Item 1A. Risk Factors
Item 1A. Risk Factors
Risks Related to the Sweetwater Acquisition
We may be unable to successfully integrate the Sweetwater Assets into our business in the expected time frame or at all.
The Sweetwater Acquisition significantly expands our business beyond our historical uranium-focused royalty strategy by adding a soda ash royalty and landholding business with substantial mineral and surface interests, royalty-bearing lease arrangements, related indebtedness, and personnel, systems, processes and relationships that differ from our existing business. Integrating Sweetwater into our business is complex, costly and time consuming, and we expect to devote significant management time and resources to integrating the Sweetwater Assets, the Sweetwater Entities and their operations, reporting processes, internal controls and administrative functions into our existing platform. Challenges involved in this integration include, among others: (i) integrating a soda ash royalty and landholding business into our existing uranium royalty, physical uranium and related investment business; (ii) retaining and integrating personnel with knowledge of the Sweetwater Assets, the Sweetwater Entities, the applicable royalty-bearing lease arrangements, landholdings, surface rights, operator relationships and related business processes; (iii) harmonizing operating practices, accounting and financial reporting processes, internal controls, disclosure controls, compliance policies and other procedures across businesses that historically operated independently; (iv) maintaining relationships with operators, lessees, counterparties, lenders, regulators, advisors and other third parties whose cooperation or performance may affect the value of the Sweetwater Assets and the revenues derived from them; (v) addressing differences in business backgrounds, commodity exposure, corporate cultures, management philosophies, reporting systems and risk profiles between our historical business and the Sweetwater business; (vi) integrating administrative, information technology, cybersecurity, finance, tax, legal and compliance functions, including processes necessary for our public company reporting obligations; and (vii) coordinating personnel and operations across geographically dispersed locations and across businesses exposed to different commodity markets, regulatory frameworks and counterparties.
There can be no assurance that we will be able to successfully integrate Sweetwater into our business within the anticipated time frame, or at all, or that the anticipated benefits of the Sweetwater Acquisition will be realized fully, or at all, or may take longer to realize than expected. The integration process could result in the diversion of management’s attention, disruption of our ongoing business, inconsistencies in standards, controls, policies and procedures, unexpected integration issues, higher than expected integration costs, loss of key personnel or business relationships, or other adverse effects on our business.
If employees or consultants with knowledge of the Sweetwater Assets or the Sweetwater Entities terminate their employment or engagement, we may have to incur significant costs in identifying, hiring, training and retaining replacements and may lose significant expertise and institutional knowledge. In addition, if we are unable to retain personnel who are critical to the successful integration and future operation of the Sweetwater business, we could face disruptions in our business, delays in integration, reduced effectiveness in managing the Sweetwater Assets and difficulty maintaining relationships with operators, lessees, lenders, regulators and other counterparties. Any of these factors could adversely affect our business, results of operations, cash flows and financial condition.
We have incurred, and expect to continue to incur, substantial costs as a result of the Sweetwater Acquisition.
We have incurred a substantial amount of non-recurring costs associated with negotiating, structuring and completing the Sweetwater Acquisition, and we expect to continue to incur integration and other costs in connection with the acquisition and the integration of the Sweetwater Assets into our business. These costs may include legal, accounting, advisory, financing, tax, audit, valuation, compliance, information technology, employee-related, administrative, reporting and other expenses, as well as costs associated with integrating processes, policies, procedures, operations, technologies, systems, internal controls and disclosure controls.
The elimination of duplicative costs, strategic benefits, additional revenues, cash flows or other efficiencies expected from the Sweetwater Acquisition may not offset transaction and integration costs in the near term or at all. While we have assumed that certain expenses would be incurred in connection with the Sweetwater Acquisition and the related
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transactions, many factors beyond our control could affect the total amount or timing of such expenses, including the complexity of integrating the Sweetwater Assets, requirements imposed by lenders or other counterparties, public company reporting requirements, changes in commodity markets, operator performance, regulatory developments and unanticipated operational or compliance matters. If the costs associated with the Sweetwater Acquisition exceed our expectations, our business, results of operations, cash flows and financial condition could be adversely affected.
We may be unable to realize the anticipated benefits of the Sweetwater Acquisition.
Our ability to realize the anticipated benefits of the Sweetwater Acquisition in the time frame anticipated, or at all, is subject to a number of assumptions that may not prove to be accurate and to other factors, many of which are beyond our control. These anticipated benefits may include increased scale, diversification of our royalty portfolio, exposure to soda ash royalty revenues, ownership of substantial land and mineral rights, potential surface-use and leasing opportunities, enhanced cash flow profile and other strategic or financial benefits. These benefits depend on, among other things, successful integration of Sweetwater, future soda ash and uranium market conditions, continued production and sales by third-party operators, the enforceability and performance of royalty-bearing lease arrangements, compliance with indebtedness and covenant obligations, availability of personnel and information, and our ability to manage a larger and more complex business.
Difficulties in integrating Sweetwater and managing the expanded operations of the Company could result in increased costs, decreased revenues, delays in realizing expected benefits, diversion of management’s time, reduced financial flexibility, operational disruptions or other adverse consequences. Even if Sweetwater is integrated successfully, we may not fully realize the anticipated benefits of the Sweetwater Acquisition, including anticipated revenues, cost savings, synergies, diversification benefits or other efficiencies, or those benefits may take longer to realize than expected. Some anticipated benefits may not occur for a period of time following the completion of the Sweetwater Acquisition and may involve unanticipated costs, liabilities, financing requirements or operational challenges in order to be fully realized. If we are not able to achieve these objectives and realize the anticipated benefits expected from the Sweetwater Acquisition within the anticipated time frame or at all, our business, results of operations, cash flows and financial condition could be adversely affected, and the market price of our common stock could be negatively impacted.
Lawsuits may be filed against us and the members of our board of directors arising out of the Sweetwater Acquisition, which may negatively affect our business and operations.
