"It's only been 12 months since the Tahuehueto silver stream was completed and this is a major milestone to see a development asset move forward to generate revenue for the company," Empress' CEO and president Alexandra Woodyer Sherron said.
"It gives Empress direct exposure to silver and combined with our low [general and administrative] provides an effective hedge against inflation pressures as seen in other industries," she added.
Executed on 16 April last year, the stream agreement saw Empress invest US$5 million with Altaley in return for 100% of the payable silver production from Tahuehueto for the first 1.25 million payable Ag oz. Following that, the percentage will step down to 20% of payable silver production for up to 10 years.
Empress will purchase the silver at 20% of the spot price.
The company noted that Altaley expects to produce 2,166oz/month of gold and 37,829oz/month of silver.
Red Cloud Securities called the update a "major milestone" for Empress.
"Projected cash flow from this stream is expected at US$1.68 million/year for a period of ten years. Compared to the initial US$5 million purchase price, we believe this stream should help boost the company's [Price to Net Asset Value], closing its gap to peers.
"It should continue to keep Empress in the black, unlike some of its royalty peers which are anticipating negative EBITDA over the next few years," Red Could said.
Empress' share price was C$0.215 (US$0.17) on July 19.
Red Cloud has a target price for the company of C$0.60.
"EMPR trades at a discount to peers at 0.5x vs 1.0x, but as revenue grows, we expect this valuation gap to close," Red Cloud said.
It also noted that in addition to Taheuheuto, pre-production activities have commenced at the Manica Au project in Mozambique where Empress holds a 3.3375% royalty on production of the first 95,000oz Au.
That royalty drops to 1.125% in perpetuity thereafter.
"This is also an important milestone for Empress, as it is now set to receive revenue/production from two other assets in addition to the Sierra Antapite Au stream in Peru," Red Cloud said.
Empress has a market capitalization of C$22.48 million.
