2024-11-18 04:12:00
Last June, a new company called Nations Royalty Corp began trading on the TSX Venture Exchange.
Quietly, it took an important step on the path to Indigenous economic reconciliation in Canada by becoming the only mining royalty company in the world to be majority-owned by Indigenous people.
Backed by Canadian billionaire Frank Giustra, a mining financier, Nations Royalty aims to attract investors with the promise of Indigenous-owned royalties.
For the Nisga’a Nation, the self-governing First Nation in British Columbia which owns 77% of the company, Nations Royalty is also a key element on the path to economic independence.
“One of our nation’s goals is financial independence. We have not yet freed ourselves from the Indian Act, as we would like. The royalties will allow us to manage our own wealth, instead of relying on public funds,” said Charles Morven, Secretary-Treasurer of the Nisga’a Nation.
The concept of royalty is simple. Virtually all mining projects in Canada are located on Indigenous territories. For legal and social responsibility reasons, mining companies wishing to obtain a permit to operate in a given region generally sign “benefits agreements” with the affected First Nations.
In most cases, these agreements include royalties, which are a regular payment that the mining company agrees to make based on the mine’s production or net profit.
By consolidating multiple royalties into a single publicly traded, dividend-paying company, Nations Royalty wants to provide investors with diversified exposure to Canadian mineral resources and create a source of income for its Indigenous owners and shareholders.
“We have the ambition to build a top-five royalty company, and the path is set, because the number and scale of royalties in Canada are very impressive,” said Rob McLeod, CEO of Nations. Royalty, which holds Nisga’a-owned royalties on five different mining projects in British Columbia. However, he clarified that there are more than 400 individual benefits agreements between mining companies and First Nations across Canada.
He added that the Nisga’a are currently looking for other First Nations royalty holders to join them and become shareholders in the new company.
An “interesting and original” concept
Typically, mining royalty companies attract investors because they are less risky than investing in a single mining project.
For royalty holders themselves – in this case indigenous royalty holders – royalty companies are a way to monetize royalty agreements that have been signed, but are not yet generating revenue, as in where the mine has not yet entered its production phase.
“Particularly for Indigenous groups who only have one mine on their land, there is a reason to be in the collective,” Mr McLeod said.
Ken Coates, director of the Indigenous program at the Macdonald-Laurier Institute and professor emeritus at the University of Saskatchewan, called the concept of nations royalty “interesting and original.”
He said he particularly admires the Nisga’a’s goal of reaching out to other Indigenous groups in Canada to pool resources and increase their economic weight through economies of scale.
In its final report released in 2015, the Truth and Reconciliation Commission of Canada defined the concept of “economic reconciliation”, affirming that Indigenous people, businesses and communities must have the opportunity to fully participate in the Canadian economy .
Coates said as an Indigenous-owned investment vehicle trading on the TSX Venture Exchange, Nations Royalty shows how far we’ve come.
“In the 1970s and 1980s, if an indigenous community purchased a gas station in a small town, it was considered a major achievement. So it’s an astonishing transition to have gotten to this point. »
Almost all members of Nations Royalty’s board of directors and management team are Indigenous.
Mr. McLeod is not. He acts as interim until a person from the First Nations is found.
Mr. Morven of the Nisga’a Nation said that in addition to creating wealth, the Nisga’a want to use Nations Royalty to build their financial capacity to access capital markets in the future.
Shareholders will be able to use their shares as securitized assets to obtain loans and invest in other projects, something indigenous communities have historically struggled to do.
“We found that there was racism in the financial markets. When we approached one of the world’s largest royalty companies to see if they were interested in investing, they said we were a risk,” Mr Morven said.
“So it’s about strengthening the capacity of the Nisga’a to train people with experience in the financial markets. We will not only build this financial capital, but also develop the capacity to manage it ourselves in the future,” he added.
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How can other Indigenous communities learn from Nations Royalty Corp’s model to enhance their own economic independence and sustainability?
**Interview with Charles Morven, Secretary-Treasurer of the Nisga’a Nation and a key figure in Nations Royalty Corp**
*Editor:* Thank you for joining us, Charles. Nations Royalty Corp has recently made headlines by becoming the first mining royalty company to be majority-owned by Indigenous people. Can you share a bit about the significance of this achievement for the Nisga’a Nation?
*Charles Morven:* Thank you for having me. This is indeed a significant milestone for the Nisga’a Nation, as it directly reflects our goal of economic independence. By owning 77% of Nations Royalty, we are taking control of our own economic destiny, managing our wealth, and reducing our reliance on public funds. This venture not only sets a precedent within the mining industry but also exemplifies the potential for Indigenous communities to lead in economic reconciliation.
*Editor:* The concept of mining royalties is not new, but consolidating them into a publicly traded company like Nations Royalty is innovative. Can you explain how this model works and its benefits for Indigenous communities?
*Charles Morven:* Certainly! The idea is that mining companies typically enter into benefits agreements with Indigenous Nations when operating on their territories, which include royalties based on production or profit. Nations Royalty consolidates multiple royalty agreements into one company, allowing investors to gain diversified exposure while providing a steady income stream for Indigenous shareholders. This collective approach reduces risk for individual communities, especially those with fewer resources or only one mine on their land.
*Editor:* Rob McLeod, your CEO, has expressed ambitions for Nations Royalty to become a top-five royalty company in Canada. What steps do you think are essential for achieving this goal?
*Charles Morven:* Scaling up is crucial. We are looking to partner with other First Nations that have royalty agreements to increase our economic weight. By pooling our resources, we can enhance our negotiating power and diversify our portfolio further. We also aim to showcase that there’s a robust market for Indigenous-owned royalties, attracting more investors who want to support our vision for reconciliation and economic sustainability.
*Editor:* Ken Coates has described this initiative as “interesting and original.” How do you envision the role of Nations Royalty in the broader context of economic reconciliation in Canada?
*Charles Morven:* Nations Royalty is emblematic of the advancements we can make when Indigenous communities come together to leverage their resources. It aligns with the Truth and Reconciliation Commission’s calls for economic reconciliation, ensuring that Indigenous peoples have an equitable place in the Canadian economy. By succeeding in this space, we can serve as a model for other Indigenous nations, illustrating that economic collaboration can lead to empowerment and resilience.
*Editor:* in addition to generating wealth, how do you see Nations Royalty contributing to the overall development of the Nisga’a community?
*Charles Morven:* Beyond wealth creation, Nations Royalty is about building capacity. We want to use the financial resources generated to invest in our community—education, healthcare, infrastructure, and other key areas. Ultimately, our goal is to enable long-term sustainability and ensure that future generations of the Nisga’a Nation thrive.
*Editor:* Thank you, Charles, for sharing your insights. It’s inspiring to hear about the positive steps the Nisga’a Nation is taking towards economic independence and reconciliation.
*Charles Morven:* Thank you for the opportunity to discuss this important initiative.
