RBC Capital Markets gave SSR Mining (SSRM.TO) a sector perform rating with a price target of US$45 after the company agreed to sell its 20% ownership stake in Hod Maden to Lidya Mines.
In exchange, SSR will receive a 4.0% net smelter return royalty. Royal Gold has the option to purchase 2.0% of this royalty for $160 million until 12 months after commercial production.
RBC projects the net impact of the transaction could reduce SSR's fair market value by a modest 1%, while it could reduce corporate net asset value by 4%.
Still, the transaction enables SSR to fully exit Turkey as an operating jurisdiction, completing the company's strategic refocus to become an Americas-only operating platform.
This is partly offset by a lingering interest in Hod Maden and no immediate cash flow from the sale.
RBC had valued SSR's stake in Hod Maden based on a projected 40% ownership post earn-in, valued at an in-situ $531 million. In comparison, the value of SSR's new 4.0% NSR would represent $238 million.
SSR at last look fell 6.7% to C$40.32 per share in Toronto Stock Exchange trading on Tuesday.
Price: $40.39, Change: $-2.82, Percent Change: -6.53%