Latest / Kitco MINING / Metalla’s Gosselin Royalty Is Becoming a Much Bigger Asset | Brett Heath

Transcript

Metalla’s Gosselin Royalty Is Becoming a Much Bigger Asset | Brett Heath · Kitco MINING

• 0:00
  SPEAKER_00: Kitco Mining on-site coverage of Mining Forum Americas is presented by Metalla Royalty and Streaming.
• 0:11
  SPEAKER_01: Royalties and streams are no longer a dirty word.
• 0:14
  SPEAKER_01: Hello and welcome to Kitco Mining with me, Paul Harris here at the 2026 Mining Forum Americas.
• 0:20
  SPEAKER_01: Joining me now is our sponsor, Brett Heath, CEO of Metalla Royalty and Streaming, which trades on the Nicy American under the ticker MTA.
• 0:28
  SPEAKER_01: Brett, welcome back to Kitco.
• 0:29
  SPEAKER_02: Yeah, thanks for having me, Paul.
• 0:31
  SPEAKER_01: Brett, I'd like to take advantage of this opportunity.
• 0:33
  SPEAKER_01: Maybe we can sort of set the scene of the entire royalty and streaming space by starting off our conversation, looking at some of what you think are the most important streams or currents in the space today.
• 0:45
  SPEAKER_02: It's interesting.
• 0:46
  SPEAKER_02: What we're seeing today is what I've never seen in my career, which is you're seeing streams start to become basically a mainstream form of financing.
• 0:55
  SPEAKER_02: So streaming royalties have always been uh an alternative form of financing.
• 1:00
  SPEAKER_02: Typically, you know, it's it's that call or kind of that last-in capital before you know the mining companies uh are worried about dilution.
• 1:09
  SPEAKER_02: Uh, but that has changed.
• 1:11
  SPEAKER_02: And I think it's being driven by really the long end of the curve.
• 1:16
  SPEAKER_02: You're seeing debt price, you're seeing the cost of capital at the long end of the curve, which is fundamentally, you know, everything is derived off of that.
• 1:24
  SPEAKER_02: Um, you're seeing that rip higher at the same time, now you're seeing kind of SOFAR, which a lot of the credit facilities are priced off, start to move higher with it.
• 1:33
  SPEAKER_02: And as those move higher, uh royalty and stream financing, I believe, is going to become kind of the critical part of that capital stack where everything else is built around for in the future.
• 1:45
  SPEAKER_02: And the difference between today and what we've seen in the past is that the companies that are doing these streams or engaging in these larger streams are ones that have great balance sheets.
• 1:56
  SPEAKER_02: Like in the past, it was always because they were trying to fix their balance sheets.
• 2:00
  SPEAKER_02: But now, with metal prices where they are, they're kicking off unlimited free cash.
• 2:04
  SPEAKER_02: It's just really becoming uh the best way for these companies to put these mines in production, given that streams and royalties are priced off the ore body.
• 2:14
  SPEAKER_02: They don't they don't move, they only become more expensive as the price goes up, and obviously the mining company makes money alongside.
• 2:21
  SPEAKER_01: I think an interesting uh element there, it's not just the miners that have good balance sheets with cash.
• 2:26
  SPEAKER_01: It's obviously that the bigger companies in the royalty and streaming space, your Franco Navarre, your weed and precious metals, your royal golds, they've got very, very healthy balance sheets.
• 2:35
  SPEAKER_01: So um they they can lend enormous sons, well not lend, they can invest enormous sums of money into projects as we saw earlier this year with uh weed and precious metals um buying the silver streamer down to Mina.
• 2:48
  SPEAKER_02: That's right.
• 2:48
  SPEAKER_02: I mean, with with metal prices where they are, uh the big three are all kicking off uh uh a billion to three plus billion a year of free cash.
• 2:59
  SPEAKER_02: And you think about as we head into this copper build cycle, we we spoke about this back uh at the BMO conference in our last interview.
• 3:06
  SPEAKER_02: Uh you know, these builds are significant.
• 3:08
  SPEAKER_02: These are not one billion dollar type of builds, they're four, five, six, seven, eight billion dollar builds.
