Royalty Corp. Gains Coverage and a Buy Rating
Research Report

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Disclosures for Atrium Research, Sailfish Royalty Corp., October 1, 2024

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-Atrium Research analysts Ben Pirie and Nicholas Cortellucci, in a research report published on October 1, 2024, initiated coverage on Sailfish Royalty Corp. (FISH:TSX.V; OTC:SROYF) with a Buy rating and a price target of CA$2.00. The report highlights Sailfish's focus on precious metals royalties and streaming in the Americas, with a particular emphasis on shareholder returns.

The analysts emphasized Sailfish's commitment to shareholder value, stating, "FISH is focusing on returning capital to shareholders via share buybacks and dividends while keeping G&A to a minimum. Sailfish has repurchased over 12M shares since June 2019, representing 16% of its shares outstanding, and currently offers a 5.0% dividend yield, the highest yield amongst all mining royalty firms."

Pirie and Cortellucci highlighted the company's key assets, particularly the Spring Valley Gold Project in Nevada, noting, "FISH has various royalties on the Spring Valley Gold Project in Pershing County, Nevada. This is an advanced development project with a >$1B NPV and is owned by Waterton Global Resource Management. The mine is expected to begin production in 2028 and scale to 349Koz [gold] Au per year."

The analysts also pointed out the steady cash flow from Nicaraguan assets, stating, "San Albino is a high-grade gold mine in Nicaragua owned by Mako Mining (MKO:TSXV) that started commercial production in July 2021. Sailfish has a gold stream equivalent to a 3% NSR on the mine."

Regarding Sailfish's strategic positioning, the analysts noted, "Given that access to capital is highly important for royalty companies, FISH has a major competitive advantage of having Wexford Capital as its majority shareholder (61.5%). Management owns 4.3% and is highly experienced in the mining royalties and capital markets."

Atrium Research's valuation methodology for Sailfish is based on a Net Asset Value (NAV) approach. The analysts explained, "We utilize an NAV valuation to derive our target price on Sailfish, using only the Nicaragua, Spring Valley, and Gavilanes assets. We project out the production and NSR for the Nicaragua assets and Spring Valley and assume an EV/oz valuation for Gavilanes."

They added, "We use a 5% discount rate to obtain a valuation on the Spring Valley royalty at US$118.9M or US$1.67/share as well as a valuation on the Nicaragua assets at US$13.2M or US$0.19/share. Our model assumes US$1/oz of silver for the Gavilanes property, equating to US$22.0M or US$0.31/share."

The analysts concluded, "We apply a 0.7x multiple onto this (small/mid-cap group average) and convert to CAD to obtain our CA$2.00/share target price."

Pirie and Cortellucci identified several catalysts for Sailfish, including:
1. EIS Submission (Q4-Q1) & Record of Decision for Spring Valley (Q2/25)
2. Potential as a takeover candidate

In conclusion, Atrium Research's initiation of coverage with a Buy rating and CA$2.00 price target reflects a positive outlook on Sailfish Royalty Corp.'s portfolio of royalties and its focus on shareholder returns.

The analysts' target price, considering the company's share price at the time of the report of CA$1.36, represents a potentially significant return to the analysts' target price, considering the 5.0% dividend yield and 52.0% total return mentioned.