Categories: Base Metals / Precious Metals
Topics: General Base Metals / General Precious Metals

Nomad Royalty (TSX: NSR)(OTC: NSRXF) CEO Vincent Metcalfe on Building the Next Multi- Billion Dollar Royalty Company

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Nomad Royalty, Mr. Vincent Metcalfe. Vince, how are you today?

Vincent Metcalfe: Good, it's great to join you again.

Gerardo Del Real: It's good to catch up. You have been extremely busy, on May the 10th you reported record revenues of $9.7 million, you have cash operating margins of 82%, you're profitable and you're wheeling and dealing, you just acquired a cash flowing royalty on the Caserones Mines in Chile, we'll get into that here in just a bit, but obviously you're working hard towards that goal of multiple streams and royalties in 2021.

Vincent Metcalfe: Yeah, no, absolutely. I mean, the sector is incredibly active at the moment. We've seen a lot of new entrance, we're also seeing the bigger companies doing very well as well, but I think where we're at, at our size, 2021 will be, I think a very good year for us. As you mentioned, our first quarter was great, our portfolio is doing incredibly well, the assets are getting optimized, we also saw Equinox buy the Mercedes Mine, so that was a big piece of news for us. We also saw a few other assets have almost record quarters Allied in Ivory Coast had a very good quarter. We also saw Northern Vertex merge with Eclipse. So a lot of activity within the portfolio and what that means also is a lot more de-risking from where we sit because we get some bigger operators that are spending even more money on our assets at no cost to us, so very good start of the year for us.

Gerardo Del Real: Very good start, very good quarterly dividend. You just declared a second quarter 2021 dividend, I believe that's industry leading or right at the top, if I'm not mistaken?

Vincent Metcalfe: Yeah, definitely at the top. We're half a percent higher than everybody else, but we started last year with our dividend, which was funded by four producing assets, with the Caserones Mine royalty that we just bought last week, we're going to be at eight producing assets. So we're in a very comfortable position to keep funding that dividend and hopefully by the end of the year, even look at perhaps increasing that level.

Gerardo Del Real: Let's talk about the Caserones royalty in Chile, if I was to play devil's advocate, I know the answer to this already, so I'm throwing you a softball Vince, but if I was to play devil's advocate, I would say you've now introduced copper exposure to the portfolio, but you're doing it at $4.71 a pound, right?

Vincent Metcalfe: Yes, absolutely. I mean since we created the company, we've always said, "We're going to be absolutely focused on gold and silver," but copper was always something that we had on the radar, especially with these big porphyry type deposits that are the perfect assets for a royalty company. The important thing for the royalty company is to gain exposure to assets that keep on producing years and decades down the road, because you might get your payback over the next five to 10 years, but if your asset keeps on rolling for another 30, 40 years, that's what really makes these companies so great because if you hit obviously a good cycle like we're in at the moment on the copper front, we started negotiating with the counterparty sometime in November last year at a much lower copper price, but now we're benefiting from a much higher copper price.

And as you said, it's a very measured exposure, it's only 4% of our overall company, but it's these perfect type of assets that fit very well within the portfolio and it is producing. So I would say from a risk point of view, we're investing in a mine has been producing since 2014, 4.2 billion have been invested in that mine already, we've got a 19 year mine life just on reserves. You mentioned Atacama in Chile, it's one of the best mining camps in the world, so we're very happy to have added that asset for Nomad.

Gerardo Del Real: Let's talk moving forward what the rest of the year looks like, more deal-making in the works?

Vincent Metcalfe: Yes, and as I mentioned in the intro, I think more and more, what Nomad's figuring out is we truly are in a niche market. We just did a $23 million acquisition last week for cash, not a lot of players of our size could do that because they don't necessarily have the cash flow or the capacity to borrow. And what we're seeing is that size range between 25 and 100 million dollars in terms of investments is quite empty, so we're there, there's a lot of tremendous amount of opportunity in front of us, and we're pretty sure we're going to be able to keep executing on those types of deals, there's a lot of things in the pipeline, so it's really about... for us it's, we're actually choosing some of these investments at this point, and we strongly believe that we're going to keep executing on several different fronts there.

Gerardo Del Real: Well, the stock is up some 15% in the last month alone, I think there is a lot of runway, especially if you continue to execute the way that you have. And again, for those that may not be familiar with the company, Vince, can you explain to everybody what the very public and aggressive stated goal is for Nomad? Again, if I'm playing devil's advocate, I could look at the company, I could say, "Well, you have a market cap of $646 million, where are you trying to get to?"

Vincent Metcalfe: No, absolutely. I mean, we're trying to get to the next royal goal in a sense. So Franco and Wheaton, quite larger than the rest of the sector, but I think there's definitely a lot of space to create another, I would say large player within the royalty and streaming sector, and that's really Nomad's point of view, we want to be a catalyst player. So we did buy a company last year through M&A, we're going to keep being active on that front as well, so we want to keep growing as a company, we want to keep diversifying the shareholder base, we're actually looking to list on the New York Stock Exchange, hopefully in the near term, which will add a lot of, I would say exposure to the US market which is very important for us. And I think we're trying to do all the right steps to really, again, create that new royal goal hopefully, and get there within a, I would say, not near term because it takes time, but in the midterm, this is definitely our stated goal.

Gerardo Del Real: A lot of runway between hundreds of millions in a market cap and billions of dollars in a market cap.

Vincent Metcalfe: Correct, but you know we have the team to do it. We've got the experience, we've been in the sector since 2014, we were part of a company in the sector that went from a $300 million market cap to today's probably two and a half, $3 billion, so we've been there, we've done it, and we're just going to do it again, but we've learned from some of our mistakes, so hopefully we're able to shorten the timeline this way, this time.

Gerardo Del Real: Love it. Well, I've been a big supporter and shareholder of the company, I continue to be so, and absolutely believe in the mission and congrats on the execution thus far, it's been fun to watch.

Vincent Metcalfe: Thank you very much.

Gerardo Del Real: All right Vince, we'll have you back on soon, thanks for the update.

Vincent Metcalfe: Sounds good, thanks Gerardo.