps: 00:00 - Intro 01:00 - Ben Finegold 00:57:59 EMX Royalty CEO Interview 01:49:41 Sovereign Metals CEO Interview
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Energy transition investing requires deep fundamental analysis of supply constraints, geopolitical positioning, and cash flow generation; uranium equities remain severely undervalued despite strong physical market dynamics, while royalty and mineral assets offer asymmetric risk-reward when paired with quality management and strategic partnerships.
- Uranium supply deficit is structural and worsening due to Kazakh production constraints, inventory depletion, and labor/infrastructure challenges that constrain rapid supply response despite decade-high prices
- Junior resource equities systematically trade at deep discounts to NAV and intrinsic value during risk-off periods, creating compounding opportunities for disciplined capital allocators with long-term conviction
- Strategic partnerships (Rio Tinto, Franco-Nevada) and demonstrated cash flow generation are the primary mechanisms for de-risking large-scale development projects and unlocking valuation multiples
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China's uranium regulations strictly limit trading to state-owned enterprises (CNNC, CGN, CNC, and C-Steel Corporation), meaning any uranium trading or export from China must be channeled through government-approved entities, effectively preventing any private market dumping or speculation.
“they've got very very strict regulations around um around the trading of uranium the ability to actually trade uranium is is limited pretty much only to the to the state-owned Enterprises uh cnnc cgn China uh nuclear Fuel Corporation and and C Steel Corporation these are all sort of state owned companies you know one of them has got a trading arm um which is cgn I believe um and look these guys again it's not like a sort of aachu or or maybe like a curs in uranium uh where by this is like what they do for a living it's it's really just to have a trading arm at their disposal should they need it”
The previous uranium bull market (2003-2007) occurred when half the world was opposed to nuclear power; today's market has fundamentally different sentiment with unprecedented government support for nuclear across major economies, making this cycle potentially more durable and valuable than the prior cycle.
“the previous bull market I can't remember who said this to me but it was a great oneliner is that the previous bll Market was when half the world was against nuclear um you know it we're in a completely uh uh sort of landscape in terms of sentiment towards nuclear power”
Sovereign Metals' Kasiya deposit in Malawi is the world's largest rutile deposit with coexisting liberated graphite, contained in soft friable saprolite rather than hard rock, creating a unique lowest-cost-producer opportunity for both titanium (rutile) and graphite with a 25-year mine life generating ~$400M annual EBITDA and $1.7B NPV8 at $600M initial capex.
“the largest root tile deposit in the world it's also liberated root Isle that we are talking about here but as I alluded at the beginning it's not on root tile that we are talking about because there is also liberated graphite in the same or body”
Sovereign has invested heavily in government relationships at multiple levels, holds bi-weekly meetings with an interministerial government committee, and presents progress every six weeks; this relationship-building has created government support for the project and expedited permitting, which Frank attributes to meeting with 15,000+ people during the environmental scoping phase.
“we have an interministerial um government committee with all the key Ministries are part of that committee everybody's well informed you know we have we make a point of of presenting to this committee every six weeks to update them on our progress”
Rutile is the preferred form of titanium dioxide for industrial applications due to direct-feed potential (lower processing cost and energy intensity than ilmenite); graphite is a critical mineral for which China restricts exports to Japan and South Korea, making Sovereign's graphite byproduct strategically significant for supply security.
“rout tile is sought after when it comes down to the world of Titanium because it's what they call a direct feed Titanium Ore meaning it doesn't require the same energy intensive upgrading process that say Elite might”
EMX acquired the Timok royalty for approximately $200,000 Canadian in cash, and it has generated cumulative revenue exceeding $1.5M in a single recent quarter and carries an estimated NAV approaching $100 million, exemplifying the value of identifying undervalued, early-stage assets with multi-generational discovery optionality.
“I paid $200,000 Canadian dollars for that royalty and today would have a a nav that is vastly higher you know probably close to hundred million and um you know last quarter paid 1.58 million”
EMX royalty portfolio generates approximately $6M in quarterly revenue with 90% from core royalties (Gike, Timok, Leval, Cieron) and the remainder from interest, option, and property income; the company is cash flow positive on an operating basis despite negative IFRS net income due to non-cash depreciation and asset write-downs that don't reflect economic reality.
