OUR 2013 Portfolio – Royalties with huge upside potential

Stocks: T.GPD/T.ALS/T.SBB/V.ASE
(Stocks mentioned: T.FNV/T.RGL/T.SSL/T.SLW/T.LIF)

Dear Readers and fellow Investors,

altough we`re already well into 2013, with this update we`re pleased to present our 2013 portfolio.

INVESTMENT THESIS:

The Royalty space remains the hottest and most promising place for Mining-Investors. Companies like Franco-Nevada, Royal Gold, Silver Wheaton, Labrador Iron Ore Royalty Corp or Sandstorm Gold continue to outperf0rm and yield substancial returns to it`s Investors, but they are far from beeing cheap.

We have put together a portfolio of only 4 Stocks, that we believe offer the best risk/reward and lowest foreward-looking Royalty Cash-Flow/Price multiple.

We believe, with this portfolio, you will not only do well in 2013, but it holds the potential to be a retirement account. For those who are already holding FNV/RGL/SLW or SSL these 4 stocks might offer an interesting opportunity to diversify further into the Royalty Sector.

For a proforma amount of just about 800 million (combined marketcaps of all 4 stocks) you buy into  possible 200+ million per annum Royalty cash flow by 2017.

and you get all the cash and all other assets also owned by the individual companies for free, like the whole Altius JV portfolio, Sabinas 6mm + high grade Gold resource or Golden Predators Yukon Projects.

We wouldn`t be suprised if some or maybe even all 4 Companies see takeover offers from the above mentioned Majors in the not to distant future.

Metrics & Comparables:

before you have a look at our portfolio, keep in mind that:

A) Franco-Nevada T.FNV, without any doubht the most succesfull and largest Royalty Company payed 1 Billion $ on this stream deal with Inmet on it`s Cobre Panama project. http://ir.inmetmining.com/press-releases/franco-nevada-and-inmet-agree-to-a-1-billion-prec-tsx-imn-201208200813206001

So basically they payed 1 Billion for an avarage 120million Royalty Revenue per annum over a 30 year mine life.

B) Silver Wheathon payed 750million for a Metals Stream with HudBay Minerals

http://www.silverwheaton.com/News1/PressReleases/PressReleaseDetails/2012/Silver-Wheaton-Acquires-Life-of-Mine-Precious-Metals-Streams-from-Hudbays-777-Mine-and-Constancia-Project1130520/default.aspx

Other than a NSR or GSR these streams do have ongoing payments. This of ourse means, free cash flow relative to royalty revenue is much lower than for our portfolios Royalties.

THE PORTFOLIO:  Outstanding Revenue Growth:

 2013-02-03_15-32_royalty portfolio finish

2013-02-03_17-01_royalty portfolio.ods

 

We are buying:

T.GPD – Gold Bullion Royalty Corp @ 0.355$

2013-02-03_15-52_Gold-Bullion-Royalty-Corp-Pres

http://www.goldenpredator.com/documents/Gold-Bullion-Royalty-Corp-Presentation-January-2013-Final.pdf

T.ALS  – Altius Minerals Corp. @ 12.66$

2013-02-03_15-54_Sept-Chicago (4).pdf

http://altiusminerals.com/uploads/2012-Sept-Chicago.pdf

 

T.SBB -Sabina Gold&Silver Corp @ 2.22$

2013-02-03_15-56_January-2013-Presentation

 

 

2013-02-03_15-57_January-2013-Presentation

http://www.sabinagoldsilver.com/i/pdf/January-2013-Presentation.pdf

 

V.ASE Asante Gold Corp @ 0.275$

2013-02-03_15-59_Presentation (7).pdf

 

http://www.asantegold.com/i/pdf/ppt/Presentation.pdf

*Please note: The Obotan NSR is subjected to the pending closing of the aquisition by Asante. 

CONCLUSION:

From our Database with over 200 Royalty-Interests, we found the combination of these four presenting the most attractive opportunity. Even if 50% of the underlying project would fail, which is given the Operators experience and capital strength highly unlikely, this portfolio would still be undervalued compared to recent transactions and market valuations of Royalty-Majors.

All 4 Stocks fullfill all our major Investment criteria: (those are important for all Mining-Investments, not only Royalties)

– proven management

– low debt/high cash level

– low country risk

– high management ownership

—————————————

Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Martin Hoff has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Martin Hoff makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Martin Hoff only and are subject to change without notice. Martin Hoff assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, I, Martin Hoff, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.

 

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3 Responses to OUR 2013 Portfolio – Royalties with huge upside potential

  1. Jockular says:

    I’d greatly appreciate, in addition to knowing about any buyback rights, your recalculation of the current market cap of the small royalty cos. you favor vrs. the NPV of their royalty portfolios. I bet it has changed for the better for buyers after the April crash!

    Thanks in advance for whatever you can offer.

  2. Jockular says:

    Very interesting!

    Are there buy-back rights associated with any of the royalties mentioned, which might “spoil the picnic”?

    I notice that ASE will emit 45M shares to pay for the Obotan royalty. With 22M now outstanding, the seller of the royalty would seem likely to gain control of the company.

  3. Zibi says:

    Great royalty portofolio. Thank you for sharing.
    What broker do you use to buy T.GPD shares? My current broker charges 0.02 cents/share on TSX which is really expensive considering share price of 0.35 CAN $. Can you recommend any?

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