Maverix Metals (MMX) - Increasing Dividend as Revenue Increases
Maverix Metals Inc. is a gold royalty and streaming company based out of Vancouver, BC that provides investors with opportunities through a portfolio of more than 120 royalties and streams across 18 countries. 13 of the company's royalties are currently generating a healthy cash flow.
We met with Ryan McIntyre, President, Maverix Metals. Ryan has over 15 years of experience in the mining and mining investment industry. He previously served as a Co-Portfolio Manager of Tocqueville Gold Strategy and Tocqueville Gold Fund. His educational credentials include a Bachelor of Commerce (majoring in finance) from Dalhousie University and an MBA from the Yale School of Management.
Maverix Metals Inc. is a gold royalty and streaming company that provides investors with opportunities through a portfolio of more than 120 royalties and streams with major operations spread throughout the Americas, Australia, and Mexico.
The company is listed on the Toronto Stock Exchange (TSX: MMX) and the New York Stock Exchange (NYSE: MMX). Founded in 2008, the company is headquartered in Vancouver, Canada.
Maverix Metals generated a revenue of $50 million at a 90% margin in the previous year. Three-fourths of the company's revenue comes from projects located in North America and Australia.
The company released the second edition of their annual asset handbook which is available on their website https://maverixmetals.com. This handbook is a 47-page user guide to Maverix Metals, which outlines its history, the creation of streams and royalties and outlines all the assets they have in their portfolio.
The annual asset handbook is a convenient way for potential investors to get an in-depth view of the company's 121 royalties and streams.
Maverix Metals made 3 big announcements in relation to their assets.
Camino Rojo project in Mexico that is coming into production in Q4 2021. It offers a 2% royalty and is being developed by Orla Mining. This project will add 4%-7% growth to the company's revenue.
A recent announcement by Karora Resources Inc. was made as it looks to double its mining throughput at the Beta Hunt Mine based in Western Australia. This project offers 4.75% royalty for Maverix Metals and a 10% revenue growth over the course of several years.
The Koné Project, acquired from Kinross in 2019 is being managed by the Montage Gold Corp. and is going through resource definition and expansion.
The company released a recent PEA that shows over 200,000oz production annually for the course of 15 years. Maverix Metals has a 2% royalty, equivalent to 4,000 gold equivalent ounces, and a 15% growth towards the revenue base. An updated resource is scheduled for Q3 2021 and a full permit is expected to be acquired by mid-2022.
The company's current evaluation stands at USD$750M - $800M. Maverix Metals has equity of $55M in cash and securities along with an additional $120M undrawn revolving credit facility. The company is also generating a healthy cash flow each quarter from 13 royalties.
The company is open for potential acquisitions which include individual assets and portfolios. The company looks for a balance between risk and return when choosing a new resource. The company has a talented in-house technical team. Risk is the first stage of evaluation along with the assessment of the revenue generation capability of a project and sustainability over its lifecycle.
Over 99% of the company's revenue is generated from gold and silver, the company is open to explore battery metals based on the risk-return prospect. The company's approach towards the royalty business model is a diversified approach that offers significant de-risking.
Maverix Metals also increased its dividends by 25% in May, standing at 1.25, expanding the dividends along with the company's growth. These dividends are representative of 15-20% of the company's free cash flow. The company has a balanced portfolio with properties generating immediate cash flow and long-term growth assets.
The company's countercyclical portfolio provides the opportunity to generate more revenue during market highs and during the downturns, it opens the possibilities for development and acquiring new portfolio and reduced prices. This allows a healthy balance between an ongoing cash flow and organic growth.
New Royalties Acquired
Maverix Metals made an announcement in June acquiring 6 royalties from Pan American Silver Corp. for $7M cash and $2.4M in MMX shares. This is the second acquisition from Pan American Silver and is majorly focused on exploration.
The Fenn-Gib Project, Ontario is a multi-million-ounce resource where a 50,000m drill program is currently ongoing. It offers a 2.5% royalty.
The Recuperada Project is an operation spread across an area of 15,000 hectares in Peru. This historic mine is being operated by Silver X Mining and offers a 3% royalty. This site is currently in the trial mining phase and the company is looking to enter production within the next few years.
The Juby assets royalty in Ontario is another multi-million dollar project located featuring a strong infrastructure that offers a 1% royalty.
The Hernandez property in Mexico surrounds SilverCrest's Las Chipas project. This is a great land package currently under development. This project offers a 2.4% royalty for Maverix Metals.
Maverix Metals looks at jurisdiction risk based on the allocation of resources, the rule of the law in the region, a trustworthy operator, and overall support from the local communities, and the government.