Elemental Royalties – What To Understand About The Hostile Bid And Reviewing Key Royalties Growth On Tap For 2022
Fred Bell, President and CEO of Elemental Royalties (TSX.V:ELE – OTCQX:ELEMF), joins us to discuss the recent hostile takeover bid received from Gold Royalty Corp (NYSE: GROY), and why the key shareholders he has talked to are not inclined to vote towards accepting the offer for a number of factors seen as inadequate. The company issues a press release on January 26th titled: “Elemental Board Of Directors Unanimously Recommends Shareholders Reject The Hostile Bid.”
We discussed that the attraction was to the Company’s pipeline of cash flowing assets which are very hard to come by in this competitive market, and that they have a great deal of growth over the next few years that has not been daylighted yet in the current valuation. Fred unpacks the two largest royalties being the Karlawinda Gold Mine Royalty operated by Capricorn Metals (ASX.:CMM), which will almost double the Company’s royalty revenue with a mine life of over 10 years, and then the key long-life Wahgnion Gold Project Royalty operated by Endeavour Mining (TSX: EDV). Fred also outlined the expected revenues to start by the second half of 2022 at the Mercedes Mine Royalty, that just changed hands from Equinox (NYSE: EQX) to Bear Creek Mining (TSX.V: BCM) and the Mt Pleasant Royalty operated by Zijin Mining (OTC: ZIJMF) that is starting to mine from their royalty concession this year.
If you have any follow up questions for Fred about Elemental Royalties, then please email us at either Fleck@kereport.com or Shad@kereport.com.
Click here to visit the Elemental Royalties website and read over both news releases we discussed.
(SVM) Silvercorp Metals Non-GAAP EPS of $0.08 beats by $0.01, revenue of $59.08M beats by $0.61M
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Feb. 08, 2022
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– FQ3 Non-GAAP EPS of $0.08 beats by $0.01.
– Revenue of $59.08M (+10.8% Y/Y) beats by $0.61M.
– Mined 292,072 tonnes of ore and milled 304,772 tonnes of ore, up 5% and 17% compared to the prior year quarter.
– Strong balance sheet with $211.6 million in cash and cash equivalents and short-term investments, down $9.5 million or 4% compared to $221.1 million as at September 30, 2021.
– 2023 Production Guidance: To mine and process approximately 1,040,000 – 1,140,000 tonnes of ores, yielding 6,300 to 7,900 ounces of gold, 7.0 million to 7.3 million ounces of silver, 68.4 million to 71.3 million pounds of lead, and 32.0 million to 34.5 million pounds of zinc.
– The guidance represents a production increase of approximately 9% in ores, 100% in gold, 11% in silver, 3% in lead, and 12% to 21% in zinc compared to the Fiscal 2022 guidance.
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https://seekingalpha.com/news/3797589-silvercorp-metals-non-gaap-eps-of-0_08-beats-0_01-revenue-of-59_08m-beats-0_61m
Gives SVM a P/E forward of about 10. If gold/silver continue to move down in the future that will mean SVM’s price in all likelihood will move down in tandem. As mentioned previously, we should know the direction of the PMs in this quarter and most likely March will hold the key. The FED as we know has a “huge” problem. This coming period of “tightening is not like the last ones where inflation was staring us and them in the face. Those who think that it will be the usual this time around as compared to the past best be careful—-I have a feeling that the FED will cause significant pain this time around to change the psychology of the markets and those that think they’ll reverse course at the first hint of significant pain. Will the FED try to ease the conventional markets and other asset prices down slowly—-absolutely. They will probably ease as long as the conventional markets don’t freefall—they’re very good at jawboning. We will know the answers by the end of the 2nd quarter of this year.
Well Doc,
I think we can all agree that the dollar will not rise with Dow or equities better put. So I’m definitely of the opinion that we will get a slightly upward movement in equities more or less a muddling around towards midterm elections later in the year. This means the US dollar is going to break lower and should mean the precious metals/gold/miners/Silver will reap the rewards. No I agree we will get a better overall picture, end of March/April but I would not be one bit surprised if it comes slightly earlier. The quarterly paints
The best picture for gold and silver and the miners requires patience that very patience Will be rewarded as history says unless the bull market in Golden Silver is finished which I highly doubt.
Hi Doc Postma, the course of stocks in the conventional markets during the coming months ahead will depend entirely on the money situation, and we all know where that is headed. Don’t Overstay this Bull Market? DT
Good thoughts and ideas to mull over from Doc, Glenfidish, and DT in this thread. Thanks guys!