• 3:14
  SPEAKER_02: And so that capital stack and ultimately uh the stream that that can fit within that as the core part of that capital funding, uh, you can see two, three, four billion dollar deals.
• 3:24
  SPEAKER_02: And so I think that you know, over the next year or two and three, we are gonna see record capital deployed by the royalty and streaming sector.
• 3:35
  SPEAKER_02: I think it's all in front of us.
• 3:36
  SPEAKER_02: We're just at the start of it, Rick.
• 3:37
  SPEAKER_01: Now I mentioned the Antamina deal.
• 3:39
  SPEAKER_01: Antamina is obviously copper mines.
• 3:40
  SPEAKER_01: Some of these um big capex builds you mentioned, sort of five billion plus, they're typically on the copper mines rather than or copper development projects rather than gold projects.
• 3:50
  SPEAKER_01: Is that where the industry is focusing now on the copper sector?
• 3:54
  SPEAKER_02: The copper sector is front and center.
• 3:56
  SPEAKER_02: When you look at the copper price, the copper price is clearly broken out uh out of a 20-year consolidation.
• 4:03
  SPEAKER_02: It's going higher, margins are there, the prices will support a lot of these builds now.
• 4:09
  SPEAKER_02: Uh a lot of the assets, particularly in like Argentina, uh have these programs like Regie where it's really a window.
• 4:17
  SPEAKER_02: And so you know these projects need to be advanced within that window to be able to capture the economics and kind of the commercial agreements that are required to protect those assets that will go for four, five, six, seven decades.
• 4:30
  SPEAKER_02: Like a lot of these mines will go for 30, 40, 50 years in in while they're in production.
• 4:35
  SPEAKER_02: And so I think that is front and center, just given kind of the quantum.
• 4:39
  SPEAKER_02: But I think this, I think this flows through to the gold sector as well.
• 4:43
  SPEAKER_02: When the when the mining companies look to build mines, they use their credit facility.
• 4:48
  SPEAKER_02: They always put credit on it.
• 4:49
  SPEAKER_02: Not always, but most of the time they put credit on it.
• 4:52
  SPEAKER_01: And as credit becomes it's typically 40, 60 debt equity, isn't it?
• 4:56
  SPEAKER_01: That's the traditional model.
• 4:57
  SPEAKER_02: Correct.
• 4:58
  SPEAKER_02: And so, you know, as what we're seeing again, the the increase on the long end of the curve of the 30 year, it's kind of similar to the copper price chart.
• 5:06
  SPEAKER_02: When you if you look at a 20, 25 year chart of the 30-year US Treasury, forget that it's a treasury.
• 5:12
  SPEAKER_02: Just look at the chart, and it's clearly broken out.
• 5:14
  SPEAKER_02: It looks like it's gonna go much, much higher.
• 5:16
  SPEAKER_02: And so what does what does a 30-year uh as six or seven or eight percent do to the mining sector?
• 5:23
  SPEAKER_02: And ultimately, uh what part of the mining sector is gonna be able to be there to take advantage of it?
• 5:29
  SPEAKER_02: And the way I see it, the royalty sector, because the mainly the bigger royalty companies are so big now and they're kicking off so much free cash, they're very, very well positioned.
• 5:40
  SPEAKER_02: And ultimately, I think they could be, you know, over the next five or ten years, the largest companies in the resource sector.
• 5:46
  SPEAKER_01: I want to let's dig into that a little bit more.
• 5:48
  SPEAKER_01: The the copper prices, you know, record levels, let's say$6.70 US per pound.
• 5:54
  SPEAKER_01: Copper miners are making a lot of money at the moment.
• 5:57
  SPEAKER_01: Um, obviously their capital requirements are rising equally to large proportions, but we're not necessarily seeing a lot of builds uh green-lighted.
• 6:07
  SPEAKER_01: You know, there's uh um still not the uh incentive price in grabs, doesn't seem to be there yet.
• 6:14
  SPEAKER_01: Well, what's your view on that?
• 6:16
  SPEAKER_01: I mean, you mentioned Rigga in Argentina, that's perhaps an external stimulus that forces companies to put the shovel in the ground sooner rather than later, but in other countries that pressure isn't there, and yet companies seem to be very cautious about greenlighting new builds.
