Source: Streetwise Reports 11/06/2020 The investment case for Nomad Royalty Company is made in a Velocity Trade Capital report.In a July 7 report, analyst Michael Siperco reported that Velocity Trade Capital initiated coverage on a new royalty entrant, Nomad Royalty Company Ltd. (NSR:TSX; NSRXF:OTCQX), with an Outperform rating and a CA$2.25 target price. In comparison, Nomad is trading at about CA$1.41 per share. "Nomad offers a pure play, precious metals royalty portfolio at a discount to peers, focused on near term cash flow and return, with rerate and growth potential that rivals producers in a higher margin, more diversified, lower risk investment," Siperco added. The analyst presented the key points about Nomad. One, the company, founded earlier this year, began with a "strong initial base of cash generating assets." Of its 10 assets, four are royalties, four are streams, one is a gold loan and one is a future contingent payment. Five assets are currently producing, and another two are expected to begin doing so in 2021. "By YE2021, without additional transactions, we expect Nomad to be at about a 25,000 ounce per annum run rate, generating +US$30 million per year in free cash flow at spot metal prices," Siperco indicated. Two, the company is expected to aggressively pursue further deals. Management is willing to consider a vast array of potential transactions in terms of jurisdiction, commodity type and structure, including partnerships, syndication, and perhaps even mergers and acquisitions. "We see additional transactions, portfolio acquisitions and diversification driving dividend growth and multiple rerating over time, even as organic delivery/cash flow growth accelerates into 2021," commented Siperco. Three, Nomad's top executives and co-founders, Vincent Metcalfe (CEO), Joseph de la Plante (chief investment officer) and Elif Levesque (chief financial officer), have had great success in the past, having expanded Osisko Royalties' portfolio to more than 100-plus from one, in about five years' time. "We have a high degree of confidence in management's ability to source new transactions and effectively manage the growth of the company," Siperco noted. Four, Nomad's management team is focused on cash flow and returning cash to shareholders. For instance, it is looking at instituting a dividend policy. Five, Nomad offers investors low-risk leverage to metal prices and value. "While a gold-silver bull market may lead to higher torque among producers, the upside from a lower risk, rapidly growing, production-focused new entrant should be highly attractive," Siperco purported. Six, though Nomad is currently trading lower than the rest of the companies in the royalty and streaming sector, that is expected to change. "We see additional transactions, portfolio acquisitions and diversification driving dividend growth and multiple rerating over time, even as organic delivery/cash flow growth accelerates into 2021," Serpico wrote. Read what other experts are saying about: Disclosure: Disclosures from Velocity Trade Capital, Nomad Royalty Company Ltd., July 7, 2020 I, Michael Siperco, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. I receive compensation from Velocity that is based upon various factors including Velocity total revenues, a portion of which are generated by Velocity Investment Banking activities. Velocity has established and implemented written policies and procedures to minimize conflicts of interest between its Clients and Velocity and its Analysts. Velocity does not allow its Analyst or household family members to hold or trade in any security on which the Analyst writes research reports. Other than what is disclosed below, Velocity is not aware of any material conflict of interest between itself and its Analyst and the Firm’s Clients. No employee, officer or director of Velocity is a director, officer or employee of the issuer or has received remuneration from the issuer, other than normal course investment advisory or trade execution services in the last 12 months. As with all employees of Velocity, a portion of the Analyst’s compensation may be derived from Investment Banking earnings. The Analyst does not receive any direct compensation from Investment Banking fees received from this issuer. Company-Specific Disclosures: ( Companies Mentioned: NSR:TSX; NSRXF:OTCQX, ) from https://www.streetwisereports.com/article/2020/11/06/coverage-initiated-on-royalty-firm-growing-cash-flow-at-the-right-price.html
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