Keats Royalty Buyback by NFG…rationaleBelow is a post on this News released this AM by NFG.......mining of Keats Trench is now highly motivated due to the enhanced value of the Royalty to Senior Golds..
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The purchase of all NSR for QWS is a long term investment, since exploitation of QWN is being prioritised.
Since QWN now has a fraction of 1% NSR then the circa 100Km property is practically royalty free.
There is a possibility that the board may be preparing for an eventual sale with a very high NSR payable by Big Gold.
The rationale for this is that, if the mining profitability were to be shown to be exceptional based on the near surface grades, then a very high buyout price would be sought by NFG.
Since most Big Gold companies would be reluctant to raise a high cash buyout price, or alternatively, dilute their equity before profits from QWN start to flow, then they could be tempted to offer an exceptionally high NSR to NFG.
A similar deal was made by AEM when they bought Canadian Malartic from Osisko. My recollection is that they are paying about 5% NSR.
In this scenario, NFG could become a Royalty company which would result in a very high PE multiple.