As for inflation – I’d say 7% CPI readings and over 9% PPI readings are definitely inflation staring the Fed in the face, which was the whole impetus to hurry up and get the tapering over with so they can start hiking rates. Unlike past rate hike cycles, the FED has never been this far behind the curve. Even if they did 4-5 (1%) hikes, instead of the measly .25% hikes they’d STILL be behind the curve and we’d still see negative real rates.
There is a major market crash/economic collapse coming that will take stocks/bonds/real estate/crypto and yes even PMs down. This one will indeed be epic. And I believe It’s coming this year. There might be, as David Hunter writes, a melt up rally in almost everything, PMs included, before that. As a matter of fact, where I live, a melt up rally in real estate is underway. Also, it appears the stock markets have bottomed and are starting their melt up. Let’s hope that the satanists Will allow the PMs to rally as well.
Doc just a couple thoughts on (SVM) Silvercorp. As for the P/E ratio of 10 that is one way to value it, but negates all the value they have in their development projects or the 5 large strategic stake holdings they have in other Junior mining companies (like the 28.3% stake in New Pacific, or 19.9% stake in Volcanic Gold, or the 29.5% stake in White Horse Gold, or the 15.2% stake in Omai, or the 43.8% stake in New Infiniti Silver). Just something to consider, as it would be like valuing Novo Resources on just their P/E ratio and ignoring the stake they have in New Found Gold or Kalamazoo Resources or their other exploration and development projects.
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Yes, Silvercrest will ultimately have leverage to the upside or downside in metals prices, just like almost any PM mining companies will. However, unlike most other Silver producers, Silvercorp is FAR more insulated against lower prices, having the lowest AISC of any Silver producer on the planet, so they would be able to withstand a metals crash while still minting money far more than any other silver producer.
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While it is true what you wrote: “If gold/silver continue to move down in the future that will mean SVM’s price in all likelihood will move down in tandem.” The opposite is also true. One could conversely state that if gold/silver continue to move up in the future that will mean SVM’s price will in all likelihood move up in tandem.
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(SVM) Silvercorp Metals – Corporate Presentation:
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http://silvercorpmetals.com/investors/corporate_presentation/
It is also interesting to note how low the forward P/E ratio of 10 would be for (SVM) Silvercorp [Yahoo Finance has it at 8.48], when (CDE) Coeur Mining is trading at a forward P/E ratio of 20, (AG) First Majestic is trading at a forward P/E ratio of 32, Hecla is trading at a forward P/E of 48.
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There is plenty of room for Silvercorp to rerate higher by 2-3 times just to get more in line with peer valuations just on that metric alone.
Below is a press release from Skeena(SKE) concerning ownership of Albino Lake tailings at “Eskay Creek” project.
Vancouver, BC (February 8, 2022) Skeena Resources Limited (TSX: SKE, NYSE: SKE) (“Skeena” or the “Company”) responds to the decision made by the Chief Gold Commissioner on the materials in the Albino Lake Storage Facility at the past-producing Eskay Creek gold-silver project (“Eskay Creek”).
An individual holding a mineral claim on the lands that underlie Skeena’s Albino Lake Storage Facility, applied to the Chief Gold Commissioner on August 27, 2021, for a determination as to the ownership of the “minerals” in the materials deposited in the Albino Lake Storage Facility by the previous operators of the Eskay Creek Mine. The materials in question consist of tailings and minerals, containing sulfides and certain deleterious elements from the Eskay Creek Mine and are managed by Skeena under a Lands Act surface lease, and authorizations under the Mines Act and Environmental Management Act.
Notwithstanding Skeena’s ongoing environmental obligations in respect of these materials, on February 7, 2022, the Chief Gold Commissioner handed down a decision, determining that the individual, Richard Mills, owns all the materials in the Albino Lake Storage Facility.
Skeena believes that the Chief Gold Commissioner’s decision is in error and intends to appeal the decision to the Supreme Court of British Columbia in accordance with the appeal provisions in the BC Mineral Tenure Act.
Walter Coles, President & CEO, commented, “It is incomprehensible to us that the Chief Gold Commissioner of British Columbia would transfer ownership of materials that Skeena and, prior to that, Barrick, have actively managed and environmentally monitored for decades in the Albino Lake Storage Facility to an individual who staked barren mineral claims below the facility. We feel this sets a grave precedent for mineral exploration, development, and environmental liability management in British Columbia. Skeena will utilize all legal avenues to remedy this situation within the BC court system and we have already begun the appeal process.”
Yikes! Terry thanks for posting that as I hadn’t seen this news out on Skeena yet, and as a current shareholder that decision by that Chief Gold Commissioner of British Columbia is not good if it hands over the mineral rights at the Albino Lake Storage Facility “to an individual who staked barren mineral claims below the facility.” That has been a big focus of Skeena’s recent focus on expanding mineralization at that project, and this news is catching me by surprise. I’m sure we’ll have Walt on at one point to unpack this from the Skeena perspective.
