Precious Metals Small-Cap Royalty Company Yielding 1.9%, the 'Highest Dividend in the Royalty Sector'

Source: Streetwise Reports   01/12/2021

Nomad Royalty, founded by three veterans in the royalty and streaming sector, has been quickly adding assets.

Nomad Royalty Company Ltd. (NSR:TSX; NSRXF:OTCQX) only began trading publicly in May, but it has amassed a portfolio of 14 royalty and streaming assets, including one that was announced yesterday. Six of Nomad’s assets are already producing.

Vincent Metcalfe, Joseph de la Plante and Elif Lévesque, colleagues at Osisko Gold Royalties, joined together to establish Nomad. Metcalfe serves as CEO, de la Plante as CIO and Lévesque as CFO.

Royalty and streaming portfolios from Orion Mine Finance and Yamana Gold were vended in, forming the backbone of Nomad’s portfolio. Both companies accepted shares as payment for the royalties and streams, and are now the company’s top two shareholders.

Nomad has since added four more royalties to its portfolio.

The first is a 1% net smelter return royalty on Troilus Gold’s Troilus Gold Project in the Frotet-Evans Greenstone Belt in Quebec. The advanced gold-copper exploration project’s current mineral resource estimate totals 4.71 million ounces of gold equivalent in the Indicated category and 1.76 million ounces of Inferred gold equivalent. de la Plante notes that the brownfield deposit “continues to demonstrate significant potential for resource expansion.”

Second is the acquisition of privately held Valkyrie Royalty Inc. that brings with it a net smelter return royalty on the Moss Gold Mine in Arizona. Metcalfe noted, “The Moss Mine is generating strong gold and silver cash flows, holds considerable exploration upside on a district scale and is located in a stable jurisdiction. In adding this royalty, Nomad further diversifies its portfolio and again strengthens its global presence by adding Arizona to its list of jurisdictions.” Northern Vertex Mining Corp., the operator of the mine, estimates production of 55,000 to 65,000 gold equivalent ounces a year, and is conducting exploration to increase the resource. The royalty varies from 0.5% to 3% on all metals and minerals produced from specific claims on the property.

Coral Gold Resources Ltd. and its sliding-scale 1.00% to 2.25% net smelter return royalty on Nevada Gold Mines’ Robertson property in Nevada comprises the third acquisition. Nevada Gold Mines is the joint venture between Barrick Gold and Newmont Corp. and the property is part of the Cortez & Pipeline mining complex. “When we created Nomad, we set the objective to become a catalyst for sector consolidation. [This] announcement marks the first step of our consolidation strategy and follows our desire to become the best global acquisition-driven precious metals royalty company in the sector,” said Metcalfe. “This acquisition will further diversify our global portfolio as we keep executing on our aggressive growth plan.”

The most recent royalty acquisition, announced on January 11, is for an existing net smelter return royalty on the Blackwater Gold project in British Columbia operated by Artemis Gold. The company noted that the royalty “consists of a 0.21% net smelter return royalty on all metals and minerals produced from mineral tenure 515809 which covers a portion of the Blackwater Gold project and the higher-grade starter pit area.” Metcalfe stated that the royalty is on a “large gold deposit with significant potential for resource expansion, and with a clear path to development. The Blackwater Gold project represents one of the few sizeable near-shovel ready projects worldwide.” The royalty adds British Columbia to the geographical jurisdictions where Nomad holds royalties and streams.

Other assets currently in production include the Bonikro Mine in Ivory Coast, where Nomad’s stream is 6% of production until 650,000 ounces of gold is produced, when it falls to 3.5%; a silver stream on the Mercedes Mine in Mexico that is operated by Premier Gold Mines, and a gold loan with Premier Gold Mines of 1,000 ounces a quarter for the next three years. In addition, Blyvoor in South Africa is expected to ramp up production within the next year, as is Woodlawn in Australia.

“This is exactly the way we wanted to build this business,” Metcalfe told Streetwise Reports, “to have a lot of sources of cash flow from various operations and not necessarily have to focus too much on one specific asset. We’re not mining operators, we’re more portfolio managers. We want to keep diversifying the portfolio, keep adding new sources of cash flow and limit all the different risks that are inherent to the mining sector, like asset concentration or jurisdictional concentration. We want to make sure that we are as diversified as possible from a portfolio point of view.”

Metcalfe noted other advantages the company offers. “The experienced management team knows where to focus; it’s really just a matter of executing right now the opportunities that are in our pipeline. We are doing it at a very low cost; a low G&A is important, so we keep the team as lean and flexible as possible,” he said. “We want to make sure that the cash flow that’s coming in is redistributed through new opportunities to keep growing the company, and also through a very strong dividend, which we’ve already put in place. We’re yielding around 1.9% at the moment, which is the highest dividend in the royalty sector.”

“That’s just the start, because we have a lot of assets that are coming online within the next 12 months as well. So a lot of growth coming back that way,” Metcalfe added.

In the third quarter ending September 30, 2020, Nomad reported record revenue of US$7.6 million, with US$5.9 coming from streams and royalties, a 100% increase quarter over quarter.

Eight firms now cover Nomad on the research front. Scotiabank and Velocity Trade Capital have Outperform ratings on Nomad and target prices of CA$2 and CA$2.25, respectively. BMO Capital Markets upgraded its rating to Outperform in December and has a target price of CA$1.70. Cantor Fitzgerald, Cormark Securities, Haywood Securities, Industrial Alliance and Stifel GMP all rate Nomad a Buy and have target prices ranging from CA$2.00 to CA$2.30. Nomad shares are currently trading at around CA$1.06.

In late December 2020, a $25 million secondary share offering was completed in conjunction with Yamana Gold. “This represents a great achievement for the company, as it further increased the public float and will contribute to increasing the liquidity of the shares,” Metcalfe said. Several new institutional and retail investors were added to the registry.

Nomad has 564.5 million shares outstanding, 9.9 million options and 22.9 million warrants. Orion Mine Finance holds 70.2%, Yamana Gold 10.0% and management 2.3%. Other large shareholders include Adrian Day Asset Management, FTQ, CI Investments and U.S. Global Investors.

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Disclosure:
1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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( Companies Mentioned: NSR:TSX; NSRXF:OTCQX, )