Metalla Royalty & Streaming Ltd, A Pure Precious Metals Play
OTCMKT:EXCFF, Canada:MTA Germany: X9CP
Metalla Conterparties: Goldcorp (NYSE:GG), Tahoe Resources (NYSE:TAHO), Osisko Mining (TSE:OSK), and Orefinders Resources (TSXV:ORX)
Metalla Royalty & Streaming Ltd. is a junior precious metals streaming company. This young firm has already got a strong growth profile, it offers investors cost predictability, direct leverage to increasing Gold and Silver prices, as experiences and aggressive management build to a high-quality asset base.
The Key element to this managements aggressive outlook are, as follows:
- Diverse structure focused on deals between $2 to 10-M that are not in the cross-hairs of the major established companies
- Immediate cash flow from producing Gold and Silver mining operations
- Very diverse asset base with Tier 1 industry counterparties including Goldcorp, Tahoe, and Osisko.
I met Brett Heath, co-Founder/President/Director, in mid-January 2017 to discuss the company’s goals and achievements to date.
Management’s goal is create diversified annual cash flow of $10-M levered to Gold/Silver, and the build the best company in the industry for for exposure to precious metals in this next Bull Market cycle.
Management’s focus is on precious metals streams and royalties in Gold and Silver, profit margin and position on the industry cost curve, counterparty risk, technical risk, and producing assets.
Detailed due diligence on mine prospects production profiles include the following:
- Site visits by technical team and independent technical advisors
- Production assumptions based on existing mine-able reserves
- Resources conversion assumptions evaluated on case by case basis
- Key mine operation factors such as geology, infrastructure and permitting, which could impact production volumes or mine life.
- Legal ownership, permits, licenses, operating agreements, titles, and corporate structure.
Metalla so far has assembled an initial portfolio of producing precious metals mines in North America (Canada)
- Hoyle Pond Extension Royalties Agreement Highlights: 1% NSR granted by Goldcorp (NYSE:GG); Location: Timmins Ontario, Canada Project Status: Producing (Since Y 1985) Counterparty: Goldcorp; Production: 160,000 ounces Au (Silver) annually; Average grade: 14 gpt Au; the leased mining rights located in Hoyle Township, east of the Hoyle Pond Gold Mine, payable after production of 500,000 ozs Gold equivalent; Company estimates based on publicly available information
- TVZ Zone and Bint Royalties (Hoyle Pond) Agreement Highlights: 1% NSR granted by Goldcorp on the fee simple mining rights (patented claims) located in Hoyle Township, east of the Hoyle Pond Gold Mine, + 1% NSR on Glencore’s “Bint Property” located in Matheson Township, east of the Hoyle Pond Gold Mine. Location: Timmins Ontario, Canada; Project Status: Planned Production Y 2021, Counterparty: Goldcorp (NYSE:GG); Company estimates based on publicly available data.
- West Timmins Extension Royalty Agreement Highlights: 1.5% NSR on the West Timmins extension properties, owned by Tahoe, subject to buyback of 0.75% at $750,000; Location: Timmins Ontario, Canada Project Status: Mine producing Production: 50,000 oz Au annually Grade: 4.5 gpt Au; Cash flow: Y 2018; Counterparty: TahoeResources (NYSE:TAHO). Company estimates based on publicly available data.
- DeSantis Mine Royalty Agreement Highlights: 1.5% NSR on the Desantis properties owned by Counterparty Osisko Mining with a buyback of 0.5% for $1-M; Location: Timmins Ontario, Canada; Project Status: Development stage; Production: mine operated from Y’s 1939 thru 1942 during which time 179,000 tons produced at a grade of 6.51g/t Au; Grade: 6.5 gpt Au.
- Mirado Mine Royalties Agreement Highlights: 2% NSR capped at C$1-M with the right to buy additional 1% NSR for life of mine for C$2-M up untill commercial production is declared; ROFR on stream financing; Location: Kirkland Lake, Canada; Project Status: Working towards Pre-feasibility study; Resource: 442,000 oz Au Inferred; Counterparty: Orefinders Resources (ORX:TSXV).