“the revenue generating emx is I suppose technically not yet profitable uh it's uh not generating a positive net income to put it more specifically as their costs and expenses were uh noted at $6.8 million for that same quarter”
Kazakstan prom's H1 2024 inventory fell to a nine-year low, dropping below their target threshold of six to seven months of attributable production for the first time since at least 2016, primarily driven by production cuts required to avoid reapplying for permits while facing sulfuric acid shortages and infrastructure delays.
“they're at a nine-year low um as I'm sure most of your viewers will know Kaz at and prom aim to keep six to seven months of attributable production in inventory um they've Fallen below that threshold for the first time at least since I've been covering them and I think going back to 2016 was the last time they were at these levels”
The term price (firm utility-negotiated contracts) has remained flat or increased for 26-27 consecutive months despite spot price volatility between $70-90/lb, indicating that utilities are willing to lock in higher prices due to perceived supply scarcity and inventory risk.
“I think it's 26 or 27 months now where the spot prices where the turn prices stayed flat or increased so um you know that that that's that for me is as strong an indication as you can get around what utilities are willing to pay for uranium and it's indicative of utility uncertainty around future Supply”
35% of potential uranium projects that could come online by 2030-2035 are unpermitted and must navigate licensing processes in jurisdictions that haven't issued uranium mining licenses for 20 years, creating a structural supply constraint independent of commodity price.
“I was looking also at at the um the potential Minds that can come online between now and 2030 35% of them are unpermitted uh they've got to go through all of these licensing and permitting processes in countries that haven't given uranium mine licenses for 20 years”
Sovereign is exploring conservation farming partnerships with the Padium Group (funded by US AID and Irish Aid) to train approximately 6,000-7,000 smallholder farmers in improved agricultural methods, with demonstrated yields of maize increasing 350% over baseline subsistence farming, creating a secondary economic development benefit and social license for the mining operation.
“the conservation farming that we're doing in Malawi um you know it's core to our our community involvement and our relationship and our social license um we've been able to uh help people increase their yields of maze by over 350% you from where they uh from where what they used to get as part of the conventional farming methods”
Only 30% of Sovereign's known mineral resource is planned for the initial 25-year mine life, with mineralization extending to the south and north; this design allows for optionality to extend mine life beyond 25 years, potentially to 100+ years, or high-grade deeper zones for increased graphite production if commodity markets shift.
“the initial 25 years of production the the 25y year L that I just mentioned that only takes into account about 30% of the known resource”
China is building nuclear capacity in line with long-term growth strategy (both Russia and China approved 11 new reactors recently) and requires approximately 1.2 billion pounds of uranium through 2040 to execute its nuclear expansion plan; at roughly 500-600 million pounds in procured inventory, China has only about half the uranium needed, ensuring sustained demand.
“some of the numbers that we've looked at are about 1.2 billion pounds required through 2040 if they're able to execute on their nuclear rollout strategy so they are not in a in a mode where they should be looking to sell to sell off inventory”
Acute taxes on Kazakh uranium production increased 75% year-over-year, reflecting the government's broader strategy to monetize its natural resource wealth, following a precedent already set in oil and gas sectors, with additional pressure from mineral extraction taxes, CIT increases, and potential export duties.
“acude taxes are up 75% year on Year and that really aligns to this trend that that we've been looking at which is the sort of Republic of Kazakhstan looking at monetizing or better monetizing their State's natural resources we've seen it in the oil sector really uranium had remained pretty exempt from from a lot of those taxes”
EMX employs a contrarian timing strategy: acquire mineral rights and royalties during downturns when commodities are out of favor and valuation multiples are compressed, then hold through commodity cycles and upgrade the resource base through operational partners, capturing both commodity upside and multiples expansion.
