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Osisko (OR) Reports Q2 Preliminary Revenues and Margins

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Osisko Gold Royalties (OR - Free Report) reported an 11% year-over-year increase in attributable gold equivalent ounces (“GEOs”) in the second quarter of 2023. Preliminary revenues from royalties and streams were disclosed at $60.5 million, which marks a 17% increase from last year’s quarter.

Attributable GEOs earned during the quarter were around 24,645. The figure includes 1,527 GEOs earned from the recently acquired CSA silver stream (in June 2023), Revenues from this stream will be recognized in the third quarter of 2023.

Preliminary cost of sales (excluding depletion) increased 16% year over year to $4.3 million in the second quarter. The cash margin in the quarter was $56.2 million, indicating 18% growth from the year-ago quarter. The cash margin was 93%, in line with the second quarter of 2022.

In the first quarter of 2023, OR earned 23,111 GEOs, an increase of 27% from the first quarter of 2022. Revenues from royalties and streams had improved 18% year over year to $59.6 million. Adjusted earnings per share were 18 cents, up 20% from 15 cents in the year-ago quarter. The company had also hiked its dividend by 9%.

Based on this solid performance in the first quarter and expected growth in deliveries over the year, backed by ramp-ups at some of its core assets and the closing of the CSA transaction, the company had stated that 2023 is likely to be a record year.

Update on Canadian Malartic Mine

Osisko Royalties also provided an update on the Canadian Malartic Complex which includes the Canadian Malartic Mine (the second largest operating gold mine in Canada) and the Odyssey Mine. OR has a 5% net smelter return (“NSR”) royalty on the Canadian Malartic mine.

The mine's operator, Agnico Eagle Mines (AEM - Free Report) recently disclosed findings of its internal study on the Odyssey underground mine and exploration results from the Canadian Malartic Complex.  Per the findings, a 23% increase in life-of-mine payable gold production from the Odyssey mine is currently expected, compared to a previous study in 2020.

The study also suggests an extension of the mine life to 2042 that includes approximately 9 million ounces of gold, including 0.2 million ounces of gold in mineral reserves, 4.8 million ounces of gold in indicated resources and inferred resources of 4.0 million ounces of gold.

AEM continues to expect 40,000 tons per day of excess mill capacity starting in 2028 as the processing of open pit ore and low-grade stockpiles gradually decreases and transitions to the higher-grade Odyssey underground mine commence. This additional mill capacity provides significant optionality for organic growth at Canadian Malartic and a greater land package.

Recent Acquisitions

Osisko Gold recently increased its silver stream percentage in the long-life Gibraltar copper mine to 87.5% from the prior 70%. The mine, located in British Columbia, Canada, is operated by Taseko Mines Limited’s wholly-owned subsidiary. Taseko currently owns an 87.5% stake in the Gibraltar mine. Osisko and Taseko have also extended the step-down silver delivery threshold. This is in sync with Taseko’s recently updated mineral reserve estimate for Gibraltar.

Osisko Gold also entered into a binding agreement to acquire a 1.0% copper NSRs royalty and a 3.0% gold NSR royalty from Hot Chili Limited for a total cash consideration of $15 million. This pertains to Hot Chili’s Costa Fuego Copper-Gold Project in Chile.

Price Performance

In the past year, shares of Osisko Gold Royalties have gained 42.3%, compared with the industry’s 14.4% growth.

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Zacks Rank & Other Stocks to Consider

Osisko Gold Royalties currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are L.B. Foster Company (FSTR - Free Report) and Koppers Holdings Inc. (KOP - Free Report) . FSTR sports a Zacks Rank #1 (Strong Buy) while KOP carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

L.B. Foster has an average trailing four-quarter earnings surprise of 140.5%. The Zacks Consensus Estimate for FSTR’s fiscal 2023 earnings is pegged at 53 cents per share. The consensus estimate for 2023 earnings has been unchanged in the past 60 days. Its shares have gained 7.7% in the last year.

The consensus estimate for KOP’s current-year earnings has been stable over the past 60 days. The consensus estimate for current-year earnings for KOP is currently pegged at $4.40 per share, reflecting an expected year-over-year growth of 6.3%. Koppers’ shares have rallied roughly 54% in the past year.

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