Stockholder complaints, including stockholder class action complaints, derivative claims or other complaints, may be filed against us, our board of directors, our officers or others in connection with the Sweetwater Acquisition or related disclosures. The outcome of any litigation is uncertain, and we may not be successful in defending against any such claims. Any lawsuits filed against us, our board of directors, our officers or others could divert the attention of management and employees from our day-to-day business, result in substantial costs, require us to pay damages or settlement amounts, delay or complicate integration efforts, or otherwise adversely affect our business, results of operations, cash flows and financial condition.
Risks Related to our Business
The Company has limited or no access to data or the operations underlying the Company’s interests and this limited access may impair the Company’s ability to assess the value of its interests, among other things.
The Company is not, and will not be, the operator of any of the properties underlying its current or future royalties, streams and similar interests and has no input in the exploration, development or operation of such properties. Consequently, the Company has limited or no access to related exploration, development, operational, geological, engineering, processing, sales, pricing, marketing and other technical or commercial data, including information underlying resource and reserve estimates, or to the properties themselves, and generally has no right to direct operations on those properties. This limited access may impair the Company’s ability to assess the value of its interests, forecast revenue, evaluate the status or prospects of development-stage projects, confirm mineral reserve or mineral resource estimates, determine whether operators are complying with applicable contractual obligations, or accurately assess the timing and likelihood of production, expansion or restart decisions. In addition, royalty payments may be
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calculated by operators in a manner different from the Company’s assumptions or estimates, and the Company’s audit and information rights may be limited, delayed or difficult to enforce.
In respect of the Company’s soda ash and sodium mineral royalty interests, royalty payments are dependent on operator-reported production volumes, sales volumes, realized prices, allowable deductions and other inputs determined by third-party operators. The Company may not be able to detect errors, omissions or inconsistencies in those calculations on a timely basis, and any audits or reviews may occur after the Company has recognized revenue, which could require retroactive adjustments in future periods.
Certain of the Company’s royalty, stream or similar interests may also be subject to confidentiality restrictions that limit the Company’s ability to disclose information received from operators or counterparties. If the information available to the Company is incomplete, inaccurate, delayed or misleading, the Company’s ability to value its interests, forecast performance and make informed business decisions may be materially adversely affected.
Dependence on third-party operators.
The Company is not and will not be directly involved in the exploration, development and production of minerals from, or the continued operation of, the mineral projects underlying the royalties, streams and similar interests that are or may be held by the Company. The exploration, development and operation of such properties is determined and carried out by third-party owners and operators thereof and any revenue that may be derived from the Company’s asset portfolio will be based on production by such owners and operators.
Third-party owners and operators generally control all decisions regarding mine planning, exploration expenditures, permitting, financing, development timing, capital allocation, production levels, processing methods, expansions, curtailments, suspensions, marketing and sales. Their interests may not align with those of the Company. For example, an operator may delay development, reduce production, prioritize non-royalty-bearing areas, defer expansions, place a project on care and maintenance, or direct capital to other assets, even where doing so reduces potential revenue to the Company.
The inability of the Company to control or influence the exploration, development or operations for the properties in which the Company holds or may hold royalties, streams and similar interests may have a material adverse effect on the Company’s business, results of operations and financial condition. In addition, the owners or operators may take action contrary to the Company’s policies or objectives; be unable or unwilling to fulfill their obligations under their agreements with the Company; or experience financial, operational or other difficulties, including insolvency, which could limit the owner or operator’s ability to advance such properties or perform their obligations under arrangements with the Company. The Company may not be entitled to any compensation if the properties in which it holds or may hold royalties, streams and similar interests discontinue exploration, development or operations on a temporary or permanent basis.
The owners or operators of the projects in which the Company holds an interest may, from time to time, announce transactions, including the sale or transfer of the projects or of the operator itself, over which the Company has little or no control. If such transactions are completed, it may result in a new operator, which may or may not explore, develop or operate the project in a similar manner to the current operator, which may have a material adverse effect on the Company’s business, results of operations and financial condition. The effect of any such transaction on the Company may be difficult or impossible to predict.
Operators may also experience financial distress, insolvency, labor disruptions, technical difficulties, permitting issues, transportation constraints, strategic changes, ownership changes or management changes. Any such circumstances could delay or reduce production or payments to the Company and could materially adversely affect the Company’s business, results of operations, cash flows and financial condition.
Dependence on future payments from owners and operators.
The Company’s revenues depend to a significant extent on the ability of owners and operators of the underlying properties to make payments when due under the agreements governing the Company’s royalty, stream and similar interests. Payments may be delayed or reduced by disputes, lender restrictions, operator liquidity constraints, insolvency proceedings, delivery interruptions, administrative errors, disagreements regarding allowable deductions
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or pricing mechanisms, the establishment by operators of reserves for expenses or other charges, or other factors affecting the operator or the project.
Payments flowing to the Company from its soda ash and sodium mineral royalty interests are particularly dependent on the financial viability and operational effectiveness of the relevant operators and their continued ability to produce, market and sell soda ash and other sodium mineral products. If an operator is unable to meet its obligations, or if its lenders impose restrictions on cash movement, the Company may experience delayed or reduced receipts.
In many cases, the Company’s rights to payment are contractual in nature and are not secured by assets that can be readily liquidated by the Company. In the event of bankruptcy, insolvency or restructuring of an operator or owner, the Company may be treated as an unsecured creditor and may have limited prospects for recovering unpaid amounts in full, if at all.
The Company’s business is significantly concentrated and a substantial portion of its revenue from a limited number of mines, operators or commodities.
The Company’s business is significantly concentrated in a limited number of producing properties, operators and commodities. A substantial portion of the revenue associated with the Company’s soda ash royalty interests has historically been derived from a limited number of soda ash mines operated by a limited number of counterparties. These properties and operators may continue to account for a significant portion of the Company’s revenue for the foreseeable future.
As a result, adverse developments affecting any one or more of these mines or operators could have a disproportionately large impact on the Company. Such developments may include operational disruptions, reduced production, maintenance shutdowns, adverse pricing, transportation or export issues, financial distress, ownership changes, management changes, permitting issues, litigation, labor disputes or strategic decisions that are unfavorable to the Company.