“when commod when a certain commodity is out of favor is when we usually like to go out and acquire mineral rights associated with that commodity because we know it'll be easier well to bring up another Rick Roll quote you're a contrarian or you will will be a victim in this space”
Traders and hedge funds are the 'apex predators' in uranium markets, creating convexity during bull markets when sentiment improves and yellow cake/Sprott trade at premiums to underlying asset NAV, amplifying gains for equity investors.
“that's when Traders will get involved that's where hedge funds will get involved who are really the apex predator in this trade who are the apex predators in the sort of 07 0607 rally um that's when you can start to see the moves that people are invested in this space for you know I think that's where you can see that the convexity that perhaps we saw in the previous cycle”
The US produced only 80,000 pounds of uranium in Q1 2024 despite having had an incentive price for US uranium mines for 18+ months, demonstrating that no meaningful supply response has materialized and the US domestic uranium industry is unlikely to solve supply deficits in the short to medium term.
“the US produced 80,000 in the first quarter of 2024 people talk about a supply side response like it's sort of you know I mean people talk about how slow the supply side response is in this sector but we we have been at an incentive price for for some uh us uranium mines for a couple of years now um or at least 18 months uh and we just haven't seen that sort of that supply side response”
Sovereign Metals is conducting infill drilling to upgrade the first 7-8 years of the mineral resource from probable to proven category, which would increase bankability of the project and provide lenders greater confidence in the resource estimate underlying the DFS.
“we in the PFS we had the first 25 years in probable so we be trying to get through this program the first seven to eight years of production into a proven uh category”
Sovereign has completed a dry mining trial moving 300,000 tons through 22m benches with no bench collapses, demonstrating that the soft friable saprolite is stable and free-dig, validating the low mining cost assumptions in the PFS.
“we've we've uh decided on doing vertical benches purely because of the you know the stability of the material itself we haven't seen any anything to to demonstrate that there's a chance of of any of the benches or none of the benches have collapsed over the course of the last you know six weeks”
EMX recently refinanced a $44M Sprott loan (originally at 7% fixed rate) with a $35M Franco-Nevada term loan at SOFR+300-425 basis points; while the SOFR-based rate is currently higher, Franco-Nevada provided lower upfront fees (1% vs. substantial Sprott fees), resulting in lower total cost of capital and better strategic alignment.
“the sprot loan had substantial upfront fees so the ultimate accumulative cost of capital was substantially higher The Upfront free with the um uh Franco loan was only 1% furthermore the bond market had made a substantial move to the negative between the point in time that the Sprout loan was initiated and the point in time that the Franco Alan was an issue of”
Sovereign will need approximately 1,100 employees at full operation and aims to recruit primarily from Malawi; while the country lacks a deep mining heritage (uranium mine closed in 2014), skilled Malawians have worked in mines across Southern Africa and are seeking to return home, making recruitment feasible with training investment.
“we will need in op full operation around 1100 um employees so it's going to be significant the objective for me is to get um to recruit as high a percentage of those people in Malawi um you know it's not a it's not a country with a very long and Rich mining um industry or track record that the caler Iranian mine operating there up until 2014”
EMX has achieved positive free cash flow for five consecutive quarters and does not need to raise equity capital given current cash flow and Franco Nevada debt facility, allowing the company to deploy capital through share buybacks and opportunistic acquisitions at favorable valuations.
“we have strong positive cash flow and have Franco NADA as a Capital Partner is a short answer to that question so I do not need to raise money right now I have a five-year note with Franco which replaced that short return note”
Malawi government previously signed mining development agreements with other large-scale mining projects (Lotus, Mango) that included a 5% gross revenue royalty, 10% free carried equity stake, and a 30% corporate tax rate; Sovereign expects similar terms, with a potential for lower carried equity but accepting 10% as a precedent.
“the the previous uh 2019 mines and minerals act stipulated a 10% free carry to the government uh on all on all large scale mining projects and the and then they they revised that in the 2023 act to a a number that's negotiable um so I I think we we would we would always like to have as little as possible given away to you know certainly at a at a as a free or as a carried interest but I'll be surprised if we can get it below 10%”
EMX experienced a $2.3M cyber loss in one of its Turkish subsidiaries that was immediately written off; a criminal investigation is ongoing and management's bonuses for 2024 will be affected through KPI reduction, aligning incentives with shareholders' desire to prevent future incidents.
