October saw a dramatic uplift in the share prices of mining royalty and streaming companies, with the average share price up 6.9% and 88% of companies in the space experiencing a positive share price movement.
The Mid-Tiers were this month’s “star pupils” up an average of 8.5%, but the Large-Tiers were hot on their heels up an average of 8.1%. The majors were up an average of 7.1% while the juniors were up an average of 6.1%.
The 1.8% rise in the gold price and improved investor sentiment to gold-related stocks, due to increased inflation worries has all helped to drive investors back to the space.
Majors
Franco-Nevada Corporation (TSX:FNV) was the best performing Major, up 9.9% on the month (↓11.4% 3-months) despite no news flow. All eyes will be on Franco’s Q321 Results due early this month, where investors will be examining if the Company has continued to build on the positive trajectory see in the first half of the year.
Royal Gold, Inc. (TSX:RGL) was the worst-performing Major, despite being up 3.7% on the month (↓18.1% 3-months). During the month, Royal Gold updated investors on its streaming sales during the September quarter, which saw the company sell 64,300 gold equivalent ounces (“GEOs”) comprised of 46,400 ounces of gold, 556,000 ounces of silver and 2,000 tonnes of copper. These stream sales were in line with the company’s guidance range of 62,000 to 67,000 GEOs for the period.
Large-Tiers
Osisko Gold Royalties (TSX:OR), was the best performing Large-Tier for the second month in a row, up 12.5% on the month (↓7.1% 3-months), following a positive set of Q321 results. Osisko earned approximately 20,032 GEOs during Q321, excluding 2,452 GEOs earned from the Renard diamond stream. This generated around C$50.0 million of preliminary revenue during the quarter. Given the low estimated preliminary cost of sales, C$3.5 million, the Company is anticipating an impressive operating cash margin of around C$46.5 million for the period.
Osisko also concluded a transaction with a subsidiary of Barrick Gold Corporation, to acquire a 2% NSR royalty on the AfriOre and Gold Rim licenses, operated by Shanta Gold Limited (AIM:SHG, OTC:SAAGF), a 1% NSR royalty on the Frontier Project operated by Metalor SA, a private company, and a 1% NSR royalty on the Central Houndé Project operated by Thor Explorations Ltd (TSX-V:THX, AIM:THX, OTC:THXPF). Osisko acquired this portfolio for total cash consideration of US$11.75 million.
Osisko is expected to provide full production and financial update with the release of its Q321 results on the 9th November.
Labrador Iron Ore Royalty Income Fund (TSX:LIF), was the worst-performing Large-Tier this month for the second month in a row, despite its share price being up by 1.7% on the month (↓26.8% 3-months). Labrador updated investor’s on Iron Ore Company of Canada (IOC)’s Q321 operational results and lowered its guidance for FY21.
IOC's total saleable production for the nine months ending September 30, 2021 was 12.31 million tonnes, which was lower than was anticipated for the year-to-date, as a result Rio Tinto, the operator of IOC, has lowered its 2021 full year guidance for IOC's saleable production tonnage from 17.9-20.4 million tonnes to 16.2-17.9 million tonnes. Labrador will be releasing its full third quarter report after the market close on November 4, 2021.
Mid-Tiers
Nomad Royalty (TSX:NSR)was the best performing Mid-Tier this month, up an impressive 24.7% (↑13.5% 3-months). A strong Q321 saw production increase to 13,141 GEOs for the months to date, with preliminary revenues of US$19.4 million and preliminary cash operating margin of US$16.4 million.
Nomad also announced a US$95 million gold stream with Orion Mine Finance on the Greenstone Gold Project, located in Ontario. The Greenstone Project is one of Canada’s largest gold mines with 5.54 million ounces in proven and probable mineral reserves grading at 1.27 grams per tonne gold. It is expected to be a conventional large-scale open-pit operation producing more than 400,000 ounces of gold on average for the first five years, and more than 360,000 ounces of gold per year over the life of mine.
In return for its US$95 million, Nomad will receive 5.938% of gold production attributed to Orion’s 40% interest in the Project until 120,333 ounces have been delivered, and 3.958% thereafter.
Anglo Pacific Group PLC (LSE:APF, TSX:APY, OTC:AGPIF) was the worst-performing Mid-Tier this month, down 0.3% on the month (↓5.3% 3-months). This was partially due to the announcement of the sale of 1% gross revenue royalty over the Narrabri Mine to the operator, Whitehaven Coal Limited (ASX:WHC), for up to US$36 million, which is below the carrying value of approximately US$45 million based on amortised cost.
We believe that this should, however, be seen as a positive step in the Company’s evolution as it represents the business’ exit from thermal coal and it significantly improves Anglo Pacific’s carbon footprint.
The company has previously stated its new strategy focused on moving away from carbon-based energy exposure and the remaining portfolio of assets has increased its exposure to metals such as cobalt, vanadium, copper and nickel, which are expected to be essential to the energy transition in the years ahead. Anglo Pacific expect the contribution from coking coal related assets to reduce to around 8% of the group’s total portfolio contribution by 2025.
Anglo Pacific also announced a positive Q321 trading update during the month, which saw a 74% increase in quarter-on-quarter total portfolio contribution to US$23.6 million, making the total contribution for the first nine months of the year US$46.9 million, around 44% higher than the same period the previous year.
Juniors
Star Royalties Ltd (TSX-V:STRR) was not only the best performing Junior this month, it was also the best performing mining royalty and streaming company overall, up 36.4% on the month (↑23.7% 3-months), following the creation of world’s first carbon-negative gold royalty platform, Green Star Royalties.
Star has created this corporate entity to accelerate the growth of its green portfolio beyond the current limitation of its 80/20 allocation framework. Green Star Royalties positions the Company to be carbon negative by 2023. The Company’s current vision is to use existing management, infrastructure and oversight to grow Green Star Royalties as a private subsidiary until critical mass is achieved. While the initial funding of Green Star Royalties has come from Star Royalties, it plans to bring in a strategic capital partner to assist with advancing the business
Vox Royalty (TSX-V:VOX) was up 11.1% during October (↑21.5% 3-months) following a whole raft of positive updates from its operating partners, including:
- the commencement of commercial production at the Segilola Gold Mine, where Vox owns a 1.5% NSR capped at US$3.5 million
- update timeline for the preparation of the definitive feasibility study on the Pitombeiras vanadium project due in Q421, where Vox has a 1% NSR
- high-grade drilling results at the Ashburton Gold Project, where Vox holds a 1.75% gross revenue gold royalty (>250koz cumulative production)
- significant new wide, shallow drilling results from the emerging Puzzle North discovery, where Vox holds a A$1/t production royalty on part of the Kookynie Gold Project.
- high-grade drill results from the Pedra Branca platinum-group-elements project, where Vox also has a 1% NSR
Morien Resources (TSX-V:MOX) was the worst performing junior and royalty and streaming coming, down 45% on the month (↑70.6% 3-months) on the back of no news flow after being the best performing mining royalty and streaming company for two months in a row, also on the back of no news flow.