The Company is also exposed to concentration by commodity. The Company’s portfolio includes uranium royalties and related uranium interests as well as significant soda ash and other sodium mineral royalty interests. The Company’s soda ash-related revenue is also less diversified by product, as it is derived primarily from royalties on soda ash and related sodium mineral products. A sustained downturn in uranium markets, soda ash markets or both at the same time could materially adversely affect the Company’s business, results of operations, cash flows and financial condition.
A portion of the Company’s assets are on non-producing, exploration-stage or development-stage properties that may never achieve production or generate revenue.
A portion of the Company’s royalty interests are on non-producing properties, properties with no established mineral reserves under applicable disclosure standards, or properties that are in exploration or development stages. Such interests may never achieve production or may not generate revenue within expected timeframes.
Few properties that are explored are ultimately developed into producing mines. Major expenditures may be required to locate and establish mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that exploration or development programs planned by the owners or operators of the properties underlying royalties, streams and similar interests that are or may be held by the Company will result in profitable commercial mining operations. Whether a mineral deposit will be commercially viable depends on a number of factors, including cash costs associated with extraction and processing; the particular attributes of the deposit, such as size, grade and proximity to infrastructure; mineral prices, which are highly cyclical; government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection; and political stability. The exact effect of these factors cannot be accurately predicted but the combination of these factors may result in one or more of the properties underlying the Company’s current or future interests not receiving an adequate return on invested capital. Accordingly, there can be no assurance the properties underlying the Company’s current or future interests will be brought into a state of commercial production or that projects on care and maintenance will recommence production activities.
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Development-stage and exploration-stage projects are subject to a wide range of risks, including financing shortfalls, cost overruns, inflation, construction delays, supply chain disruptions, labor shortages, equipment failures, engineering issues, permitting delays, environmental restrictions, power and water constraints, adverse commodity prices and changes in development plans. There can be no assurance that any such project will be completed on time, within budget or at all, or that it will ultimately reach profitable commercial production.
If properties underlying the Company’s interests do not achieve production or expansion on schedule or at all, the Company may not realize expected revenues or value, and the carrying value of its interests may be impaired.
Our royalty, stream and similar interests may not be honored by operators or counterparties.
The Company’s royalty, stream and similar interests are generally governed by contracts, deeds, conveyances, leases or other legal instruments. Such arrangements may be subject to interpretation, technical defects, ambiguities, disputes or challenges. Operators, grantors or other counterparties may interpret the Company’s interests in a manner adverse to the Company or may otherwise fail to comply with their contractual obligations.
Disputes may arise regarding royalty rates, production subject to royalty, allowable deductions, pricing mechanisms, cost allocations, thresholds for payment, audit rights, the geographic extent of the burdened lands, the identity of the obligated payor, or the continuing validity of the interest after transfers, restructurings or amendments to underlying project arrangements. Such disputes may result in delayed payments, reduced payments, litigation or the loss of expected economic benefits.
Where the Company is required to enforce its rights, legal proceedings may be time-consuming, costly and uncertain in outcome. Any failure by an operator or counterparty to honor the Company’s interests, or any adverse determination in litigation or arbitration, could materially adversely affect the Company’s business, results of operations, cash flows and financial condition.
Defects in or disputes relating to the existence, validity, enforceability, terms or geographic extent of royalties, streams and similar interests.
The Company’s ability to realize value from its royalty, stream and similar interests depends on the existence, validity, enforceability and proper scope of those interests. Defects in title, conveyancing errors, deficiencies in registration or recording, inconsistent legal descriptions, ambiguities in governing agreements, conflicting third-party rights, insolvency-related challenges or other legal defects may impair the Company’s rights.
The Company seeks to conduct due diligence when acquiring interests, but confirming the validity, enforceability and extent of royalty, stream and similar interests can be complex and jurisdiction-specific. In some jurisdictions, such interests may be purely contractual and not interests in land, which may expose the Company to greater risks in insolvency, foreclosure, transfer or change-of-control scenarios.
If any of the Company’s royalty, stream or similar interests is determined to be invalid, unenforceable, narrower in scope than expected, or subordinate to third-party rights, the Company may not realize the anticipated benefits from that interest and could incur impairment charges or other losses.
Royalty, stream and similar interests may be subject to buy-down, buy-back, pre-emptive or similar rights.
Certain royalty, stream and similar interests held by the Company may be subject to contractual rights that permit the operator or another party to repurchase, reduce or otherwise dilute all or a portion of the applicable interest. Some interests may also be subject to rights of first refusal, rights of first offer or other pre-emptive rights in favor of third parties in connection with a proposed transfer by the Company.
If such rights are exercised, the Company may receive proceeds that are less than the long-term economic value it expected to derive from the applicable interest. The exercise of these rights could reduce future revenue, limit strategic flexibility and adversely affect the value of the Company’s portfolio.
Project costs may influence the Company’s future royalty returns.
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The Company holds, and may in the future acquire, royalty and similar interests under which payments are calculated by reference to net profits, net proceeds, project-level margins or similar metrics that reflect certain costs incurred by operators. Under such arrangements, rising capital costs, operating costs, sustaining capital, labor costs, energy costs, environmental compliance costs, transportation charges, financing costs, interest charges or other expenditures may reduce or defer payments to the Company.
Some interests may not generate payments until operators recover prior development, exploration or operating expenditures, and cost inflation or operational inefficiencies may significantly delay the commencement of cash flows. The Company has no control over such costs and may have only limited visibility into the assumptions and accounting methodologies used by operators.
Any sustained increase in costs at projects underlying the Company’s interests could materially reduce or delay royalty revenue and adversely affect the Company’s business, results of operations, cash flows and financial condition.
Risks faced by owners and operators of the properties underlying the Company’s interests.
To the extent the Company’s interests depend on exploration, development, production, processing, transportation or sale of minerals or mineral products from underlying properties, the Company is exposed to many of the same risks faced by the owners and operators of those properties. These include risks relating to financing, geology, mine planning, metallurgical performance, processing efficiency, equipment reliability, labor availability, industrial accidents, fires, explosions, flooding, cratering, ground conditions, unexpected geology, less than expected recoveries, tailings or waste management failures, severe weather, natural disasters, transportation interruptions, environmental liabilities, community relations and regulatory compliance.
