Stifel GMP lifted its target price on Maverix Metals Inc (TSX:MMX) following news the company has acquired a new gold stream and struck a long-term strategic partnership with Auramet Capital Partners.
The broker repeated a 'Buy' rating on Maverix stock and lifted the target to C$8.75 from C$8.50 previously. Maverix shares closed in Toronto on Tuesday at C$5.62 each.
Stifel also raised its current gold equivalent ounces (GEOs) estimates for Maverix for 2022-2023 by over 15%.
As reported on September 28, 2021, the new stream will deliver 5,000 ounces of gold to Maverix per year in quarterly deliveries, with the company making ongoing cash payments equal to 16% of the spot gold price for each ounce received.
READ: Maverix Metals acquires new gold stream of 5,000 ounces per year from longstanding partner Auramet Capital Partners
Maverix will make an upfront cash payment of $50 million and Auramet will have the option of terminating the stream after 50,000 ounces have been delivered and paying $5 million in cash.
Auramet International, of which Auramet Capital Partners is an affiliate, is one of the largest physical precious metals merchants in the world with over $20 billion in annual revenues.
Stifel analysts noted: "The gold stream is immediately accretive on GEOs and cash flow with 5koz/ yr being meaningful to MMX. As we look at the stream alone, we estimate an after-tax IRR of around 7.5% (based on $1,750/oz)."
"Additionally, MMX will be entitled to an equivalent amount in gold from Auramet's FY dividend, which further increases the IRR on this transaction. Partnering with Auramet broadens MMX's network to source new accretive deals," added the analysts.
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