Categories: Precious Metals
Topics: General Precious Metals

Nomad Royalty Company (TSX: NSR) CEO Vincent Metcalfe on Impressive 2020 Q3 Gold & Silver Delivery Numbers

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Nomad Royalty Company (TSX: NSR)(OTC: NSRXF), Mr. Vincent Metcalfe. Vincent, how are you today?

Vincent Metcalfe: Very good, thank you very much. Very happy with the recent release we just printed last night. I'm more than happy to talk about it on the show.

Gerardo Del Real: I believe that this is your first New Orleans Investment Conference for Nomad, correct, being that you just went public recently? I'm attending. Mr. Nick Hodge, co-owner of this site, is attending. I believe you're there as well?

Vincent Metcalfe: Yeah, it's the first time for Nomad. We've been there in the past. It's always been a really good conference to attend. I'm looking forward to see what comes out of it.

Gerardo Del Real: Well, your news yesterday, then, was pretty timely. You announced 2020 third quarter gold and silver deliveries. Can you give us a brief breakdown? Pretty impressive numbers. A heck of a way to start out the gate, the way that you've intended to, which was going to be cashflow positive, accretive transactions, and a lot in the pipeline from what I understand.

Vincent Metcalfe: Yeah, for sure. We came out with our Q3 deliveries, which were really, I would say, impressive from where we stand. The assets are doing very, very well. If you look at just the royalty and stream deliveries from the gold assets, they're up 30% quarter over quarter. If you look at the silver, it's pretty much very stable from last quarter. In terms of what it means, in terms of generating revenue, we generated $7.6 million this quarter, which is pretty much in line with last quarter. 

Even though we went through a pandemic and so on, the revenue is right on point. We're probably looking at revenues north of $20 million so far for 2020. So very much in line with our expectations, even though we're going through a crisis. What's most important is that if you look at the portfolio, if things go as planned, 2021 will be a very, very good year for us.

Gerardo Del Real: Yeah, my brain went to a quick marketing headline for Nomad. Pandemic-proof with a dividend.

Vincent Metcalfe: Yeah. That's the other thing that we've put forward since our last conversation. We announced the dividend. Right now, our dividend's yielding 1.5%, which is more than double our peers in the royalty sector. So obviously a very good time for investors to come into the stock to get that type of return on the dividends. It doesn't happen very often. To that end, it's 1.5% at the moment but, most importantly, that's just a starting point for us. As the portfolio matures next year, we should see increases on that front.

Gerardo Del Real: Let's talk about the portfolio. For people that are new to the Nomad story, we're kicking the tires, we're here virtually at the New Orleans Investment Conference. I can tell already by the dialogue, there was a lot of first time people in the space that are looking around for opportunities. As you and I both know, this space is inherently risky, but the beautiful thing about a company like Nomad is that you mitigate so much of that risk. 

Can you provide an overview of the company, the portfolio, and just how you look to take advantage of this bullish cycle while mitigating as much risk as possible?

Vincent Metcalfe: Yeah. For us, it's adding assets. We started this business with 9 assets. Four months in now, we're up to 12 assets. It's really adding assets globally and diversifying that risk and, as you said, mitigating all these risks that are inherent in the mining space. It means adding other cashflowing royalties and streams, whether they're in North America, Latin America, other parts of the world. Really we strongly believe as we keep building this portfolio, a bit like a portfolio manager does when they're building their own portfolios, limiting asset concentration, limiting too much concentration in a specific jurisdiction. Really what that provides to the investor is full exposure to the commodity price. 

That's what at the end of the day investors are looking for. They're looking for exposure for gold, for silver, and that's what we provide. What we limit is exposure to the risk, which are capital structure, in terms of operating costs, in terms of capital development costs. That's usually where you see inflated or, I would say, misses as these operations go forward and go through the various cycles they go through.

But most importantly, in this type of environment where we're seeing increased gold price and increased silver price, is that we're seeing more and more money thrown at these assets. What that means is we're seeing more ounces becoming economical. We're seeing more drilling on these projects, and that's what an investor that invests in a royalty and streaming company also gets the benefit from.

Gerardo Del Real: You and the team have a deep network of contacts. You've been very, very vocal, as has everyone at Nomad, about the fact that you plan on being aggressive through accretive transactions. That can be M&A, that can be partnerships, a number of approaches. Can you walk me through what the next several months look like and just what that business model looks like in 2021 as you work through the rest of the year?

Vincent Metcalfe: Yes, absolutely. When we created Nomad, one of the main things for us as a management team is we want it to be owners first. That's the way we structured this company. Joseph, myself, and Elif are some of the largest single shareholders in the business, and that will stay that way. What that means is when we're looking to grow this business, we're thinking like shareholders first and owners first, which, I think, for any investors coming alongside of us, they're always going to have that reassurance that we think like shareholders and we want to make sure that per share metrics are put forward when we're doing transactions. 

Really what that means is staying a sub-$1 billion dollar company at the moment is not something we want. We're not in this business to collect a paycheck every couple of weeks. The main thing for us is to make sure we build a platform which drives value on the long-term front. When you look at the royalty and streaming sector, the larger companies and the larger mid-caps all benefit from much higher multiples because they have that size, because they have that diversification, because they have that liquidity in stock. 

Our ultimate goal for Nomad is to get this platform, whether we are the ones running the company, whether we get acquired, whether we acquire or we merge with a peer, is to get this platform to a size which is probably between $3 and $5 billion over the next, I'm going to say, two to three years. I believe that if we reach that, we're definitely going to get a second re-rating down the road. I think we're going to be working right now for the next 12 months or so to get that first re-rating. When we think like shareholders, we know exactly what the plan is. 

Right now, it's showing the market and the investors what's the portfolio within the next 12 months. People are going to see the deliveries every quarter. They're going to see the assets do well. Then with the bigger plan over the next two to three years, it's building that larger platform. If we always keep our focus on those two objectives, I think we're definitely going to see higher value and higher per share values for Nomad investors in the future.

Gerardo Del Real: I was an early investor in Nomad. A part of what attracted me to the company, along with the team, was the fact that the G&A, the burn rate, there was a focus there to keep that to a minimum. You wanted to make sure that the cash that you brought into the company went into accretive assets and getting to that billion dollar plus market cap valuation. I'd like for you to speak to that, because not enough companies focus on that, especially initially.

Vincent Metcalfe: Yeah, exactly. That goes back to what I said earlier about creating a business in which we're actually owners first. When you're an owner and you realize where these costs are going, you want to minimize what we don't think necessarily adds to the value of the company. We want to maximize efficiency. The three of us executives this year are actually not taking a cash salary. We're taking shares on a quarterly basis. We get a proportional amount of shares every quarter. That, again, is to make sure that we are as fully aligned with the investors.

It also means we're making decisions in terms of we decided not to have an offshore subsidiary for this company, which is sometimes typical for royalty companies. That minimizes G&A two times versus our peers. It's also not necessarily focusing too much on salaries, more on actually creating value on a per share metric. I think it's the mentality that we have, it's the vision that we put forward always, and, again, it's just having a focus on making sure that we deliver value to our shareholders.

Gerardo Del Real: Well said. Vincent, I know you have lots to get to, so I'll let you get to it. Thanks so much for your time today.

Vincent Metcalfe: Thank you very much. And looking forward to talking to people, hopefully, during the New Orleans Investment Conference.

Gerardo Del Real: Excellent. Take care.

Vincent Metcalfe: Thank you.