Mining and mineral processing are inherently hazardous activities and may be disrupted by events beyond operator control. Such events may cause injury or loss of life, damage to property, environmental harm, work stoppages, cost increases, reduced output, suspension of operations, legal claims or regulatory sanctions. Production forecasts may prove inaccurate due to actual ore mined varying from estimates, lower than expected feed grades, revisions to mine plans, short-term operational factors, labor shortages, strikes, failure of key production components or other operational problems.
The Company is also exposed to physical climate risks affecting underlying operations, including increased severity or frequency of storms, droughts, flooding, wildfire, high winds, freezing conditions, extreme temperatures and other climate-related events. Such events may damage infrastructure, interrupt production, impair logistics, reduce water availability, increase costs or delay development. Any material adverse event affecting an operator or a property underlying the Company’s interests could reduce or eliminate payments to the Company and materially adversely affect the Company’s business, results of operations, cash flows and financial condition.
Title, permit or licensing disputes related to properties underlying the Company’s interests could materially reduce or eliminate revenue payable to the Company.
The Company’s business depends on the underlying operators and owners maintaining valid rights to explore, develop, mine, process and sell products from the properties burdened by the Company’s interests. Such rights may be challenged, lost, reduced, not renewed, suspended or revoked for a variety of reasons, including title defects, boundary disputes, non-compliance with permit conditions, failure to maintain claims or leases, governmental action, litigation or administrative proceedings.
If an operator loses or fails to maintain required mining claims, leases, concessions, permits, licenses, rights of way, water rights, processing authorizations, export rights or other property or regulatory rights, production or development on the underlying property may be delayed, curtailed or terminated. Any such event could materially reduce or eliminate revenue payable to the Company.
Excessive cost escalation, as well as development, permitting, infrastructure, operating or technical difficulties on properties underlying the Company’s interests could materially reduce expected revenue.
Many of the projects or properties underlying the Company’s interests are or may be in permitting, construction, development, expansion or restart phases, including uranium and soda ash projects. Such projects are subject to
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numerous risks, including delays in obtaining equipment, materials or contractors, inflationary cost pressures, labor shortages, technical design changes, infrastructure limitations, power shortages, water constraints, transportation bottlenecks, permitting delays, litigation, opposition from stakeholders and changes in environmental or other laws.
Any inability to complete development, restart or expansion activities as planned could materially reduce expected revenue and adversely affect the Company’s business, results of operations, cash flows and financial condition.
Volatility in commodity prices and demand may affect revenue derived by the Company from its asset portfolio.
The value derived by the Company from its asset portfolio is directly tied to commodity prices and demand, including uranium prices and soda ash and other sodium mineral product prices. The market value of the Company’s royalty interests, the amount of payments received thereunder, the attractiveness of development projects and, where applicable, the value of any physical uranium inventory are all sensitive to changes in commodity prices.
Commodity prices are affected by numerous factors beyond the Company’s control, including global and regional supply and demand, industrial activity, inflation, interest rates, exchange rates, trade restrictions, tariffs, sanctions, transportation costs and constraints, market expectations, export market dynamics, production and inventory levels, geopolitical developments and broader macroeconomic conditions. Commodity prices can be highly volatile, and sustained price declines may result in reduced revenue, delayed project development, lower production levels, suspension of operations or permanent mine closures.
Any material decline in uranium prices, soda ash prices or the prices of other commodities relevant to the Company’s interests could materially adversely affect the Company’s business, results of operations, cash flows and financial condition.
Risks related to foreign jurisdictions and emerging markets, including Russia’s invasion of Ukraine, may adversely affect the Company.
Some of the properties on which the Company holds or will hold royalties, streams or similar interests are located outside of Canada and the U.S., including the Langer Heinrich Mine in Namibia. In addition, future investments and physical uranium acquisitions expose the Company to additional jurisdictions. The exploration, development and production of minerals from, or the continued operation of, these properties by their owners and operators are subject to the risks normally associated with conducting business in foreign countries. These risks include, depending on the country, nationalization and expropriation, social unrest, political instability and war, less developed legal and regulatory systems, uncertainties in perfecting mineral titles, trade barriers, exchange controls and material changes in taxation. These risks may, among other things, limit or disrupt the ownership, development or operation of properties, mines or projects in respect of which the royalties, streams or similar interests that are or may be held by the Company, restrict the movement of funds, or result in the deprivation of contractual rights or the taking of property by nationalization or expropriation without fair compensation.
In particular, Namibia is considered an “emerging market”. In addition to the risks noted above, heightened risks associated with emerging markets include, without limitation, the risk of war, terrorism or nationalization; limitations on the removal of funds or other assets, or diplomatic developments that affect investments; policies which may restrict the rights of the owner, operator or Company, including restrictions on investment in the mining industry and requirements that government approval be obtained prior to any such investment by foreign persons; policies that may restrict the Company’s repatriation of income or capital, including temporary restrictions on foreign capital remittances; the lack of uniform legal, accounting and auditing standards and/or standards that are different from the standards required in Canada; potential difficulties in enforcing contractual obligations; and less development and/or obsolescence in banking systems and practices, postal systems, communications and information technology and transportation networks.
Russia’s military invasion of Ukraine, which commenced in February 2022, has continued to result in significant geopolitical instability, market volatility and changes in global trade patterns. In response to the war, the United States, the European Union, the United Kingdom, Canada and other jurisdictions have imposed, expanded and modified financial and economic sanctions, export controls, import restrictions and other measures targeting Russia, Belarus and certain related individuals, entities and industry sectors. These measures, and any additional sanctions, trade
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restrictions, countermeasures or retaliatory actions, may continue to affect global energy and commodity markets, including the uranium market.
