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TICKERS: MTA; EXCFF

A New Royalty Kid on the Block
Contributed Opinion

Source:

John Newell Adrian Day Fund manager Adrian Day discusses a young precious metals royalty company that has accomplished a lot in a short time. Technical analyst John Newell of Fieldhouse Capital Management provides charts.

Streetwise Reports: Adrian Day Asset Management holds various precious metals royalty companies. Would you tell us about one young royalty company that your fund holds?

Adrian Day: I like the royalty and streaming business model. It's a low risk model both from the point of view from a company, and also from the point of view of the investor. With larger royalty companies, the advantages of being a royalty company really start to kick in when you get the diversification of royalty revenue streams. Although Metalla Royalty & Streaming Ltd. (MTA:TSX.V; EXCFF:OTCQB) has only been in business for two years, it has done an incredible job building the company in that length of time.

In two years Metalla, without wasting money, has three revenue producing assets and about 14 assets in development and close to production. It is now at the point where it pays a dividend, 2.2% at today's market, which is better than the S&P 500 and the vast majority of mining companies. To me, paying the dividend is a validation that it's actually a real company. You can't keep on paying a dividend for very long if you're not actually earning money.

Metalla buys royalties with both shares and cash. When it finds a royalty it wants to buy, it goes out to raise the funds for that particular asset. The decisions of potential investors are a signal as to whether they view it as a good deal and accretive to the company, so that's another validation of whether the asset is good or not.

SWR: Is Metalla's stream mostly silver?

AD: Most of Metalla's revenue right now is from silver, a silver stream with the Endeavour Mine, but it is not intending to be a silver streaming company. Over time most of its pipeline is gold.

In addition to the Endeavour Mine, the New Luika Gold Mine (NLGM) in Tanzania is producing, and there is small-scale production at the Zaruma Mine in Ecuador.

Metalla's website is very good. It explains the business model and provides information about its projects in an easy-to-follow format.

SWR: Would you tell us a little about Metalla's management?

AD: I've known Brett Heath, Metalla's president and CEO for a long time, before he founded Metalla, and he is a person who does what he says he is going to do, which to me is critical.

I like the management, the way they have built the company in just two years and have actually achieved something, three producing royalties, and a good pipeline. I think that as it gets more royalties that are producing and developmental, the valuation multiple will more toward that of the larger royalty companies; as Metalla gets more diversified, the valuation gap will begin to close.

SWR: Thanks for your insights, Adrian.

Technical charts prepared by John Newell of Fieldhouse Capital Management, giving potential targets.

Metalla chart

Chart from October 23:

Metalla chart

Chart from August 31:

Metalla chart
Charts courtesy of StockCharts.com.

Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is "Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks."

John Newell is a portfolio manager at Fieldhouse Capital Management. He has 38 years of experience in the investment industry acting as an officer, director, portfolio manager and investment advisor with some of the largest investment firms in Canada including Scotia McLeod, CIBC Wood Gundy and Richardson Greenshields (RBC Capital Markets). Newell is a specialist in precious metal equities and related commodities, and follows a disciplined proprietary approach incorporating equity research, analytical frameworks and risk controls to evaluate and select long and short stocks primarily from the Canadian small and mid-cap coverage. Many large, midcap and junior precious metal companies use his technical charts. Newell is a registered portfolio manager in Canada (advising representative).

Disclosure:
1) Patrice Fusillo conducted this interview for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this interview are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Adrian Day: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I, or members of my immediate household or family, are paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this interview: None. Adrian Day Asset Management funds hold shares of the following companies mentioned in this interview: Metalla Royalty & Streaming Ltd. I determined which companies would be included in this article based on my research and understanding of the sector. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) John Newell: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I, or members of my immediate household or family, are paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this interview: None. Fieldhouse Capital Management funds hold shares of the following companies mentioned in this interview: None. I determined which companies would be included in this article based on my research and understanding of the sector. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Metalla Royalty & Streaming Ltd., a company mentioned in this article.

Additional Disclosures and Disclaimer from John Newell, Fieldhouse Capital Management

Legal Notice / Disclaimer:

This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

John Newell has based this document on information obtained from sources he believes to be reliable, but which has not been independently verified.

John Newell makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of John Newell only and are subject to change without notice. John Newell assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.

Furthermore, I, John Newell, assume no liability for any direct or indirect loss or damage or for lost profit, which you may incur because of the use and existence of the information provided within this Report.

John Newell manages the Fieldhouse Global Precious Fund Class G, which does not own shares of Metalla.

He was not paid by Metalla to write this article.

John Newell does not hold shares of Metalla.

It should not be assumed that the methods, techniques, or indicators presented in these pages will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these pages are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.
Hypothetical and historical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical and historical performance results and the actual results subsequently achieved by any trading program. One of the limitations of hypothetical and historical performance results is that they are generally presented with the benefit of hindsight. In addition, hypothetical and historical trading may not present the financial risks and returns for future trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect actual trading results.

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Neither the information, nor any opinion expressed constitutes a solicitation for the purchase of an investment program. Any further disclosure or use, distribution, dissemination or copying of this message or any attachment is strictly prohibited; such information, whether derived from Fieldhouse Capital Management or from any oral or written communication by way of opinion, advice, or otherwise with a principal of the company is not warranted in any manner whatsoever, is for the use of our customers only and may be obtained from internal and external research sources considered to be reliable.

Charts provided by John Newell.




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