At first glance, it appears that September brought an end to the summer sell-off, with the average share price of mining royalty and streaming companies up 0.6% but this belies the fact that 70% of the sector experienced negative share price movements during the month. September was a month during which, the many fallers were offset by just a few large gainers.
The large number of falling share prices was not exclusive to the mining royalty sector, with Wall Street posting its worst month since the start of the COVID-19 Pandemic, with the S&P 500 down 4.8% for the month.
Investors are concerned that the political impasse in the US regarding the debt ceiling could lead to a Governmental debt default. These fears were echoed by the US Treasury Secretary, Janet Yellen, who warned of a potential economic catastrophe if the US Congress did not raise the debt limit. Current estimates determine that the US Treasury will run out of cash in October this year, and global markets stand on a knife-edge.
The Majors were the worst performing subset of the sector this month down an average of 13.9%. The Large-Tiers faired a little better, down an average of 13.0%. The Mid-Tiers were down 6.4% while the Juniors were the only subset to finish the month in positive territory, up 8.4%.
Majors
Franco-Nevada Corporation (TSX:FNV) was the best performing Major, in relative terms, down 10.9% on the month (↓10.5% 3-months). The company went ex-divi on the 14th of September and this may perhaps be responsible for at least part of this month’s fall.
Wheaton Precious Metals Corp (LSE:WPM, TSX:WPM, NYSE:WPM) was the worst-performing Major, down 16.6% on the month (↓14.7% 3-months), with investors seeming to take little comfort from the company’s investor day on the 22nd of September.
Large-Tiers
Osisko Gold Royalties (TSX:OR), was the best performing Large-Tier, down 8.1% during September (↓18.0% 3-months), after announcing that it had spent C$18.5 million, between January and August 2021, buying back 1,267,666 common shares. The buyback policy represents the Board’s opinion that the intrinsic value of the Company is not properly reflected in the market price of its common shares. Through a combination of buybacks and dividends, Osisko has now returned over C$35 million to shareholders this year.
Labrador Iron Ore Royalty Corp, was the worst-performing Large-Tier this month down 20.0% on the month (↓25.0% 3-months) despite declaring a quarterly cash dividend of $2.10 per share, an increase of 20% on the previous quarter and an increase of 367% on the same period last year.
A dramatic 25% fall in the iron ore price is likely to have had a big impact on Labrador’s share price as its principal assets are a 15.10% equity interest in Iron Ore Company of Canada and a 7% gross overriding royalty and a 10 cent per tonne commission on all iron ore products produced, sold and shipped by the Iron Ore Company of Canada.
Mid-Tiers
Nomad Royalty (TSX:NSR) Company Ltd was the worst-performing Mid-Tier during September, down 14.8% (↓21.0% 3-months). The closure of a US$125 million revolving credit facility, with an option to increase to US$150 million seems to have already been factored in by investors and the company appears to have been dragged down by the market’s negative movement.
Maverix Metals Inc (TSX:MMX) was the best performing Mid-Tier, down 2.8% on the month (↓17.1% 3-months). Maverix has made some exciting progress on two fronts this month, first increasing its revolving credit facility by US$40 million to US$160 million. Then secondly, acquiring a US$50 million gold stream from Auramet Capital Partners, L.P, one of the largest physical precious metals merchants in the world.
Juniors
Morien Resources (TSX-V:MOX) was the best performing Junior and best performing mining royalty and streaming company for the second month in a row, up 103.8% (↑202.9% 3-months), this is despite the second month of no news flow.
Uranium Royalty Corp, also performed well this month up 24.7% (↑18.4% 3-months), after entering into contracts for three additional spot purchases totalling 300,000 pounds of U3O8 at an average cost of US$38.17 per pound U3O8.
Following completion of these deliveries, the Company will hold 648,068 pounds U3O8 at a weighted average cost of US$33.10 per pound. Based on a spot price of US$45.00 per pound the Company has seen a US$7.7 million increase in the net realizable value of its physical uranium holdings. With C$80 million in cash, marketable securities and physical uranium the company is well-positioned for the coming months.
Empress Royalty Corp (TSX-V:EMPR, OTCQB:EMPYF). was the worst-performing junior this month, down 20.8% (↓26.0% 3-months). The share price performance is surprising as the Company has just increased its stream interest in the producing Sierra Antapite Gold Mine, located in Peru. A further investment of US$2.5 million see’s Empress increases its stream on the project to 3.375% from 2.25% and the Company is expecting to generate significant revenue next year. Empress is also currently in discussions with several financial groups to provide a debt facility, after ceasing discussions with Accendo Banco regarding a potential debt financing.