Although we have no operations in Russia, Belarus or Ukraine, the ongoing war and related sanctions and trade restrictions could adversely affect our business, results of operations, financial condition and growth prospects. These impacts may include disruptions to uranium supply, conversion, enrichment, transportation, financing, insurance, banking, settlement systems and other logistics; increased costs or delays in transporting uranium or related materials; reduced availability of services from counterparties with exposure to Russia or affected regions; and greater volatility in uranium prices and demand. In particular, uranium produced in Kazakhstan may be affected by regional trade, transportation and logistical constraints, including disruptions or increased costs associated with routes that historically have involved Russia or other affected jurisdictions.
The Company’s policy is to apply various methods, where practicable, to identify, assess and, where possible, mitigate these risks prior to entering into agreements to acquire royalties, streams and similar interests. Such methods generally include conducting due diligence on the political, social, legal and regulatory systems and on the ownership, title and regulatory compliance of the properties subject to the royalties, streams or similar interests; engaging experienced local counsel and other advisors in the applicable jurisdiction; and negotiating where possible so that the applicable acquisition agreement contains appropriate protections, representations and/or warranties, in each case as the Company deems necessary or appropriate in the circumstances, all applied on a risk-adjusted basis. Notwithstanding all of the foregoing, there can be no assurance, however, that the Company will be able to identify or mitigate all risks relating to holding royalties, streams or similar interests in respect of properties, mines and projects located in foreign jurisdictions (including emerging markets), and the occurrence of any of the factors and uncertainties described above could have a material adverse effect on the Company’s business, results of operations and financial condition.
Uranium market risks may adversely affect the Company’s revenues.
The international uranium industry, including the supply of uranium concentrates, is relatively small, highly competitive and heavily regulated. Worldwide demand for uranium is directly tied to the demand for electricity produced by the nuclear power industry, which is also subject to extensive government regulation and policies. In addition, the international marketing and trade of uranium is subject to potential changes in governmental policies, regulatory requirements and international trade restrictions (including trade agreements, customs, duties and taxes). International agreements, governmental policies and trade restrictions are beyond the control of the Company. Changes in regulatory requirements, customs, duties or taxes may affect the supply of uranium to the United States and Europe, which are currently the largest consumption markets for uranium in the world, as well as the future of supply to developing markets, such as China and India.
The supply of uranium is affected by a number of international trade agreements and government legislation and policies. These and any similar future agreements, governmental legislation, policies or trade restrictions are beyond our control and may affect the supply of uranium available in the United States, Europe and Asia, the world’s largest markets for uranium. There is no assurance that the United States or other governments will not enact legislation or take other actions that restricts who can buy or supply uranium or facilitates a new supply of uranium. Any political decisions about the uranium market could affect the prospects of the projects underlying our royalty and other interests, the price of uranium and our financial condition and results of operations.
Soda ash and sodium mineral market risks may adversely affect the Company’s revenues.
The market for soda ash is influenced by macroeconomic conditions, industrial demand, transportation and logistics conditions, export market dynamics, production levels in key producing regions, competition from natural and synthetic soda ash producers, and trade and regulatory developments.
Demand for soda ash is closely linked to end-use markets such as glass manufacturing, chemicals, construction and automotive sectors. A downturn in any of these sectors, or a broader industrial slowdown, may reduce demand for soda ash and adversely affect operator production and sales volumes. In addition, increased use of substitute materials such as plastic, aluminum or other packaging alternatives, or greater use of recycled glass in container glass production, may reduce demand for virgin soda ash in some markets, reducing production and sales by operators of properties underlying the Company’s soda ash royalty interests and adversely affecting the Company’s revenue.
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A substantial portion of soda ash production from the Green River Basin is exported. As a result, the Company’s soda ash royalty revenues will be indirectly exposed to economic conditions, regulatory frameworks and trade policies in export markets. Exchange rate volatility, tariffs, import restrictions, sanctions, shipping disruptions, adverse port or rail conditions, trade disputes and changes in international competition may negatively affect the ability of operators to sell soda ash profitably in export markets.
Global soda ash markets are also affected by production and export dynamics in China and by competition from synthetic soda ash producers and other international suppliers. Increased supply, lower-cost competing production or reduced cost competitiveness of Wyoming soda ash could adversely affect pricing, margins, market share and production levels.
Public acceptance of nuclear energy and competition from other energy sources may affect the Company’s uranium-related interests.
Demand for uranium is tied to demand for electricity generated by nuclear power. The growth of the uranium and nuclear energy industries depends on continued acceptance of nuclear technology by the public, policymakers and regulators. Nuclear incidents, safety concerns, adverse political developments or changes in regulatory policy could reduce support for nuclear energy and adversely affect uranium demand.
Nuclear energy also competes with other energy sources, including natural gas, coal, hydroelectricity, wind, solar and emerging technologies. Sustained lower prices for alternative energy sources or significant advances in competing generation technologies could reduce demand for uranium and adversely affect the value and revenue potential of the Company’s uranium-related interests.
Absence of a broad public market for physical uranium may affect the Company’s ability to monetize uranium inventory.
If the Company acquires or holds physical uranium from time to time, it will be exposed to the limited liquidity and specialized nature of the uranium trading market. There is no broad, transparent public market for physical uranium comparable to exchanges for many other commodities. Transactions may involve a limited number of counterparties, negotiated terms and potentially lengthy sale cycles. The Company may not be able to sell physical uranium in desired quantities, at desired prices or within desired timeframes, which could adversely affect liquidity and financial condition.
Macroeconomic developments and changes in global economic, financial and market conditions may negatively impact the market value of the Company’s securities and assets.
The Company and the operators of properties underlying its interests are exposed to broader macroeconomic conditions, including inflation, interest rate changes, recession, credit tightening, banking instability, sovereign debt issues, energy price shocks, trade disruptions, pandemics, war, civil unrest and other external events. The uranium industry is relatively small, highly regulated and influenced by government policy, utility procurement decisions, nuclear reactor construction and restart activity, and public acceptance of nuclear energy. The soda ash industry is driven by industrial demand, global trade and cost competitiveness. These factors may reduce commodity demand, increase costs, impair financing availability, delay project development or negatively affect the market value of the Company’s securities and assets. General economic slowdowns, recession, inflation, higher interest rates, industrial contraction, reduced construction or manufacturing activity, transportation disruptions, trade barriers or changes in government policy may adversely affect demand for uranium, soda ash and other mineral products relevant to the Company’s interests and may impair the ability of underlying operators to finance development or maintain operations.
