Canada’s top-10 royalty and streaming companies

The Northern Miner presents the top-10, Canadian-headquartered royalty and streaming companies by market capitalization, as of early July 2018.

1. FRANCO NEVADA
$20.5B market cap

Franco-Nevada (TSX: FNV; NYSE: FNV) stands head and shoulders above the rest of the royalty and streaming pack, with a $20.5-billion market cap — or $3.5 billion higher than last year, and $6.5 billion more than its closest current competitor.

The company has a portfolio of 51 producing gold and gold-equivalent assets, plus 55 producing energy assets. The portfolio also holds 37 advanced gold and equivalent assets, 202 gold and equivalent exploration assets, and 25 energy assets.

Some of its long-life assets include: Cobre Panama in Panama, with a US$1.36-million investment for a gold and silver stream; Antapaccay in Peru, with a US$500-million investment for a gold and silver stream; Antamina in Peru, with a US$610-million investment for a 22.5% silver stream; and Candelaria in Chile, with a US$655-million investment for a gold and silver stream.

In the first quarter of 2019, Franco posted quarterly records for revenue at US$179.8 million, and net income at US$65.2 million.

For 2019, the company is guiding 465,000 to 500,000 equivalent oz. gold, plus energy revenue of US$70 million to US$85 million.

Franco-Nevada has had 12 consecutive years of dividend increases, and has paid out more than US$1.1 billion since its initial public offering in December 2007.

Cofounder and chairman Pierre Lassonde announced in May that he would retire as chairman at the next annual meeting in May 2020.

 

2. WHEATON PRECIOUS METALS
$14B market cap

Based in Vancouver and led by president and CEO Randy Smallwood, Wheaton Precious Metals (TSX: WPM; NYSE: WPM) is one of the world’s largest precious metal streaming companies.

Wheaton has streaming agreements for 19 operating mines and nine development projects. Its portfolio of low-cost, long-life assets include a gold stream on Vale’s Salobo mine in Brazil, and silver streams on Glencore’s Antamina mine in Peru, and Newmont Goldcorp’s (TSX: NGT; NYSE: NEM) Penasquito mine in Mexico.

In the first quarter of 2019, Wheaton generated almost $120 million in operating cash flow, driven by record gold sale volumes of 93,585 oz. gold, up 22% from a year earlier. During the first quarter, Wheaton posted net earnings of US$47.3 million on US$225 million in revenue, versus US$68.1 million and US$199.3 million in the year-ago period.

Wheaton says the increase in attributable gold production owed to its San Dimas gold stream on May 10, 2018, and its Stillwater precious metals stream on July 1, 2018, as well as higher production at Sudbury.

A decrease in attributable silver production primarily owed to the San Dimas silver stream ending May 10, 2018, and all deliveries from the Lagunas Norte, Veladero and Pierina mines ceasing March 31, 2018, in accordance with the Pascua-Lama precious metals purchase agreement.

 

3. LABRADOR IRON ORE ROYALTY
$2.2B market cap

Low-key Labrador Iron Ore Royalty (TSX: LIF; US-OTC: LIFZF) derives all its revenue from Rio Tinto’s Iron Ore Co. of Canada (IOC), and related operations. Labrador Iron holds 182 sq. km of mining leases near Labrador City. IOC leases some of this land, and pays Labrador Iron a 7% gross overriding royalty on sales of its iron ore products.

In 2018, the company recorded net income of $128.5 million on revenue of $130.9 million, versus $157.3 million on $158.6 million in 2017. All of this was before the Vale iron ore tailings disaster in Brazil in early 2019, which cut global iron ore production, and lifted iron ore prices.

On June 18, the company declared a regular quarterly cash dividend of 25¢ per common share, plus a special dividend of 65¢ per common share, payable to holders of record at the close of business on June 30, and to be paid on July 25, 2019.

In March, William H. McNeil stepped down as president and CEO, and was replaced in both positions by John F. Tuer. McNeil subsequently was appointed chairman at the company’s annual meeting, with the resignation of William J. Corcoran from that position.

 

4. OSISKO GOLD ROYALTIES
$2.1B market cap

Montreal-based Osisko Gold Royalties (TSX: OR; NYSE: OR) bills itself as an “intermediate precious metals royalty company focused on the Americas” that started activities in June 2014.

Osisko holds a North American-focused portfolio of over 130 royalties, streams and precious metal offtakes.

It says its portfolio is anchored by five cornerstone assets, including a 5% net smelter return royalty on Canadian Malartic in Quebec, which is the largest gold mine in Canada. Osisko also owns a portfolio of publicly held resource companies, including a 15.5% interest in Osisko Mining (TSX: OSK), a 33.4% interest in Barkerville Gold Mines (TSXV: BGM) and a 12.7% interest in Falco Resources (TSXV: FPC).

