Q: What is your opinion on merger between EMX and ELE? I have a small starter position, wonder with the merger will have any positive impact on share prices?
5i Research Answer:
Both stocks have done very well this year, and as a result are hardly cheap. But in the sector, investors afford a higher valuation for larger companies, and thus we think the potential for continued gains is certainly there, assuming the sector continues to do well. The combined company will have more diversification (16 paying royalties) and higher revenue ($80M). It will also have 200 total royalties for future growth. There are some synergies and it is accretive to cash flow overall. We would consider it a good move by the companies.