The above listed projects provide diversification of 4 cash flowing assets by 2020, thus making Metalla eligible to list on the TSX Main Board in Y 2017.
Monday morning, 30 January 2017 Gold and Silver Market Outlook
Gold at 1194.57 moved up on weakness in The US Dollar (.DXY) Index. Note: 1st resistance is at 1200-1210, which is likely to keep prices capped near term, targeting 1160, while trading below 1210.
Silver at 17.17 is trading below the 17.50 resistance, while that holds, it could come off towards 17.00-16.00 near term.
Mr. Heath and his senior team have laid out a Path to $10-M Free Cash Flow by Y 2020, giving Matalla the ability to stream metals from Gold and Silver mining Companies when they do not need capital, contract with strong and stronger counterparties,, to diversify producing streams in expanding market, and allowing for accretive transactions.
Metalla’s Streaming Pipeline
|Jurisdiction||Investment (millions)||Gold/Silver||Cash flow (millions)|
|TOTAL||$56||Avg. Cost 3.5X CF||$16|
Again, Metalla’s Goals, as follows:
- Grow streaming and royalty portfolio to $10-M in free cash annually with a projected valuation of $200-M
- Execute growth through pipeline of streaming and royalty transactions
- Proprietary deal flow generated through industry wide network
- Acquire non-‐core producing royalties with equity consideration from mining companies and private parties
- Consolidate existing streams/royalties from funds
- Become attractive take-over target for existing streaming and royalty companies
- Create attractive return for investors through equity appreciation and dividend
- Provides a high yield vehicle tied to precious metals prices
Note: During Gold and Silver Bull Market cycles streaming companies tend to grow through M&A, as it is more difficult to complete deals when equity is less expensive.
Metalla Royalty & Streaming, Ltd. is pure precious metals streaming company. It has entered into agreements and LOI’s to purchase all or a portion of the Silver and/or Gold production from high-quality mines located in politically stable regions for an upfront payment and an additional payment upon delivery of the precious metals.
Metalla currently has streaming agreements and LOI’s for operating mines and development stage projects (listed above). The company’s growth profile is driven by a portfolio strong assets. Metalla’s specialized business model creates significant stakeholder value by providing, the following:
- Leverage to increases in the price of Gold and Silver
- Additional growth through the acquisition of new streams
- A possible dividend yield, which has the potential to grow over time
- Participation in the exploration success of the mines underlying its agreements.
Metalla offers the above benefits while at the same time reducing many of the Southside risks faced by traditional mining operators.
The Company offers its investors both capital and operating cost certainty.
Other than its initial upfront payment, Metalla would typically have no ongoing capital or exploration costs.
Its operating costs will be fixed way below the spot market prices of its Gold and Silver allowing shareholders to benefit from strong margin growth in this next precious metals Bull Run .
The company has an experienced management team with a strong track record of success, and is well positioned for further growth.
Brett Heath– President/Director
Mr. Heath has a comprehensive career in the structured finance, corporate finance, and investment management industry. He was previously the managing director of High Stream Capital a specialty streaming and royalty consulting firm where he worked with First Mining Finance, (FF:CVE) several other private equity funds, and public companies. Prior to that he was the President of a private streaming company where he deployed $11-M in 4 producing streaming transactions in 3 jurisdictions. Prior to that he was a founding principal of KSIR Capital Management a hedge fund focused on small and micro-‐cap mining companies. He also advised several mining companies with KSIR Capital, the corporate finance division of KSIR. Mr. Heath graduated from San Diego State University.
For more information on Gold and Silver streaming and stream agreements, please click here.
Metalla Royalty and Streaming Limited.
8 King St E Suite 1010
TORONTO, ON M5C 1B5 Canada
Email: [email protected]
By Paul Ebeling, Analyst
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