• 6:31
  SPEAKER_02: Well uh a clock will not fix what that looks like in the future because it takes on average 18 years for these copper mines to go from uh discovery to production.
• 6:48
  SPEAKER_02: Right?
• 6:48
  SPEAKER_02: If you look at like it's 18 months to build a data center, but the underlying commodities that are involved in that take a much, much longer time.
• 6:57
  SPEAKER_02: The price is not going to fix that, right?
• 6:59
  SPEAKER_02: Like the higher price is not going to be able to allow these companies to put this to bring this copper online uh sooner.
• 7:08
  SPEAKER_02: And we and we, you know, this is what we were thinking about years, years ago, before you know AI was even mentioned in the same sentence as a mine.
• 7:18
  SPEAKER_02: And two, you know, our our job was to go out and say, hey, where which one of these assets are actually going to get built?
• 7:25
  SPEAKER_02: Because a near-term copper project might be five or even 10 years from production, is the reality of it.
• 7:31
  SPEAKER_02: Um, we've got two of our core copper royalties, one on uh Copper World, which is being advanced by HUD Bay, just brought in a joint venture partner, expected um feasibility this year in construction decision in 2027, and then Tacataca, which is one of the world's largest uh developed copper projects.
• 7:51
  SPEAKER_02: It's in Argentina.
• 7:52
  SPEAKER_02: This is first quantum, and uh and that one looks like it's also advancing uh, you know, we're expecting uh final permits and uh REGI submission in 2026, and then potentially, you know, joint venture partner usually follows that with FID following that.
• 8:10
  SPEAKER_02: So we could see all of that kind of play out potentially uh you know by the end of 2027.
• 8:16
  SPEAKER_02: So those are two very, very significant projects.
• 8:19
  SPEAKER_02: There's a few others out there, but uh, as you noted, you can't really speed them up.
• 8:23
  SPEAKER_01: Okay.
• 8:24
  SPEAKER_01: I had the pleasure to do a side visit to Takataka in Salta early this year.
• 8:28
  SPEAKER_01: Now, um going back to the sort of the traditional capital stack, uh the banks typically syndicate the debt to share the risk.
• 8:36
  SPEAKER_01: Uh do we do you think we'll start seeing the royalty and streaming companies syndicate that part of the financial capital stack, or do they have access to so much money they don't need to do that?
• 8:48
  SPEAKER_02: You know, I I think I think we will see syndication within the royalty sector.
• 8:53
  SPEAKER_02: I mean, these are very, very big deals.
• 8:56
  SPEAKER_02: Uh and they're they're very, very large checks.
• 8:59
  SPEAKER_02: Now, that being said, you know, the major royalty companies, they do have the capacity to write those checks themselves.
• 9:06
  SPEAKER_02: You know, you saw uh Wheaton do it with with uh BHP on on Antonema.
• 9:12
  SPEAKER_02: Um you know, the deleveraging profiles with these checks are still pretty significant for these companies, but you know, is there is there capital there uh that's willing to fund it?
• 9:23
  SPEAKER_02: You know, yes.
• 9:24
  SPEAKER_02: But I I think potentially we may see syndication for sure.
• 9:28
  SPEAKER_01: Okay.
• 9:28
  SPEAKER_01: Well, let's talk a little bit more specifically about Metalla and what you've been doing earlier this year in the first quarter.
• 9:34
  SPEAKER_01: Um, you describe your results as a step change in cash flow.
• 9:38
  SPEAKER_01: What specifically is driving that step change?
• 9:41
  SPEAKER_02: So, what's driving that step change is just the portfolio maturing.
• 9:45
  SPEAKER_02: So, you know, our strategy was always to go out and buy really high quality, that means good jurisdictions, good operators, very long reserve lives, and then kind of wait, basically.
• 9:55
  SPEAKER_02: You know, our our business has been in the way that we like to make money for shareholders, is really the arbitrage of time combined with world-class geology.
• 10:04
  SPEAKER_02: And if you've got those two, you know, we have found it to be the best way to really bring home significant returns for shareholders.
• 10:12
  SPEAKER_02: So, what we're seeing is all of that really start to flow through into the producing side.
• 10:16
  SPEAKER_02: So now uh, you know, we put out our best quarter in Q2.
• 10:20
  SPEAKER_02: We're a profitable company, we're showing net income, it's just growing from there.
