logo-loader

Royalty round-up: The sector comes roaring back

Published: 12:54 07 Mar 2022 GMT

Wheaton Precious Metals Corp -

After dipping during January, February saw mining royalty and streaming companies come roaring back with the average share price up 7.9%, the biggest-one month rise since April 2021.  Around 72% of mining royalty and streaming companies experienced positive share price movements during an upbeat month for the sector.

The majors were the best performing subset of the sector, up an average of 13% on the month. The Large-tiers were up 11.3%, Mid-tiers up 8.7% and the Juniors up an average of 5.6%.

Majors

Royal Gold, Inc. (TSX:RGL) was the best performing major for the third month in a row, up a staggering  19.8% on the month (up 21.6% three months). The company is moving to a calendar year-end reporting system to bring it in line with the other majors, so this month it published its six-month transition period accounts.

Net income for the period ended December 31, 2021, totalled US$138.3mln, or US$2.10 per share, on revenue of US$343mln and operating cash flow of US$248.8mln. The production volume of 191,300 gold equivalent ounces (GEOs) for the period, exceeded the Company’s top end of the revised guidance range of 180,000 to 190,000 GEOs and 73% of revenue came from gold, 11% from silver, 12% from copper.

Royal Gold also increased its dividend for the 21st consecutive year to $1.40 per share, a 17% increase over the prior year, and as a result, it has been included in the S&P High Yield Dividend Aristocrats Index, and is the only precious metal company in this index.

Royal Gold is well funded for future acquisitions with its full $1 billion revolving credit facility, undrawn and available, combined with working capital of $154.6mln, Royal Gold has total available liquidity of approximately $1.2 billion.

Royal Gold expects to issue guidance for 2022 GEO sales during the second quarter of 2022.

Wheaton Precious Metals Corp (LSE:WPM, TSX:WPM, NYSE:WPM) was the worst-performing major for the second month in a row, despite being up by 8.3% on the month (up 4.5% three months). Wheaton met its production guidance for FY21 coming in at 750,220 GEOs, right in the middle of its guidance range of 735,000 to 765,000 GEOs.

Wheaton also provided guidance for FY22 with production of 700,000 to 760,000 GEOs with a 5-year annual average to FY26 of 850,000 GEOs and a 10-year annual average of 900,000 GEOs, though an acquisition completed later in the month meant these numbers have already been revised up.

During the month the Company entered into a definitive precious metal purchase with Sabina Gold & Silver Corp. for a gold royalty on the Goose Project, located in Nunavut, Canada. The Goose Project is forecast to be a high margin mine in the lowest half of the gold cost curve with a 15-year mine life.

Wheaton will invest US$125mln in return for 4.15% of the payable gold production from the mine dropping to 2.15% of the payable gold production from the Mine after delivery of 130,000 ounces of gold and dropping to 1.5% of the payable gold production from the Mine after delivery of 200,000 ounces of gold.   

As a result of this acquisition, Wheaton increased its ten-year production guidance to 910,000 GEOs from 900,000 GEOs. 2022 and five-year guidance remain unchanged.

Wheaton also made a positive commitment to achieve net-zero carbon emissions by 2050. As at September 30, 2021, Wheaton had approximately US$372mln of cash on hand US$2bn available through a revolving term loan and ongoing operating cash flows, which means Wheaton is also well funded to make additional acquisitions.

Full production and financial details will be included with the release of its 2021 fourth quarter and full-year results on Thursday, March 10, 2022.

Large-tiers

Labrador Iron Ore Royalty Corp was the best performing large-tier for the second month in a row, up 17.1% on the month (up 26.4% three months). While the company had no news flow during the month, the ongoing recovery of the iron price is helping to buoy the stock.

From a low of US$92/t in November last year, the iron ore price has now risen 55% to US$143/t.

Deterra Royalties Limited was the worst-performing large-tier this month, remaining flat during the month (up 7.7% three months). The Company posted its half-year results for the period ending 31 December 2021, with revenue of A$92.8mln, an NPAT of A$61.7mln and EBITDA of A$88.7mln, giving the company a sector-leading margin of 96%.

The fully franked interim dividend of 11.68 cents per share represents 100% of NPAT, which is great news for investors. Deterra, also announced that it had refinanced its existing facility, increasing the total credit limits from A$40mln to A$350mln, giving it the ability to act flexibly on value accretive acquisitions.

Mid-tiers

Altius Minerals Corporation (TSX:ALS) was the best performing mid-tier, up 21.5% on the month (up 32.9% three months), after updating investors on the new mineral exploration discoveries relate to its Chapada 3.7% copper stream interest and its Silicon 1.5% net smelter return royalty interest.

