Metalla Royalty & Streaming's Re-Rating: A Precious Play on Commodity Upside?

BMO Capital Markets' recent upgrade of Metalla Royalty & Streaming (NYSE: MTA) to “Outperform” with a raised price target of C$8.00 has reignited investor curiosity about the company's prospects in a precious metals sector that's both volatile and ripe with opportunities. The upgrade, announced on June 25, 2025, comes amid a backdrop of rising gold and silver prices, strategic financial moves by Metalla, and a stock price that has lagged sharply behind its net asset value (NAV). Let's unpack whether this is a contrarian bet worth taking or a fleeting blip in a challenged sector.

BMO's Case for a Turnaround

BMO's analysts highlighted three critical factors behind the upgrade:
1. Discounted Valuation: Metalla's shares had fallen over 50% since March 2021, trading at a “meaningful discount to NAV” despite holding a portfolio of royalty and streaming assets.
2. Operational Catalysts: The second half of 2025 is expected to deliver improved cash flow as new assets—such as the restart of production at the Endeavor mine and the integration of accretive deals—come online.
3. Financial Flexibility: The company's June 24 signing of a $40 million revolving credit facility (expandable to $75 million) reduces reliance on costly debt and positions Metalla to pursue growth without equity dilution.

The price target increase to C$8.00 from C$7.00 reflects BMO's belief that these factors will finally re-rate the stock. But how does this fit into the broader precious metals landscape?

The Precious Metals Playbook: Royalty/Streaming Model Resilience

Metalla's royalty and streaming model—a niche within mining—has long been seen as a safer, less capital-intensive way to profit from rising commodity prices. Unlike miners that face operational risks, royalties (fixed percentages of production) and streams (buying future output at discounted prices) allow companies like Metalla to scale without the balance sheet strain of building mines.

This model is proving its mettle. Gold prices have risen ~15% year-to-date in 2025 amid geopolitical tensions and inflationary pressures, yet Metalla's stock has lagged. BMO argues this disconnect creates a compelling entry point, especially as the company's NAV—estimated to be significantly above its current stock price—anchors its valuation.

Recent Deals and Production Momentum

Metalla's strategy hinges on expanding its portfolio of low-risk, high-potential assets. Key recent moves include:
- A $40 million revolving credit facility with BMO and National Bank Financial, replacing a higher-cost convertible loan.
- The Endeavor mine restart, which should add ~10,000 ounces of gold annually starting late 2025.
- Smaller accretive deals, such as its 2024 acquisition of a silver royalty from the Greenside Mine, which is now entering peak production.

These moves are critical to addressing a key investor concern: Metalla's relatively small scale compared to peers like Royal Gold (RGLD) or Franco-Nevada (FNV). The upgraded credit facility, in particular, signals a shift toward growth without financial recklessness—a theme BMO emphasizes.

Contrasting with Broader Market Sentiment

While BMO sees opportunity, the broader market remains cautious. Analyst consensus remains a “Hold” with an average price target of $5.75, implying only a 59% upside from June 2025's $3.61 price. GuruFocus, however, estimates a one-year fair value of $3.47—a 3.88% downside—highlighting skepticism about Metalla's ability to execute its growth plans.

This divergence raises questions: Is the market underestimating the power of Metalla's royalty model in a rising commodity environment? Or is BMO overly optimistic about the timing of production ramp-ups and NAV realization?

Investment Considerations

• Bull Case: If gold and silver prices sustain momentum, and Metalla's new assets deliver as expected, the stock could re-rate sharply. The NAV discount (~40% below BMO's implied NAV) provides a margin of safety.
• Bear Case: Precious metals could falter if inflation eases, central banks pivot, or geopolitical risks subside. Operational execution risks—like delays at Endeavor—could also drag on cash flow.

The Bottom Line

Metalla Royalty & Streaming presents a classic value proposition: a company trading well below its asset-based valuation, with clear catalysts in 2025 to close that gap. BMO's upgrade isn't just a ratings call—it's a vote of confidence in the royalty model's resilience and Metalla's ability to scale.

For investors willing to bet on rising commodities and patient enough to wait for operational execution, MTA offers asymmetric upside. However, the stock's volatility (beta of 1.54) and the broader sector's sensitivity to macroeconomic shifts require caution. Consider a gradual build into the position, with a stop-loss below $3.00, while tracking gold's price action and Metalla's cash flow updates.

In a sector where patience is rewarded, Metalla's re-rating could be just beginning.