Peter Epstein Blog | Is This The Cheapest #Royalty / #Streaming Company? | Talkmarkets
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Is This The Cheapest #Royalty / #Streaming Company?

Date: Monday, July 23, 2018 8:17 PM EDT

The following interview of Brett Heath, CEO of Metalla Royalty & Streaming (TSX-V: MTA) / (OTCQB: MTAFF) was conducted by phone and email over a one week period ended July 18th.  Metalla is a small-cap precious metals royalty / streaming company.  The investment thesis (in my opinion) is that someday it will be acquired by a larger player in the sector.  

In the meantime, it trades at roughly 1/3 the valuation of peer industry giants.  Brett and his accomplished team are growing the Company rapidly via prudent transactions that diversify risk and appear to have highly attractive return profiles.  {corporate presentation}

I’ve written a few articles on Metalla Royalty & Streaming and I’m happy to report that management has delivered on its promises.  It was up-listed to tier 1 on the TSX-v, instituted and has already increased a monthly cash dividend, made accretive deals and has several more in the works (including Valgold Resources).  Metalla has secured several new team members and closed a blockbuster transaction with prominent mid-tier miner Coeur Mining.  

Without further preamble, here’s my exclusive interview with President & CEO Brett Heath

Brett, when we first met, you had a couple of early stage royalties and a C$ 10 M market cap.  Now you have a growing portfolio of producing, development & exploration royalties / streams and a C$ 60 Mmarket cap.  How were you able to do this?

As far as mining investments go, it’s hard to beat the stability of precious metals royalties.  Just look at companies like Franco-Nevada (NYSE: FNV) / (TSX: FNV)Wheaton Precious Metals (NYSE: WPM) / (TSX: WPM) or Royal Gold (NYSE:RGLD).  They have significantly outperformed traditional mining companies and the underlying gold price over the last decade.  

That success created an opportunity that Metalla, just 1/200th the average market cap of those three, has been able to capitalize on.  Our size allows us to look at hundreds of royalty & streaming deals that aren’t big enough to move the needle of larger companies. 

Our third-party acquisition strategy has allowed us to pick up royalties on projects operated by multi-billion-dollar companies like Goldcorp, Pan American Silver, Tahoe Resources, Agnico-Eagle, TOHO Zinc and Osisko Mining (not to be confused with Osisko Gold Royalties).  These strong operators will drive big premiums for Metalla shareholders as we continue to add more royalties and streams to the portfolio.

How important is your team?  You say that you benefit from smaller, more attractive transactions, but the Majors have deep pockets and access to top-notch financial advisors & mining experts.

Our team is critical.  Every deal is different.  Each requires specific expertise once you get down into the details.  That’s why we have a strong, full-time team and we also retain consulting experts to help us solve unique problems in the deal process.  This means we have access to the same caliber of legal, technical and financial (tax/accounting, etc.) people as our much larger peers, but without the bloated payroll.

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