Lundin Mining announced initial drill results from a new high-grade copper and gold discovery, Saúva, which is located approximately 15 kilometres north of the current mining and processing area at its Chapada operation and on lands that are subject to Altius’s royalty interest. Results include:

  • Hole FOR-113: 55.48 m at 0.88% Cu and 1.15 g/t Au or 1.72% CuEq, from 6.52 m, including: 27.26 m at 1.30% Cu and 1.89 g/t Au or 2.68% CuEq, from 33.74 m
  • Hole FOR-115: 65.45 m at 0.61% Cu and 0.70 g/t Au or 1.12% CuEq, from 23.55 m, including: 18.41 m at 1.26% Cu and 1.92 g/t Au or 2.66% CuEq, from 50.43 m
  • Hole FOR-123: 64.25 m at 0.72% Cu and 1.10 g/t Au or 1.51% CuEq, from 158.45 m, including: 43.25 m at 0.90% Cu and 1.52 g/t Au or 2.01% CuEq, from 158.45 m and: 70.40 m at 0.42% Cu and 0.11 g/t Au or 0.50% CuEq, from 248.70 m

The initial copper and gold grades at Saúva are significantly higher than the current ore being processed at Chapad, and Saúva remains open for expansion in all directions. As delineation and other evaluation work continue and Lundin Mining will consider implications of the discovery related to its ongoing expansion studies at Chapada, with these potentially including options for new dedicated processing facilities for Saúva or the incorporation of ore trucking to the existing mine processing facilities.

At the Silicon Project located near Beatty, Nevada, AngloGold Ashanti (ASX:AGG) announced a maiden inferred resource of 3.37mln ounces of gold. AngloGold also announced its plans for the project to form part of a consolidated regional development strategy, which highlighted the potential for more than 300,000 ounces of gold production per year beginning in approximately three years.

Nomad Royalty (TSX:NSR) Company Ltd was the worst-performing Mid-tier for the second month in a row, despite being up 1.6% on the month (down 6.8% three months) following the announcement of its Q421 preliminary results.

Nomad achieved GEOs production of 3,231 during Q4 2021 and 16,372 for the full year 2021 (14,870 for 2020). Revenues totalled US$6.8 mln during Q4 2021 and US$27.2mln for the year (US$26.8mln for 2020). Net loss attributable to Nomad's shareholders totalled US$2.5mln for Q4 2021, and US$1.7mln for the year (net income of US$20.1mln for 2020). Nomad had US$12.4mln of cash as at December 31, 2021, but raised C$42.5mln in the beginning of January 2022.

During 2022, Nomad expects attributable royalty and stream sales to total 23,000 to 27,000 GEOs, rising to 60,000 GEOs by 2025, assuming the start of operations at the  Greenstone and Platreef Mines in 2024 and Cortez complex's Robertson Deposit in 2025.

Juniors

Trident Royalties PLC (AIM:TRR) was the best performing junior for the second month in a row and the best performing royalty company overall this month, up 27% (up 33.8% three months). Trident received royalty payments of US$357,000 during Q421, but this is expected to increase in Q122, as material ore tonnage was mined and stockpiled from the royalty zone at the Koolyanobbing iron ore mine in Q421, this material is expected to be sold over the coming quarters. As a result, Trident only a nominal royalty payment for the fourth quarter but with sales anticipated to increase materially in Q122.

Trident also received its inaugural revenue under the acquisition from a portfolio of gold offtakes post-quarter end on 14 January 20229 following the handover of operational control from Orion. Regular shipments and sales are now occurring with the offtakes well-positioned to capitalise on current macroeconomic volatility.

The Mimbula copper royalty generated a payment of US$375,000 for the quarter based on the Minimum Payment, this increases to US$500,000 per quarter in 2022 and US$750,000 per quarter for the first two quarters of 2023. First gold production is also anticipated from Lincoln Gold Project in Q122, so is a bust start to the year for Trident.

Empress Royalty Corp (TSX-V:EMPR, OTCQB:EMPYF). also had a strong month, up 16.4% (up 10.3% three months). Empress has a diversified portfolio of 17 investments focused on precious metals. Empress is already generating around US$2.2mln in cash flow from its 4.5% stream on the Sierra Antapite Gold Mine, where an expansion is expected to increase production by 25%. Alongside this, the company has two development stage projects that are anticipated to be in production within the next couple of months and another one, expected to come online in Q222.

Empress has published revenue guidance of US$5.6mln to US$6.3mln for FY22, US$9.3mln to US$10.6mln for FY23 and US$12.8mln to US$14.8mln for FY24, all from its existing portfolio. Would expect to see Empress build on this as the company has a robust pipeline and is currently evaluating over US$75mln of potential investments.

Electric Royalties Ltd (TSX-V:ELEC, OTC:ELECF) was the worst-performing junior during January, down 9.5% (down 13.0% three months) despite publishing NI 43-101 technical report on the Middle Tennessee Mines, Tennessee, where the company has a sliding scale gross metals royalty.

Oriole Resources outlines 2023 achievements and future exploration plans

Oriole Resources PLC (AIM:ORR) CEO Tim Livesey and chief financial officer Bob Smeeton join Proactive's Stephen Gunnion with details of the company's 2023 financial and operational performance. Livesey highlighted successful exploration programs in Cameroon, at the Bibemi and Mbe projects,...

1 hour, 4 minutes ago