Metalla Royalty: Poised to Double Production in 2025 as Assets Enter 'Harvesting Phase'

• Metalla Royalty has built a diversified portfolio of gold, silver and copper royalties through 32 transactions since 2016, focusing on assets operated by experienced producers in top jurisdictions
• The company is transitioning from a "growth phase" to a "harvesting phase" as several major assets enter production, driving significant cash flow growth in 2024-2027
• Metalla expects to roughly double production in 2025 vs 2024, reach 8,000-10,000 gold equivalent ounces by 2027, with potential to double again in 2-3 years thereafter
• The company has intentionally built a long-life portfolio to deliver consistent returns across the commodity cycle, with industry-leading 20+ year reserve life
• Metalla is positioning to be a leading mid-tier royalty consolidator, targeting $50-200M transactions to complement organic growth; sees further industry M&A ahead

In a world of economic uncertainty and inflationary pressures, savvy investors are increasingly turning to hard assets like precious metals as portfolio diversifiers. While the major gold and silver miners are a common first stop, a case can be made for the royalty and streaming sector. And within that space, one company that is working to achieve exceptional growth potential is Metalla Royalty & Streaming.

Interview with CEO Brett Heath

Building a Royalty Powerhouse 

Since its founding in 2016, Metalla has rapidly built a diversified portfolio of gold, silver and copper royalties and streams through a highly active dealmaking approach. The company has completed 32 transactions to date, assembling an asset base of over 100 royalties across 3 continents. Metalla's portfolio is anchored by several cornerstone assets operated by large, experienced mining companies in Tier 1 jurisdictions.

This focus on quality over quantity is a key differentiator for Metalla. As CEO Brett Heath explained in a recent interview,

We are focused on Gold Silver and copper royalties. We've got 101 assets across the Americas in Australia we also have a very significant growth profile and most of our royalties are operated by some of the largest most experienced um operators in the business across most of the proven geological trends and with a very exciting growth profile.

Inflection Point Reached 

That patience and portfolio construction is now paying off. After several years of aggressive deal-making and asset accumulation, Metalla is hitting an inflection point as those development-stage royalties begin to throw off serious cash flow. The company expects to roughly double production in 2025 compared to 2024 as major assets like Endeavor, and Cote enter production.

This is just the beginning of what Heath calls Metalla's "harvesting phase". The company is guiding for 8,000-10,000 gold equivalent ounces of annual production by 2027, with the potential to double again within 2-3 years thereafter based on the current portfolio. Those are transformative growth numbers for a company with a market cap of just US$273 million.

Built for the Long Haul

Importantly, Metalla's portfolio is built for the long-term. The company's 10 largest assets have a combined reserve life of over 20 years - the highest amongst its royalty and streaming peers. These are not short-cycle mines but large, district-scale assets that can deliver returns across multiple commodity price cycles.

Reserve Life of our top 10 assets is 20 years it's the most out of all the mid-tiers and juniors so you know we have that ability to I think play those cycles.

Primed for M&A 

Even with over 100 assets in the portfolio, Metalla is far from done deal-making. The company sees substantial opportunities to consolidate sub-scale royalties and streams held by smaller operators. With larger industry players increasingly focused on $300M+ transactions, a growing void is developing in the $50-200M deal size that Metalla aims to fill.

I think there'll be a lot of opportunities in 50 million to kind of $200 million range when we look out and I think we're going to be a big beneficiary. I think a lot of the consolidation will be kind of necessity consolidation within the Juniors. I think there's real potential that we see consolidation within the majors and the mid tiers

Royalty Companies: The Smart Way to Play 

For investors looking to gain exposure to gold, silver and copper, there are a number of different options available. Physical bullion, futures contracts, mining stocks, and ETFs are among the most common. But one of the most compelling and perhaps lesser-known avenues is royalty and streaming companies.

Royalty companies provide upfront capital to mining companies in exchange for the right to purchase a percentage of future metals production at a predetermined price. This creates a leveraged play on rising metals prices, without taking on the operational risks or capital intensity of running a mine. Many royalty companies have asset bases diversified across dozens or even hundreds of properties, spanning different geographies and development stages.

This inherent diversification makes royalty companies an attractive option for risk-averse investors looking for exposure to the metals complex. As Heath explained,

the royalty business is all about the cycles. I mean when you look at the big royalty companies um most of their growth were in these like little pockets right like 12 -18 months.

An Undervalued Opportunity 

Despite their many advantages, royalty and streaming companies have not been immune to the broader volatility and investor apathy in the metals space in recent years. This undervaluation is creating attractive entry points for long-term investors, especially for some of the emerging royalty companies beyond the well-known industry leaders.

we're you know one of the more undervalued. I mean I liked it a lot more when we were the most overvalued, but we're on the other side you know. The pendulum swings in different directions.

The Investment Thesis for Metalla Royalty:

• Portfolio of 100+ development and producing royalties provides broad exposure to gold, silver and copper
• Industry-leading production growth profile with potential to reach 8-10,000 GEO's by 2027
• 32 transactions completed since 2016, highlighting management's deal-making expertise
• Cornerstone assets anchored by large, Tier 1 operators like Newmont, Agnico Eagle and First Majestic Silver
• 20+ year reserve life on top 10 assets ensures diversified, long-term cash flow streams
• Well positioned to be an industry consolidator and grow into a leading mid-tier royalty company

Macro Thematic Analysis:

The global economy finds itself at a critical inflection point as we enter the mid-2020s. The era of cheap and easy money is rapidly coming to an end. Inflation has surged to 40-year highs, forcing central banks to aggressively hike interest rates. Global debt levels are at record highs, raising concerns about servicing costs and rollover risks. Geopolitical tensions are on the rise between the world's major powers.

As Metalla CEO Brett Heath explained:

we see the mid tiers [royalty companies] kind of going up, continuing to get bigger, to be relevant. I mean you have to be $5 billion company today to even be remotely relevant to capital outside of this sector. There's no capital in this sector so those companies are going to have to get bigger.

While broad exposure to metals prices is attractive, royalty companies provide a lower-risk, higher-margin way to invest in the space compared to miners. By collecting a percentage of revenue from each mine they hold a royalty on, companies like Metalla are insulated from rising cost pressures and operational missteps. This allows them to generate substantial free cash flow even in flat commodity price environments.

With metals supply struggling to keep pace with demand, the royalty business model is poised to become even more valuable in the years ahead.