Maverix Metals (MMX) - 13 Cash Flowing Assets, Growth & Dividends

April 16 2021, 11:24 GMT+01:00

Maverix Metals

  • TSX: MMX
  • Shares Outstanding: 140.4M
  • Share price C$6.73 (24.03.2021)
  • Market Cap: C$938M

Maverix Metals is a Gold royalty and streaming company that provides investors with opportunities through a portfolio of more than 100 royalties and streams across 18 countries with major operations spread throughout the Americas, Australia, and Mexico. The company is based out of Vancouver, British Columbia.

We met with Mr. Dan O'Flaherty, the Director, CEO, and co-founder of Maverix Metals. Dan O'Flaherty has a decade-long career in investment banking before entering the mining industry. He has strong experience in finance, mergers, and acquisitions. Dan holds a Bachelor of Commerce degree, with honors from the University of British Columbia.

Company Overview

Maverix Metals is a gold-focused royalty and streaming company with a diverse portfolio and an existing market cap of USD $700M. This consists of more than 115 precious metals royalties and streams, out of which 13 are currently responsible for generating strong cash-flow margins. The company is on its way to complete 5 years in the market. It has observed a steady growth as Gold prices continue to appreciate in recent years.

Although there have been new players in the streaming and royalty market, Maverix Metals' financial capabilities with $50M liquidity along with a USD $120M undrawn credit facility makes them largely risk-averse to market uncertainties.Maverix Metals (MMX) - 13 Cash Flowing Assets, Growth & Dividends

The Complexities of the Gold Market

There has been a pullback in gold prices in recent months, though it hasn't hindered people's ability to earn healthy returns on their investments. The market has observed a disconnect between Gold prices and Gold equities.

Gold equities trading and investment are significantly lower as compared to direct trading, but royalty and streaming services such as Maverix Metals offer a low-risk Gold exposure to investors. They serve as a part of the capital structure where investments can be driven by the economic viability of projects rather than following the unpredictable market trends.

The Gold market has also taken a hit due to the rise in the popularity of cryptocurrencies as a potential investment vehicle. However, given the history of Gold, serving as a great store of value, the interest seems to be consistent due to its stability compared to crypto.Maverix Metals (MMX) - 13 Cash Flowing Assets, Growth & Dividends

Existing Shareholders

Maverix Metals was co-founded in 2016 by Geoff Burns and Dan O'Flaherty. Geoff Burns served as a CEO of Pan American Silver for 12 years before becoming Chairman at Maverix Metals. Geoff's experience in the mining industry spans 4 decades. He holds a BSc. degree in Geology, along with an MBA.

The larger shareholders in Maverix Metals include Newmont, Pan American Silver, and Kinross. Additionally, the company also has representatives from Newmont and Pan American Silver as part of the board. There's also a shared Director between Maverix and Kinross. These relationships and their combined experience give Maverix a unique edge says O'Flaherty.

Current Portfolio and Financial Data

Maverix Metals currently owns 115 precious metals Royalties and Streams, out of which 13 are generating consistent cash flow. As per the Q3 2020 financial results, the company generated USD $15M revenue at 90% cash margins, Gold and Silver accounting for 99% of this revenue.

Maverix Metals possesses development assets, longer-term exploration assets, and very long data optionality assets in their portfolio. The company is planning to announce the financial results for Q4/20 in the coming weeks. The company's guidance for 2021 stands at 27,000oz - 30,000oz Gold equivalent at a 90% margin. The company is cashflow-oriented and is planning to increase its portfolio of assets in the Western United States in the coming 1-5 years. The majority of Maverix's portfolio are public companies with the exception of the El Mochito mine and Waterton-owned Gem field that are privately owned.

Upcoming projects

Maverix Metals' current project scheduled is Orla's Camino Rojo, a high-end advanced oxide heap leach project based in Mexico.

Another royalty project, Coeur's Silvertip is an underground silver-zinc-lead mine based in northern British Columbia, Canada. The mining and processing operations were halted in 2020 due to operational challenges, however, the company is improving the resource back and the project is expected to come online in the next 18 months.Maverix Metals (MMX) - 13 Cash Flowing Assets, Growth & Dividends

Cashflow Trends

When Maverix Metals was started in 2016, they had sub-2,000 GEOs (Gold Equivalent Ounces). By 2017, they had 11,000 oz GEOs. This grew to 23,000 oz and 29,000 oz in 2018 and 2019 respectively. This demonstrates a strong upward trajectory throughout Maverix's operating history and indicates strong future growth.

Maverix Metals has been conservative with its approach towards cash flow. Out of the 13 cash-generating assets, none of the individual assets accounts for more than 15% of the total revenue. These assets are highly diversified, making them risk-averse.

Latest Acquisition involving Newmont

In Q4/20, Maverix Metals acquired a second portfolio from Newmont. This acquisition consisted of 10 development Gold royalties with a transactional value of USD $75M. Additionally, Newmont increased its stake from 20% to 30% as a shareholder.Maverix Metals (MMX) - 13 Cash Flowing Assets, Growth & Dividends

Overall, Maverix Metals have experienced a positive cash-on-cash return along with a strong ROI. This was achieved through multiple factors including the appreciation in Gold prices, new acquisitions, an increase in overall production, and expansion of the resource base.

The Hope Bay Royalty Project in Northern Canada was recently acquired by Agnico Eagle. This deal had a partial buyback which resulted in proceeds of USD $50M for a USD $40M investment along with ongoing cash flow.Maverix Metals (MMX) - 13 Cash Flowing Assets, Growth & Dividends

In 2020, Maverix Metals transacted with Karora Resources f(ormerly, RNC Minerals) which lead to a change in Gold royalty from 7.5% to 4.75%. This resulted in revenue of USD $18M for Maverix.

In a recent development, Maverix Metals was added to the GDX-J index for rebalancing. The company forecasts that this will be a catalyst for its upcoming and existing projects. This is the first major index the company is involved in and it has the potential to further elevate the company's capital market profile and significant equity price returns. The company plans to increase cash flow through a combination of organic growth paired with potential acquisitions. 

Maverix Metals has made it easy for potential investors to get an in-depth look into their portfolio of assets, their locations, stages of development, and ownership through an online guide on their official website.

For more details check out the Maverix Metals website.

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