• 10:25
  SPEAKER_02: Uh, you know, another asset coming online uh in in the second half of this year, uh, and then a number several assets coming online between now and the end of the decade.
• 10:36
  SPEAKER_02: So all of that growth is bought and paid for growth.
• 10:40
  SPEAKER_02: At the same time, you've got uh all of these operators spending records amount looking for more gold around the projects.
• 10:47
  SPEAKER_02: Like we just saw uh Gmining, uh, they just announced last week they discovered uh another zone at depth under Tokentinzinho.
• 10:55
  SPEAKER_02: That's where we've got one of our that's one of our larger producing royalties.
• 10:59
  SPEAKER_02: Uh and then Gurupi.
• 11:01
  SPEAKER_02: That is one of the most exciting drill result press releases I've seen in a while.
• 11:07
  SPEAKER_02: You know, it's probably a little too early to say, but I think that project is going to get very, very big.
• 11:12
  SPEAKER_02: Um, also Gmining top operator.
• 11:14
  SPEAKER_02: So as all of these projects are are advancing forward, the cash flow is kicking up.
• 11:19
  SPEAKER_02: You know, we've seen a very significant change in regards to our share register.
• 11:22
  SPEAKER_02: We've had a lot of institutions come on our register.
• 11:28
  SPEAKER_01: In just a moment, but before we get there, Brett, um on the back of your sort of improving performance, your and cash flow, your market capitalization's got up to just about 1 billion US dollars.
• 11:40
  SPEAKER_01: Um, why is that a significant threshold to get to and get past?
• 11:45
  SPEAKER_01: What does that mean for the company?
• 11:47
  SPEAKER_02: It is a very significant threshold.
• 11:48
  SPEAKER_02: Growing a royalty business from zero to a billion in market cap is a very, very difficult thing.
• 11:54
  SPEAKER_02: You look at what Metalla did, it took us 10 years.
• 11:57
  SPEAKER_02: Took us 10 years, uh, one transaction at a time, uh, to be able to build this business up to where it's at today.
• 12:05
  SPEAKER_02: You know, growing from 1 billion to 5 billion, I think is a much, much easier uh equation uh because a lot of times that's just a sounds like a forward-looking statement, Brett.
• 12:14
  SPEAKER_02: Uh could be.
• 12:15
  SPEAKER_02: But uh but it's it's it's an easier equation because you get access to credit, you've got a bigger balance sheet, you can do bigger transactions, and it's easier to scale.
• 12:25
  SPEAKER_02: So, you know, ultimately, I think for any royalty company, uh getting over that one billion dollar hump is is a very, very big uh milestone.
• 12:32
  SPEAKER_02: And we've seen that with the majors as well.
• 12:34
  SPEAKER_02: Uh you know, go from a billion or two billion market cap to where the big guys sit today, kind of around 50.
• 12:40
  SPEAKER_01: Okay, well, congratulations there.
• 12:42
  SPEAKER_01: I want to sort of go back to you you you you spoke about the sort of quality of your portfolio, things of that nature.
• 12:48
  SPEAKER_01: Um, an interesting element or twist to that earlier this year, Franco Nevada acquired an existing um royalty on Iron Gold's Cote Goslin um assets in Ontario for just over one billion US dollars.
• 13:02
  SPEAKER_01: You've got an existing 1.5% NSR on the same asset.
• 13:06
  SPEAKER_01: So, what impact did that have on the valuation of the company?
• 13:10
  SPEAKER_01: The fact you've got the big guy, one of the big guys in the space paying a lot of money for basically this similar sort of product that you already have?
• 13:18
  SPEAKER_02: Well, it's it's it's a different type of asset, but what it did was it really shed a lot of light because that was Franco's largest royalty transaction uh in the history of the company for royalty, not a stream.
• 13:29
  SPEAKER_02: Uh, you know, we obviously bought that years ago.
• 13:32
  SPEAKER_02: Uh we bought that five years ago.
• 13:34
  SPEAKER_02: We paid paid about six million for that when we acquired it.
• 13:37
  SPEAKER_02: Today, the present value of that royalty analysts carry it at around 120 million US.
