ROCKLINC Investment Partners Inc. on OR Royalties Inc.
Thesis
ROCKLINC favors gold royalty and streaming businesses as asset-light beneficiaries of its forecast for higher precious-metal prices over the next three to five years. OR Royalties reported preliminary third-quarter attributable production of 20,237 gold equivalent ounces and approximately $90.2 million in royalty and stream revenue. An approximately 96.8% cash margin illustrates the superior economics of a royalty model without direct mining operating costs. Share repurchases, selective royalty acquisitions and substantial liquidity reinforce the manager’s view that these companies can compound value while limiting operating risk relative to mines.
“OR Royalties (formerly Osisko Gold Royalties) delivered strong preliminary Q3 results with 20,237 attributable gold equivalent ounces”
Key risks
- Gold-price volatility created significant quarterly swings.
- A firmer U.S. dollar and rising real yields pressured gold late in the quarter.
- Royalty cash flows still depend on underlying mine production and metal prices.