How mining royalty stocks are doing in the bear market
As we reported last month, the downward trend in the mining and streaming royalty sector continued in June, with the average share price down 6.8% and 92% of companies mining and streaming royalties experiencing negative stock price movements.
June was the third consecutive month of declining stock prices and the average stock price is now down more than 20% in this three-month period, meaning the royalty sector is officially in bear territory.
A lack of news feeds across the board in the mining and streaming royalty sector has exacerbated the problems faced by the broader markets with, the S&P 500 down nearly 20%, the Dow Jones Industrial Average down 14% and the Nasdaq down 30%. A host of factors, led by inflation, added up to give markets the worst first half since 1970.
Investors now face the prospect of a global economic slowdown and potential recession, and as a result, we don’t expect to see a turnaround in the mining royalty sector in July.
Royal Gold, Inc. (TSX:RGL) was the best performing major in June, after being the worst performer in the previous two months, down 5.5% on the month (↓24.4% 3m ). During the month, there were no key developments at the company, but it let investors know it was embarking on a no-deal roadshow.
Wheaton Precious Metals Corp (LSE:WPM, TSX:WPM, NYSE:WPM) was the worst performer in June, down 13.1% (↓24.3% YoY) despite being named to the 2022 list of Corporate Knights of the Top 50 Corporate Citizens in Canada. Corporate Knights has been producing global company and fund rankings for 20 years.
The top 50 were selected from a pool of 332 Canadian companies, including all those with revenues over C$1 billion. Each company was assessed on a set of 24 environmental, social and governance indicators, compared to their industry peers and using publicly available information.
Within the global asset management peer group, Wheaton ranked third out of 207 global companies and within the metals and mining GICS industry, Wheaton finished ninth out of 304 global companies.
Deterra Royalties Limited was the best performing large-scale royalty company in June, down 4.9% (↓11.0% YoY), despite a lack of news feed.
Labrador Iron Ore Royalty Income Fund (TSX:LIF) was the worst performing large fund in June, down 13.2% (↓32.5% YoY), despite an 80% increase in dividend at $0.90 per share, compared to $0.50 in the previous quarter.
Maverix Metals Inc (TSX:MMX) was the best-performing midstream segment, up 1.2% in June (↓9.4% YoY), despite the lack of news feed.
Nomad Royalty (TSX:NSR) was the worst performing mid segment, down 10.7% on the month (↓1.0% 3m), also despite the lack of news feed.
Anglo Pacific Group PLC (LSE:APF, TSX:APY, OTC:AGPIF) fell 7.0% in June (↓16.9% YoY), even with the start of production at the project’s small plant Piauí Nickel in Brazil, where Anglo Pacific holds a 1.25% royalty on the project. The small-scale plant will feed into the bankable feasibility study being completed for a large-scale project.
Anglo has the option to acquire an additional 3% royalty, for an additional $70 million. Once at full production, Brazilian Nickel PLC, the operator, expects annual production of up to 24 kt of nickel and 1 kt of cobalt, potentially contributing to annual royalty income of between 12.5 and 17 US$.5 million for Anglo based on current long-term broker consensus forecasts. .
Morien Resources (TSX-V:MOX) was the best performing junior company and the best performing mining royalty company overall in June, up a staggering 93.0% on the month (↓23.9% over 3 months), following media speculation about reopening. of the Donkin coal mine, located in Cape Breton, Nova Scotia, on which Morien has a variable royalty.
Gold Royalty Corp (NYSE-A:GROY) was the worst performing junior for the month of June, down 23.7% (↓45.4% 3-month) due to lack of news feed .
Orogen Royalties Inc. (TSX-V:OGN) stock price also fell sharply in June, down 18.6% (↓20.0% YoY) despite reaching an agreement with Advance Lithium Corp. to buy 3% net smelter royalties on three potential minerals. licenses in the Lake Victoria gold fields in western Kenya.
Under the agreement, Orogen will pay Advance Lithium US$120,000 for royalties and transfer its interest in the Sarape gold project to Advance Lithium. Orogen will continue to retain a 1.5% net smelter return royalty on the Sarape project.