• 13:44
  SPEAKER_02: But when we look at the life of mine kind of estimated after tax cash flows, we expect that royalty already to exceed over 400 million dollars.
• 13:54
  SPEAKER_02: And so the the interesting part going back to Franco's investment, I think what drove Franco to really uh want to buy that was Gosslin.
• 14:03
  SPEAKER_02: Gosslin is the growth part of that asset.
• 14:05
  SPEAKER_02: Our royalty covers basically all of Gosslin and it covers a small part of Gote.
• 14:10
  SPEAKER_02: Um, you know, Kote is a very big mine, it's one of the largest mines in Canada, and it has a mine plan and it's producing.
• 14:18
  SPEAKER_02: Gosslin is a deposit that's gone from zero to over eight million ounces in five years.
• 14:23
  SPEAKER_02: And in the back half of this year, uh I am gold is going to release a super pit uh tech study to mine and integrate Goslin into the pit.
• 14:33
  SPEAKER_02: And you know what we're hearing is that they're contemplating uh potentially uh up to about 70,000 tons per day, which would make it one of the biggest mines in the world, not just Canada.
• 14:43
  SPEAKER_01: Okay.
• 14:43
  SPEAKER_01: Now you mentioned about some of uh the the companies that have been investing in Metalla, one of which is Tether, the stablecoin company.
• 14:53
  SPEAKER_01: They've uh continued to accumulate and they've now got a what a 14% stake in the company.
• 14:58
  SPEAKER_01: Do you have um any idea of what Tether's game plan vis-a-vis Metalla is?
• 15:04
  SPEAKER_02: You know, I I can't comment on what my shareholders' objectives are, uh, but it's great to see disruptive capital come into the sector.
• 15:12
  SPEAKER_02: Obviously, Tether has a very, very large balance sheet.
• 15:14
  SPEAKER_02: Uh, they're putting it to work, not just with Metalla, but with our peers as well.
• 15:18
  SPEAKER_02: I think they own or they're the largest shareholder in I think all of the kind of more material juniors or emerging mid-tiers in the sector.
• 15:27
  SPEAKER_02: So it's great to see uh it's great to see them come into the market.
• 15:31
  SPEAKER_02: It's also great to see, you know, as I noted before, a lot of other very significant institutions uh show up at on the register.
• 15:39
  SPEAKER_02: You know, it really allows uh you know uh Metalla as a company uh to have access to that capital, to look at those bigger deals.
• 15:47
  SPEAKER_02: You know, five years ago, we couldn't think about a hundred million dollar transaction.
• 15:52
  SPEAKER_02: You know, today, if we found the right transaction, could we do something much, much larger than that?
• 15:57
  SPEAKER_02: Like I think we can execute uh you know multiples of what that is if it was the right deal.
• 16:02
  SPEAKER_02: Um, you know, obviously we remain disciplined, we've done we've done one transaction in the last three years uh just because a function of where the market sits today and where valuations are at.
• 16:12
  SPEAKER_02: But but we do have that uh that firepower, I think, with the right transaction.
• 16:16
  SPEAKER_01: So at the moment you see tether very much as a sort of passive investment into the company?
• 16:20
  SPEAKER_02: They've been a great shareholder so far.
• 16:23
  SPEAKER_02: Uh they they have bought, you know, they've bought all their uh position in the market, same with a lot of the other institutions.
• 16:28
  SPEAKER_02: We haven't issued any equity uh at all in the last three years.
• 16:32
  SPEAKER_02: So uh all the institutions that have come onto the register have all bought in the market uh today.
• 16:38
  SPEAKER_01: Okay, well let's talk a little bit about your pipeline.
• 16:40
  SPEAKER_01: You mentioned uh one transaction in the last three years.
• 16:43
  SPEAKER_01: What is potentially on the horizon?
• 16:45
  SPEAKER_01: And particularly given the fact that now you've got that billion-dollar market cap, does that enable you to perhaps look at deals that uh you wouldn't have been able to have looked at in the past?
• 16:56
  SPEAKER_02: It does.
• 16:56
  SPEAKER_02: It does.
• 16:57
  SPEAKER_02: And we we have been very busy.
• 16:59
  SPEAKER_02: Uh you know, we're we're looking at uh all of the deals that we looked at last year, you know, probably a hundred different transactions or a hundred different potential opportunities.
