The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Tweet from BRN:
"Substantial progress was made with the construction of the #PNP1000 site by the end of January, at almost 84% complete. The awarding of an Operating License for #BRN in the Q4 21 was also great news, which keeps the Company on track for planned first #nickel production"
https://t.co/0PGT4xsTKy
https://twitter.com/TridentPlc/status/1493522165257445379?t=WuKf4Ectrgg-uh6_zMwVjw&s=19
Registration link within the tweet above
Altus Strategies PLC - Altus Intersect 1.23 g/t over 127m at Lakanfla #ALS @Altusstrategies https://www.**********.co.uk/rns/announcement/e67563ed-adb0-4b12-a772-c62cbabd647b #**********
Excellent drill results this morning. Starting to look like a very attractive project. 127m from near surface is fantastic. Plan here is to sell the project on and retain a royalty. I suspect that price tag is rapidly increasing :)
What makes the author think that? Most royalty companies (including those with a project generator arm) trade at multiples of 0.8 - 1.2x NAV. The big royalty players like Wheaton and Franco Nevada enjoy 2x NAV multiples. Not sure why CDL would be any different. Last stated NAV was around 4.4p I believe.
Yes the US seems intent on n shooting itself in the foot when it comes to resource self sufficiency. UK similar. There's very much a 'not in my back yard' culture - making it tough to get environmental permits etc, though everyone keen on the idea of electrification and a greener, cleaner way of living. US seems to want to import from Canada/Australia/Brazil. They'd be foolish to throw a spanner in the works with regards Thacker Pass though.
Not quite yet. Just need the appeal hearing to uphold the initial decision in favour of LAC. Last I read the appeal hearing had been delayed to April (rather than February), so we'll know within the next 2-3 months
Agreed. Salamanca just isn't going to happen.
Now, Candente Copper just released some excellent news from Canariaco. That's looking like it should be one that gets over the line in the future. Similarly Dugbe is progressing very well under Pasofino Gold, with the BFS due in April. Incoa will produce revenue but limited.
What we need here is a bigger pipeline providing plenty of optionality.
Piaui looks like it's well supported and should develop into an excellent replacement as Kestrel falls way. But I suppose the underlying issue is we've got the future pinned (at the moment) on 3 or 4 assets. For arguments sake let's just imagine that Paiui fails to get permits that enable them to get into production. Okay, it'd be a problem for any royalty co, but most others have other projects moving along the development curve. I just don't see those lost ounces being replaced within the pipeline yet. There has to be a constant replenishment, with potential future cashflow replacing what's been mined.
There's scope for APF to bulk out the pipeline with assets that'll contribute £2-5m per year, rather than relying on just one or two pig payers, with a few £1-2m streams dotted here and there.
An example of where this is evident is through comparing Elemental Royalties and Metalla Royalty. Both are precious metals royalty companies. Elemental has cashflow from 80% of its assets. It's income is circa $10m per year, with a market cap of circa $100m. What it lacks though is a pipeline. Whilst it enjoys cashflow today, those ounces aren't being replaced and, at the moment, it's difficult to see where future growth comes from outside of what's in the limited pipeline already. Compare that to Metalla, where they've got circa $2m revenue at very best, from a small % of their total portfolio, but they have a stellar pipeline of future growth and optionality from royalties on assets operated by the likes of Newmont, Agnico, Barrick etc. Metalla's market cap is circa $275m. From my (and most other value investors) point of view is that Elemental is the better value. But it's always been the case in the PM royalty space that future growth and optionality carries a premium.
I'm not saying that APF should just go and buy royalties over any assets they can find. What I'd like to see are royalties over some earlier stage assets that look like they're going to be producing mines in the future. Orion picking up a a 2.25% NSR on HZM's Araguaia project, or their 2% on HZM's Vermelho. Both likely to go into production later this decade. Both royalties bought by Orion for circa $25m. Something along those lines, across the spectrum of commodities/stages of development. That's what I'd like to see, and I think the market would react very favourably too.
I think that's absolutely key. Whilst the portfolio is fleshing out quite nicely it's still only job half done (if that). Looking at some of the very successful North American royalty companies (admittedly they're precious metals focused) they have extensive pipelines, and it's clear to see where growth/earnings or the potential for growth/earnings is coming from much further down the line.
The opportunity is now for Trident to make hay whilst competition for diversified mining royalties is few and far between. Only a few other companies globally have the sort of mandate and expertise that Trident enjoys. I'm convinced over the next five years we'll see an influx of wannabe diversified royalty companies just as we have seen in the precious metals space over recent years. It's key for Trident to make full use of this time. They've assembled an excellent team, and it's crystal clear they're exceptional at sourcing and executing on accretive deals. Recently they've shown the ability to think we'll outside the box too. I'd much rather they focus on growth over the next few years and look to become that go-to company for folks looking for exposure to mining/commodities.