“we lost $2.3 million it's very embarrassing”
EMX Royalty has achieved a 14% compounded annual growth rate in share price since first raising external capital at $0.15 USD equivalent, significantly outpacing the S&P 500 average and outperforming many junior resource companies over the same period.
“we first raised money from outside sources not including seed stock into emx at the equivalent of 15 cents USD per share uh and we're now trading at around $1.70 um that's about a 14% compounded annual growth rate um since the find that we first raiseed money since that point in time and that's um you know ahead of the S&P 500 average uh and well ahead of many Junior resource companies”
EMX's strategic investments have generated $55 million+ in cumulative USD profit on a 20%+ compound annual internal rate of return basis, with some investments returning multiples of the initial investment and others reaching complete loss, but net result demonstrating disciplined capital allocation.
“our internal rate return on our strategic Investments has been you know plus 20% on a compounded annual basis uh We've made a lot of money with our strategic Investments a couple of outsized winds some of those strategic Investments have gone to absolute zero so they don't all win uh but the but the net result is we've made over 55 million usar on our strategic Investments”
Rio Tinto initially took 15% of Sovereign in July 2023, exercised its option to increase to 17.7% in July 2024, and has subsequently taken additional shares to reach 19.9% ownership, signaling strategic commitment; the investment agreement includes an option for Rio to become the operator post-DFS, suggesting Rio may eventually consolidate full control.
“July last year they took 15% um they had an option to increase that to 19.9 in July this year they they they exercised their option they went to 17.7 um 79 um in the last few days they took up some additional shares under the investment agreement to go to 19.9 um they have the option to become the operator you know and that option lapses after 180 days after we published DFS”
The uranium sector is pegged to the spot price; equities have moved down roughly 10% recently despite production cuts, inventory draws, and Kazakh prom confidence in delivering guidance, signaling that macro risk-off sentiment and broad market weakness are overriding fundamental uranium supply tightness.
“a very volatile day yesterday where we saw the sector off sort of 10% but you know even even last week I don't think that the equities sort of got the reaction that that perhaps we and other people other commentators in the space had expected um I think you know we can get into some of the reasons you know why why I think that's you know why that's happened but ultimately you know the sector is still pretty P to the spot price”
Data centers and AI infrastructure have become the 'single largest threat' to the AI revolution because power supply constraints are acute; nuclear power is uniquely positioned to solve this and will drive incremental uranium demand beyond traditional reactor restarts and new builds.
“the most underappreciated aspect of the demand side is Data Centers I feel like people it's kind of spoken about but these data centers have got their number one problem is is power I think it is the single largest threat to the sort of AI Revolution is power and a lack of sustainable renewable zero carbon power”
A Chinese trader unloaded approximately 500,000 pounds of uranium in the market for a Namibian offtake near month-end, which Ben believes was not fundamentally driven and should not be interpreted as evidence of China dumping its reported 600 million pound inventory to suppress prices.
“I think it's well it's well documented that I think is that a Chinese Trader had unloaded about half a million pounds of of volume uh this was to do with a namibian off take towards month end so I don't think this was fundamentally driven by any means and I don't think that uh the sort of you know I've seen various sort of theories in space which is you know Chinese unloading their 600 million pounds of inventory um I I don't think that this is a a long-term problem”
Sovereign aims to complete a definitive feasibility study by Q3-Q4 2025 and expects to reach a final investment decision by early 2026, on a timeline dependent on successful completion of current pilot mining, deposition, tailings, and rehabilitation work, and permitting progress with Malawi government.
“we are aiming to complete by third or fourth quarter next year um and then it's a question you know then there'll be some a question whether what Rio does once we publish the Affairs but I think we will go depending on our discussions with you know Banks or lenders and ofch partners the intention would go into front and Engineering at that stage or shortly thereafter um hopefully by six months after we've we've completed the the definitive study we can be at a point where we can be in you know final investment decision uh point so hopefully early 2026”
Political risk is commonly overvalued while technical risk is undervalued in junior mining; EMX has successfully operated in jurisdictions perceived as high-risk (Haiti, Kyrgyzstan, Turkey) because strong geology and experienced teams can de-risk technical execution, which is the binding constraint on value creation.
