In a June 24 research note, ROTH Capital Partners analyst Jake Sekelsky reported that GoldMining Inc. (GOLD:TSX; GLDLF:OTCQX) noted Gold Royalty Corp., a gold royalty entity that "represents an opportunity for long-term value creation."
"We are supportive of management's proactive approach to unlocking value from its portfolio of gold assets and expect Gold Royalty Corp. to provide GoldMining shareholders with optionality going forward," Sekelsky added.
Sekelsky described the new vehicle. It will hold 14 newly created royalties that will range from 0.5–2% on the same number of GoldMining's projects. Two of the royalties will be 2%, 11 will be 1% and one will be 0.5%. With all of the royalties, Gold Royalty has exposure to 14.3 million Measured and Indicated ounces and 16.6 million Inferred ounces of gold equivalent.
The analyst presented two ways in which Gold Royalty could offer GoldMining shareholders value. One is through its valuation because royalty companies tend to trade at a premium to explorers and developers, GoldMining for instance. Thus, Gold Royalty could "command a premium to the net asset value multiple received for GoldMining's existing asset base," wrote Sekelsky. He noted that ROTH assigned a value of $10 million to Gold Royalty.
The second way is through future exploration on the 139,000 hectares of land that GoldMining holds in the Americas and that the 14 royalties will cover.
ROTH has a Buy rating and a CA$5.75 per share price target on GoldMining, the current share price of which is now about CA$2.33.
"In our view, GoldMining is well-funded to execute on its stated objectives for 2020 and believe the company should continue to provide investors with leverage to rising gold prices," Sekelsky concluded.
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Disclosures from ROTH Capital Partners, GoldMining Inc, Company Note, June 24, 2020
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Shares of Goldmining, Inc. may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.