Saturday, December 10, 2016

Metalla Royalty & Streaming Ltd. : the Next Great Gold Royalty Stock, Diamond Fields, Cameco, Silver Wheaton , Franco Nevada

When it comes down to it, there are really only a few ways to get rich from buying a single mining stock.

There’s the lucky exploration firm who finds a massive deposit. This happened in 1994 when Diamond Fields Resources discovered the massive Voisey’s Bay nickel deposit. Shares soared from roughly $1 to $161 in barely over a year. That’s a 16,000% gain.

Then there’s a company that sits on a large hoard of a resource when it enters a huge bull market. This happened about a decade ago when shares of uranium miner Cameco Corp soared 1,453% during the uranium bull market.

Finally, you have the rarest and most powerful way of making a big score in mining: Buying royalties.

As you most likely know, mining royalty firms don’t mine any gold, copper, or silver of their own. They finance the construction and development of mines. In return for fronting the cash, royalty firms get a substantial share of the mine’s production for as long as it operates.

The royalty business model is “asset lite” and “employee lite.” Royalty business owners don’t employ thousands of workers. They don’t operate big mining shovels. They don’t drive dump trucks. Most of the revenue a royalty firm earns drops straight to the bottom line.

Truly great opportunities to buy mining royalties don’t come along very often. But when they do, the gains shareholders make are so large, the numbers almost seem made up.

Consider the story of Silver Wheaton. In 2004 a little-known company called Chap Mercantile Inc. sold shares for $0.40. It told investors the proceeds pay for the right to purchase all the silver produced by Wheaton River Minerals Ltd. at its Luismin project in Mexico. The catch…it would pay $3.90 per ounce for that silver regardless of silver’s market price.

The company soon changed its name to Silver Wheaton Corp. (SLW). Silver ultimately ran to $50 per ounce. The company’s stock hit a high of $44.92 in 2011. That means those original $0.40 shares in Chap Mercantile Inc. shot up 11,130%.  That’s more than a 100 fold gain. An investment of $10,000 would have turned into more than $1,000,000.

A similar story unfolded in Nevada back in 1983. Pierre Lassonde and Seymour Schulich sold shares in their new exploration company for $0.35.

The two quickly realized their fledgling exploration company would go belly-up if it couldn’t create reliable income. From a tip to answer an ad in the Reno newspaper they bought a small package of gold royalties. One of those royalties covered land bought by mining giant Barrick Gold Corp.

Barrick discovered a massive deposit called Goldstrike on the property. It became the largest gold project in North America. The tiny royalty company with a $0.35 stock became Franco-Nevada.

The company sold to Newmont Mining Corp in 2004 for $2.6 billion. Shareholders booked a gain of 12,500%. That’s 1,250 times the price paid for the company’s first shares. It means every $1,000 invested turned into $1,250,000

Franco-Nevada trades on its own again today. It went public at $15 in 2007. Those shares sell for $75.

Today, everyone knows about Franco’s success. When its stock traded for $0.35, nobody paid any attention. Even though the company told investors exactly what it planned to do….few listened. The ones that did made a fortune to last several lifetimes.

A Similar Story Today

Today in a small Toronto office, one company is making the same bet. Just like Franco-Nevada back then, it has a $0.30 stock price. It told the market its plans to buy valuable gold royalties.

Not many people listened. The ones that did stepped in to help the company buy its first portfolio of royalties. Those investors understand the incredible profit potential of gold royalties.

The company, Metalla Royalty & Streaming Ltd. (MTA in Canada and EXCFD on the OTCQB), has 6 royalties. Four of its royalties are on major gold and silver mines. The best part is, larger mining companies have all the work to do. Metalla gets a royalty on anything they find.

Take the company’s Hoyle Pond Extension royalty for example. Located in Ontario’s mining-rich Timmins district, it first produced gold in 1985. In its 2015 annual report, Goldcorp, the mine’s operator, says it produces 160,000 ounces per year at the site. As production continues, and especially if it expands…Metalla’s royalty claim on the extension property comes into play. That’s the same kind of bet Franco-Nevada made back in 1983.

These 6 royalties are only the beginning. Metalla plans to build the next great royalty & streaming company. When it does, that $0.30 stock will be a distant memory.

You can find more information about the company on its website and what it plans to do next.