The Royalty Report is also available for easy viewing at Metal Augmentor


Conclusion


The universe of metals and mining royaltycompanies is quite varied and up until now it may have been difficultfor many investors to evaluate the financial metrics of any one of them,much less all of them on a comparative basis. We hope this report hashelped clarify how these companies compare against one another on anumber of fundamental valuation metrics. Although companies like SilverWheaton currently trade above their target valuations, this may notalways be the case. On the other hand, a rich valuation is notnecessarily a bad thing because often it means that management has beenvery successful in delivering value to shareholders. Ideally, though, wewant to identify situations before the delivery happens.

The real beauty of our model is that it isfully dynamic and can be updated at the push of a button, which allowsthe pinpointing of value opportunities in almost real time. Weconstantly add companies and monitor our model for subscribers not onlyto identify opportunities in the royalty area but also silver producers,gold producers (an update on gold producers will be released veryshortly) as well as other sectors (copper producers, gold developers,etc.). Our complete model including all royalty and other data isavailable to subscribers of our Metal Augmentor Institutional service.Current Institutional subscribers include Callinan among the royaltycompanies and several others in the gold and silver space.

Alright, time for some final thoughts.

  • On the opposite end of the valuation scale from Silver Wheaton, Terra Nova looks interesting but uncertainty surrounding the exact royalty agreement at its Wabush mine and the recombination with Mass Financial makes it a sensible idea to remain on the sidelines for the time being.
  • In their individual ways, Bullion Monarch, Callinan, Golden Arrow, Golden Predator and Sandstorm Resources all appear to offer value to investors interested in royalties or the royalty model.
  • Sandstorm Resources is the only “pure” gold royalty company and it is also aggressively seeking new royalties.
  • Callinan is spinning off its exploration business and will focus its future efforts on royalty generation.
  • Golden Predator in our view has an attractive exploration portfolio in the Yukon where several projects have seen drilling that suggests the tenor of gold mineralization could support a mine if sufficient tonnage can be delineated.
  • Gold Wheaton seems to offer decent fundamental value at the present time and could be a dark horse that eventually gets market respect approaching the status of its namesake sibling, although a U.S. exchange listing would be helpful as would the addition of new royalties and improvement at the South African operations.
  • We favor one of the companies above the others in the short term and we plan soon to profile it separately for subscribers of the Metal Augmentor service.

Disclaimer: From time to time we have and may own shares inseveral of the companies mentioned in this analysis but at thepublication we held no material position. No compensation has been received fromany of the companies mentioned except Callinan Mines and FirstMajestic Silver which are institutional clients of the Metal Augmentorservice. This is not investment advice; should youseek investment advice we recommend you discuss the company with alicensed investment advisor or broker.