“Gold Royalty Stock That’s Roaring” by Thom Calandra

Abitibi Royalties continues to fulfill the
promise of its Malartic properties, adjacent to Canada’s largest producing gold
mine in Quebec. The stock is nearly at $4 CAD for the first time. 

Abitibi Royalties (RZZ in
Canada) has a variety of legal and corporate developments ahead, and new
president Ian Ball will be meeting with lawyers and
often as he confers with geologists. 

Abitibi Royalties’ has legal claims against
Agnico-Eagle and Yamana Gold on the Malartic CHL property, located next to the
two’s Canadian Malartic mine. Thus far, the tiny Abitibi Royalties appears to be winning each stage of
the proceedings. 

RZZ’s parent, Golden Valley Mines, or GZZ in
Canada, owns 60-odd percent of RZZ and thus is what they call levered
or geared, to the royalty holder and CHL Malartic alliance
partner. Today, GZZ stock is nearing 20 cents CAD. 

When these legalities — which started a
few months ago — conclude, RZZ and GZZ shareholders surely will have cash in
hand from their piece of the net smelter returns from ore that will be fed into
the Canadian Malartic mill. 

The far greater valuation question is the
30 percent working interest that is part of the original Abitibi-Osisko Mining alliance. Thus far, Abitibi Royalties
has won legal stays from Quebec Superior Court regarding Yamana (AUY) and
Agnico-Eagle’s entirely pig-headed behavior in the matter. 

Of course, that behavior began with the
executives from Osisko Mining, now Osisko Gold Royalties. 

I believe we could see OR shares take a hit
because of the RZZ wins. Abitibi Royalties is contesting one Quebec ruling
that it go to an arbiter with all this. What is to arbitrate when it is all
signed, sealed and agreed upon more than three years ago?

I can say, being close to serial royalty
holder and Abitibi/Golden Valley Mines founder Glenn Mullan, that original
projections three years ago for RZZ’s Quebec holdings at Malartic were in the
range of $80 million. That’s still about $40 million north of the current
market worth. 

Mr. Ball is a former Rob
McEwen employee. Mr. McEwen
is a large shareholder and recent financier of Abitibi Royalties. Mr. McEwen
holds a quarter of the shares of his own McEwen Mining and has a conference
call scheduled for today to discuss his company’s interests in Argentina,
Mexico and Nevada. It is MUX in USA. 

Forgotten in the rush to Abitibi shares this northern hemisphere
summer are the two other companies that Mr. Mullan of Val d’Or, Quebec, created
in Canada’s first three-way spinoff from a single company — three years ago
July. 

Those are Nunavik Nickel and Uranium Valley Mines. 

Nunavikis
KZZ
in Canada. It holds title to the Fortin Property, the Marymac Prospect,
the Shoot Out Prospect and the Donnybrook and Overtime claims. 

Uranium Valley Mines is VZZ in
Canada. Uranium Valley Mines Ltd. holds a 100% interest in the Mistassini-Otish
Property, as well as a 40% interest in a joint venture uranium property in
Saskatchewan (the Beartooth Island Property). 

So we have GZZ, RZZ, KZZ and VZZ. 

VZZ — the uranium one — is the only one
in which Golden Valley Mines does not own approximately 60%. Uranium Valley
Mines has a Rob McEwen connection in that the RM/Lexam
VG group holds approx. 36%,
and GZZ holds 37%. 

RZZ, or Abitibi Royalties, is a
Quebec story that is three years in the making. I spent 2 years accumulating
it, and I spent three years writing about it and visiting it.  
 

The parent, Golden Valley Mines, has many
claims and options across the Abitibi, stretching across Quebec and other
neighboring provinces. These include nickel, diamonds, gold, uranium. 

In addition, RZZ owns title to mineral
property in Ontario. 

My takeaway at TCR: At this point, GZZ is
actionable at 21 cents CAD. Mr. Mullan is on record saying he intends to
dividend out any cash that goes into RZZ to GZZ shareholders — how is not yet
known, even I believe by him. 

“How many hours are in your day?” the
57-year-old geologist and hockey-team owner said to me Thursday. 

Owning GZZ also will give shareholders a
reach into a portfolio of properties, titles, claims and options in Canada. GZZ
also owns shares of companies with which it has formed alliances. 

Fair TCR value for GZZ is about 40 cents CAD, given
current developments. Fair TCR value for RZZ is about $8 CAD. I might sell a
portion of my approx. 25,000 shares in RZZ at $6 CAD.

The boilerplate is here: Abitibi Royalties holds a 30%
free-carried interest on the Malartic CHL Property. In addition, RZZ holds a 2%
net smelter return, or royalty, on portions of the Gouldie and Charlie zones at
the Canadian Malartic mine and full title to the Luc Bourdon and Bourdon West
Prospects in Ontario.

Actionables: We’re
entering the home stretch for this year’s landmark 40th Anniversary New Orleans
Conference. Please
come. … I have been purchasing more BioCryst Pharma (BCRX) and
more Nouveau Monde Mining (NOU in
Canada) — graphite and diamonds in Quebec. I have been selling at steep losses
Bellhaven Copper & Gold (BHV in
Canada); I own about 1 million shares still of the Colombia prospector.

THE CALANDRA
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