Andrew Kaip, analyst for BMO Capital, highlighted Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) in a Sept. 5 report that focused on "the evolutionary trends and introduce cost reporting for the precious metal royalty/streaming sector. We ask the question, 'Who has the better deck of cards?'"
Kaip pointed out that Wheaton Precious Metals' strength is "cash generation and liquidity." He noted that "following the old adage that 'Cash is King,' Wheaton Precious Metals is king, generating +40% of total cash flow among its peer group annually. . .barring any future equity raises, Wheaton Precious Metals has the most enviable liquidity positions to be able to transact on future opportunities."
Kaip stated that "when evaluating royalties/streams, the quality of the asset, jurisdiction, and commitment from management become cornerstone attributes for consideration. For WPM, for example, +90% of its production come from assets in the lowest half of the cost curve, and the portfolio has almost 20 years of mine life based on reserves."
Kaip concluded that "breaking it down to the individual company level, WPM is the standout in the generation of overall operating cash flow, bringing in about 40% or more in any given year. As we note from past commentary from the company, WPM is comfortable with its debt levels and drawing down on its revolver. . .should investors look to obtain higher leverage to the underlying commodity longer term, we see WPM as most leveraged to the price of gold. In terms of silver, both in the near term and longer term, we see WPM as the most sensitive to a change in the price of silver."
Kaip has an Outperform rating on Wheaton Precious Metals with a target price of $20.96. Wheaton Precious Metals is currently trading at $19.82.
Great Panther Silver Limited (GPR:TSX; GPL:NYSE.MKT) had a site recently visited by ROTH Capital Partners analyst Jake Sekelsky. In a Sept. 5 report, Sekelsky described a site visit to Great Panther's Guanajuato Mine Complex. Sekelsky highlighted that the first thing he noticed was the relationship between Great Panther and the community due its operations being so close to the town. He explained that given "Great Panther has been operating in the area since 2005, we believe the firm has a strong presence in the local community as both an employer and proponent of preserving local mining history. We believe efforts such as this go a long way in maintaining Great Panther's social operating license in Guanajuato."
As the tour continued to the Cata Plant, Sekelsky noted that "the 1,200 tpd processing facility appeared to be in good working condition. He continued by pointing out the "various upgrades and refurbishments made to the plant since its purchase in 2005. Importantly, the flotation cells were replaced in 2012 and resulted in recoveries increasing from the mid-70% range to current levels of 87%-89%."
"We walked away impressed with the company's flagship operation. . .we are maintaining our Buy rating and $2.00 target. Accordingly, we have not made any changes to our model following the site visit. In our view, our estimates that were set forth in our initiation on August 10, 2017 were confirmed on this site visit," Sekelsky concluded.
Great Panther's shares are currently trading at $1.63.
In the Sept. 6 edition of Resources Maven, Gwen Preston delved into Columbus Gold Corp. (CGT:TSX; CBGDF:OTCQX). The analyst explained that Columbus Gold is at a "crossroads" because of the "pending spinout of Allegiant Gold, which will contain all of Columbus' Nevada assets. The concept is to put Columbus' two halves in separate vehicles so that either can be dealt or advanced on its own."
The second vehicle Preston is referring to is Columbus Gold's 45%-owned joint venture, Montagne d'Or, in French Guiana. Preston pointed out that "the mainstay of [my] investment thesis was—and still is—that someone will want to own all of Montagne d'Or. That someone could be Nordgold, Columbus Gold's partner that owns the remaining piece of Montagne d'Or, or it could be another gold miner, who would deal for one or both parts."
Preston highlighted that "Columbus' Nevada portfolio has some good projects and is powered through a partnership with some of the best Nevada explorers in the world. It deserves more than to be lost in a shuffle, or even overshadowed by another project like it has been for so long." By dividing the two halves, Columbus makes sure that "its Nevada portfolio so that it does not get lost in any Montagne-focused shuffle. It also wants to remind the market that it is more than Montagne."
She also said she likes Columbus management because it is "particularly good at looking ahead and ensuring that deals or structures will work well for shareholders in all kinds of might-happen situations. The decision to not assay these Bolo cores until after the spinout is one example. The entire equation underlying the joint venture with Nordgold for Montagne is another, in that Columbus was careful to ensure they could not get diluted down to a royalty."
Preston concluded "that Buying now makes sense in that you get exposure to whatever happens with Montagne and shares in Allegiant." Preston has a Buy rating on Columbus Gold.
Columbus is currently trading at $0.73.
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Disclosure:
1) Melissa Farley compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an employee. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Columbus Gold, Great Panther Silver and Wheaton Precious Metals. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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