Maverix Metals is delivering consistent profits from its high-quality portfolio of precious metal royalties

• A pure gold play royalty investment
• A global portfolio and experienced management
• Low overheads and track record of growth

What Maverix Metals does:

Maverix Metals Inc (CVE:MMX) is a rapidly growing gold royalty and streaming firm with high margins and growing free cash flow.

In return for making an upfront payment, Maverix receives a royalty on the underlying precious metal sold by an operator, or in the case of a precious metal stream, the right to purchase an agreed-upon amount of gold, silver or other precious metal, at a significant discount to the spot commodity price.

Such agreements provide Maverix, and its shareholders, with exposure to precious metals price rises and the exploration upside of the mine or project without any additional capital outlay, while also fixing the ongoing costs of acquiring precious metals in the case of a stream.

Since being founded in 2016 by chairman Geoff Burns and CEO Daniel O’Flaherty, Vancouver-based Maverix, with a market cap of US$750 million,  now has 115 royalties and streams, 13 of which are paying. Its assets lie throughout Australia and the Americas.

How is it doing:

Maverix Metals entered 2021 with a strong financial wind at its back. 

The firm’s 1Q results showed an uplift in net income and revenue, while the royalty company announced a 25% increase to the dividend.

Net income for the three months to end-March was US$14.7 million, up from US$860,000 in Q1 2020, on total revenue of US$13 million, up 41% from US$9.2 million a year earlier.

Gold equivalent ounces sold in the three months was 7,302, up from 5,871 in Q1 2020 and the cash flow from operating activities was US$13.4 million (Q1 2020: US$4.8 million).

The board has approved a quarterly dividend of $0.0125 per share to be paid on June 15, 2021, This is a 25% increase from the previous dividend of $0.01 per share, noted Maverix.

Maverix has set its 2021 guidance for attributable gold equivalent ounces to be between 27,000 to 30,0001 for 2021 at around a 90% cash margin with about 99% of expected revenue derived from gold and silver.

On its asset front, Maverix also noted that recently, Agnico Eagle Mines Limited became the owner of Hope Bay following its acquisition of TMAC Resources Inc and announced plans to continue mining the Doris deposit.

The miner expects quarterly production of between 18,000 to 20,000 ounces of gold, with a significant exploration program planned for this year.

Elsewhere, at the Moss mine in Arizona, Maverix said that Northern Vertex Mining Corp completed the previously-announced business combination with Eclipse Gold Mining Corp.

Under the terms of the deal, Maverix sold 19,511,041 shares of Northern Vertex and received net proceeds of approximately C$9.8 million, realizing a gain on the sale of nearly C$2 million.

Inflection points:

• Further acquisitions of royalties/streams
• Ongoing gold and precious metals price advances

What the broker says:

Following Maverix Metals’ 1Q results, Stifel GMP said it was maintaining its ‘Buy’ rating and C$8.25 target price on the stocks, noting a “slight beat” in the quarter and higher dividend.

“Maverix Metals had slight better results in 1Q than we expected,” analyst Ingrid Rico wrote.

“Revenue of $13 million from 7,300 gold equivalent ounces sold beat our forecast of 6,500 (consensus 6,900 oz).”

“This resulted in a top line beat flowing down to slightly better EPS and CFPS,” Rico added. “Maverix reaffirmed their guidance of 27,000 to 30,000 gold equivalent ounces (we have maintained our estimate of 29,000 for 2021), increased their silver stream on El Mochito, and raised their quarterly dividend to $0.0125 per share.”

Stifel’s Rico also noted Maverix’s “strong financial position” with nearly $170 million in capital to deploy into new deals.

What the boss says:

Dan O’Flaherty, Maverix CEO told investors that the first quarter had marked another milestone for Maverix as it was included in March in the VanEck Vectors Junior Gold Miners ETF (GDXJ).

“We are well on track to achieve our previously announced guidance of 27,000 to 30,0001 GEOs for 2021 at approximately a 90% cash margin, with approximately 99% of expected revenue derived from gold and silver,” he said.

“Maverix is also pleased to have Agnico as an operating partner, as it completed the acquisition of the Hope Bay mine, in Nunavut. We look forward to Agnico applying its operating expertise to maximize the long-term value of the mine and the highly prospective surrounding land package.”

Contact Angela at [email protected]

Follow her on Twitter @AHarmantas

Story by ProactiveInvestors