Streaming firms reward shareholders with rising dividends on strong Q1 earnings

VANCOUVER (miningweekly.com) – Shareholders of some of the most prominent Canadian precious metals streaming firms have been rewarded with rising dividends on the back of strong first-quarter earnings results.

Precious metals streaming deal pioneer and the largest player in this specialist sector, Wheaton Precious Metals (WPM), has reported a 14.2% year-on-year rise in first-quarter headline earnings to $69.95-million, or $0.16 a share. The result, which typically excludes special items, was on the mark with average analyst forecasts.

Revenue for the three-month period rose 0.7% to $199.25-million, as silver sales rose 21.4% to 6.34-million ounces, but gold sales fell 20.8% to 69 973 oz. WPM said the decrease in gold sales volume was mainly owing to the result of negative changes in the balance of payable gold produced, but not yet delivered to the company, coupled with the decreased production levels at the Minto and Sudbury mines.

Attributable silver output climbed 11.7% to 7.42-million ounces, mainly owing to sharply higher output from the San Dimas mine, which was partially offset by the expiry of the Cozamin silver purchase agreement on April 4, 2017.

WPM declared a quarterly dividend of $0.09 a common share, reflecting an increase of 29% relative to the comparable period in 2017.

WPM also announced on Thursday that it has now closed a new silver purchase agreement with First Majestic Silver on the San Dimas mine, in Mexico, following its acquisition of Primero Mining that also closed on Thursday.

Further, WPM reported that a mid-September 2019 date has been set down for a two-month hearing in the Tax Court of Canada regarding its ongoing dispute with the Canada Revenue Agency.

Metals streamer Franco-Nevada reported record adjusted profit of $63.9-million, or $0.34 a share, comfortably beating analyst forecasts for earnings of $0.27 a share, on revenues of $170.05-million.

In the event, attributable sales came to $173.1-million – a new record.

The company reported that the 115 671 oz of gold equivalent sold in the quarter was lower than the comparable period a year earlier, as a 17.9% drop in Latin America output weighed on the consolidated performance.

Franco-Nevada said it funded the additional precious metals stream on the Cobre Panama project, in Panama, for $356-million on March 16. The company now has exposure to all of the precious metals to be produced from the Cobre Panama project.

Further, the company finalised the purchase of a royalty portfolio in Delaware, which represents the western portion of the larger Permian basin in Texas for $101.3-million on February 20. The royalties are derived principally from mineral title which provides a perpetual interest in royalty lands. The transaction has an effective date of October 1, 2017. Revenue in the quarter included $1.3-million from the Delaware royalties.

Franco-Nevada increased its quarterly dividend from $0.23 a share to $0.24 a share – a dividend increase for the eleventh consecutive year, the company noted.

On Wednesday, gold royalty company Sandstorm Gold reported record revenue of $19.5-million, which was an improvement on the the $18.8-million reported in the same period a year earlier. Attributable output fell more than 1 000 oz to 14 685 oz year-on-year, pushing up the average cash cost to $276/oz, resulting in an operating margin of $1 050/oz, up from costs of $258/oz and a margin of $952/oz in the first quarter of 2017, respectively.

Net profit fell to $400 000, compared with $7-million a year earlier, as it booked a $4.5-million noncash impairment charge related to the Gualcamayo royalty and a decrease in the gains recognised on the revaluation of the company's investments.

Based on Sandstorm's existing royalties, attributable gold equivalent production for 2018 is forecast to be between 53 000 oz and 60 000 oz. The company is forecasting attributable gold equivalent production of 125 000 oz/y by 2022.

Meanwhile, Osisko Gold Royalties said last week it has doubled operating cash flow to $23.3-million in the first quarter – up 94% year-on-year.

Net earnings were down 42% to C$2.3-million, or C$0.01 a share.

Attributable production came to 20 036 oz of gold equivalent, which was in line with the 2018 guidance.

The company generated cash flows from operating activities of $23.3-million, a record which represents a 94% increase over the first quarter of 2017.

The company said it has recorded cash operating margins of 91% from royalty and stream interests, maintaining the highest margin in the metals and mining sector, and generating C$29.5-million in addition to a cash margin of C$2.4-million from offtake interests.

As at April 30, the company held C$205-million in cash and cash equivalents and $382-million in equity investments.

The company said it is looking forward to significant organic growth in the portfolio, with the Eleonore, Renard, Brucejack and Amulsar projects all ramping up or close to production. The company expects that attributable output will double in the next five years.

Osisko distributed C$7.8-million in dividends to shareholders through the fourteenth consecutive dividend payment, bringing the total to C$62.9 million since inception in 2014.