(Kitco News) - The drop in commodity markets is unlike past drawdowns, said Metalla Royalty & Streaming CEO Brett Heath.
Last month Heath spoke to Kitco at the Gold Forum Americas show in Colorado Springs.
Metalla (NYSE:MTA) is a six-year-old royalty and streaming company. The company has 70 assets in its portfolio including IMAGOLD's and Sumitomo's Cote, Equiniox Gold's Castle Mountain and Oz Minerals Centrogold. The company has a market capitalization of roughly $250 million.
The precious metal sector has had a tough year. Gold hit a multi-year low and the gold miner index (GDX) is off 20% year to date. Heath finds the pace of the drawdown unusual.
"It's interesting because we haven't had a crash. Usually in [a] market like this, it involves some type of crash, but this has kind of been just a slow-motion drawdown of equity and prices," said Heath.
One plus is that the balance sheets of the mid-tiers and senior gold miners are healthy, barring more bouts of inflation. Recent precious metal highs were a boon for miners.
Heath said that the sector is under-invested, which has created "...some incredible opportunities, some very significant asymmetric bets."
Heath was asked about the status of Cote. Earlier this year IAMGOLD reported that the project was over budget. The cost blow out resulted in executive churn. In August IAMGOLD reported that the project needs another $1.25 billion to wrap up work. Heath admitted the project is facing challenges, but it will be an "incredible asset" once it is running.
"It's about 60% complete. They still need to raise quite a bit of capital to be able to complete it, but the key is that it is going to be an incredible asset," said Heath. "How many places in good jurisdictions...can you find a project that's got north of 20 million ounces? There's very very few of them."
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