Metalla Royalty – A STRONG BUY after a 79% decline?

In this video we are looking at the investment case for Metalla Royalty and Streaming (Symbol MTA on the New York Stock Exchange).

MTA has royalties on 100 different gold, silver, and copper assets around the world, which are concentrated in North America, South America, and Australia.

Of the royalty and streaming companies, Metalla probably has the best jurisdictional risk profile of any of them.

In addition to their great jurisdictional risk profile, Metalla also has a very strong growth pipeline in the next few years and also in the coming decade. 10 years from now, the company will likely look nothing like what it looks like today.

A royalty company like this often offers an excellent investment case if purchased at the right price because all of their growth is paid for, they have a safe business model, and huge margins. Even if they make no additional acquisitions, the company will experience tremendous growth with virtually zero additional investment.

Never make any investment decisions based on my videos. This sector is very risky and this should not be considered investment advice. Always do a lot of your own research before investing your hard earned money.

When you watch this video, I may own shares of MTA, and I may buy more or sell my shares at any time.

#miningstocks #goldstocks #metallaroyalty

Today we’re looking at matala royalty and streaming the stock price has declined like crazy over the past couple years so we’re going to look at whether it’s a stock to stay away from or whether it might be a good buying opportunity here first I’m going to help

You get familiar with the company and then after that we’re going to talk valuations and what kind of returns we could potentially see and as always don’t take this as investment advice and always do lots of your own research before investing any of your money let

Me first briefly cover some of the perks of a royalty company like matala one good thing is that they have fixed costs so let’s say gold is $2,000 an ounce and here we have a producer and here we have a royalty company well the royalty company is going to make $2,000 per

Ounce however the producer they might have costs of $1,300 an ounce so they may only make $700 per ounce and now let’s say in the next next few years that the gold price goes from $2,000 an ounce to $2500 an ounce well the royalty company is going to be making another

$500 per ounce they’re going to be making $2500 per ounce whereas the producer although they’re now selling their gold for $500 more per ounce their costs have gone up over that time period as well so now instead of making $700 an ounce they may only be making $800 an

Ounce to despite the spot price of gold going up $500 the next perk of a royalty company is that they get free growth what do I mean by this so let’s say you have a producing mine that’s producing 200,000 ounces of gold per year and metall royalty has a royalty on this

Mine so they’re getting let’s say 1% of the gold that’s produced well this mine has 4 million ounces of reserves so they have a 20 year mine life and this company who’s producing this gold is like hey we have this long mine life but the market isn’t giving us credit for

Anything past 10 years so let’s invest to double our production so we’re going to spend $300 million to double our production so now we’re going to be producing 400,000 ounces a year the company operating the mine had to drop $300 million to make this happen however matala doubles their annual attributable

Ounces for free another perk of a royalty company is that they have very high margins so for a royalty company their gross is basically their net another great thing about a royalty company is they have virtually no costs that increase whereas a mining company they’ll have all these inputs for

Example they might be using cyanide they’ll be using a lot of energy usually using a lot of oil so as the prices of all of these commodi ities increase well their costs go up and up and up however with a royalty company their costs stay pretty much the same and also the

Companies take very few employees to run the next benefit of a royalty company is that they’re typically very highly Diversified whereas a mining company may only have one or a few mines and if something happens at one of those mines like there’s a major problem at one of

Those mines that can destroy the company in some cases and at the very least their share price is going to take a major hit however a royalty company may have 10 20 100 different royalties so comparing a royalty company to a minor well if something happens at one of

These producing royalties well then the stock isn’t hurt nearly as much now it can still get hurt but not nearly as much as you could see a producer get hurt from something serious happening at one of their minds let’s take a look at malala’s assets here so as you can see

They’re almost all in North America South America and Australia out of all of the royalty and streaming companies matala has one of the best political risk profiles and at the moment matala has five assets that are in production these aren’t big assets actually most of metall’s value is in their pipeline so

They have three assets that are currently in construction and 24 development assets but in addition to those then you have other Advanced exploration assets and exploration royalties as well so here you have quite a few short-term potential catalysts but also long-term potential catalysts and when it comes to royalty and streaming

