In a Sept. 2 research note, analyst David Davidson reported that Paradigm Capital initiated coverage on Vox Royalty Corp. (VOX:TSX.V), calling it "the highest acquisitive story in the industry" and "a high-growth, precious metal-focused stream and royalty company with a portfolio of over 40 transactions spanning seven jurisdictions."
Paradigm likes the Vox story for its "significant growth opportunity," Davidson noted. The Toronto-headquartered company owns an exclusive database containing 7,000-plus potential transactions, which often leads to it being the sole bidder for assets. "The company has secured an industry leading 17 transactions for 38 royalties since January 2019 and now holds a collection of 43 royalties and streams," the analyst wrote. Many of its acquisitions have been on projects nearing production.
Further potential upside for Vox comes from the exploration-stage properties on which it holds a royalty. Currently, more than 100,000 meters are being drilled over some of those, which should result in resource expansion and new discoveries.
"VOX's acquisitions are underpinned by a strong technical focus which considers mineral endowment, historical exploration, prospectivity and metallurgy," Davidson highlighted.
"These factors, coupled with non-technical inputs, such as tenure security, operator quality, country risk and fiscal terms, enable the company to quickly identify and prioritize the best risk-adjusted royalty investment opportunities."
Davidson noted that Vox also is attractive because of its primary focus on precious metals and politically safe jurisdictions, including North America, Australia, Brazil and Peru.
"Royalty companies that exhibit these positive attributes tend to trade at premiums to peers," Davidson pointed out.
A third positive key attribute of Vox is its valuation, added the analyst. For example, Paradigm values Vox's Koolyanobbing iron ore royalty at $7 million, its Segilola gold royalty at $5.7 million and its Ashburton gold royalty at $3.1 million. Based on its discounted cash flow valuation, Paradigm assigned Vox a CA$3.75 per share price target, which compares to its current share price of about CA$3.12. Paradigm rates Vox a Buy.
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Disclosures from Paradigm Capital, Vox Royalty Corp., Initiation Report, September 2, 2020
The analyst (and associate) certify that the views expressed in this report accurately reflect their personal views about the subject securities or issuers. No part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations expressed in this research report.
Analysts are compensated through a combined base salary and bonus payout system. The bonus payout is determined by revenues generated directly or indirectly from various departments including Investment Banking, based on a system that includes the following criteria: reports generated, timeliness, performance of recommendations, knowledge of industry, quality of research and investment guidance and client feedback. Analysts are not directly compensated for specific Investment Banking transactions.
Vox Royalty Corp.:
Paradigm Capital Inc. has assumed an underwriting liability for, and/or provided financial advice for consideration to the subject companies during the past 12 months.
Paradigm Capital Inc. expects to receive or intends to seek compensation for investment banking services from the subject companies in the next 3 months.
