In 2023, First Nations across Canada received an estimated $350 million in cash royalty payments from impact benefits agreements on resource projects like mines.
That amount roughly doubles when royalties from oil and gas are included.
Rather than passively collecting royalties from mine projects in their territory, the Nisga’a Nation is putting their royalty revenue to work through a new investment vehicle—a kind of mutual fund of sorts for First Nations resource sector royalties.
In June 2024, a new precious metals royalty company, Nations Royalty Corp., was listed on the TSX Venture Exchange after a reverse takeover of Vega Mining. In November, it was also listed on the Frankfurt Stock Exchange under the symbol Y96.
With 77 per cent of the company’s stock, the Nisga’a Nation is the company’s largest shareholder, and B.C. financier Frank Giustra’s Fiore Group is its second-largest shareholder, at 15.6 per cent.
“Frank has been a big proponent for the company,” said Nations Royalty vice-president of corporate development Kody Penner. “He really helped us with our original $10 million raise. He’s actually one of our major shareholders.”
Giustra is also an advisor for the company, which last week had a market cap of $75 million.
After meeting with Nisga’a leaders, Nations Royalty CEO Rob McLeod—former CEO of IDM Mining, which was acquired, along with its Red Mountain project, by Ascot Resources Ltd. in 2019—had the idea of leveraging Nisga’a resource royalties to seed an Indigenous royalty company, and pitched the idea to Giustra, who got behind the project, Penner said.
“I am honoured to collaborate with the Nisga’a and other First Nations in establishing this essential new company,” Giustra said in February of last year, after the company acquired the rights to five annual benefit payment entitlements from the Nisga’a Nation.
“Almost two decades ago, I played a role in developing the metals streaming concept as a co-founder of Wheaton Precious Metals and I see Nations Royalty as a vitally important successor to this concept.”
The Nisga’a Nation has royalty rights through impact benefit agreements from five mine and mine development projects in its traditional territory: Brucejack, Premier Gold Mine, KSM, and the Red Mountain gold and Kitsault molybdenum deposits. Those royalty rights were acquired by Vega Mining, which became Nations Royalty, in exchange for majority shares in the new company.
Nations Royalty currently earns revenue from one producing mine: Brucejack. According to recent financial filings, Nations Royalty had $283,061 in revenue from Nisga’a royalties for the six months ending September 30, 2024.
If all five mine projects were to go into production, total Nisga’a royalties would have an estimated value of US$214 million ($307 million), Penner said.
The Seabridge Gold KSM mine promises to be the big money maker in terms of royalty revenue, based on its size. The project is considered one of the largest undeveloped copper-gold deposits in the world, with proven and probable reserves totalling 47 million ounces of gold and 7.3 billion pounds of copper.
“It’s an absolute monster in the cash flows that we’re going to be receiving,” Penner said. “Off of that are the cash flows that build large royalty companies. You need a cornerstone asset like that.”
Pointing to royalty and streaming companies like Franco Nevada Corp. and Wheaton Precious Metals, Penner said Nations Royalty has a similar business model.
Under royalty agreements, mining companies get financing to build new mines, and once they are in production, the royalty company gets a share of revenue from sales of whatever commodity is being produced.
“The business model is the exact same as those other companies,” Penner said of Nations Royalty. “Essentially what they’ve done is they’ve created portfolios of royalty income. Think of it as a mutual fund of royalties. We work the exact same way, but we’re first movers in the Indigenous royalty space. No one’s ever actually looked at pooling Indigenous royalty income before.”
Nations Royalty is intended to be an investment vehicle in which First Nations across Canada can maximize royalties from impact benefit agreements by pooling them. The company estimates there are 100 benefits agreements with First Nations from mining across Canada.
“When you pool more of these royalties together into one company, you’re lowering the risk for any single royalty,” Penner said. “And when you lower risk, but provide essentially the same return, your share price should rise accordingly. I’m talking with over 50 Indigenous groups across Canada, and internationally, to see if they want to partner on this journey.”
Currently, the company is focused on precious metals mining, but going forward, Penner said the company could expand into other areas, like base metals and oil and gas.