Companies the market gives the companies no value for these assets when it comes to royalty and streaming companies something that I’d really like to see is for them to have long life assets because you know how I was talking about earlier where the producer will invest to expand their Mills so they can

Produce more ounces than their currently producing producing well the longer their asset lives are the more incentive they have to expand their Mill which means free growth for the royalty company and taking a look at mata’s competitors matala has the longest life assets of any of them here’s a list of

Mata’s assets and what’s interesting here you can see there’s a whole lot of them and for almost all of these the company gets zero value for from the market the only ones the market values are the production ones and also the development ones that have a timeline to

Go into production pretty soon but other than that the rest of them get no value whatsoever even though any one of these could provide significant cash flow to matala in the future and these are royalties that are already bought and paid for a royalty company’s production

Is usually measured in terms of GEOS or gold equivalent ounces and right now matala has about 4,000 gold equivalent ounces that they’re receiving per year now the truth is that this is pretty low and if you compare metalis valuation to their current cash flows or their price

To earnings ratio the stock doesn’t look cheap however this is a big however almost all of mata’s value is in their pipeline in their near-term growth and in their long-term growth and 2024 and 2025 are going to be very significant years for matala as these projects that are currently in construction get into

Production but it’s not just 2024 and 2025 this goes until the end of the decade and as the end of the decade rolls around we’ll in all likelihood see some of those 100 assets be even more advanced and then we have a timeline for those to get into production as well so

All that to say they have an incredible pipeline that’s already bought and paid for and since we have so many development assets and assets that are in construction we’re going to see a lot of news flow coming from those companies over the coming months and years as well

And now let’s look at some of mata’s important assets that are currently in construction and development one is I am Golds cot and Goslin deposits this might not look like a significant royalty because it says estimated production is only 400 ounces a year however this is going to be a very significant producer

For metala in the coming years because matala only has a royalty on a small part of the kot deposit however there’s the kot deposit and then right next to it is the Goslin deposit and matala royalty covers all of the Goslin deposit and that deposit is enormous and also

It’s not in their mine plan yet it’s not an imold mine plan and we’ll probably see that into their mind plan in 2025 and at that point we’re going to have a lot more clarity in the future of what the potential cash flow for matala could

Be this slide is from January it says an updated resource is expected in early 2024 incorporating 57 drill holes for approximately 35,000 MERS that were drilled however this just happened we just got this news a couple of days ago from I gold and they added 2.4 million

Ounces to what was already a very substantial deposit at gosin so 2.4 million ounces and Metal’s portion of that is 1.35% net smelter royalty so they get all of that for free and imold has said that they’re planning another 35,000 M drill program for gosin in 2024 four so

Perhaps in 2025 we get another resource update and maybe we see another 2.4 million ounces added to the Goslin deposit this thing looks like it’s going to keep growing because it’s totally open at depth this deposit I don’t know how to pronounce it so I’m going to call

It TOA so TOA is being built by G mining Services which is one of the best developers in the industry this is located in Brazil and when it’s fully completed and in full production it’s going to bring metel an average of 1300 ounces per year so this is going to

Start production in the second half of 2024 and then it’s going to be ramping up over the next couple of years and after it’s ramped up and in full production that will be an additional three or four million coming into metalis treasury every single year for free next Castle Mountain Phase 2 so

This is owned by Equinox gold which is also Al one of the best operators in the industry and as you can see this is set to be a very important asset for matala as their average annual gold equivalent ounces is going to be 5,000 per year keep in mind right now

The entire company is bringing in about 4,000 ounces per year so this one mine is going to be bringing in more than what the entire company is bringing in today Equinox gold is waiting on their final permits for this so they can start this development of their phase two

Project Equinox has said that they don’t know when those final permits are going to come in but their best guess is between one year and three years so what they’re telling the market is that they expect to get those final permits in approximately two years but the truth is

That they don’t know for sure but when this gets into production that is going to be huge for matala and another one that is going to be huge for matala is first quantum’s takat Taka project so although this looks like a relatively small royalty at only 42%

