http://www.proactiveinvestors.com/companies/news/40368/a-good-time-to-get-into-golden-predators-shares-on-new-royalty-focus-says-broker-40368.html

A good time to get into Golden Predator's shares on new royalty focus, says broker

1:46 pm by Deborah Bacal

Jennings forecasts significant royalty revenue for Golden Predator starting in the second half of 2014, and a more than doubling in royalty revenue from 2015 to 2018.

Jennings Capital analyst Kwong-Mun Achong Low initiated coverage Thursday on Golden Predator (TSE:GPD) with a speculative buy rating and a 12-month target price of 65 cents per share, saying the gold company "re-invented" itself.

The re-invention came with the announcement that it would be spinning out its Yukon assets to focus on its royalty assets - a deal where "the sum of the parts is greater than the whole", says the analyst.

"We see significant value in the company, trading at a 57% discount to our NAV [net asset value] of 81 cents," he notes.

Achong Low adds that the assets are "on the cheap", and that he believes the quality of the royalty portfolio could attract the attention of a royalty major, where current trading multiples suggest that Golden Predator's royalty portfolio could be worth as much as $100 million - almost double its current market cap.

The analyst calls the company "as good as gold". "We are impressed with the quality of the near- mid-term royalties including those operated by Barrick Gold and by Midway Gold, a company headed by former Newmont management. We believe this reduces the financing and operational risk of the underlying assets," he says.

Jennings forecasts significant royalty revenue for Golden Predator starting in the second half of 2014, and a more than doubling in royalty revenue from 2015 to 2018.

The Jennings analyst notes that royalties are a rare commodity, as supported by the aggressive acquisition of 60% of Premier Royalty's (TSE:NSR) shares by larger competitor Sandstorm Gold (TSE:SSL) within two months of Premier forming.

"Given this scarcity and strong investor interest in the royalty space, we do not expect Golden Predator to remain undervalued for long," he concludes, adding that now is a good time to get into the stock before the wider investor base realizes the value of the company's new focus