Osisko Gold Royalties Ltd. (OR, Financial), a precious metal royalty company headquartered in Montréal, closed the last quarter of 2016 with a profit attributable to the shareholders of Osisko of $8.7 million, an 89.1% increase year-over-year, or 8 cents per share, 60% higher from the EPS of the same quarter of the prior year.
Earnings adjusted for one-time charges also increased by 7%, from $6.1 million in the last quarter of 2015, to $6.9 million in the last quarter of 2016, or by 16.67% from 6 cents per share in the last quarter of 2015 to 7 cents per share in the last quarter of 2016.
For the fourth quarter of 2016, the company also reported an increase in gold-equivalent ounces earned compared to the same period of 2015: 8,964 gold-equivalent ounces, a 10% increase on year over year basis.
For the full year 2016, the Canadian precious metal royalty company’s revenue came in at $62.7 million, a 38% increase from the fiscal year of 2015 when the company reported revenue of $45.4 million. This was a record as well as the one that the company achieved with the total amount of gold-equivalent ounces that Osisko earned during the last year: In 2016 the company earned 38,270 ounces of gold equivalent versus 30,588 ounces in 2015.
From Malartic Mine and Éléonore Mine, both located in Quebec, Osisko Gold Royalties derives most of its net revenue. The amount of ounces of gold that Osisko earned in 2016 from Malartic and Éléonore amounted to approximately 91% of the company’s total amount of ounces earned.
Canadian Malartic Mine, the largest gold mine in Canada, produced 585,000 ounces of gold in 2016. The asset is operated by Agnico Eagle Mines (AEM, Financial) and Yamana Gold (AUY, Financial), while Osisko received approximately 5% of the total production as gold royalty or 29,250 ounces of gold.
Canadian Malartic Mine has 7.1 million ounces of gold reserves. According to Agnico Eagle Mines’ guidance on gold production for 2017, 2018 and 2019, the mine is expected to produce respectively 600,000, 650,000 and 640,000 ounces of gold. While Osisko expects to earn between 30,500 ounces and 31,500 ounces of gold in 2017, 33,000 ounces of gold in 2018 and 32,500 ounces of gold in 2019.
Éléonore Mine produced 278,000 ounces of gold in 2016 and the Canadian asset is operated by Goldcorp Inc. (GG, Financial). From the Éléonore Mine’s total gold production, Osisko received a gold royalty of 2% to 3.5%.
Éléonore Mine has 4.57 million ounces of gold reserves and according to Goldcorp’s guidance on gold production for 2017, the asset is expected to produce 315,000 ounces of gold. From Éléonore Mine, Osisko will earn between 6,800 ounces and 7,000 ounces of gold in 2017.
The other two assets that generated royalties in 2016 are Island Gold (Ontario) and Vezza (Quebec).
In 2016, an amount of 83,323 ounces of gold was produced at Island Gold where Osisko gets a NSR of 1.7% to 2.55% and gold production for 2017 is expected by the operator Richmont Mines Inc. to be between 87,000 ounces and 93,000 ounces. Osisko expects to earn between 1,400 ounces and 1,600 ounces of gold from Island Gold. While from Vezza mine, operated by Nottaway Resources Inc., Osisko has a 5% NSR plus a net profit interest of 40%. From Vezza and others, Osisko expects to receive between 2,000 ounces and 3,000 ounces of gold in 2017.
At the beginning of 2017, Osisko added another asset to its portfolio of productive royalty mines: the Gibraltar mine, a silver deposit located in British Columbia and operated by Taseko Mines Ltd. The asset is expected to produce between 200,000 ounces and 350,000 ounces of silver every year over a life of mine of 23 years. The Canadian gold royalty company forecasts to earn a stream of 2,600 to 3,000 ounces of gold equivalent in 2017.
Osisko’s portfolio of assets is also composed of non-income generating royalty’s assets the company is advancing in other places in Canada.
In fiscal year 2016, Osisko generated a net profit of $42.1 million, a 46.7% increase from fiscal year 2015, or 40 cents (U.S. Dollars) per share, a 25% increase on a year over year basis.
Earnings adjusted to one time charges also increased by nearly 18% from $29 million in 2015 to $34.2 million in 2015. Adjusted earnings per share was 33 cents in 2016 exactly as reported by the company at the end of the year before.
In 2016, Osisko generated a cash flow of $53.4 million from its operations, an 84.8% increase on a year over year basis, and on March 15 it declared a quarterly dividend of 4 cents per common share. This leads to a dividend yield of 1.46%.
As of the fourth quarter of 2016, Osisko has $499.2 million in cash and equivalent.
Osisko Gold Royalties is trading at $10.94 per share with a price-book ratio of 1.30 and an Enterprise Value/EBITDA ratio of 34.58.
Disclosure: I have no positions in any stock mentioned in this article.
