Why This Gold Stock Is Surging (and headed higher)
Earlier this week, Gold Royalty announced it was acquiring Ely Gold Royalties to create a leading growth and Americas-focused precious metals royalty company.
Since the announcement, shares have jumped from around $5.00 to over $6.50.
And analysts have price targets even higher. HC Wainwright increased its price target to $7.50, commenting that:
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"GROY’s gross proceeds of $90.0M from its recent IPO have quickly been put to work given the announcement to acquire Ely Gold. We commend management in finding a transaction that allows for near-term cash flow from well-known assets that are located in a geopolitically safe jurisdiction. We appreciate that the company is moving towards near-term cash flow generation, which should ultimately provide a runway for future growth opportunities. We further note the potential for a re-rating in the market." |
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Gold Royalty went into the transaction with 18 royalties all in the development stage. And it came out of it with nearly 100 royalties, including four producing royalties.
The company was also recently added to the VanEck Vectors Junior Gold Miners ETF (GDXJ), leading President and Chairman David Garofalo to say: |
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"Our path to creating an exciting high growth, diversified public royalty company began with our successful IPO in March this year. At that time, we knowingly entered a congested arena that has seen a proliferation of new public royalty companies in the past 18 months. Yesterday's announced C$292 million proposed acquisition of Ely Gold Royalty (EGR) moves the Company significantly along this path to create a leading growth and Americas oriented precious metals royalty company. This transaction coupled with our demonstrated ability to successfully access the capital markets, combines with yet another important milestone for the Company - GRC's inclusion in the GDXJ which further raises the Company's profile among retail and institutional investors. Having meaningfully advanced our goals in a short timeframe, we are poised to take advantage of a strong balance sheet, liquidity position and capital markets presence to successfully compete with the larger intermediate companies in our sector and to further execute on our growth ambitions." |
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David would know. He previously ran one of the largest gold mining companies in the world (Goldcorp) before it was acquired by Newmont to create the largest gold mining company in the world.
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We caught up with David, who candidly told us that he expects “a re-rating of 50 to 100% over and above our current share price as this transaction is consummated.”
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Transcript is also available.
— Resource Stock Digest Research |