Excellent update.
Whilst Koolyanobbing remains a little frustrating after its initially great start, Min Res moving into the Claw Deposit will get that back on track. One of those short term frustrations where certain areas fall in/out of the royalty zone. Evens itself out over time though.
Quite clear Trident is going to look like a very different beast over the next 12/18 months. Even sooner than that, Q1's cashflow will be a massive step change compared to what we've seen thus far.
Key to any successful royalty company is a significant pipeline that has a realistic chance of getting into production. It's easy to just buy claims over any old project and call it a pipeline. Tridents pipeline fills me with a lot of confidence about my investment here.
Yes of course they're predominantly precious metals focused. The stated ambition of these diversified royalty companies like APF, TRR, Altius etc is to try and bridge that valuation gap. I absolutely don't want APF to venture down the precious metals route. I've owned some of the aforementioned gold focused royalty companies for many years and don't want another one. I want APF to continue to do what they've been doing, but also to grow the pipeline akin to those PM peers. I'm not suggesting they buy gold assets, I'm merely suggesting they build a portfolio where the future growth is clear to see, hence the reason I've used them as examples. A better example might be Altius Minerals who are a diversified royalty company.
I agree with you regarding copper and lithium. Two very key resources going forward, so projects across the development curve would be good additions to the portfolio.
It'll be interesting to see how Marc approaches this. Obviously they've got Incoa and Piaui to contribute to soon, but as you say there's plenty of firepower to deploy. Trident have done well with regards good quality lithium royalty deals. Hopefully Marc can be similarly opportunistic.
The sort of rating that Wheaton, Franco and smaller royalty companies like Sandstorm, Osisko, Maverix and even Gold Royalty Corp all enjoy are much higher than APF. What they all have is visibility on pipeline developments.
APF (and other similar companies like Altius Minerals, Trident etc) has stated that they want to be the first $bn diversified royalty company. Many times JT allided to the ratings that Franco etc enjoy as a target for APF. This has to be the goal for Anglo Pacific. Yes they can carry on as they are, but other than dividends we aren't going to see much capital appreciation. Ultimately a successful royalty company is one that consistently grows in scale.
Yes agreed, we can judge him on future results. As I said yesterday, the problem for APF isn't the current crop of cashflowing royalties. It's the pipeline/what provides future record cashflows. Piaui should hopefully go some way to replacing Kestrel (assuming we upgrade the NSR). The rest of the portfolio is relatively small scale. Canariaco and Dugbe are very promising, but they're a long way off production. The bigger North American royalty companies enjoy much higher ratings, but that's not just because they're hitting record cashflows. A major factor is they have pipeline visibility of where the growth is coming from. Don't get me wrong, I'm a supportive shareholder of APF and willing to give Marc time, but in order to take APF to the next level and see the sort of premium valuations some peers enjoy then APF needs to prove to the market that firstly the impending fall off of Kestrel income is replaced. Subsequently they need to show where the future growth comes from. They don't have the pipeline for that yet. The likes of Wheaton, Franco and others enjoy higher ratings, higher proportional institutional ownership etc etc because investors can look at the pipeline and see clear growth.
The initial deal was stuck with Vale to fund the VB underground. Circa $700m funding came in the form of a stream - constructed, negotiated and funded by Wheaton and Cobalt 27. That stream was for sale of the byproduct cobalt. APF eventually bought cobalt 27's portion of the stream.
As CaneToad says, it doesn't really matter now. What is critical though is that the new CEO has the ability to source and negotiate new deals. APF suffers from a lack of future pipeline. Many royalty co's enjoy better ratings as the pipeline is packed with optionality. Piaui is potentially exceptional, and Incoa will switch on soon. I'd like to see Marc flesh out the pipeline a little more though.
It was in response to your claim that the VB process was led by BL.
The people who deserve credit for the VB transaction is Wheaton. APF simply jumped at the opportunity to tag onto that deal.
I can't believe there wouldn't have been significant interest in the CEO role. Disappointed they haven't attracted a bigger hitter to the role. The outlook for APF and the diversified royalty space is very compelling, and many would have fancied the opportunity. MBL has always left me a little underwhelmed whenever I've heard him present.
Excellent Interview with Paul Smith
https://youtu.be/WN0IRiCF0cA
Agree with your thoughts on JT.
He's going to be heading up Cotec. Shares are currently suspended, but I'm keeping an eye out for when they come out of the trading halt.
Here's the website:
https://cotec.ca/