Nomad Royalty Company Ltd (TSE:NSR) (OTCQX:NSRXF) (FRA:IRLB) has received an updated target price of C$16 from broker Canaccord Genuity, in response to the release of a NI 43-101 technical report on the Blyvoor gold mine in South Africa, operated by Blyvoor Gold.
Canaccord also reiterated its BUY rating after increasing the target to C$16 from C$15.50.
The royalty firm holds a gold stream on Blyvoor, which is Nomad's largest asset, representing 40% of the royalty/streaming net asset value (NAV).
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Despite news from private company Blyvoor being scarce, production is expected to reach planned levels over the next 12 months and bolster investor confidence, said Canaccord analysts.
Blyvoor is a past-producing gold mine that was once one of the world’s largest gold producers, with output of more than 45 million ounces (oz) historically. The mine which was closed in 2013 is currently in the restart process, they added.
“Overall, we view the update as positive with more ounces expected to be delivered to Nomad over the life of stream vs our previous model and at a higher run rate. We now model life of mine (LOM) deliveries to Nomad of 309,000 oz (up from 180,000 oz previously) and at an average of 20,000 oz/year once the mine is fully ramped up," said analysts
"Our NPV5% for the stream has increased almost 50% to $173 million, from $116 million previously; our consolidated NAV5% for Nomad has increased 13%."
Canaccord also reminded investors that Nomad has a 10% stream on the first 160,000oz produced in a year at Blyvoor and 5% on any production above 160,000oz until 300,000 oz has been delivered to Nomad.
From there Nomad is entitled to receive 0.5% of the first 100,000 oz produced each year, for which Nomad will pay $572 per ounce received.
Using the current LOM plan, Canaccord anticipates the 300,000 oz threshold to be reached in 2037.
The ramp-up at Blyvoor continues to progress with the mill expected to reach its initial production target of 20,000 tons per month by the end 2021.
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