In a Dec. 23 research note, Noble Capital Markets analyst Mark Reichman reported that Ely Gold Royalties Inc. (ELY:TSX.V; ELYGF:OTCQX; I4U:FSE), through its subsidiary Nevada Select Royalty subsidiary, agreed to acquire from a private third party a 2% net smelter returns (NSR) royalty on three unpatented mining claims within Coeur Mining's Lincoln Hill property in Nevada.
Reichman reviewed the benefits of the transaction to Ely Gold, the terms of the deal and Coeur's plan for the Lincoln Hill project.
"The Raven royalty transaction is another example of Ely Gold leveraging its exposure to projects where it already owns royalty interests and is familiar with the project and operator," specifically Coeur's Rochester mine expansion, Reichman noted.
He pointed out that the Vancouver-based company also owns three other NSR royalties in the area: 2% associated with Lincoln Hill, 1% on 38 claims associated with Coeur's Lincoln Hill and Gold Ridge and 1.5% on 23 unpatented claims on Gold Ridge's western boundary.
Total consideration for this latest 2% NSR royalty, part of the aggregate 4% Raven NSR royalty, consists of $200,000 in cash and 500,000 warrants exercisable at the Dec. 22, 2020, closing price for three years.
As for the current status of the Lincoln Hill project, Coeur plans to start drilling there in mid-2021 and aims to commence production in 2024-2025. The current resource at Lincoln Hill encompasses 364,000 ounces of gold and 10.2 million ounces of silver, in the Measured and Indicated category, and 255,000 ounces gold and 8.2 million ounces silver in the Inferred category.
Looking forward, "Ely offers an attractive growth profile and is well positioned to make additional acquisitions," added Reichman.
Noble Capital will incorporate this most recent acquisition into its financial model of Ely Gold upon closing, the analyst noted. For now, the investment banking firm maintains its US$1.55 per share target price on Outperform-rated Ely Gold Royalties, which is trading today at about US$0.91 per share.
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Disclosures for Noble Capital Markets, Ely Gold Royalties, December 23, 2020
Company Specific Disclosures
The Company in this report is a participant in the Company Sponsored Research Program ("CSRP"); Noble receives compensation from the Company for such participation. No part of the CSRP compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed by the analyst in this research report.
The Company has attended Noble investor conference(s) in the last 12 months.
Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) within the next 3 months.
Noble is not a market maker in the Company.
ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE
Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis. Named WSJ 'Best on the Street' Analyst and Forbes/StarMine's "Best Brokerage Analyst." FINRA licenses 7, 24, 63, 87.
