Elemental Royalties (ELE) - New Gold Royalty looks to Near-term Revenue

Matthew Gordon,
Ptolemy Capital

5 Months ago

Elemental Royalties listed at the and of July 2020, having been private for 3 years prior to that. They chose the TSX-V and became part of the Discovery Group of companies. Bell is a young, but intelligent CEO. He recognised that the 6 royalties that they had on listing would not be enough to thrill the market for long, so they have just consummated a deal with South32 for 3 very solid royalties at 1x NAV. So a good price. Total cost $55M. An acquisition of equals which is never easy to do and no small feat. Management are to be congratulated. They raised some money with Sprott ($25M 2 yr debt facility, not cheap but easily refinanced soon and no doubt on better terms). and then a $12M private placement. Meaningful cashflow starts in 2021 and grows quickly from there. Impressively quick to focus on revenue which will make it easier and cheaper to raise funds in the future, once the remove they security on the Sprott debt.

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