Roth Capital Partners analysts upgraded shares of Metalla Royalty & Streaming Ltd (CVE:MTA) (NYSEAMERICAN:MTA) (FRA:X9C) to ‘Buy’ from ‘Neutral’, while increasing their price target to $11.40 from $10.
“Our valuation is based on an expectation that the shares should trade at 2.3x net asset value (NAV), which is appropriate given the strong history of adding value through accretive transactions over the past four years,” the analysts said.
They noted that Metalla announced four transactions in late 1Q, 2021, adding two new counterparties and one new jurisdiction, Brazil, while further diversifying its royalty portfolio.
READ: Metalla Royalty & Streaming added another 18 royalties to its portfolio in 2020, with five more so far this year
In Brazil, Tocantinzinho is a fully permitted, high-grade open pit gold deposit with expected mine life of 10 years. Metalla estimates its Tocantinzinho royalty will generate $2.3 million in revenue annually over the first eight years of mine life and sees exploration potential of the main orebody and surrounding area as prospective, given that drilling has not gone deeper than 400 metres.
The company also acquired a 1% to 2% net smelter royalty (NSR) on the CentroGold project, which it called one of the largest undeveloped gold projects in Brazil, with an estimated life of mine production of 1.1 million ounces that could begin operations as soon as 2023 or 2024. Metalla anticipates the mine could produce US$4 million of cash flow annually over the first six years of operation.
As well, the company recently acquired a 0.5% NSR on a portion of Barrick Gold's (NYSE:GOLD) Alturas-Del Carmen gold-silver project in Argentina, part of an 8.9 million, 1.0 grams per tonne (g/t) gold inferred resource. The analysts said the resource has similar characteristics to Barrick’s operating Veladero mine in Argentina. Barrick has indicated it will seek a preliminary economic assessment (PEA) on the project in 2021.
And, they also noted that Metalla acquired a 0.45% NSR on Agnico Eagle Mines’ (NYSE: AEM) Amalgamated Kirkland and North AK Property in Ontario for C$0.7 million in cash. The analysts said the AK property, along with Upper Beaver and Upper Canada deposits, host a potential 180,000 to 240,000 ounce yearly gold operation. Agnico guided spending of US$14 million during 2021 for 52,200 metres of drilling at the Kirkland Lake project.
The Roth Capital analysts added that their NAV estimate is based on expectations of $1,700 per ounce gold price and $21 per ounce silver price from 2024 onward.
Contact Sean at sean@proactiveinvestors.com