3 Reasons to invest
The key driver for our Company continues to be our royalties at the Canadian Malartic Mine. The operators made meaningful progress on several fronts during 2018. We will review the various items that led to this progress including production start-up from the open pit, permitting of the underground resources and the successful exploration programs that took place. We believe the opportunity for additional growth remains very strong and this is due to the deeper resource potential, our expanded royalty portfolio at the mine and size of the Canadian Malartic mill, which is one of the largest processing facilities in the gold sector.
Royalty Acquisitions: Last year’s letter outlined the parameters we look for in potential new royalties. We also stated the mining sector was looking more compelling in terms of price and counter parties’ willingness to sell. However, as each of you knows, the mining sector doesn’t have a “Golden Reputation” when acquiring assets. I have also been an advocate of believing in one’s own asset versus buying. This letter will attempt to outline why these new royalties were purchased and how fair value was determined.
In 2018, Abitibi Royalties generated cash flow of approximately CDN$2.7 million (CDN$0.23 per share). This is up from approximately CDN$2.2 million in 2017 (CDN$0.19 per share). Cash flow during the first quarter of 2019 was approximately CDN$1.0 million (CDN$0.08 per share). Besides subtracting administration expenses, we have no capital obligations and are free to reinvest this cash. Most mining companies are required to reinvest in their mines in order to sustain operations, thus locking up capital. Free cash flow is the secret sauce of the royalty sector.
Canadian Malartic Mine3% NSR Odyssey and East Malartic
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