In a May 11 research note, CIBC analyst Alex Hunchak reported Nomad Royalty Company Ltd.'s (NSR:TSX; NSRXF:OTCQX) Q1/21 financial results and progress at one of its royalty assets.
Nomad prereported that quarterly sales of gold equivalent ounces (GEOs) in Q1/21 were a record high, at 5,575 GEOs, and included first contributions from the Blyvoor gold stream. Due to sales, Hunchak noted, the company's Q1/21 financials were mostly in line with CIBC and consensus' estimates.
For instance, adjusted earnings per share (EPS) and cash flow per share were $0.00 and $0.01, "largely in line with our and consensus estimate of $0.01/$0.01." EPS came in slightly under, resulting from higher depreciation and general and administrative expenses. EPS also was impacted by Nomad recognizing the changed value of its gold loan following Equinox's acquisition of Premier Gold.
During Q1/21, Nomad generated about $6.5 million in operating cash flow and $5.27 million in free cash flow. At quarter's end, it had $25.3 million in cash on the balance sheet. In addition, the Montreal-based company has $75 million available to it in an undrawn revolving credit facility. Given its available liquidity, Nomad likely will "remain active on the acquisition front in 2021," Hunchak wrote.
"Nomad's Q1/21 financial results were surprise free and highlighted the company's strong cash flow potential at current precious metals prices," concluded Hunchak.
Looking forward, CIBC estimates full-year 2021 sales of about 21,400 GEOs, after picking up in H2/21. Nomad has not released annual guidance because ramp-up timing at Blyvoor and Woodlawn are uncertain.
Regarding Blyvoor, the royalty and stream firm still expects production to hit full capacity by year-end 2021 after completion of the technical report sometime in Q2/21, Hunchak relayed. The operation has been ramping up since April 12, 2021, after being suspended temporarily.
"Derisking the Blyvoor asset is a key deliverable for Nomad, given the project's about 30% contribution to Nomad's net asset value," Hunchak wrote. "We continue to view the successful de-risking of the Blyvoor asset as the key to the company's re-rating against the peer group in the year ahead."
Regarding the Robertson project on which Nomad holds a sliding scale NSR royalty, the project operator, Barrick Gold, recently announced positive exploration results; stepout drilling 300 meters beyond the current resource indicated potential near-surface mineralization. Barrick will follow up that finding with further drilling in Q2/21 and will drill test another area, previously undrilled, between the Robertson and Pipeline deposits.
CIBC has a Neutral rating and a CA$1.25 per share target price on Nomad Royalty. Today, the share price at about CA$1.09.
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Disclosures from CIBC, Nomad Royalty Company Ltd., Earning Update, May 11, 2021
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Important Disclosure Footnotes for Nomad Royalty Company Ltd (NSR.TO)
• 2a These companies are clients for which a CIBC World Markets company has performed investment banking services
in the past 12 months: Nomad Royalty Company Ltd
• 2c CIBC World Markets Inc. has managed or co-managed a public offering of securities for these companies in the
past 12 months: Nomad Royalty Company Ltd
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past 12 months: Nomad Royalty Company Ltd
• 2g CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from
these companies in the next 3 months: Nomad Royalty Company Ltd
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