Following the large rise in February, mining royalty shares continued to climb in March, with the average share price up 3.7%, and 56% of companies experiencing positive share price movements.
The Mid-Tiers were the best performing subset of the sector, up an average of 12.7% on the month, with the Majors up 11.3% and the Large Tiers up 5.4%. The Juniors were the only subset to see negative movement, down an average of 1%.
Majors
Royal Gold, Inc. (TSX:RGL) was the best performing major for the fourth month in a row, up 16.1% on the month (↑34.3% 3-months). During the month, the company confirmed its second-quarter dividend of $0.35 per share, while this had already been guided to by the company in November last year, Royal Gold has been participating in a number of investor events, which appear to be helping to get the message out to investors.
Franco-Nevada Corporation (TSX:FNV) was the worst-performing Major this month, despite being up by an impressive 8.8% (↑15.4% 3-months) following the publication of its annual results. Net income for the period ended December 31, 2021, totalled US$673.6 million, or US$3.52 per share, on revenue of US$1.3 billion and operating cash flow of US$955.4 million.
The production volume of 728,237 gold equivalent ounces (GEOs) for the period, including energy assets, is particularly impressive. Excluding energy assets, GEOs totalled 558,397 for the year, which is at the lower end of guidance of 555,000 to 585,000 GEOs set back in March 2021.
High iron ore prices during the year boosted Franco’s revenues from its iron ore holdings and rising energy prices resulted in its energy revenues doubling making a significant contribution to the portfolio.
In 2022 Franco is anticipating a slightly lower production profile compared to 2021, with attributable GEOs expected to range between 680,000 and 740,000, with precious metals contributing between 510,000 and 550,000 GEOs. The company then expects annual GEOs to organically increase to between 765,000 and 825,000 GEOs by 2026, of which 570,000 to 610,000 GEOs are expected to be generated from Precious Metal assets.
Large-Tiers
Sandstorm Gold Ltd (TSX:SAND) was the best performing Large-Tier this month, up 15.4% (↑30.3% 3-months), following an update that Lundin Mining Corporation (TSX:LUN) has made a discovery of a new copper-gold mineralised system called Saúva at the Chapada Project, located in Brazil. The first two drill holes at Saúva confirmed the presence of shallow high-grade copper-gold mineralisation. As of early February 2022, further drilling was completed to evaluate this potential, with a total of 47 holes defining a mineralised area measuring about 750 metres by 650 metres. Sandstorm has a copper stream agreement at Chapada.
At the Lobo-Marte Project, located in Chile, where Sandstorm has a 1.05% net smelter return royalty on the Lobo-Marte project, Kinross Gold Corporation (TSX:K) released results from a feasibility study. The feasibility study outlines 14 years of mining with two additional years of residual production for total mine production of 4.7 million gold equivalent ounces. The project is planned as an open pit, heap leach operation. Construction is estimated to begin in 2025 at the earliest, with the first production expected in 2027, subject to a positive development decision.
Sandstorm also declared the company’s second quarterly cash dividend for 2022 for C$0.02 per common share.
Labrador Iron Ore Royalty Corp was the worst-performing Large-Tier this month, after being the best performing Large-Tier for the previous two months, down 8.4% (↑11.9% 3-months), following the announcement of the results of its operations for the year ended December 31, 2021.
Net income per share for the year ended December 31, 2021, totalled $5.93 per share, which was a 67% increase over 2020. The adjusted cash flow per share for 2021 totalled $5.98 per share, which was 94% higher than in 2020, due to higher royalty revenues and increased dividends from the Iron Ore Company of Canada (IOC).
In 2021, IOC paid dividends to its shareholders of US$1,200 and had a year-end net working capital balance of $16.9 million, compared to dividends of US$450 and a year-end net working capital balance of $229.7 million in 2020. LIORC's strong financial results are mainly due to the high iron ore price environment in the first half of the year.
Rio Tinto's 2022 guidance for IOC's saleable production tonnage (CFS plus pellets) is 17.0 million to 18.7 million tonnes. This compares to 16.6 million tonnes of saleable production in 2021. Given current pellet premiums, it is expected that IOC will continue to focus on maximizing pellet production in 2022.
In March Labrador declared today a quarterly cash dividend for its shareholders of $0.50.
Mid-Tiers
Anglo Pacific Group PLC (LSE:APF, TSX:APY, OTC:AGPIF) was the best performing Mid-Tier, up 24.1% on the month (↑30.4% 3-months) following the publication of its full-year results for the year ended 31 December 2021.
The company generated US$85.6 million in revenue, up 80% from US$47.5 million in 2020, with 45% of this generated in the final quarter. Profit after tax for the year totalled US$37.5 million up from a loss after tax of US$23.9mln in 2020, which includes valuation and impairment charges and reflects a US$30.5mln valuation increase.
2021 was a transformational year for Anglo Pacific with 21st-century commodities now representing around 75% of the group’s royalty assets on the balance sheet, compared to just 32% in 2020. The company is well-positioned this year with US$120m of liquidity available to finance further growth initiatives.
The company also proposed a final dividend of 1.75p per share, which will take the total dividend for 2021 to 7p per share in line with the company’s guidance during the year.
Maverix Metals Inc (TSX:MMX) was the worst-performing Mid-Tier for the month, despite being up 2.6% on the month (↑10.1% 3-months) following the publication of its operating and financial results for the fourth quarter and year ended December 31, 2021.
Maverix achieved a fifth consecutive year of record revenue of US$57.5 million in 2021, with 32,026 GEOs sold. Cash flow from operating activities totalled US$43.2 million, with an average cash cost per GEO of US$167, resulting in a cash operating margin of 91% or US$1,629 per GEO.
Net income for the year totalled US$24.1 million, or US$0.17 per share, leading the company to increase its dividend by 25% to US$0.0125 per share.
Maverix continues to expect 32,000 to 35,000 attributable GEOs for 2022 at about a 90% cash margin with around 99% of expected revenue derived from gold and silver.
During the month the company also acquired a package of three royalties on exploration to resource stage gold projects located in Nevada from an indirect, wholly-owned subsidiary of Waterton Precious Metals Fund II Cayman, LP for US$5 million.
Juniors
Morien Resources (TSX-V:MOX) Corp. was the best performing Junior up 26.1% (↑15.0% 3-months) on the back of no news flow. Nova Royalty Corp. (TSX-V:NOVR) also performed strongly, up 11.1% (↑8.8% 3-months) on the back of no news flow.
Star Royalties Ltd (TSX-V:STRR) was the worst-performing Junior during the month, down 12.7% (↓22.6% 3-months) despite announcing that Agnico Eagle Mines Limited has agreed to purchase 14,134,620 shares of its subsidiary, Green Star Royalties Ltd., for C$14.13 million. Star’s management team and board of directors also agreed to collectively invest an additional C$1.25 million. Upon completion of the placing, Green Star Royalties will be owned 61.9% by Star Royalties, 35% by Agnico Eagle and 3.1% by management.
This announcement, which seems like a great development for shareholders, gives Star’s shareholders a senior Canadian gold mining company as a cornerstone shareholder in its subsidiary and also demonstrates a “see-through” valuation of Star’s 61.9% ownership of Green Star Royalties at C$25 million as well as creating a pathway for Green Star Royalties to grow, accelerate its ability to pursue larger green opportunities and establish a substantial pure-green royalty company that should attract capital from both generalist and ESG-focused investors.