The Company may be unable to repay indebtedness or comply with obligations under debt arrangements associated with the Sweetwater acquisition.
The Company’s ability to make scheduled principal and interest payments, comply with financial covenants or refinance indebtedness will depend on future operating performance, commodity prices, operator performance, capital markets conditions and other factors beyond the Company’s control. The Company may not generate sufficient cash flow to service such indebtedness or refinance it on acceptable terms, if at all.
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Debt arrangements may contain affirmative and negative covenants, financial tests, restrictions on additional indebtedness, liens, distributions, amendments to underlying contracts, asset sales and other transactions. Failure to comply with such covenants may result in an event of default and permit lenders or noteholders to accelerate indebtedness or exercise remedies.
In addition, the Royalty Notes are secured by royalty interests and related cash flows associated with the acquired soda ash royalty business and may require revenues to be held in restricted accounts or otherwise limit cash distributions from relevant subsidiaries. These restrictions could reduce the Company’s financial flexibility and adversely affect its liquidity and financial condition.
We have entered into a senior secured credit facility, and our failure to comply with its covenants or to repay or refinance amounts drawn thereunder could adversely affect our business.
On July 27, 2026, we entered into the Credit Agreement with the Agent and the Lenders providing for the Facility, a senior secured revolving credit facility of up to $50.0 million, together with the Accordion Facility, which permits incremental commitments of up to an additional $25.0 million, subject to the satisfaction of certain conditions. Up to $40.0 million may be drawn under the Facility as a single advance to fund a portion of the Sweetwater Acquisition and related expenses. Any amounts drawn for that purpose must be repaid in full, and the Facility must have no outstanding balance on or before the Bridge Repayment Date. Prior to the Bridge Repayment Date, the Company is required to apply 100% of the net proceeds of any capital markets issuance to repay outstanding balance of the Facility.
Our obligations under the Facility are guaranteed by certain of our subsidiaries and are secured by a first-ranking security interest in substantially all of our and the Guarantors’ present and future real and personal property, including certain material agreements, equity pledges and cash accounts. The Credit Agreement contains customary representations and warranties and affirmative and negative covenants, including financial covenants requiring us to maintain minimum liquidity and minimum tangible net worth thresholds, and, following the Bridge Repayment Date or in certain circumstances of increased utilization, a minimum debt service coverage ratio and a minimum interest coverage ratio. These covenants restrict, among other things, our and our subsidiaries’ ability to incur and carry additional indebtedness, create liens, dispose of assets, make distributions or engage in certain other transactions, which may limit our operational and financial flexibility.
Our ability to comply with these covenants and to make scheduled payments under the Facility will depend on our future operating performance, commodity prices, the performance of operators underlying our interests, and capital markets conditions, many of which are beyond our control. A breach of any covenant, or our failure to make a required payment, could result in an event of default under the Credit Agreement, which would permit the Agent and the Lenders to accelerate all amounts outstanding thereunder and to exercise remedies against the collateral securing the Facility, including foreclosure on substantially all of our and the Guarantors’ assets. The events of default under the Credit Agreement also include cross-defaults to other indebtedness in excess of a specified threshold and a change of control of the Company, which could be triggered by events outside of our control. Any such event of default, acceleration or exercise of remedies could materially and adversely affect our business, results of operations, cash flows and financial condition, and there can be no assurance that we would have sufficient liquidity to repay amounts accelerated under the Facility or that we would be able to refinance the Facility on acceptable terms, or at all.
Any inability of the Company to obtain necessary financing when required on acceptable terms or at all.
The Company may require additional equity or debt financing to fund acquisitions, debt service, working capital, general corporate purposes or other strategic initiatives. Its ability to obtain financing on acceptable terms will depend on capital market conditions, investor sentiment, commodity prices, the value and performance of its portfolio and broader economic conditions.
If the Company is unable to obtain required financing when needed, it may be unable to execute its business strategy, pursue acquisitions, service obligations or take advantage of business opportunities. Equity financing may dilute existing shareholders, while debt financing may increase leverage and financial risk. The Company has historically had limited operating revenues relative to its corporate objectives and has relied on financings, asset sales and other transactions to fund operations and acquisitions. Although the Sweetwater Acquisition is expected to increase the Company’s exposure to producing royalty cash flows, there can be no assurance that the Company will generate
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sufficient positive cash flow from operations on a sustained basis, and capital markets may not be receptive to new debt or equity offerings on acceptable terms, or at all.
Negative cash flow from operating activities and limited operating history of revenue generation.
The Company has historically had limited operating revenues relative to its corporate objectives and has relied on financings, asset sales and other transactions to fund operations and acquisitions. Although the Sweetwater acquisition is expected to increase the Company’s exposure to producing royalty cash flows, there can be no assurance that the Company will generate sufficient positive cash flow from operations on a sustained basis.
If expected revenues from uranium, soda ash or other royalty interests do not materialize, if debt service obligations are significant or if operating expenses increase, the Company may continue to require external financing. Capital markets may not be receptive to new debt or equity offerings on acceptable terms, or at all.
Risks associated with future acquisitions.
The Company regularly evaluates acquisition opportunities involving royalties, streams, physical uranium, soda ash and other mineral or energy-related interests. Acquisitions involve numerous risks, including selecting inappropriate targets, overpaying, inaccurate due diligence, unforeseen liabilities, integration challenges, financing risks, covenant restrictions and failure to achieve expected strategic or financial benefits.
There can be no assurance that the Company will successfully integrate the acquired business, manage the resulting complexity or realize expected benefits. If the Company is unable to manage these new areas effectively, or if management’s assumptions regarding the acquired business prove incorrect, the Company’s business, results of operations, cash flows and financial condition could be materially adversely affected.
For risks relating specifically to the integration of the Sweetwater Entities and the Sweetwater Assets, see “Risks Related to the Sweetwater Acquisition” above.
Any inability to attract and retain key employees.
