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Golden Valley Mines: Like Buying Abitibi Royalties At A Significant Discount


  • Golden Valley Mines is a hybrid of royalty company and project generator.
  • Its current enterprise value equals approximately 60% of the market value of its shareholdings.
  • Its main asset is a 44.8% equity stake in Abitibi Royalties.
  • The market assigns no value to the other assets.

The gold mining sector includes various kinds of companies. Some of them are focused directly on gold production, the aim of some of them is only to find a feasible gold deposit, develop it to an advanced stage and sell it to another company. There are also royalty and streaming companies that provide capital in exchange for share on gold production of other companies. There are also project generators, companies that stake a huge number of prospects, realize only the early exploration programs, and seek a majority partner that will finance the rest of exploration and development costs. And there are also companies that combine several of the above-mentioned characteristics. One of them is Golden Valley Mines (OTCQX:GLVMF).

Golden Valley Mines holds a major equity stake in Abitibi Royalties (OTCPK:ATBYF), Val-d'Or Mining Corporation (OTCPK:VDOMF), and International Prospect Ventures (OTCPK:URANF). It also owns a 15% free-carried interest and a 3% NSR royalty on the Lac Barry project, 4% NSR (excluding gold) royalty on the Cheechoo project, and 100% of the Centremaque project. And it has a 70:30 joint-venture with Eldorado Gold (EGO) on 9 properties in Quebec and Ontario.

Shares of Abitibi Royalties are Golden Valley Mines' main asset. Golden Valley owns 44.8% of the royalty company with a market capitalization of $204.83 million. Abitibi Royalties' cornerstone asset is a package of royalties related to the Agnico Eagle Mines (AEM) and Yamana Gold (AUY) -owned Canadian Malartic mine. Abitibi owns a 3% NSR royalty on the Odyssey, East Malartic, Jeffrey and Barnat zones, a 2% NSR royalty on the Gouldie and Charlie zone, 1.5% NSR royalty on the Midway project and 15% carried net profit interest on the Radium property.

Source: Abitibi Royalties

Abitibi's strategy is to acquire royalties on land packages adjacent to major producing mines. As can be seen above, it

This article was written by

Peter Arendas profile picture

Peter Arendas is an associate professor at the University of Economics in Bratislava. He has over 15 years of investing experience. Peter specializes in covering small and mid-cap companies in the resource sector with an in-depth insight into the precious and industrial metals royalty & streaming industry.

Peter is the leader of the investing group Royalty & Streaming Corner where he offers in-depth analysis of long-only investment ideas, actionable research, model portfolios, discussions of the latest news, and direct access for questions in chat. Learn More.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (69)

Sorgenfrei profile picture
We haven't heard from Matt Geiger in a long time.

I'll post the report from January 26 (MJG Capital).


As always, well worth reading.
What are your thoughts on Altius mineral corportatio, and also Labrador Iron ore corp.
Peter Arendas profile picture
I would be cautious at Labrador, as in my opinion, the iron ore prices won't be able to maintain their current levels in the mid- to long-term. Altius looks much better, it is well diversified. I like also their exposure to renewable energies.
Just reading the latest Abitibi presentation.

- Compounded average growth rate of 89.4% (amazing) over the last 6 years.

- Buyback of shares..reduced sharecount below 12.5m now

- Over 67m in cash and shareholding’s vs mkt cap of 287m

- 1/4ly dividend introduced

- 30 royalties

- share consolidation done

- new listing to generate a wider audience

- NO debt

........all of this available at a huge discount to net asset value, by buying Golden valley shares.

This is the easiest investment decision I’ve ever made..buying more in the morning,tony
I like everything about it except the price. I have been selling my RZZ above 22 CAD. Where is the cash flow going to come from to justify the high price? Illiquidity works both ways, if another selloff should be able to pick up cheap shares as I did in March.
Sorgenfrei profile picture
Golden Valley Mines $GLVMF after 1:10 share consolidation has now new institutional shareholders: Sprott Asset Management, Resource Capital Investment and Exploration Capital Partners.

They own jointly 15,08% of Golden Valley and therefore 6,5% of Abitibi Royalties $ATBYF.

Who are the sellers, open market?

I think it`s positive with this low share count, look at yesterdays down day.

More corporate activity coming?

Matt Geiger profile picture
Good eye but this looks like it may be a filing mistake from the Sprott funds. Notice how the ownership jumped just after the 10 for 1 consolidation. Also there wasn't enough volume traded in recent weeks for such a large position to be amassed.
Ten for one consolidation coming....expect a name change in another few months. I’m hoping these moves will raise GZZs profile and get them onto money managers radars,t
Appreciate the article. I'm in for a medium term hold.