NSR it’s actually huge because the mine is going to be so big now this is mostly going to be copper Revenue coming from takat taka and metala has assets on Gold Silver and copper which are three of my favorite metals to have royalties on and especially huge copper mines like this

With enormous Reserve currently their reserves are set at 32 years and remember what I was talking about earlier when a producer has an asset with a really long mine life they typically like to expand their production and expand their Mill so they can increase that by 50% by 100% maybe

Even by 200% as the years progress and matala is going to get all of that growth for free when this is in production this is set to bring into matala for 4,900 gold equivalent ounces a year but that’s assuming that first Quantum doesn’t expand their processing facilities which in all likelihood when

You have really long mine lives they tend to get expanded over time and that’s all for free for matella and this endeavor mine here this is a pretty significant mine as well for matella and this is a past producing mine that will probably be restarted and could be

Bringing in money as soon as 20 25 or 2026 and then this operated by ago Eagle so when anniko Eagle at their Canadian malartic mine starts to go underground well then matala has a royalty on that and that’s going to be bringing in a significant amount of money for matala

Here before too long at current gold prices we’re talking about6 million per year now let’s take a look at the value proposition of matala so this slide is a little outdated this is from January when the share price was a bit higher but at that time the company was trading at

.53 time nav so that’s basically like you’re buying a dollar for 53 in a very safe company but since the share price has declined since then we’re actually looking at 4.7 times nav and keep in mind that these analysts who are calculating the nav typically underestimate the nav

Especially on long life mines and why do they underestimate the nav well number one they assume that production is always going to stay the same but in addition to that the nav is also underestimated because the analysts typically assume that the price of the commodity will be about the same as it

Is now into the future however you look at a price chart of almost any commodity and over time it tends to increase because the cost to produce these Commodities go up over time and we have General inflation so over over time the price of the commodity tends to go up

Which would bring these multiples down even further making the company even cheaper and also over time the companies The Producers tend to expand their production which would bring this multiple down even more so maybe maybe today it would be more fair to say we’re trading at 04 times nav instead of 047

Times nav and now we look at this over here on the right side the current price today is $264 so this is a little bit outdated it’s actually lower than this so what if we were to rate to one times nav well then we would be looking at a stock price of

$5.70 but in the history of the company and in royalty and streaming companies in general they tend to trade at more than one times nav because you have all that leverage that I was talking about earlier you have leveraged the increasing prices while your costs don’t

Increase at all and you get all of the exploration upside for free and you get all of the increased production for free as well so if matallo were trading at what been about average for the history of the company that would be a stock price of

$745 and let’s take a look at the valuation in another way so this orange line here is the history of the company and what the company was trading at relative to nav at that time so the company got as high as about three times nav and right now the company is way

Below average and let’s keep in mind the number one rule of investing is Buy Low sell high and is there any better time to buy than right now so you could be buying at the very lows right now just at the same time when matala is going

Into an important growth phase where a lot of new projects are in construction and are in advanced development stages and if you look at this yellow line here this is the company’s nav per share over the years and as you can see it’s pretty steadily increasing so right now the nav

Per share is at about $750 but this was actually created before we got that update from gosin where they added 2.4 million ounces of gold to their resource so I think it’s fair to say that that’s probably even higher now the current share price is $264 and my time Horizon for this

Investment is going to be 6 years because I think six years is a good amount of time for all or a significant portion of their Catalyst of the company’s Catalyst to play out and in six years time I think the nav per share should be north of $10 and also in that

Time the company is going to be a much bigger company they’re going to have a lot of cash flow at that time so I think they’ll get a higher multiple so I’m going to put their multiple at 1.3 so $10 time 1.3 multiple is $113 per share and finally risk level so

This is on a scale of 1 to 10 one being the safest 10 being the riskiest their share price is really low right now so that helps bring the risk down but also they have a very safe business model they have very high margins they have a

Lot of growth coming up they have confidence management the only thing they get punished on is they’re a smaller company but because the share price is so low right now and also I think the Commodities that they’re invested in Gold Silver and copper have a very good

Outlook I’m going to put the risk level at three making it a very safe bet if you found this video helpful please subscribe to the channel and next watch this video on why gold and silver Road T streaming companies are such great Investments