After three months of continuous gains, June 2021 saw an end to the positive trajectory of the mining royalty and streaming sector, with the average share price down 4.1% this month.
Over 74% of the sector had negative share price movements in what has been a painful month for investors. The fall in the gold price from over US$1,900 per ounce at the start of the month to US$1,760 per ounce at the end of the month weighed heavily on the sector, which largely focuses on precious metals.
This month all subsets of the sector were down compared to the previous month. The Large-Tiers were the best performing subset, down an average of 1.9%, followed by the Juniors, down an average of 2.5%. The Mid-Tiers were down an average of 6.3% while the Majors were the worst performing subset of the sector, down an average of 6.8%.
Majors
Wheaton Precious Metals Corp (TSE:WPM)(LON:WPM) was the worst-performing Major this month, after being the best performer last month, down 9.2% (↑15.3% 3-months); this movement was on the back of no news flow. Despite the negative movement analyst remain bullish on the company’s prospects with it having eleven buy ratings and three hold ratings.
Franco-Nevada Corporation (TSE:FNV) was the best-performing major, down 2.8% (↑15.8% 3-months). Franco is getting a more mixed reaction from analysts with one sell recommendation, five hold recommendations and six buy recommendations.
Large-Tiers
Deterra Royalties Limited (ASX:DRR) was the best performing Large-Tier this month, up 3.9% (↑10.8% 3-months) despite no news flow. The rise could be related to the recent commencement of production at BHP Group PLC’s (LON:BHP) South Flank Iron Ore Mine, where Deterra has a 1.232% royalty. South Flank is an 80 million tonne per annum (mtpa) operation that when combined with BHP’s Mining Area C (MAC), will form the largest operating iron ore hub in the world with a nameplate capacity to produce 145 mtpa of iron ore.
Sandstorm Gold Ltd (TSE:SVC) was the worst-performing Large-Tier this month, down 10.5% (↑16.0% 3-months) despite making two significant cash flow acquisitions. The first was the acquisition of a US$30 million gold stream and royalty agreement with Vatukoula Gold Mines (LON.VGM). This stream returns fixed production for the first six years, growing from 2,280 ounces of gold per year in the first 24 months to 5,340 ounces of gold per year for the remainder of the fixed delivery period of four years, followed by a variable stream for the life of the mine.
The second was the US$108 million purchase of a royalty package on a portion of Vale SA’s (ADR) (NYSE:VALE) producing and exploration stage assets. This portfolio is expected to contribute to Sandstorm’s portfolio for several decades, including US$11–$12 million of royalty revenue in 2021.
Mid-Tiers
Altius Minerals Corporation (TSE:ALS) was the best-performing Mid-Tier this month, down 4.3% (↑13.5% 3-months) despite no significant news flow.
Nomad Royalty Company Ltd (TSE:NSR) was the worst-performing Mid-Tier this month down 9.4% (↑1.8% 3-months) despite completing two important milestones. Early in the month Nomad closed the acquisition of a 0.28% net smelter royalty (NSR) on JX Nippon Mining & Metals Corporation’s producing Caserones Copper-Molybdenum Mine, located in Chile, for US$23 million. The mine has a life of 19 years and is expected to produce an average of 148,000 tonnes of copper equivalent per annum.
Nomad also filed a NI 43-101 technical report on Blyvoor Gold’s Blyvoor Gold Mine, located in South Africa, where the company has a 10% gold stream on the first 160.000 ounces of gold within a calendar year and 5% on any additional gold production the same year. The study indicated a life of mine of 22 years with average annual gold production of 242,000 ounces of gold. The operation is currently ramping up operations and is expected to reach full capacity by the end of the year.
Juniors
Ely Gold Royalties (CVE:ELY) was the best performing Junior, and the best performing company in the entire sector, this month, up 24.2% (↑48.9% 3-months). This strong performance was on the back of news that it had entered into a definitive agreement with new market entrant Gold Royalty Corp’s (NYSEAMERICAN:GROY) (↑7.8% 1-month, ↑18.9% 3-months) to acquire all of the issued and outstanding common shares of Ely Gold at a 42% premium to the 30-day volume-weighted average price (VWAP) of Ely Shares, valuing Ely at C$295 million.
Should it close, this transaction will create a sizable Americas-focused royalty company with a robust development pipeline, including nearly 100 royalties on various production, near-production, development and exploration assets. Ely Gold intends to call a meeting of shareholders to be held in August 2021 to seek shareholder approval for the arrangement.
Nova Royalty (CVE: NOVR) was the worst-performing junior down 21.8% (↓31.8% 3-months). This was despite the company completing a very attractive royalty purchase agreement of a 1.0% net proceeds royalty on the West Wall Copper-Gold-Molybdenum Project for US$4.2 million. The West Wall Project is a 50/50 joint venture between Anglo American PLC (LON: AAL) and Glencore PLC (LON: GLEN) on a 1.9 billion tonne (0.46% Cu) porphyry deposit, located in Chile.
Vox Royalty (CVE:VOX) was down 2.7% this month (↑1.3% 3-months) despite entering into binding agreements to purchase a 0.633% net smelter returns royalty and associated advance minimum royalty payments of over C$120,000 per annum on part of Gold Standard Ventures Corp's (CVE.GSV) Railroad-Pinion Gold Project, located on the prolific Carlin Trend in Elko County, Nevada, for US$1,980,000. You can read our recent update note on this deal here.