Osisko Royalties reports strong deliveries, US royalty additions

Gold-equivalent deliveries received by Osisko Gold Royalties (TSX, NYSE: OR) in the first quarter of this year were ahead of the company’s expectations and higher than the ounces recorded in the fourth quarter of 2020. The Montreal-based royalty company has also added royalties in Nevada and Idaho to its global portfolio for total cash consideration of US$26 million, funded by cash on hand.

In the first three months of 2021, Osisko received approximately 19,960 gold-equivalent ounces (GEOs), recording preliminary revenues of $66.9 million with an estimated cost of sales of $20.4 million, before depletion, for a cash operating margin of 46.5 million. In the fourth quarter, Osisko earned 18,829 GEOs and, in the first quarter of 2020, received 18,159 GEOs.

“First quarter deliveries were above our expectations as our portfolio continued to perform well. We are particularly pleased with the quarter given that our GEOs grew by 6% over the fourth quarter, despite the planned deferment of ore stacking at the Eagle mine (held by Victoria Gold (TSX: VGCX)) during the winter months,” Sandeep Singh, Osisko Royalties president and CEO, said in a release.

Singh added that production from Eagle is expected to ramp up throughout 2021.

Additional production and financial details will be provided with the company’s complete first-quarter results release, scheduled for May 11.

A research note by BMO Capital Markets’ Jackie Przybylowski notes that the latest results are “broadly in line with Street expectations on shipments, revenue, and costs.” The mining analyst has a $20 per share target on the stock with a ‘market perform’ rating.

Nevada asset additions include four royalties on the prefeasibility stage heap leach Spring Valley project held by private equity firm Waterton Global Resource Management and a separate 1% NSR (net smelter return) royalty on the 20-sq.-km Moonlight exploration project, also owned by Waterton, just north of Spring Valley.

At Spring Valley, Osisko is acquiring four royalties: a sliding scale 2.5% NSR (the maximum 2.5% royalty kicks in at gold prices above US$700 per oz.) payable once 500,000 gold oz. have been recovered from the project that covers the core of the Spring Valley deposit. Adding to an existing 0.5% NSR, the royalty company now holds a 3% royalty on the core claims.

Also at the heap leach project, Osisko has added two 1% NSR royalties, for a total of 2%, on Spring Valley claims that cover the northeast part of the deposit as well as a 0.5% NSR on the broader property and add to the two 1% royalties. With these additions, Osisko’s overall NSR holding on Spring Valley has increased to between 2.5% and 3%, up from 0.5% previously. Historic resources at this open pittable project total 49 million tonnes at 0.94 g/t gold in the measured category, 80 million tonnes grading 0.79 g/t gold in the indicated category and 21 million tonnes at 0.73 g/t gold in the inferred category.

In Idaho, Osisko has agreed to acquire a 0.5% NSR royalty and a 30% precious metal offtake on Gold Mining’s (TSX: GOLD, NYSE: GLDG) low-sulphidation Almaden deposit.

This year, Osisko Gold Royalties expects to receive 78,000 to 82,000 GEOs, from a combination of royalty, stream and offtake interests. The company’s North American-focused portfolio includes over 150 royalties, streams and precious metal offtakes with a cornerstone 5% NSR on the Canadian Malartic mine in Quebec, held by Yamana Gold (TSX: YRI; NYSE: AUY) and Agnico Eagle Mines (TSX, NYSE: AEM).

For more information, visit www.OsiskoGR.com.