Royalty Round up, February 2021 – Important battery metals and uranium deals announced but majors and juniors still take a knock

February 2021 did not live up to expectations with the average share price for mining royalty and streaming companies down 3.4%; 76% of mining royalty and streaming companies had a negative or neutral share price movement compared to the start of the previous month. This is despite major developments last month with deals in the battery metals and uranium royalties space. These deals demonstrate that the royalty market is starting to change, with the importance of royalties over large mining and metals projects that are not in the traditional precious metals space increasing. This could well be the pivotal moment in the short history of royalty companies, where we start to see the rise of non-precious metals and diversified royalty companies. The majors were worst off last month down a massive 9% on average. Wheaton Precious Metals Corp (TSE:WPM, LON:WPM), was the worst-performing major, down 13.1% on the month (↓8.8% over three months). Early in the month, Wheaton came in at the mid-point of its production guidance, which appears to have been below investors’ expectations for 2020. Guidance for 2021 looked strong, 7%-16%-higher than those achieved in 2020, mainly driven by growth at Salobo, San Dimas and Constancia. Franco-Nevada Corporation (TSE:FNV) was down 11% on the month (↓20.2% 3-months) following its announcement of a quarterly dividend of US$0.26 per share, which was only up one cent on the same period last year. The large-tiers were the best performing subset of the peer group this month, up 1.6%, after being the worst performers in January. Labrador Iron Ore Royalty Corp (TSX:LIF) was the best performing large-tier this month, up 21.2% (↑46.8% 3-months), as iron ore prices continued to rise from US$148.42 per tonne (t) at the start of the month to its current level of US$173/t. Osisko Gold Royalties (TSE:OR) was once again the worst performing large-tier this month, down 11.9% on the month (↓9.3% 3-months). This was despite the company beating its 2020 production guidance figures, generating record revenues from royalties and streams of US$156.6m, up 12% on the previous year and reducing the interest on its debt by 1.5% per annum. Production guidance for 2021 was 18%-24% higher than in 2020, which is a substantial rise for such a large business. The mid-tiers were down an average of 0.6% this month, with Maverix Metals Inc (CVE:MMX) the worst-performing mid-tier, down 5.4% (↓4.9% 3-months). Maverix was down despite record annual sales of 28,916oz Au eq (ounces of gold-equivalent), which exceeded guidance and is an increase of 20% from 2019. Guidance for 2021 was between 6.6%-lower and 3.7%-higher than 2020, so the limited growth from the existing portfolio is probably making investors nervous. Anglo Pacific Group PLC's (LON:APF, TSE:APY) was the best performing mid-tier this month, up 9.5% (↑34.0% 3-months) following a £43mln placing and the announcement of an agreement for Anglo Pacific to acquire a company that holds a 70%-interest in a stream on cobalt production from the Voisey’s Bay Mine, located in Canada, for a cash consideration of US$205mln and further contingent consideration of up to US$27mln. This deal, once closed, will make Anglo Pacific the biggest royalty player in the battery metals space. The junior end of the mining royalty and streaming market was down an average of 4.4% this month, Empress Royalty Corp. (CVE: EMPR) was the worst performer, down 32.2% on the month, giving back some of the gains since its December 2020 initial public offering. Uranium Royalty Corp (CVE:URC) has been the best performing mining royalty and streaming company during February 2021, up a whopping 42.5% (↑137.5% 3-months). This dramatic rise follows the announcement it has entered into a definitive agreement to acquire existing royalty interests on the McArthur River and Cigar Lake Mines in Saskatchewan, Canada. If this deal closes it would be transformational for the company giving it potential cash flow from the two-largest high-grade uranium mines in the world, with a production capacity equal to 21% of global forecast uranium demand in 2021. While both operations are currently on care and maintenance, the Cigar Lake Mine closure is expected to be temporary due to the impact of COVID-19. The purchase price of US$11.5mln, payable in US$10mln cash and US$1.5mln in common shares, looks undemanding considering the quality of the projects on which the royalties cover and the importance of the operating counterparty of these assets, uranium major Cameco Corporation (TSE:CCO). Next month will be the first full month of trading for the newest listed player in the mining royalties and streaming market, Star Royalties (CVE: STRR). Star is a precious metals-focused royalty and streaming investment company that also engages in green (carbon credit) and battery metal investment opportunities. It has significant firepower having raised over C$40mln in the past 12-months and will be seeking to execute on its pipeline of deals in the months to come. Star will be focused on originating new royalty and streaming agreements where it can leverage its deep industry relationships.