The Company’s success depends on the continued services of its directors, officers and key employees and on its ability to attract and retain personnel with expertise in royalty transactions, mining finance, uranium markets, soda ash and industrial minerals, accounting, legal compliance and public company administration. Competition for such personnel is intense. If the Company is unable to retain existing personnel or recruit qualified replacements, its business strategy and growth prospects may be adversely affected.
Key employees currently employed by the Company in the operations of the Sweetwater Entities have continued employment following the Arrangement. The Company is reliant on the Sweetwater Entities’ personnel, good faith, contractual compliance, expertise and judgment in providing the services, where the Company’s ability to manage operational risks may be limited. It is possible that these employees may decide not to remain with the Company. If the Company is unable to retain key employees who are critical to the successful integration and future operations of the companies, the Company could face disruptions in its operations, loss of key information, expertise or know-how and unanticipated additional recruitment costs.
Competition and pricing pressure.
The royalty and streaming business is highly competitive. The Company competes with specialized royalty companies, mining companies, investment funds and other market participants for acquisition opportunities. Many competitors have greater financial resources, broader technical capabilities, larger teams, longer operating histories or lower costs of capital.
The number of attractive royalty acquisition opportunities in uranium, soda ash and other minerals may be limited, and competitive pressure may increase acquisition prices or reduce the Company’s ability to complete transactions on acceptable terms. Inability to acquire additional interests at reasonable valuations may impair the Company’s growth strategy.
Liquidity in equity and other investments.
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Some investments that may be held by the Company may be thinly traded or illiquid. The Company may not be able to dispose of such investments in a timely manner or at favorable prices. If the Company is required to sell investments during periods of market weakness or low trading liquidity, it may incur substantial losses.
Changes in legislation, permitting and licensing regimes, taxation and government policy.
The properties underlying the Company’s interests are located in multiple jurisdictions and are subject to evolving laws, regulations and governmental policies relating to mining, mineral processing, environmental protection, reclamation, taxation, royalties, trade, labor, health and safety, foreign ownership, land use, exports, imports, permitting and Indigenous or community rights.
Changes in applicable laws, regulations, policies or their interpretation or enforcement may adversely affect operators’ ability to develop, operate or expand projects underlying the Company’s interests. Such changes may increase costs, delay or prevent development, reduce production, restrict exports, alter tax or royalty burdens, or impair the enforceability or economics of the Company’s interests.
Regulations and political or economic developments in jurisdictions where the Company holds or may hold royalties, streams or other interests may adversely affect the Company.
The Company’s royalty, stream and other interests are located in Canada, the United States, Namibia, Spain and potentially other jurisdictions in the future. Conducting business across multiple jurisdictions exposes the Company and the underlying owners and operators to sovereign, legal, political, economic and regulatory risks. These risks include, among other things: expropriation or nationalization of mining property; seizure of mineral production; exchange and currency controls and fluctuations; limitations on foreign exchange and repatriation of earnings; restrictions on mineral production and price controls; import and export regulations, including changes to trade policies, tariffs, trade sanctions and restrictions on the export of uranium; changes in legislation and government policies, including changes related to taxation, government royalties, tariffs, imports, exports, duties, currency, foreign ownership, foreign trade, foreign investment and other forms of government take; changes in foreign investment rules; challenges to mining, processing and related permits and licenses, or to applications for permits and licenses, by or on behalf of regulatory authorities, Indigenous populations, non-governmental organizations or other third parties; changes in economic, trade, diplomatic and other relationships between countries, and the effect on global and economic conditions, the stability of global financial markets, and the ability of key market participants to operate in certain financial markets; high rates of inflation; labor practices and disputes; enforcement of unfamiliar or uncertain foreign real estate, mineral tenure, contract, water use, mine safety and environmental laws and policies; renegotiation, nullification or forced modification of existing contracts, licenses, permits, approvals, concessions or the like; war, crime, terrorism, sabotage, blockades and other forms of civil unrest, and uncertain political and economic environments; corruption; exposure to liabilities under anti-corruption and anti-money laundering laws, including the United States Foreign Corrupt Practices Act and similar laws and regulations in other jurisdictions; suspension of the enforcement of creditors’ rights and shareholders’ rights; and loss of access to government-controlled infrastructure, such as roads, bridges, rail, ports, power sources and water supply.
The Company’s soda ash royalty interests acquired in the Sweetwater acquisition are primarily U.S.-based, but they remain exposed to U.S. federal, state and local regulation and to international trade conditions because a substantial portion of underlying production may be sold into export markets. The Company’s uranium and other interests may face additional cross-border political and economic risks, including risks associated with emerging markets.
Any such developments could limit or disrupt project development, production, processing, transportation or sales; restrict the movement of funds; reduce the value or enforceability of the Company’s interests; or materially adversely affect the Company’s business, results of operations, cash flows and financial condition.
Compliance with environmental, health, safety and related laws and regulations.
Underlying mining and mineral processing operations are subject to extensive environmental, health and safety laws and regulations, including those relating to air emissions, water discharges, water use, waste management, hazardous substances, reclamation, land disturbance, worker safety, endangered and threatened species, habitat protection and cultural or historical resources.
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Compliance with these requirements may require significant expenditures by operators and may delay or restrict development, expansion or production. Operators may also incur liabilities for environmental contamination, natural resource damages, personal injury claims, regulatory penalties or remediation obligations. Stricter future standards, increased enforcement or adverse permitting outcomes could reduce production or increase costs at properties underlying the Company’s interests.
If operators incur significant compliance costs, lose permits, are required to curtail operations or become subject to fines, penalties or other liabilities, the Company’s revenues may be reduced, delayed or eliminated.
Risks associated with Indigenous rights, land claims and similar interests.
Certain properties underlying the Company’s interests may be subject to asserted or unasserted Indigenous rights, land claims, consultation obligations, treaty rights or similar claims and interests. These issues may affect permitting, land access, project development, operations or expansion and may result in delays, additional costs, negotiated accommodations, litigation or restrictions on development.
