David Garofalo (CEO) and the team at Gold Royalty (GROY.NYSE) are pulling off one of the best royalty acquisitions I’ve seen in years in the space.
The pace at which this team move reminds me of mining legends like Ross Beaty, Lukas Lundin, and Robert Friedland.
This is exactly how those guys ran their massive scores during the early years—only faster.
In fact, Gold Royalty (GROY.NYSE) is moving a lot quicker than even I expected. And I don’t expect anything less than lightspeed with companies I’m involved with.
The details get a little complex, but trust me—it’s worth it…
FULL DISCLOSURE: I, Marin Katusa, am a large shareholder of Gold Royalty Corp. Thus, I am extremely biased. And that’s why I’m buying more shares.
So, let’s get right to it…
The is the single best assembly of gold mining legends I have ever seen
Here’s how it went down…
On September 7, Gold Royalty Corp (GROY.NYSE) announced a 3-way merger with Golden Valley and Abitibi Royalties.
Canada’s largest producing gold mine at 700,000 ounces a year is called Malartic, which is located in the province of Quebec and is ranked as the #1 mining jurisdiction in the world.
It’s owned and operated by Agnico Eagle and Yamana.
- Agnico is a top 5 gold producer in the world and David Garofalo was the CFO at Agnico while it created its first few gold mines in this region.
Abitibi owns a 3% NSR over the Odyssey Underground Portion which is the next portion of the Malartic gold mine.
Currently, the mine is an open pit. Phase two is underground.
The grades are incredible, and it will be the largest underground mine in Canada when in operation.
Now we want you to connect the dots of the billionaire investors in the gold space…
The two companies merging with Gold Royalty are majority-owned by some of the largest players in the gold markets: Eric Sprott, Rob McEwen, and Jimmy Lee.
If you’re not familiar with them, let me put faces to these names…
- Eric Sprott was the largest shareholder of Kirkland Lake, the best performing major gold producer since 2015.
- Rob McEwen is the founder and CEO of Goldcorp, which got a $10 billion buyout. He backed New Found Gold at $0.50 two years ago… and it hit a recent high of $13.50.
- Then there’s Jimmy Lee, a brilliant billionaire investor you’ve probably never heard of. When silent, self-made billionaires like him make huge bets, watch closely.
Each of these men has signed up for hard lock-ups with their Gold Royalty shares.
In other words, instead of cashing in, they’re doubling down.
They clearly see the “double bump” re-rate potential in the share price.
This is Better than Our First Entry
When GROY went public, we had a lot of emails of subscribers asking when they could buy stock.
We said to be patient.
- Now the largest shareholder of Gold Royalty (GROY.NYSE), Eric Sprott has acquired more stock just under the current trading price of $5 per share.
The shares are very liquid and list on the New York Stock Exchange (NYSE).
Patterns To Success
There are certain things the ultra-successful do that the rest don’t. When it comes to investing, the ultra-successful always start with the management team.
Second, is a world-class portfolio of projects that they can buy below its true value.
That is exactly why Eric Sprott, Rob McEwen, Rick Rule, Doug Casey, Jimmy Lee, Ian Telfer, Warren Gillman, and many other incredibly successful and rich gold investors are not only shareholders but also acquiring shares now.
- This transaction, when closed and completed, makes Gold Royalty Corp a top 10 Global precious metal and royalty company.
That is just the start, the company has only been public for less than 6 months.
Other than the Big 4, no other royalty or streaming company have a tier 1 asset like a 3% NSR on a portion of the largest operating gold mine in Canada.
- With this transaction, Gold Royalty (GROY.NYSE) has 72% of their NPV coming from the two best jurisdictions globally in mining (Quebec and Nevada).
The rest in Alaska (3), Idaho(3), Oregon(3), New Mexico(2), Ontario(19), North West Territories(5), Brazil(4), Peru(1), and Columbia(3).
Post this transaction, the company will have 6 royalties on producing assets, 7 royalties in development with near-term cash flow.
This puts it at the top with MCAPs under $1B.
After this transaction, the new co-market cap of Gold Royalty (GROY.NYSE) will be about $500million.
- With that, index funds will be required to purchase more shares as per their rebalancing index rules.
In addition, other funds that are required to hold royalty companies will realize that Gold Royalty Corp (GROY.NYSE) is a vastly superior royalty and streaming company than peers with a similar market cap but nowhere near the royalties on quality assets.
The flow of funds will come into Gold Royalty (GROY.NYSE) and I believe this newly merged entity will rerate post-close.
The risk is the transaction doesn’t close: That being a larger company is willing to pay more.
That is possible and in that case, Gold Royalty (GROY.NYSE) walks away with $15million in break-up fees for their efforts.
There has only been one financing with this company and that was almost exclusively taken down by KRO subscribers and was extremely oversubscribed.
I am very impressed with David Garofalo and his team thus far.
Tomorrow morning pre-market open, I will send you an exclusive interview I just put together with David.
You will want to make time for this interview.
I show up representing the shareholders asking tough questions and David Garofalo delivers big time.
I fully understand why the smart shareholders of Golden Valley and Abitibi like Jimmy Lee, Eric Sprott, and Rob McEwen signed hard lock-ups with Gold Royalty (GROY.NYSE) because they see the re-rate potential in the share price.
We will prepare a full report on the company and the breaking news for you.
Founder, Katusa Research
Katusa Research, Marin Katusa and its directors, employees, and members of their households directly own shares of the following Companies which are described in this publication – Gold Royalty Corp (GROY.NYSE). Therefore, Katusa Research is extremely biased. All publications of Katusa Research represent only the opinion of the respective authors and not of the company. Gold Royalty Corp did not review this report or articles. The information in the publications of Katusa Research do not replace and are not to be taken as individual needs geared professional investment advice and is for informational purposes only.
This report and information are neither explicitly nor implicitly to be understood as a guarantee of a particular price development of the mentioned financial instruments or as a trading invitation. Every investment in securities mentioned in publications of Katusa Research involves risks which could lead to a total loss of the invested capital and—depending on the investment—to further obligations for example additional payment liabilities. Katusa Research does not guarantee that any of the companies mentioned in this newsletter will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect. All information published in publications from Katusa Research is based on public filings and news releases.