Post by
thseeker1 on Oct 28, 2019 1:44pm
estimated to be 25% undervalued NOW
Current undervalued by about 25%
NIA has put together a chart showing how the median gold royalty company owned by VanEck Vectors Gold Miners ETF (GDX) is trading with an enterprise value/revenue ratio of 17.33, which is 5.50X higher than the median gold mining company owned by GDX. Why are gold royalty companies worth so much more than gold mining companies? The median gold royalty company generated free cash flow last quarter equal to 54.55% of revenue vs. the median gold mining company generating free cash flow equal to only 5.42% of revenue! Click here to see NIA's exclusive chart!
Wallbridge Mining (TSX: WM) is up another 12% today to $0.56 per share making it by far the #1 best performing mid/large-cap gold stock in the entire market! WM's market cap is now CAD$279.22 million and after subtracting its cash position of CAD$14.6 million it has an enterprise value of CAD$264.62 million. On a very conservative basis, ELY's 2% royalty in WM's Fenelon project deserves a valuation equal to 11% of WM's enterprise value due to the fact that the market is currently valuing gold royalties 5.50X higher than equity in the same gold mine!
Therefore, ELY's 2% royalty in WM's Fenelon project is worth a minimum of CAD$29.11 million!
At the foundation of ELY is their Nevada Select business that has optioned 22 gold properties to 20 different publicly traded gold explorers. These 22 option agreements are contracted to bring in total 2019 revenue for ELY of USD$957,500 (CAD$1,250,687). In addition, ELY will receive advance royalty payments this year from 6 previously completed option agreements totaling USD$105,000 (CAD$137,151). With ELY's Nevada Select set to generate total 2019 revenue of CAD$1,387,838 from option agreements and advance royalty payments, the median gold royalty company enterprise value/revenue ratio of 17.33 values ELY's Nevada Select business at CAD$24.051 million!
Therefore, ELY deserves to trade immediately with an enterprise value of CAD$53.16 million from its WM royalty and Nevada Select business alone! ELY has a net cash position of CAD$2.1 million so ELY deserves to trade immediately with a market cap of CAD$55.26 million which equals a price of $0.55 per share!
Comment by
mjh9413 on Oct 29, 2019 4:12pm
Clarification? If Sprott bought the Balmoral Fenelon 1% Royalty from ELY in June for $1.3MM after ELY had bought that 1% for $600K why is ELY's current 2% be worth so much more?.