Another one off the board
With this week’s takeover of EMX Royalties by Elemental Altus, my watchlist of needle-moving gold royalties that would interest a major is looking picked over.
- Odyssey, Cote, Vares: Gold Royalty
- Spring Valley/Moonlight: Sailfish Royalties
Timok royalty basket:EMX Royalties- Frotet: Kenorland Minerals
I talked to everyone I could about the Elemental-EMX deal, here are the main takeaways.
This is Tether’s world. The rest of us just live in it.
Current Elemental CEO Fred Bell isn’t even on the board of his own company and nobody expects incoming CEO David Cole to last long term. The expectation is Cole will leave as soon as he’s eligible for his enhanced change of control payment ($1.25 million in total compensation for termination without cause subsequent to change of control). He wouldn’t be the only one leaving as all the mining experience and value-add board members (Alphasense, La Mancha, Sandeep Singh) have departed ELE since Tether arrived.
And only one ELE shareholder benefits from this. It’s not you.
Speaking of change of control payments
Tether’s $100-million financing into Elemental wasn’t required to close the deal. It was required to make sure Elemental shareholders owned 51% of the combined company, thus triggering a change of control at EMX.
Gold Royalty is the logical next target
It pains me to say this as someone now completely out of this position (see below), but GROY has a lot of chunky assets reaching nameplate capacity. The paradox of GROY is the share price has moved well above net asset value because they haven’t done any more dilutive deals or tried to run a placement – just like they’ve been screaming at the market. Of course with the stock trading above NAV, now is the time to run a placement or use their paper to make accretive acquisitions, which they can’t do because the stock would collapse.
If you can’t eat, you get eaten. Particularly when there’s a new growth-obsessed player with infinite capital, you own a plug-and-play growth portfolio and there are change of control fees there for the taking.