• 17:07
  SPEAKER_02: Uh, you know, the thing with Metalla is that we we are not going to grow for the sake of growth.
• 17:13
  SPEAKER_02: You know, we don't we don't necessarily buy into uh you know bigger is always better.
• 17:19
  SPEAKER_02: We want to make sure that the deals that we do uh grow per share value and are good for shareholders as a whole and all stakeholders within our company.
• 17:28
  SPEAKER_02: And so, you know, ultimately that has restricted us from engaging in a lot of the transactions that you see today.
• 17:34
  SPEAKER_02: But you know, I think that uh at some point in time uh we will be able to uh engage on some of these deals and execute them.
• 17:43
  SPEAKER_02: And and you don't need a lot of these big deals to really scale your business from one to two to three billion market cap with all of our growth that's built in, right?
• 17:51
  SPEAKER_02: So our growth is going from 35 to 4,500 gold equivalent analysis this year.
• 17:55
  SPEAKER_02: You know, we're forecasting between kind of 12 and 20,000 by the end of the decade.
• 18:00
  SPEAKER_02: All of that's bought and paid for.
• 18:02
  SPEAKER_01: Okay.
• 18:02
  SPEAKER_01: A lot going on, uh it seems, uh, Brett.
• 18:05
  SPEAKER_01: So for our viewers, what are some of the catalysts they can expect to see from you over the next 12 to 18 months?
• 18:11
  SPEAKER_02: So big catalyst here in the next six to twelve months.
• 18:15
  SPEAKER_02: Uh the the Kote uh Goslin Super Pit uh tech study.
• 18:20
  SPEAKER_02: So that's coming out uh expected in the in the before the end of this year.
• 18:24
  SPEAKER_02: So that's a significant uh milestone kind of valuation creamp for us as we hold that royalty on the 1.5% on Goslin.
• 18:31
  SPEAKER_02: Goslin's gonna be integrated into that study, and it'll really, I think, provide a lot of view uh on what that's worth.
• 18:38
  SPEAKER_02: You're gonna get, I think, the TACA uh ESIA permits.
• 18:43
  SPEAKER_02: You're going to get um likely Riji submission alongside of that.
• 18:47
  SPEAKER_02: You've got uh Joaquin, which has been a royalty that was in production that we had from Pan American.
• 18:52
  SPEAKER_02: They sold it to Unico.
• 18:55
  SPEAKER_02: That royalty, they have had a ton of exploration success.
• 18:59
  SPEAKER_02: It's kind of slowly working its way up to a top 10 asset for Metalla.
• 19:03
  SPEAKER_02: Um, but that we're expecting uh uh a PFS on that in 2027, uh, with probably uh a construction decision that the following year.
• 19:12
  SPEAKER_02: Um also Copper World sanction decision and and feasibility within the next 12 months.
• 19:17
  SPEAKER_02: So a lot of different uh major catalysts on the core portfolio.
• 19:21
  SPEAKER_02: Castle Mountain also.
• 19:23
  SPEAKER_02: Um, you know, I would call kind of Castle Mountain, Takataka, Cote Gosling, Copper World kind of the cornerstone assets in the portfolio.
• 19:30
  SPEAKER_02: And we should see um catalysts across all of those four assets, which represent, call it more than half of our production growth between now and the end of the decade.
• 19:39
  SPEAKER_01: That's a lot of potential on some very good assets there.
• 19:42
  SPEAKER_01: Uh Britt Heath, thank you very much for joining me today.
• 19:44
  SPEAKER_01: Yeah, thanks, Paul.
• 19:45
  SPEAKER_01: Thanks for having me.
• 19:45
  SPEAKER_01: And once again, Metallic Royalty and Streaming trades on the Nighty American market under the ticket MTA.
• 19:51
  SPEAKER_01: We have a lot more to come from the 2026 Mining Forum Americas conference here in Colorado Springs.
• 19:57
  SPEAKER_01: So stay tuned and hit that subscribe button.
• 19:59
  SPEAKER_01: I'm Paul Harris, and this is Kitko Mining.
• 20:02
  SPEAKER_00: Kitco Mining on-site coverage of Mining Forum Americas is presented by Metalla Royalty and streaming.