How to Value a Gold Royalty

On December 8, 2021, Great Bear Resources was acquired by Kinross Gold for CAD$1.8 billion.

On July 11, 2022, Great Bear Royalties was acquired by Royal Gold for CAD$199.5 million, which owned a 2% NSR Royalty in the Great Bear Resources Dixie Project.

Great Bear Royalties was acquired for 11.083% of the valuation of Great Bear Resources for a 2% NSR Royalty valuing the royalty 5.54X higher than an equal amount of Great Bear Resources stock.

EarthLabs (TSXV: SPOT) owns a 0.2% NSR royalty covering New Found Gold (TSXV: NFG)'s highest grade Keats and Lotto Zones and an average royalty of 0.5% for the entire Queensway Project. If we go with 0.3% for the purpose of valuing this royalty and multiply by 5.54, SPOT's NFG royalty is worth 1.662% of NFG's enterprise value of CAD$855 million. This values SPOT's NFG royalty at CAD$14.21 million.

SPOT had CAD$33.58 million in positive working capital as of September 30th.

SPOT received a CAD$24 million cash payment in October for selling its GoldSpot AI technology to ALS.

SPOT owns CEO.ca which they previously acquired for CAD$12.783 million.

SPOT's current market cap is somehow only CAD$30 million.

We previously told you SPOT's GoldSpot AI technology for discovering gold sounded too-good-to-be-true and is nothing compared to a great geologist like the late David Lowell.

Most SPOT shareholders believed in this magical AI technology for discovering gold that didn't work (although ALS thought it was worth $24 million). SPOT is insanely undervalued because the SPOT shareholders who believed in the magical AI gold spotting technology have given up on the stock.

NIA which was previously bearish on SPOT when it was trading for $1+ per share became bullish on SPOT for the first time in history on Thursday at $0.20 per share recognizing the overlooked value of their remaining assets.

Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. This message is meant for informational and educational purposes only and does not provide investment advice.