The start of 2022 saw the average share price for companies in the mining royalty and streaming sector fall by 3.0%, with 60% of companies experiencing negative share price movements.
The Large-Tiers were the best performing subset of the sector during January, down 1.2%. The Juniors came next down 2.9%, with the Majors and Mid-Tiers down 4.6% and 4.1%, respectively.
Royal Gold a shining light among the majors
Royal Gold, Inc. (TSX:RGL) was the best performing major for the second month in a row, down 3.5% on the month (↑2.6% 3-months). The company provided an update on its December 2021 quarter with 61,700 gold equivalent ounces (GEOs) sold and an inventory of 26,000 GEOs. The cost of sales for the quarter was about US$407 per GEO. As of December 31, 2021, the company owned interests in 190 properties on five continents, including interests on 44 producing mines and 17 development stage projects.
Wheaton Precious Metals Corp (LSE:WPM, TSX:WPM, NYSE:WPM) was down 6.1% on the month (↓0.2% 3-months). This is despite entering a US$175.5 million definitive precious metal purchase agreement with Adventus Mining Corporation for the Curipamba Copper Project, located in Ecuador.
Under the agreement Wheaton will purchase 50% of the payable gold production from Curipamba, dropping to 33% for the life of mine once 150,000 ounces of refined gold have been delivered; and 75% of the payable silver production referenced from Curipamba, dropping to 50% for the life of mine once 4.6 million ounces of refined silver have been delivered.
Adventus anticipates construction activities to begin in late-2022, with commissioning and commencement of mine operations in 2024. The operation is expected to produce an average of 17,000 oz of gold and 551,000 oz of silver per year for the first five years of production and the operation has an initial 10-year open-pit mine life and the potential to transition into an underground mine after the exhaustion of the open pit.
Large-tiers lead the way
Labrador Iron Ore Royalty Corp was the best performing Large-Tier up 4.3% on the month(↑9.3% 3-months) following a quarterly operational report from Rio Tinto, which included Iron Ore Company of Canada (IOC) production and sales information.
Labrador owns a 15.10% equity interest in IOC and receives a 7% gross overriding royalty and a 10 cent per tonne commission on all iron ore products produced, sold, and shipped.
During the fourth quarter of 2021, IOC had total saleable iron ore production of 4.26 million tonnes, comprised of 2.54 million tonnes of pellets and 1.72 million tonnes of concentrate with total iron ore sales of 4.60 million tonnes, comprised of 2.91 million tonnes of pellets and 1.68 million tonnes of concentrate. Rio Tinto also released IOC's 2022 production guidance (pellets and concentrate) of 17.0 to 18.7 million tonnes.
Osisko Gold Royalties (TSX:OR) the worst-performing Large-Tier down 9.8% on the month (↓12.5% 3-months) despite achieving record cash margins in its December quarter preliminary results. Osisko earned about 19,830 attributable GEOs in the fourth quarter, for a total of 80,000 GEOs in 2021, in line with its annual guidance of 78,000 – 82,000 GEOs.
The company achieved preliminary revenues of C$50.7 million during the fourth quarter at a preliminary cost of sales (excluding depletion) of C$3.7 million resulting in a very large cash margin of some C$47.0 million, or 93%, which is a quarterly record for the company.
Osisko also signed a non-binding term sheet with Osisko Utah LLC, a wholly-owned subsidiary of Osisko Development Corp, concerning a US$20-40 million metals stream on the high-grade Trixie Mine, located in Central Utah.
Mixed mid-tiers
Anglo Pacific Group PLC (LSE:APF, TSX:APY, OTC:AGPIF) was the best-performing Mid-Tier during January, up 2.5% (↑16.8% 3-months) following a trading update for Q421. The company generated royalty and streaming income of US$38.15 million during the quarter and US$85.21 million for the financial year, an 80% uplift on fiscal 2020 (FY20). This was a second consecutive quarterly record – 61% more than the previous record of US$23.6 million in the third quarter of 2021 (Q321) and more than double the US$15.0 million in Q420.
In addition, Anglo Pacific announced the appointment of Marc Bishop Lafleche as chief executive officer, with effect from 1 April 2022, succeeding Julian Treger. Bishop Lafleche has been with Anglo Pacific for eight years, most recently as chief investment officer responsible for originating and executing the group’s acquisitions and disposals. He led the group’s most recent and transformational Voisey’s Bay cobalt stream acquisition and the successful exit of Anglo Pacific’s only thermal coal royalty.
Nomad Royalty (TSX:NSR) Company Ltd was the worst-performing Mid-Tier this month after being the best performer last month, down 16.8% (↓15.3% 3-months) after closing a C$42.5 million bought deal. Funds from the placing will be used to support the recently announced acquisitions of streams on the Greenstone Gold Project and the Platreef Palladium-Rhodium-Platinum-Nickel-Copper-Gold Project, as well as for general corporate purposes.
Busy month for Juniors
Trident Royalties PLC (AIM:TRR) was the best performing Junior during January up 9.7% (↑10.5% 3-months) after a busy month following several exciting developments including, the close of the US$69.75 million acquisition of a portfolio of producing gold offtake streams from Orion Resource Partners.
This portfolio is expected to generate around US$13.3 million during 2022 as ramp-up and expansions occur at the Blyvoor and Los Filos gold mines, respectively. This is expected to increase to US$14.3 million per year between 2023-2026, settling thereafter to an expected average annual revenue of US$6.3 million from 2027-2035.
Trident also into an agreement to acquire an indirect 1.5% gross royalty over the Sonora Lithium Project in Mexico from the estate of Colin Orr-Ewing. Under the agreement, Sonoroy Holdings Limited, a joint venture company in which Trident holds a 50% interest, has the right to acquire the royalty for a total consideration of US$52 million in cash (US$26 million attributable to Trident).
Trident is paying a deposit of US$2.5 million with the balance to be paid upon completion of the transaction, expected to occur in early-2023, following a favourable resolution of a dispute between the estate and Bacanora.
Bacanora is challenging the validity of the 3% royalty over the MSB concessions within the Sonora Lithium Project, payable to the Orr-Ewing Estate, and is seeking to overturn a judgment of the Court in Alberta, which dismissed Bacanora's challenge in 2021 on the basis that the action by Bacanora was time-barred. On 21 September 2021, Bacanora filed a notice of appeal in respect of the judgment, which Trident believes will be heard and determined in 2022.
Star Royalties was the worst-performing Junior during January, down 12.9% (↓10.0% 3-months) despite two exciting developments. The first was the execution of an additional definitive royalty purchase agreement and gross revenue royalty agreement with Elizabeth Metis Settlement (EMS).
Under the agreement, Star Royalties will acquire an additional 27% gross revenue royalty on EMS’s revenue share from the creation and sale of carbon offset credits from forested lands located in EMS in Alberta, Canada, for an additional consideration of C$600,000 in cash. Star Royalties now owns an effective 40.5% gross revenue royalty on the EMS Forest Project.
The company also announced the execution of a definitive royalty purchase agreement and gross revenue royalty agreement with MOBISMART Mobile Off-Grid Power & Storage Inc. to acquire a 2.5% gross revenue royalty on all current and future gross revenues and any potential business divestment revenues generated by MOBISMART for a total consideration of C$300,000 in cash. MOBISMART is a private company that specialises in mobile solar power generation systems with integrated battery storage.