 

5. SANDSTORM GOLD ROYALTIES
$1.3B market cap

Vancouver-based Sandstorm Gold (TSX: SSL; NYSE-AM: SAND) was founded in 2008 by Nolan Watson and David Awram, and has since grown to encompass a portfolio of over 185 royalties, assembled through more than $3 billion in royalty acquisitions.

Sandstorm says it has “stable cash flow from 21 producing mines and a credit facility of $225 million, providing readily available capital for new acquisitions and further growth.”

For the second quarter of 2019, Sandstorm sold 16,400 attributable gold-equivalent ounces — a record for the company.

Sandstorm’s most high-profile asset is its 30% net profit interest and 2% net smelter return royalty on the advanced Hot Maden gold project in Turkey, which is being developed by majority-owner Lidya Madencilik, with an eye to first production by late 2022.

 

6. MAVERIX METALS
$621M market cap

Vancouver-based Maverix Metals (TSX: MMX; NYSE-AM: MMX) got its start as a royalty and streaming company in 2016, when it changed its name from MacMillan Minerals and acquired a 13-asset royalty and stream portfolio from Pan American Silver, and then an 11-asset portfolio from Gold Fields. More recently it added a 50-royalty portfolio from Newmont Mining.

Maverix has a portfolio of 80 royalties and streams in 16 countries, of which 13 of the underlying mines are producing, and says its “strong, cash-generating asset base and experienced team makes Maverix an opportunistic new vehicle to grow with.”

Maverix graduated to the Toronto Stock Exchange and NYSE American in June 2019, after having previously traded on the TSX Venture Exchange and over-the-counter in the United States.

 

7. ALTIUS MINERALS
$545M market cap

Altius Minerals (TSX: ALS; US-OTC: ATUSF) directly and indirectly holds royalties and streams that generate revenue from 15 operating mines in Canada and Brazil that produce copper, zinc, nickel, cobalt, iron ore, potash, and both thermal and metallurgical coal.

The portfolio also includes development-stage royalties in copper, renewable energy and a large portfolio of exploration stage projects.

Altius’s royalty interests in Canada include a 4% net smelter return royalty on Hudbay Minerals’ (TSX: HBM; NYSE: HBM) 777 copper-zinc mine in Manitoba, six potash mines and five coal mines in Western Canada, and a royalty on the Voisey’s Bay nickel-copper-cobalt mine in Labrador.

In Brazil, it has a 3.7% stream interest in the Chapada copper-gold mine.

Altius also gets regular dividend income from is equity ownership in Labrador Iron Ore Royalty Co., which is treated as iron ore royalty revenue, being a pass-through vehicle.

Altius says these royalties could generate between $67 million and $72 million in royalty revenue this year.

8. ABITIBI ROYALTIES
$156M market cap

Ian Ball-led Abitibi Royalties (TSXV: RZZ; US-OTC: ATBYF) was spun out of Golden Valley Mines (TSXV: GZZ) and listed as a public company in 2011.

Abitibi’s flagship royalty is its 3% net smelter return royalty on the eastern portion of the Canadian Malartic mine — owned and operated by Agnico Eagle Mines (TSX: AEM; NYSE: AEM) and Yamana Gold (TSX: YRI; NYSE: AUY) — which includes the Jeffrey Zone and the Barnat Extension, where production activities were expected to start in 2018 and 2020.

The royalty includes the Odyssey North discovery and other parts of the Odyssey project, as well as areas of the East Malartic property, which was a historical gold producer.

 

9. EMX ROYALTY
$131M market cap

David M. Cole-led EMX Royalty (TSXV: EMX; NYSE-AM: EMX) is a precious and base metals royalty company based in Vancouver.

Its royalty and property portfolio spans five continents, and consists of what it calls a “balanced mix of precious metal, base metal, and other assets” in countries including the U.S., Norway, Haiti, Serbia, Sweden, Turkey, Australia and Chile.

The sale of the Malmyzh copper asset in Russia’s Far East by IG Copper for US$200 million in October 2018 translated to EMX’s strategic stake in IG converting into a US$65-million, initial cash payment, and up to US$4 million from escrow.

 

10. METALLA ROYALTY & STREAMING
$124M market cap

Vancouver-based Metalla Royalty & Streaming (TSXV: MTA; US-OTC: MTAFF) says it has several positive characteristics: experienced managers; the most active royalty company, as measured by material acquisitions; positive cash flow that delivers dividends and increasing growth; the greatest exposure to silver of any publicly listed royalty company; a focus on acquiring royalties on projects operated by large producers; and a share valuation that is at a “significant discount to its peers, despite recent outperformance.”