“generally speaking that political risk as we read about it in the papers every day is fully if not overvalued and Technical risk geologic engineering Etc is commonly undervalued or underunderstood and that can create opportunities if there is uh if a place has um perceived High political risk but maybe has outstanding geogy There's an opportunity there”
Discovery optionality is the most important driver of royalty valuation; EMX prioritizes projects with strong geological potential for further discovery, particularly in arc terrains (prospective for copper-gold) and ultramafic/mafic rocks (sulfide nickel with byproduct copper, cobalt, PGM), and explicitly avoids trendy commodity bets like lithium that lack exploration upside.
“the most important aspects of royalties that really Drive their valuation is optionality and the the most significant component of optionality there's commodity price optionality there would be um the ability to to further the engineering or the metallurgical aspects of a project that's another type of optionality but the most important one is Discovery optionality”
Western mines in Kazakhstan (operating at 77-80% of nameplate capacity) are disproportionately impacted by acid-allocation prioritization versus Russian and Chinese joint ventures, signaling potential geopolitical alignment of production cuts that favor non-Western buyers.
“catco um is operating and about if if you again simple math double what they did in the first half of the year and the second half of the year that can kind of give us some kind of idea around guidance to what each mine's going to produce that would mean that Capco which is a a Rano JV 49% owned by Rano is going to operate at about 77% um and then you can also look at um the the inai mine which was about 80%”
Western uranium utilities (US, Canada) are likely less well-covered with long-term supply than European utilities (EDF, Dominion) because Kazakh uranium flows naturally to China and Russia via transcaspian or northern/eastern routes; Western utilities will face acute supply panic if inventories draw below critical thresholds.
“the question comes down to is the West prepared for a situation whereby you know the major the overwhelming majority of of kazak uranium is going to China and Russia it's a position where we kind of already are today but once inventories are drawn down further and that sort of potential Panic comes into Market um how are the US going to Fair it's certainly not going to be from their domestic uranium industry in the short term”
EMX does not plan to raise equity capital or sell royalties at current valuations; the company will only engage in transformational transactions if counterparties offer substantially more than current NAV, and the stated long-term objective is achieving 17-18% compounded annual growth rate in share price through organic cash flow growth and strategic capital allocation.
“we're not in any hurry to issue share Capital when we're trading at a fraction at nav period... I have actually a very simple answer to that question and it's the same answer that I would have given you um two decades ago what I care about is longterm not by next weekend but longterm compounded annual growth rate of the share price”
Ben and his firm Ocean Wall have been correct on the uranium thesis for four years, and uranium is currently in 'innings three out of five' of the bull cycle, with significant upside ahead as supply deficits persist and prices drive cash flow generation.
“I really still do I'm remain convicted that this is sort of innings three out of five um and that and that we have a long way to go”
Sovereign's market cap of approximately $365M (at $0.61 CAD per share) represents only ~20% of the PFS-estimated $1.7B NPV8, creating a 90% discount to net present value that could be closed by project de-risking, Rio Tinto partnership validation, and market re-rating of critical minerals assets.
“the 2023 paa says will generate an annual EA of over $400 million us over what is expected to be a 25-year LOM that means a 1.7 billion dollar... us npv 8”
Sovereign Metals' listing on OTC Markets (QX) in the last month is part of a strategy to build out its North American shareholder base while maintaining ASX listing, recognizing that geographic diversification of shareholders improves capital raising flexibility.
“we've we've just um listed on the OTC QX last month um so we're trying to build out our shareholder base in North America”
The uranium sector's historical pattern shows that majors, after completing a significant project like Paladin's recent M&A activity, eventually acquire or heavily consolidate smaller producers and developers; consolidation is likely as projects de-risk and move toward production.
“m&a activity with fision and Paladin um obviously the sort of day of reckonings coming there on Monday I think was was where the vote had been extended to um but look uranium exploration companies are are the ones that are going to suffer during sort of tough markets”