{"id":69068,"date":"2023-10-05T12:16:46","date_gmt":"2023-10-05T16:16:46","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/metalla-royalty-streaming-all-streamers-are-not-created-equal-nysemta\/"},"modified":"2023-10-05T12:16:56","modified_gmt":"2023-10-05T16:16:56","slug":"metalla-royalty-streaming-all-streamers-are-not-created-equal-nysemta","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=69068","title":{"rendered":"Metalla Royalty & Streaming: All Streamers Are Not Created Equal (NYSE:MTA)"},"content":{"rendered":"
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Introduction<\/h2>\n

On August 11, 2023, the Vancouver, British Columbia-based Canadian Metalla Royalty & Streaming Ltd.<\/strong> (NYSE:MTA<\/span>) announced its operating and financial results for the second quarter of 2023.<\/p>\n

Also, on September 8, 2023, the company announced its merger with Nova Royalty Corp.<\/span><\/strong> (<\/span>NOVR:CA) (<\/span>OTCQB:NOVRF). Brett Heath, President and CEO of Metalla, stated:<\/span><\/p>\n

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We are very excited about the combination of these businesses. This merger represents a transformative moment for both companies and will lay a clear, low-risk path to becoming an intermediate royalty company. Together, we expect that our peer-leading, high-quality growth, underpinned by some of the best-in-class operators in the mining sector, will deliver superior long-term value for our shareholders.<\/p>\n<\/blockquote>\n

The only party “excited” about such a merger seems to be the management, judging by its caustic effect on the stock price. Nova shareholders will have approximately 40%<\/strong> ownership in the combined company.<\/span><\/p>\n

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MTA Merger Goal (MTA Presentation)<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Following the merger, MTA announced a special dividend payment on the Common Shares, for C$0.03 per share, <\/strong>paid on September 15, 2023.<\/p>\n

MTA dropped significantly after the deal was announced, whereas Nova Royalty fared a little better, losing only 16% YoY.<\/p>\n

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\"Chart\"
Data by YCharts<\/figcaption><\/figure>\n<\/p>\n

Note:<\/strong> This article updates my article published on June 18, 2023. I have followed MTA on Seeking Alpha since December 2020.<\/p>\n

1 – Stock performance<\/strong><\/h4>\n

Metalla Royalty & Streaming Ltd. has tumbled 32%<\/strong> on a one-year basis and is now one of the worst performers in the group. The company has used its stock to finance its expansion and entered into a merger with Nova, significantly diluting shareholders in the process.<\/p>\n

It is the same strategy used at Sandstorm (SAND) or Gold Royalty (GROY), which produced the same dilutive effects. SAND, GROY, and MTA are the only stocks down significantly YoY (see below), with GROY winning the contest with a drop of 55%.<\/strong><\/p>\n

Note:<\/strong> I recommend reading my article on all the streamers indicated below by clicking here, and especially my recent GROY article here.<\/p>\n

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\"Chart\"
Data by YCharts<\/figcaption><\/figure>\n<\/p>\n

2 – Merger Thesis <\/strong><\/h3>\n

MTA remains in development despite owning 105 assets <\/strong>as of September (including 23<\/strong> assets from Nova Royalty).<\/p>\n

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\"Metalla<\/span>
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MTA Map Assets Pre-Merger (MTA Presentation)<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

The merger with Nova is mainly an attempt to enter the copper market that the company viewed as “at the core of all electrification and decarbonization technologies for the 21st century and is projected to become the lifeblood of the new economy.”<\/p>\n

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MTA Main Royalties List (MTA Presentation)<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Note:<\/strong> The new MTA will generate Cash Flow from Aranzazu royalty (copper, gold, silver)<\/em>, along with Tocantinzinho, C\u00f4t\u00e9 Gold, and Amalgamated Kirkland royalties, expected to commence cash flow in 2024.<\/p>\n

