Stifel Financial Corp has increased its price target for Nomad Royalty (TSX:NSR) Company Ltd at C$21.50 from C$20.00 following the company's recent acquisition of a gold stream on the tier-one Platreef palladium-rhodium-platinum-nickel-copper-gold project located in Limpopo, South Africa from Ivanplats (TSX:IVP) Ltd.
The Montreal-based exploration company will provide $75 million for its portion in gold stream funding to Ivanplats as a part of a $200 million gold stream co-investment with Orion Mine Finance.
The Stifel analysts anticipate that Platreef becoming “a cornerstone asset” for Nomad Royalty’s portfolio.
“We believe Nomad Royalty (TSX:NSR) is set to display rising scale and one of the strongest growth rates in attributable revenue gold equivalent ounces (GEOs), relative to peers, resulting in strong cash flow generation in the near-term,” the analysts said.
READ: Nomad Royalty acquires $75M gold stream on Ivanhoe Mines Platreef PGM project in South Africa
“We project 2020-2024 revenue GEO compound annual growth rate (CAGR) of 30% with royalty peers in our coverage showing compound annual growth rate ranging between 5% and 19%," they continued, adding: "We estimate an aftertax IRR of 10%, which we view positively in addition to the exposure to a Tier 1 asset and strong operator backing."
"Phased development is targeting initial production by 2024 providing Nomad with line of sight to cash flow from this new stream," the analysts said, noting that there is expansion potential beyond the currently envisioned production rate that would take Platreef to the status of largest platinum group metal producer.
They noted that Nomad, as an emerging small-cap company, offers investors the opportunity to participate in the re-rating of the stock.
“We expect that as Nomad Royalty builds a track record of performance and continues to grow its core revenue-generating portfolio, it should justify correspondingly higher valuation multiples," the analysts added.
"This is NSR’s third sizable transaction this year, and we are pleased to see that the strong partnership with Orion is working as a competitive advantage for Nomad to source new deals," they concluded.
Nomad Royalty is a gold and silver royalty company that purchases rights to a percentage of the gold or silver produced from a mine, for the life of the mine. Nomad owns a portfolio of 15 royalty and stream assets, of which eight are currently producing mines.
Contact Ritika at ritika@proactiveinvestors.com