In Canada, First Nations rights may be claimed on Crown properties or other types of tenure with respect to which mining rights have been conferred. The legal basis of such claims is complex, and the impact of negotiated settlements, self-government agreements or judicial pronouncements cannot be predicted with certainty. A broad recognition of Indigenous rights or title may adversely affect the timing, scope or economics of exploration, development or mining activities on lands burdened by the Company’s interests.
Although the Company does not operate underlying properties, any successful claim or material dispute affecting lands burdened by the Company’s interests or the Sweetwater Assets could adversely affect production or development and thereby reduce revenue to the Company.
Fluctuations in foreign exchange rates.
The Company reports in U.S. dollars but may receive revenues, hold assets or incur obligations denominated in Canadian dollars, Australian dollars or other currencies. The Company may also have exposure to other currencies through foreign assets or operators. Exchange rate fluctuations may affect reported revenues, asset values, debt obligations and overall financial performance.
Disruptions to the information technology systems of the Company or third-party service providers.
The Company relies on information technology systems and third-party service providers for financial reporting, treasury functions, data management, communications, portfolio monitoring and other corporate functions. These systems contain, among other information, the Company’s proprietary business information and personally identifiable information of its employees. These systems may be vulnerable to cyber-attacks, ransomware, unauthorized access, data loss, service outages, software defects, physical damage, power interruptions or other disruptions. The proper functioning of these systems and the security of such data are outsourced by the Company to third-party service providers on whom the Company relies for the security and proper functioning of these systems.
A cyber incident or systems failure could result in operational disruption, reputational harm, regulatory exposure, theft or loss of confidential information, increased costs and legal claims. The use or non-use of evolving technologies, including artificial intelligence tools by the Company or its service providers, may create additional operational, accuracy, compliance or competitive risks.
Litigation risks.
The Company may become involved in legal proceedings arising in the ordinary course of business, including contractual disputes, securities claims, employment matters, acquisition-related claims, tax disputes or claims relating to underlying properties burdened by its interests. Litigation may be costly, time-consuming and distracting to management, and outcomes are inherently uncertain.
The Company may also be indirectly affected by litigation involving owners, operators, lessors, neighboring landowners, governmental authorities, Indigenous groups, non-governmental organizations or other stakeholders with
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respect to underlying properties. Such litigation could delay, restrict or prevent exploration, development, production or payments and materially adversely affect the Company.
Potential conflicts of interest.
Certain directors and officers of the Company may serve as directors or officers of, or have interests in, other natural resource, royalty, investment or mining companies. These relationships may create actual or perceived conflicts of interest in connection with acquisition opportunities, financing arrangements, strategic transactions or other corporate decisions. Although the Company expects such persons to comply with applicable corporate and legal duties, conflicts may nevertheless arise and may adversely affect the Company.
Any inability to ensure compliance with anti-bribery, anti-corruption and similar laws.
The Company is subject to anti-bribery, anti-corruption, anti-money laundering and similar laws in the jurisdictions in which it operates or has exposure. Violations by the Company, its employees, agents, contractors or counterparties could result in reputational damage, civil or criminal penalties, investigations, legal costs and other adverse consequences. The Company may not be able to ensure compliance in every jurisdiction or circumstance.
Any failure to maintain effective internal controls.
As a public company with a growing and increasingly complex business, including the acquired soda ash royalty business, the Company must maintain effective internal controls over financial reporting and disclosure controls and procedures. Expansion, acquisitions, personnel changes, system changes or process failures may strain internal controls.
If the Company fails to maintain effective controls, it may not be able to report financial results accurately or on a timely basis, prevent fraud, comply with securities laws or maintain investor confidence. Any material weakness, significant deficiency or control failure could result in regulatory scrutiny, litigation, reputational harm or declines in the market price of the Company’s securities.
High-risk and speculative nature of an investment in the Company’s securities.
An investment in the Company’s securities is highly speculative and involves a significant degree of risk. The Company’s revenues depend on external operators, commodity prices, project development and financing conditions that are beyond its control. The predecessor Company had net income in 2026 and 2024 but incurred a net loss in 2025. The Company may not achieve profitability in the future, and investors may lose all or part of their investment.
Dilution.
The Company may issue additional Shares or securities convertible into Shares in connection with acquisitions, financings, debt restructurings, compensation arrangements or other corporate purposes. Any such issuance may dilute existing shareholders, potentially materially.
Volatility of share price.
The market price of the Shares may be volatile and may fluctuate for reasons unrelated to operating performance, including changes in commodity prices, market sentiment toward mining or royalty companies, general economic conditions, acquisitions, financing transactions, analyst coverage, trading liquidity or broader market volatility. Securities litigation may also arise following periods of volatility.
Dividend policy.
The Company has not historically paid dividends and may not pay dividends in the foreseeable future. Any future payment of dividends will depend on the Company’s financial condition, operating results, debt obligations, contractual restrictions, working capital needs, acquisition opportunities and other factors determined by the board of directors. Holders of Shares should not assume they will receive any return on their investment in the form of dividends.
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An active trading market for shares of our common stock may never develop or be sustained, which may make it difficult to sell the shares of our common stock.
The price of shares of our common stock may fluctuate significantly due to general market and economic conditions and forecasts, our general business condition, our relatively small number of stockholders and the release of our financial reports. An active trading market for our common stock may not develop or continue or, if developed, may not be sustained, which would make it difficult for stockholders to sell their shares of common stock at an attractive price (or at all). The market price of our common stock may decline below stockholders’ respective purchase prices, and they may not be able to sell their shares of common stock at or above those prices (or at all). Additionally, if our common stock is delisted from Nasdaq for any reason and is quoted on the Over-the-Counter Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our common stock may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange. Stockholders may be unable to sell common stock unless a market can be established or sustained.
General
Effects of the spread of illness or other public health emergencies.
Pandemics, epidemics and other public health emergencies may adversely affect the Company, the operators of properties underlying its interests, the commodities markets in which the Company participates and the broader economy. Public health events may disrupt labor availability, supply chains, financing markets, transportation, development schedules and ongoing operations at underlying projects.
Such events may also heighten many of the other risks described in this section, including commodity price volatility, financing risk, operational delays, cybersecurity risks and counterparty performance risk.
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