Concurrent with closing the transaction, Beedie Capital<\/strong> has agreed, among other things, to increase the loan facility from C$25.0 million to C$50.0 million. <\/strong><\/p>\n

Despite what the company has said about this merger and the estimated “142% revenue growth to 2025,” I am very skeptical that this ill-timed transaction will benefit common shareholders.<\/p>\n

It is another dilution exacerbated by the Beedie Capital’s agreement. As always, shareholders are not part of the equation for such early-stage development companies.<\/p>\n

Thus, due to the high risk of dilution, I do not recommend MTA as a long-term investment, expecting more acquisitions and financings along the way.<\/p>\n

Thus, the best way to profit from such a volatile stock is to trade short-term LIFO of about 85+%<\/strong> of your total position and use ONLY the short-term gain to build up a derisked long-term position, hoping for an elusive success story down the road.<\/p>\n

Metalla Royalty & Streaming Ltd.: 2Q23 Financial Snapshot History – The Raw Numbers<\/h2>\n

Note:<\/strong> The numbers are indicated in $US.<\/strong><\/p>\n

<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Metalla Royalty<\/strong><\/td>\n2Q22<\/strong><\/td>\n3Q22<\/strong><\/td>\n4Q22<\/strong><\/td>\n1Q23<\/strong><\/td>\n2Q23<\/strong><\/td>\n<\/tr>\n
Total Revenues in $ Million<\/td>\n0.46<\/td>\n0.66<\/td>\n0.63<\/td>\n0.98<\/td>\n0.96<\/td>\n<\/tr>\n
Net Income in $ Million<\/td>\n-1.37<\/td>\n-2.54<\/td>\n-4.79<\/td>\n-1.36<\/td>\n-0.49<\/td>\n<\/tr>\n
EBITDA $ Million<\/td>\n-0.74<\/td>\n-1.65<\/td>\n-4.11<\/td>\n-0.44<\/td>\n1.41<\/td>\n<\/tr>\n
EPS diluted in $\/share<\/td>\n-0.03<\/td>\n-0.06<\/td>\n-0.10<\/td>\n-0.03<\/td>\n-0.01<\/td>\n<\/tr>\n
Operating Cash Flow in $ Million<\/td>\n0.12<\/td>\n0.32<\/td>\n-0.18<\/td>\n0.16<\/td>\n0.80<\/td>\n<\/tr>\n
Capital Expenditure in $ Million<\/td>\n0.00<\/td>\n0.12<\/td>\n0.35<\/td>\n2.82<\/td>\n0.03<\/td>\n<\/tr>\n
Free Cash Flow in $ Million<\/td>\n0.12<\/td>\n0.20<\/td>\n-0.53<\/td>\n-2.66<\/td>\n0.77<\/td>\n<\/tr>\n
Total Cash $ Million<\/td>\n3.37<\/td>\n3.30<\/td>\n4.56<\/td>\n4.80<\/td>\n11.71<\/td>\n<\/tr>\n
Total Long-Term Debt in $ Million<\/td>\n10.81<\/td>\n10.29<\/td>\n10.59<\/td>\n10.50<\/td>\n7.87<\/td>\n<\/tr>\n
Shares Outstanding (diluted) in Million<\/td>\n44.58<\/td>\n44.83<\/td>\n45.50<\/td>\n50.51<\/td>\n52.22<\/td>\n<\/tr>\n
Producing assets<\/strong><\/td>\n2Q22<\/strong><\/td>\n3Q22<\/strong><\/td>\n4Q22<\/strong><\/td>\n1Q23<\/strong><\/td>\n2Q23<\/strong><\/td>\n<\/tr>\n
Gold in GEOs<\/td>\n560<\/td>\n714<\/td>\n683<\/td>\n927<\/td>\n856<\/td>\n<\/tr>\n
GoldCashivalent price realized<\/td>\n1,844<\/td>\n1,714<\/td>\n1,715<\/td>\n1,836<\/td>\n1,945<\/td>\n<\/tr>\n<\/table>\n

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