Maverix Metals is delivering consistent profits from its high-quality portfolio of precious metal royalties

A pure gold play royalty investment A global portfolio and experienced management Low overheads and track record of growth What Maverix Metals does: Maverix Metals Inc (CVE:MMX) is a rapidly growing gold royalty and streaming firm with high margins and growing free cash flow. In return for making an upfront payment, Maverix receives a royalty on the underlying precious metal sold by an operator, or in the case of a precious metal stream, the right to purchase an agreed-upon amount of gold, silver or other precious metal, at a significant discount to the spot commodity price. Such agreements provide Maverix, and its shareholders, with exposure to precious metals price rises and the exploration upside of the mine or project without any additional capital outlay, while also fixing the ongoing costs of acquiring precious metals in the case of a stream. Since being founded in 2016 by chairman Geoff Burns and CEO Daniel O’Flaherty, Vancouver-based Maverix, with a market cap of US$750 million,  now has 115 royalties and streams, 13 of which are paying. Its assets lie throughout Australia and the Americas. How is it doing: The company entered 2021 with a strong financial wind at its back.  On February 16, Maverix announced it had achieved record attributable gold equivalent ounces sold for the fourth quarter and full year ended December 31, 2020, exceeding its guidance for the year. "Maverix had another year of tremendous growth in 2020, achieving a new company record for attributable gold equivalent ounces, exceeding our 2020 guidance, and expanding our royalty portfolio with the acquisition of 10 gold royalties. We look forward to building off this performance with further growth in 2021, driven in large part by the push towards development and production at a number of the underlying precious metals assets where we hold royalties," said Dan O'Flaherty, CEO. On its asset front, Maverix also noted that recently, Agnico Eagle Mines Limited became the owner of Hope Bay following its acquisition of TMAC Resources Inc and announced plans to continue mining the Doris deposit. The miner expects quarterly production of between 18,000 to 20,000 ounces of gold, with a significant exploration program planned for this year. Elsewhere, at the Moss mine in Arizona, Maverix said that Northern Vertex Mining Corp completed the previously-announced business combination with Eclipse Gold Mining Corp. Under the terms of the deal, Maverix sold 19,511,041 shares of Northern Vertex and received net proceeds of approximately C$9.8 million, realizing a gain on the sale of nearly C$2 million. In its 4Q to end December 2020, Maverix posted revenue of US$16.6 million from 8,836 gold equivalent ounces sold, and a net income of US$5.3 million. For FY2020, Maverix delivered record revenue of US$51.7 million from a record of gold ounces sold – 28,916 ounces, according to a statement. The group delivered record net income of US$23.7 million, including a one-time gain on an amendment of a royalty interest, for an adjusted net income of $15.6 million during the 2020 financial year. The gold ounces were sold at a margin of 90% for both FY and 4Q, at average cash cost of US$184 during the quarter and $174 for the full 12-month period. Maverix is setting its 2021 guidance of attributable gold equivalent ounces to be between 27,000 to 30,0001 for 2021 at around a 90% cash margin with about 99% of expected revenue derived from gold and silver. Inflection points: Further acquisitions of royalties/streams Ongoing gold and precious metals price advances What the broker says: Canaccord Genuity in early February 2021 initiated a 'Buy' rating on Maverix with a C$8 price target and on February 16 repeated that rating and target, saying the firm's Q4 gold-equivalent ounce sales and 2021 guidance were both ahead of the broker's estimates and consensus. Canaccord noted that the company and Agnico have now completed the previously-announced buy back of a 1.5% NSR for which Maverix received proceeds of C$50 million on February 12. Maverix retains a 1% NSR on the Hope Bay mine in Nunavut, which Agnico plans to continue to operate at current run rates while re-evaluating geological potential, mine plans, and processing options. "Maverix noted it will use part of the proceeds from the Hope Bay buy back transaction to repay the $35 million outstanding balance on their credit facility, after which the company will have access to the full $120 million credit facility and cash of around $50 million," said analyst Carey MacRury. What the boss says: "Maverix delivered another successful year in 2020, with revenue increasing over 50% from 2019, demonstrating the strength of our diverse, high-quality portfolio of precious metals royalty and stream interests,” CEO Dan O’Flaherty said in a statement accompanying the 4Q and FY results. “We look forward in 2021 and beyond, to organic growth from our existing portfolio while continuing to focus on adding value through additional royalty and stream acquisitions,” O’Flaherty added. “Our capital position has never been stronger, as we are now debt free and have access to the full $120 million available under our credit facility, while holding approximately $55 million in cash and marketable securities.” Contact Angela at angela@proactiveinvestors.com Follow her on Twitter @AHarmantas