Orogen Royalties Turns $375,000 of Exploration Into a $25 Million Royalty and a $421 Million Exit

Orogen Royalties spent roughly $375,000 to generate its two flagship royalties. About $225,000 into the Silicon project ended in a $421 million sale to AngloGold Ashanti, and $150,000 into Ermitaño has so far returned more than $25 million in royalty revenue. CEO Paddy Nicol laid out that arithmetic in a pre-symposium interview with Rick Rule, and it is the clearest illustration of how the company builds royalty value from low-cost grassroots work.

Nicol described 30 years in mineral exploration, including 15 years running prospect-generation companies that moved from Mexico into British Columbia and then the western United States. The 2019 merger with fellow prospect generator Renaissance Gold turned the business into a royalty company — and, per Rule, a vote of confidence in Nicol, who was chosen to lead a group with an unusually strong grassroots track record in Nevada.

## Two projects tell the whole story

The clearest way to understand Orogen is what it spent versus what it got back. Nicol said the company invested roughly $225,000 in the Silicon property in Nevada's Walker Lane — hyperspectral analysis, claim staking around 2015, and two years of holding costs — before turning it over to AngloGold Ashanti. The Silicon royalty anchored a $421 million transaction completed in July, of which $343 million was attributable to Silicon by Nicol's account. The deposit is now known as the Arthur gold project.

Ermitaño, in Sonora, Mexico, followed the same path. Orogen was hunting epithermal targets — precious metal deposits formed by hot fluids near the surface — and spent about $150,000 generating the project before selling it to First Majestic. The sale brought roughly $1.5 million in payments, and the retained royalty on the mine that followed has since delivered more than $25 million of revenue to Orogen. "That's basically what sustains Orogen now," Nicol said.

## How the model works

Orogen is a prospect generator: it identifies and stakes early-stage projects cheaply, then hands them to partners who fund all ongoing exploration. Nicol put the typical generation cost at $150,000 to $200,000 per project. When a project is sold or partnered, Orogen collects share and cash payments and — the step he called most important — keeps a royalty. A royalty is a claim on future production, and it matters because it gives exposure to a project's entire lifecycle, including a producing mine, without further investment or dilution. If a project fails, the loss is capped at the modest generation cost. After the Silicon sale, Nicol said the company continues through its spin-out with almost all the same assets except the Silicon royalty, running the same early-stage, organic royalty-creation model.

## The engine behind the hits

Rule asked how a deposit he sized at roughly 10 million ounces could be found in a district as thoroughly prospected as the Walker Lane. Nicol's answer was hyperspectral data analysis — imaging of surface mineral alteration captured from satellites or aircraft. Some data is free, since NASA releases it periodically; freshly flown surveys cost more but resolve more. Anyone can acquire the data, he said. The edge is the interpretation: Orogen has refined a process for telling one silica cap from another — a silica cap being the hard, silicified ground that can sit above epithermal gold systems.

The team carries that history. Orogen was formed in 2019 through a merger with Renaissance Gold, whose predecessors discovered Long Canyon in Nevada. The geologist who first targeted the Silicon area is still with the company, and this past March the Renaissance and AngloGold Ashanti teams shared a PDAC award for the discovery.

## What the company looks like today

Last year Orogen generated just over $13 million of revenue, Nicol said: about $9.5 million from royalties — essentially all Ermitaño — and more than $3 million from the prospect-generation business, mostly in share and cash payments. That second arm is designed to be profitable on a standalone basis, a rule the team set six years ago when it decided royalty income would not be recycled into high-risk exploration. "Our royalties are being created for free," Nicol said. Rule sharpened the point: better than free, because the business accumulates cash.

The balance sheet backs that framing. Nicol put the market cap around $200 million, with no debt and a cash-heavy working capital position. He estimated the net present value of the Ermitaño royalty at roughly half the market cap, which Rule translated into a range of about $100 million to $110 million. The mine keeps improving on the metrics a royalty holder cares about: roughly one million ounces when production started in 2021 and about one million ounces today, with First Majestic lowering the cutoff grade in response to higher gold prices. Mine life, about seven years in 2021, now looks like eight to 10 years to Nicol.

## What to watch

The pipeline is busy at Orogen's favorite price: nothing. Nicol counted 14 partner-funded drilling programs this year, none paid for by Orogen, ranging from 1,500 to 2,000 metre programs costing around $1 million up to programs of 10,000 to 20,000 metres. He estimated $50 million to $75 million of partner spending across the portfolio and said partners have raised more than $100 million over the past six months to fund the work. Partner news flow runs at one to two releases per week. Generative alliances with groups including Altius Minerals and Triple Flag co-fund early-stage exploration, with the resulting data jointly owned.

## The takeaway

Two caveats belong next to the numbers. Concentration: nearly three-quarters of last year's revenue came from a single royalty on one mine, so Ermitaño's performance drives the near-term story. And setting: Rule disclosed that his organization owns stock in every company it exhibits and that he has backed Nicol for two decades, so the interview is friendly by design. Even so, the model Nicol described — small, capped generation costs, a debt-free balance sheet, and partners paying for the drilling — is specific enough to follow up on. His own summary of the setup: 14 attempts are in the ground, and "at some point, one of these will become the next big value creation event for Orogen."