Abitibi up 10.59% today... so mkt cap of US$ 200m.... which gives Golden valleys 44.8% stake a value of near US$ 90m....nice holding for a company with a current mkt cap of US$ 63m! Looking forward to the share consolidation and wider audience that will come from new listing,t
hulubalang profile picture
You are moving the market Peter. GV shares up over 10% yesterday. Still undervalued based on the company's Abitibi Royalties stake, not to mention the rest of GV's assets. Odd to see the share price ramp up like this just before a reverse split.
Peter Arendas profile picture
I wish, I had such an impact :D
It's probably only a technical question. The gold price was up and GV share price was just below a resistance level. After the share price broke the resistance at 0.46, it jumped up to 0.48.
hulubalang profile picture
The new GV share price should be around $6 after the 1:12 consolidation. That opens opportunities for financing and fund investments. Looks like GV (with the same management as Abitibi Royalties) may be getting into the royalty business in its own right. That's good news and another reason to hold on to your GV shares here.
Peter and fire2ball:Thks. Just wondering.
No mention of the possible 1 for 12 reverse split!
Peter Arendas profile picture
It must be agreed upon by the shareholders first.
Matt Geiger profile picture
Nice article Peter. While it still needs to be voted upon, I expect the reverse split will go ahead as planned. Important to note that there won't be a financing in association with the split, which is not usually the case when junior mining co's consolidate shares. The higher share price will give GZZ the option to list on a major US exchange if/when appropriate.
Great article from Pete Panda! I see the reverse split as a positive because it is to gain a Dual Listing in the US. Other companies like (USAS) Americas Gold & Silver and (EQX) Equiniox Gold also did reverse splits to get their dual listing and it has worked out well for them. I've been following Golden Valley for a long time (since Glenn spun out Abitibi Royalties as GZZ is the mother ship) , and believe the NSR on the JVs like Bonterra's Lac Barry, Siros Cheecho, and O3 Mining's Centremaque will be the icing on the cake.
I pointed that out over at ceo.ca a number of times including January of this year. Cheers! ceo.ca/...
The missing link in these analyses is tax. There should be a discount due to embedded capital gain. Diottica has interesting solution.
Matt Geiger profile picture
Valid point. While there are more tax efficient ways to go about things, I've confirmed with company that were they to sell all of their RZZ shares for cash tomorrow, the effective tax rate would be 13.25% at current federal/provincial tax rates. This doesn't factor in GZZ's non capital loss balance of ~C$8m which gets subtracted from the tax bill... so the effective rate will be lower than the 13.25% number.
It is unlikely that Golden Valley will sell their position in Abitibi Royalties anytime soon, as GZZ is the company that spun out and birthed RZZ, IZZ, and VZZ. Glen usually appears with Ian at pressers and big events and obviously keeps close tabs on things.
I'm more interested to see if a larger royalty company like Maverix, Metalla, Sandstorm, or Osisko tries to backdoor into Abitibi Royalties by taking over Golden Valley. I could see Osisko being able to pull that off for the access to Malartic.
One solution might be for Abitibi Royalties to acquire Golden Valley and cancel part of its own shares thus acquired. Also keep all the Royalties it wants and sell off the remaining parts.
@Peter Arendas Thanks for bringing Golden Valley to more peoples attention. Even though it has been around not many have heard of it. With the main players in the Royalty space becoming so well known investors are looking for something new.
Apologize for spelling at end of first sentence (“& nbsp”)speech recognition glitch
Appreciate the article! 

Any news if golden valley doing consolidation / reverse stock split ( like metalla ) to enhance value , etc.?
@kalalau @Etienne Pouliot Nomad comes out with over 500 million shares last Friday and Golden will reverse split with only 130. Interesting.
hulubalang profile picture
I've held Golden Valley for over a decade. It has been undervalued for most if not all that time. I received Abitibi Royalties shares as a spin-off from GV some years ago (along with Val-d'Or and International Prospect Ventures). After all these years, I do have a nice gain my Golden Valley shares (especially after the recent appreciation). However, the Abitibi Royalties shares I received are worth far more than my initial investment in Golden Valley so can't complain. It would be nice if GV shares were fully valued. I don't know if/when that will happen.

Golden Valley and Abitibi Royalties belong to the same business group. They share the same management so I think they would resist any hostile effort to take over GV. It's an odd situation considering the persistent discount on Golden Valley shares.

Abitibi Royalties looks great, nice tight share structure, Rob McEwen owns 11%, management another 10%, plus the company holds a pile of Yamana and Agnico Eagle shares. The Malartic NSR provides steady income, about $4M per year last time I checked; that should increase with improving PM prices.
@hulubalang nice you have been in Golden Valley that long.
I have held Golden Valley for more than two years, buying at support and selling at resistance. However, since the March Swoon, I have been keeping the portion financed by "house money" as I think the stock is a no-brainer in the long run. Thank you for an excellent article that high-lights the excellent value of this stock.
Cheers Peter, good article, kudos for the Matt Geiger credit...after Blackham, Golden Valley is my largest axe....i'm very happy to have a 40% discounted way, to access such a leveraged pool of quality assets...IF i get taken out in a buyout from a predatory large tier, i'll bank the immediate 50% premium and move on..but i'd prefer them being left alone and just keep being conservative with their approach, to a volatile and leveraged sector, this stock defines the phrase NO BRAINER,t
04 Jun. 2020
Interesting, thank you. Would love to see more value ideas like this.
Sorgenfrei profile picture
@Peter Arendas
thanks for your article, much appreciated!
I agree, Golden Valley is very undervalued.
I think Abitibi Royalties $ATBYF could be the object of desire.
Glenn Mullan would likely ask for a significant premium to the value of the $ATBYF shares before he even considers an offer and Golden Valley $GLVMF usefully acts as a shield against a potential hostile takeover of Abitibi.
The Abitibi shares are in strong hands and an acquirer has to go to Golden Valley and pay a hefty premium. The other way is to buy Golden Valley first, but there is also strong insider ownership (up from 21% to now 29%). Osisko Royalties $OR (a potential acquirer) now own, I think, 6% of $GLVMF.
A takeover bid should come to both companies with a big extra charge and for us shareholders also.
An catalysator for share price advance of $GLVMF could be the recently announced share consolidation and the listing on US markets for bigger attention and shareholder base.
The longterm chart looks interesting.
Kind regards
If OR buys GZZ I am out as soon as I get the OR shares...
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