Gold stocks are risky. After all, they are more than driven by straight commodity prices; they are also moved by global headlines. The swings can be violent for the smaller companies in the sector, with risk beta's often causing a smaller gold-focused company to either outperform or underperform the general gold market by +/- 10% on any given day.
But, like the market itself, playing the risk can lead to substantial rewards. And for a company that has diversified its holdings and is still considered "small" by industry standards, investor gains can sometimes be exponential. A company fitting that profile is
But while prospects were good then, consider them great now. In fact, if the past two weeks are any indication, investors may be in for a surge in shareholder value during the last two quarters of this year and even more substantially in 2022. Why the bullish sentiment? Because GROY completed what can only be referred to as a transformative acquisition. Better said, they made two.
Actually, it gets better. By adding in its recently secured revolving credit line of up to
Acquisitions... And More Acquisitions
Foremost, GROY is in hyper-growth mode, to say the least. In August, GROY completed its strategic business combination with
Adding to its four producing royalties, GROY announced last week that it closed on its planned acquisitions of
From the start, GROY gets Abitibi's royalties on various parts of the Canadian Malartic mining complex. And not only is it a big deal but it's also diversified. Abitibi brings to GROY a 3% NSR royalty on Odyssey,
The Canadian Malartic mine, owned by
It Gets Better With Age
Better still, Agnico and Yamana are developing an underground mine at Odyssey, where additional underground deposits were identified. According to estimates at that site, the Odyssey deposit contains measured, indicated, and inferred resources of nearly 2 million toz gold. That adds to an estimated 6 million toz of gold situated at
Still, that was only the first purchase. GROY also acquired
Abitibi also owns 37.96% of Val-d'Or Mining (OTCPK: VDOMF) and an 11.45% stake in
In addition,
With what GROY owns now, reasoned speculation points to a more deserved valuation closer to the
Revenues Expected To Ramp
There, the acquisition of Abitibi and
Still, after breaking down the deal structure,
That's already apparent. According to its breakdown,
And while there is the suggestion that the GROY market cap may be stretched even at current levels, the numbers tell a different story. Moreover, investors hungry for growth believe that GROY can grow into even more lofty valuations above the
Hence, while the stock looks expensive to some today, an aggressive multiple on revenues is likely to be in fashion. Updates on the portfolio reserves later this year or in 2022 can intensify the bullish proposition even further.
Big Finish To 2021
Undoubtedly, September has been a transformative period for GROY. Still, the impression made is that its pace of growth won't slow down. Now supported by an up to
Notably, the deal exposes the value that investors needed to see. And the premiums paid to
Also, considering that GROY shares rebounded quickly as investors worked on valuing the sum of the parts of this multi-party acquisition, catching some volatility in a long-term investment play can be an excellent way to capture value. Still, timing the market, particularly individual stocks, can be tricky and leaves money on the table more often than not.
The right mentality for investment in GROY may be to take advantage of these current levels while still in play. Moreover, as "peoples" inflation, which includes food and energy, hits the headlines, expect the double speak from policymakers to have less impact on keeping the gold markets tame. Real inflation is what matters. And it's likely that once the big banks and institutions get comfortably positioned, the more realistic expectations for outcomes from a decades-long easy money policy will earn the front page.
It's being ahead of that news that matters. And with
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