On March 8, 2018, Osisko Gold Royalties Ltd (TSX: OR) paid CAD$98 million for a 5% NSR royalty in Victoria Gold (TSXV: VIT)'s Eagle Ford gold project. Click here to read about this for yourself! Since then, the price of gold in CAD has increased by 17.1%. If VIT waited 18 months they likely would have received CAD$115 million from OR for the same 5% NSR royalty in Eagle Ford.
Interestingly, Eagle Ford's gold reserve size and production estimates are extremely similar to the Robertson gold project that Coral Gold (TSXV: CLH) sold to Barrick Gold (TSX: ABX) in mid-2017 after establishing an inferred gold resource in 2012 of 2.7 million oz. Eagle Ford has a gold reserve of 2.7 million oz and is estimated to produce 200,000 oz of gold per year with a mine life of 10 years. Based on Barrick's recently published long-term gold production estimates, we believe they are estimating that Robertson will contribute gold production of 200,000 oz per year with a mine life of 10 years.
Eagle Ford is a very close comparison to Robertson and if OR paid CAD$98 million for a 5% NSR royalty that is probably worth at least CAD$115 million today, CLH's current 1.5% NSR royalty in Robertson is currently worth an estimated CAD$34.5 million. After gold surpasses USD$2,000 per oz, CLH's Robertson NSR royalty will increase to 2.25% and will then be worth approximately CAD$51.75 million.
An enterprise value for CLH today of CAD$34.5 million will value the stock at $1.105 per share. An enterprise value for CLH in the future of CAD$51.75 million will later value the stock at $1.467 per share! The big upcoming catalysts for CLH will be when Nevada Gold Mines (the JV between Barrick/Newmont) announces their 3Q Robertson drilling update, followed by 2019 year-end drilling results, and the release of their Robertson prefeasibility study in 2020! After their 2018 drilling at Robertson found much thicker gold grades than CLH's earlier drilling had indicated, they have ramped up drilling in 2019 and devoted two-thirds of their entire Cortez exploration budget to drilling at Robertson!
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