Canaccord Genuity (TSX:CF, LSE:CF) has raised its price target for Nomad Royalty (TSX:NSR) Ltd following its acquisition of a gold stream on Orion Mine Finance's 40% interest in the Greenstone gold project, noting that Orion is Nomad's largest shareholder, with around a 70% interest.
The broker maintained its 'Buy' rating on the company and raised its target price to C$17.50 from C$16.50.
Canaccord's analysts said they view the transaction as positive, with an NPV5% (net present value at a 5% discount rate) of $102 million and internal rate of return (IRR) of about 7% on their long-term gold price assumption of $1,860 per ounce (oz); about 5% at $1,600/oz.
The Greenstone stream gives Nomad a long-life, anchor asset in Canada, representing about 17% of its royalty net asset value for Nomad, they added.
READ: Nomad Royalty Company further bolsters its portfolio, striking US$95M gold stream deal with Orion Mine Finance for Ontario project
"We expect the stream to contribute approximately 9,000 to 10,000 gold equivalent ounces (GEOs) to Nomad starting in 2024, and to help underpin the company's GEO growth profile from about 20,000 ounces (oz) in 2021 to over 50,000 oz in 2024 (+60%),” Canaccord said.
Canaccord said it expects Nomad to fund the purchase from cash flow and its $125 million credit facility, which it has an option to increase to $150 million.
"The transaction also demonstrates the alignment between Nomad as a stream/royalty provider and Orion as a debt/equity/offtake provider to potentially offer full financing solutions to the mining industry," the Canaccord analysts concluded.
Nomad Royalty (TSX:NSR) Company Ltd is a precious metals royalty company, which buys the rights to a percentage of gold or silver produced from a mine for its life. Nomad owns a portfolio of 15 assets, of which eight are on currently producing mines.
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