Nomad Royalty (TSX:NSR) Company Ltd. has revealed that it realized $5.1 million from its preliminary deliveries and sales from its royalty and stream interests for the third quarter of 2021.
For the period ended September 30, 2021, the Montreal, Canada-based gold and silver royalty company realized preliminary revenues from its precious metal interests of $5.1 million, for a preliminary precious metals cash operating margin of $4.4 million.
The cash operating margin is calculated by subtracting the cash costs of gold and silver sold from revenues and evaluates Nomad’s ability to generate strong cash flow.
Investors responded well, sending shares nearly 2% higher to C$8.53 on the Toronto Stock Exchange on Friday and more than 1% to US$6.89 on the New York Stock Exchange.
READ: Nomad Royalty Company boosts royalty on producing Caserones copper mine in Chile
Meanwhile, Nomad generated preliminary revenue from its precious metal interests of $19.4 million for the nine-month period ended September 30, 2021, for a preliminary precious metals cash operating margin of $16.4 million.
In addition, the company said the total gross amount receivable from the Compania Minera Caserones (CMC) copper royalty for 3Q is estimated at $2 million, thanks to 1,112 gold equivalent ounces attributable from Nomad's 67.5% ownership interest.
Nomad also said it received $1.7 million in September for 942 attributable gold equivalent ounces in connection with CMC's 2Q 2021 activities.
On August 31 this year, Nomad completed the acquisition of an additional 37.5% ownership interest in Caserones, a private Chilean company that holds the payment rights to 32.5% of a 2.88% NSR royalty on the Caserones copper mine in Chile representing an effective 0.651% NSR royalty.
Slight beat
In a report, Canaccord Genuity (TSX:CF, LSE:CF) analysts maintained their Buy recommendation and unchanged C$16.50 target on Nomad after its slight beat.
“Nomad announced it received 4.8 thousand tonne (koz) gold equivalent ounces (GEOs) in Q3/21, above our estimate of 4.2 koz and up 85% quarter-over-quarter,” said the Canaccord Genuity (TSX:CF, LSE:CF) report.
“Included were 2.5 koz gold (CGe 3.5 koz), 29.9 koz silver (CGe 31.3koz), and 1.8 koz GEOs attributable to the NSR royalty for the Caserones copper mine (CGe 0.2 koz).”
Canaccord estimated that combined 3Q preliminary revenue totaled $8.8 million and costs excluding depreciation were $0.7 million for a 92% cash margin, up 4% quarter-over-quarter.
The analysts noted that the royalty company was poised for “significant growth heading into 2022.”
“As a reminder, we expect Nomad's GEOs to increase from approximately 19 koz in 2021 to approximately 33 koz in 2022 (+77%) and more than double to approximately 39 koz by 2023,” said the report.
“We note that this growth is dependent on Blyvoor (37% of NAV) ramping up per plan, the potential restart of Woodlawn (10% of NAV), and Bonikro (10% of NAV) getting back on track after a slower Q2.”
In addition, Canaccord said that Nomad had an attractive valuation. “Nomad is trading at 0.83x NAV and 7.9x 2022E EV/EBITDA, well below the royalty average of 1.47x NAV and 14.2x EBITDA,” said the report.
Nomad said the financial information is preliminary, “subject to final quarter-end closing adjustments, and may change materially.” The will release its results for the 3Q on November 3, 2021, after the markets close.
Nomad purchases rights to a percentage of the gold or silver produced from a mine, for the life of the mine. It owns a portfolio of 15 royalty and stream assets, of which 8 are on currently producing mines.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive
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