If it looks like a bull market (technical breakout in gold), smells like a bull market (significant negative yielding debt) and feels like a bull market (funds flowing into gold), it must be a bull market. Our analysis shows that equities in smaller sized companies outperform during a bull market. However, not all junior miners are created equal, and we believe there are three keys to picking them.
Impact: Positive
Sailfish Royalty Corp. has announced the completion of the all-share acquisition of Terraco Gold (TSXV:TEN) at an implied value of C$17.8M. This adds another royalty in a top-tier jurisdiction to the portfolio. Our preliminary view of valuation implies that Sailfish is undervalued, and we expect that as San Albino approaches production, the company should re-rate.
Our view is that the San Albino project is poised to re-rate both the operator, Mako Mining (TSXV:MKO) and the royalty holder, Sailfish Royalty (TSXV:FISH), when it comes online next year. We recently had the opportunity to visit Mako Mining’s San Albino project in Nicaragua where construction is underway. Additionally, the company has ramped up exploration on what we believe is a prospective land package and our visit combined with recent results suggests to us that this resource is likely to grow materially. Our preliminary view of valuation implies that both Mako and Sailfish are undervalued, and we expect that as San Albino approaches production, both stocks should re-rate.