According to the latest research note from National Bank of Canada Capital Markets (NBCCM), Elemental Royalty Corp. (TSXV:ELE) is poised for significant long-term growth following its completed merger with EMX Royalty Corporation. Analyst Shane Nagle, CFA, has resumed coverage with an Outperform rating and a new target price of C$27.50, representing an estimated total return of 32.6%.
This merger marks a transformative step for Elemental Royalty, transitioning the business into an emerging intermediate player in the precious metals royalty space. The deal added immediate scale and diversification, with the combined company now boasting 200 total royalties, including 16 currently producing assets.
In Nagle’s words, “The merger with EMX improves the near-term growth outlook and adds additional scale, helping to support improved FCF generation.”
Merger Benefits and Portfolio Highlights
The EMX transaction was structured as a share exchange, with EMX shareholders receiving 0.2822 ELE shares per EMX share. This move brought long-life, cornerstone assets into the fold—namely Timok, Caserones, and Gediktepe—which now account for approximately 49% of the total Net Asset Value (NAV).
With the inclusion of EMX’s portfolio, ELE’s forecast five-year compound annual growth rate (CAGR) in gold-equivalent ounces (GEOs) has improved from -2% to 12.6%, a remarkable reversal reflecting the benefits of portfolio scale and diversification.
Key producing and development assets now include:
- Timok: A major copper-gold royalty in Serbia with production forecast to exceed 8,500 GEOs/year by 2030.
- Caserones: A long-life copper asset in Chile, where ELE now holds a 1.3036% NSR, contributing roughly 4,000 GEOs annually.
- Gediktepe: A Turkish polymetallic deposit delivering over 4,000 GEOs/year, with milestone payments expected in 2028 and 2029.
Collectively, four cornerstone assets (Timok, Karlawinda, Caserones, Laverton) represent 47% of NBCCM’s NAV model.
Robust Financial Position
The company’s financial position is also robust. Following the merger, Tether Investments, Elemental’s largest shareholder, invested an additional US$100 million via a private placement. Tether now owns approximately 32% of shares outstanding, reinforcing long-term strategic support for Elemental’s ambitions.
ELE is expected to end the year with US$40 million in cash, no debt, and US$50 million in available liquidity, which NBCCM believes could be expanded further thanks to improved cash flow generation and scale.
Full-Year Financial Outlook
NBCCM projects strong financial momentum through 2026, driven by the expanded asset base. Key projections include:
FY2026E Highlights:
- Revenue: US$85.9 million
- Adjusted EBITDA: US$65.9 million
- Adjusted Net Income: US$32.8 million
- GEO Production: 21.5k ounces
- Free Cash Flow: US$54.6 million
- Adjusted EPS: US$0.58
Notably, ELE currently trades at 1.02x NAV, a discount to its Junior royalty peers (1.22x) and Intermediate peers (1.56x), indicating potential valuation upside as the company scales up.
In Closing
Elemental Royalty Corp. has quickly repositioned itself as a stronger, more diversified player in the royalty sector through its transformative merger with EMX. With key cornerstone assets driving production growth and the backing of a major shareholder like Tether Investments, the company is well-placed to lead further consolidation in the junior royalty space.
As Analyst Shane Nagle notes, “Support from its largest shareholder (Tether), provides access to low cost forms of capital increasing the probability of additional diversification of the portfolio through either asset acquisition or further consolidation of the Junior royalty space.”
With a compelling growth outlook, improved cash flow generation, and undervalued relative positioning, Elemental Royalty looks well on track to deliver for shareholders over the coming years.
