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Orogen Revenues up as Market Focuses on Key Royalty
Contributed Opinion

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Two of the juniors on Global Analyst Adrian Day's list reported year-end financial results last week, though in both cases, Day believes the financials were less important than other potential developments.

Orogen Royalties Inc. (OGN:TSX.V) reported record revenue of $8 million for the year 2023 when it released preliminary fourth-quarter and full-year financial results. This is up 70% from 2022 revenue, led by royalty revenue from Ermitaño, which was up 58% to $5.9 million, with prospect generation revenue more than doubling to $1.8 million.

After-tax net income of $1.8 million was up 114% from 2022. The fourth quarter saw Ermitaño royalty revenue up almost 100% on the prior fourth quarter, continuing a trend of higher production and revenue from that royalty. The company ended the quarter with working capital of $18.5 million and no debt.

Here, we have an unusual beast — a junior exploration company with a strong balance and positive free cash flow. However positive this is, the company's value now is being driven by its 1% royalty over AngloGold's Silicon and Merlin deposits in southern Nevada, with a resource of 13.2 million ounces.

Major Companies Want That Royalty

Clearly, a royalty like this would be very attractive to other major royalty companies who would love to acquire it. Following comments from Altius Minerals Corp.'s (ALS:TSX.V) CEO Brian Dalton earlier in the month — Altius holds a royalty of 1.5% on the project — and an arbitration scheduled for next month on Altius's royalty on a wider "area of interest," the process could get underway soon.

Clearly, any transaction on Altius's royalty would put Orogen's in play. We do not know how this will play out, of course, though we can guess at possible outcomes. Whether a large royalty company wants all of Orogen or only the Silicon/Merlin royalty, we suspect the outcome will result in a higher share price.

With the possibility the royalty will be in play soon, Orogen remains a Buy.

Vista Advances Project With New Funding

Vista Gold Corp. (VGZ:NYSE.MKT; VGZ:TSX) released its 2023 results, showing a loss of $6.6 million, 35% greater than the 2022 loss (which included a gain on a property sale). Operating expenses fell by $1.5 million to $6.8 million, however. The company ended the year with cash of $6.1 million, which included the first payment of $3 million on a $20 million royalty sale to Wheaton Precious Metals. It has now received the second of three scheduled payments.

There have been several developments on the Mt Todd project in Australia of late. As discussed, the company has completed an internal study on smaller-scale alternatives to develop Mt Todd, as well as an updated Feasibility Study. The agreement with the Northern Territory government has been extended to 2029. A new drilling program has been initiated, both to add resources to the north and to convert resources in that area to reserves. And finally, the company has published its first ESG report, something I have no doubt investors were waiting for with bated breath.

Most of this is all well and good, but what is lacking is any concrete news that an M&A transaction is in the works, the critical development that the market really wants. The company said that it "continues to host site visits and respond to inquiries" and that it remains "very focused on achieving a transaction."

We are holding.

Separately, Randy Eppler, a director of the company since 2004, died earlier this month. I have met Mr. Eppler many times over the years and have always enjoyed our chats. I recall and appreciate his broad view as well as his sunny disposition. RIP.

TOP BUYS this week, in addition to the above, include Nestle SA (NESN:VX; NSRGY:OTC), Kingsmen Creatives Ltd. (KMEN:SI), Franco-Nevada Corp. (FNV:TSX; FNV:NYSE), Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX), and Lara Exploration Ltd. (LRA:TSX.V).

WEBINAR WEDNESDAY This week, my co-host Rich Checkan and I shall be hosting guest Lobo Tiggre, editor of The Independent Speculator, as well as a good friend and Puerto Rico neighbor. Among other topics, we plan to discuss junior mining stocks, silver, and uranium. In addition to a wealth of knowledge and insight into resource markets and specific companies, Lobo has years of experience in how to be a successful speculator, as well as some of the common mistakes that many investors make. It promises to be an insightful and valuable discussion. The webinar is complimentary, but you must sign up to secure a spot; register here.

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Important Disclosures:

  1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Altius Minerals Corp., Orogen Royalties Inc., Franco-Nevada Corp., and Lara Exploration Ltd.
  2. Adrian Day: I, or members of my immediate household or family, own securities of: All. My company has a financial relationship with All. I determined which companies would be included in this article based on my research and understanding of the sector.
  3. Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found  below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. 
  4.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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Adrian Day Disclosures

Adrian Day’s Global Analyst is distributed for $990 per year by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. Publisher: Adrian Day. Owner: Investment Consultants International, Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. © 2023. Adrian Day’s Global Analyst. Information and advice herein are intended purely for the subscriber’s own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.

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