‘If you’re a wage earner you’re going to fall behind’: Ex-Fed insider warns of ‘difficult few years’ due to inflation
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Jeffry Bartash – MarketWatch – Feb. 8, 2022
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“Former Federal Reserve insider Thomas Hoenig thinks the U.S. faces a painful reckoning because of high inflation.”
“Hoenig was a lone dissenter eight times in 2010, when the Fed voted to pursue a then-novel strategy, known as quantative easing, of buying trillions of dollars in Treasury and mortgage-backed bonds. The goal was to flood the U.S. with money and slash interest rates in an effort to juice up the economy. The Fed doubled down on the strategy during the pandemic.”
“Then and now, Hoenig warned the policy could lead to more harm than good.”
“It’s going to be a very difficult couple of years for the U.S. economy and the Federal Reserve. If they raise rates to bring inflation down, then the hard part begins. Because when that happens and the economy begins to slow, they’ll worry about recession. There’ll be a likelihood they ease policy again even while inflation remains four to five percent.”
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https://www.marketwatch.com/story/if-youre-a-wage-earner-youre-going-to-fall-behind-ex-fed-insider-warns-of-difficult-few-years-due-to-inflation-11644341292
Gold Continues to Find Buyers
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Christopher Lewis – FX Empire – Feb 8, 2022
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“Gold markets continue to be positive overall, as every time we get a little bit of a dip, traders seem to be willing to buy it. Yes, gold tends to be very volatile and quite frankly it is a miserable place to trade, but when it does decide to finally settle on some type of trend, momentum seems to be the word of the day. Because of this, I think that we will continue to go higher but it may be a bit of a fight. There is a gap above at the $1830 level that I think should be paid close attention to, as it looks like we are going to try to fill it.”
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https://www.fxempire.com/forecasts/article/gold-continues-to-find-buyers-891917
Gold Prices Rises Despite Higher Yields
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David Becker – FX Empire – Feb 8, 2022
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“Gold prices continued to move higher despite a small rebound in the dollar. U.S. yields were higher, with the 10-year yield hitting 3-year highs and the 2-year yield hitting a pre-pandemic high.”
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https://www.fxempire.com/forecasts/article/gold-prices-rises-despite-higher-yields-892004
Gold Rises Despite Expectations of Aggressive Fed and Rising Treasury Yields
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Gary Wagner – FX Empire – Feb 8, 2022
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“As of 4:40 PM EST gold futures basis the most active April contract is up $5.10, or 0.28%, and fixed at $1826.90. Since the beginning of last week gold has risen from a low of $1786 to its current price gaining approximately $41.00. Gold’s value has increased by 2.29% in the last seven trading sessions. This in light of a tightening of the Federal Reserve’s monetary policy and rising Treasury yields.”
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https://www.fxempire.com/forecasts/article/gold-rises-despite-expectations-of-aggressive-fed-and-rising-treasury-yields-892309
TheAdaptiveInvestor @adaptiveinvest 1:39 PM · Feb 7, 2022 · Twitter
“Gold is holding strong despite the rise in interest rates. We saw the same thing in Q4 2018 when gold formed its bottom. Why is this happening? Because gold is sniffing out that both growth and inflation have peaked and that interest rates are peaking.”
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https://twitter.com/adaptiveinvest/status/1490802540396658694
Funny. The future will always “give us a better Idea” of what’s to come. Last month it was February that would do so.
I still disagree with the cashed-up bears. They have this week to get things going their way or they can forget about their March/April plans to buy lower. They are going to regret missing the buying opportunities of the last several months.
Silver has been bottoming versus gold as well as dollars since the end of September and is most likely done. That bodes well for the sector in general, especially the miners.
https://stockcharts.com/h-sc/ui?s=%24SILVER%3A%24GOLD&p=D&yr=0&mn=9&dy=22&id=p54110974610&a=1077666344
No matter how many times history repeats, the retail investor never recognizes or trusts the golden opportunities that keep coming. For example, here’s over ten years of First Majestic Silver:
https://stockcharts.com/h-sc/ui?s=AG&p=W&yr=13&mn=0&dy=0&id=t3124043708c&a=706703704&r=1644397110987&cmd=print
IPT is trying to break out versus First Majestic…
https://stockcharts.com/h-sc/ui?s=IPT.V%3AFR.TO&p=D&yr=1&mn=9&dy=0&id=p26586376164&a=450748116
Speaking of the royalty and streaming space… Here is an event happening tomorrow featuring some of the larger cap major and mid-tier companies in the sector:
Franco Nevada, Wheaton Precious Metals, Triple Flag, Sandstorm, Nomad, and Maverix:
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https://bloorstreetcapital.com/event-registration/