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Also, operating cash flow was a beat during this strong quarter for the Quebec-based firm, noted a Haywood Securities report.
Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE) had 'a solid third quarter' of 2022 with record cash margins and higher-than-expected operating cash flows, reported Haywood Securities analyst Kerry Smith in a November 10, 2022 research note.
'We recommend accumulating shares at current levels,' Smith wrote and summarized Osisko's financials for the quarter.
Best-Ever Cash Margins
The Quebec-based royalty company achieved CA$49.3 million (CA$49.3M), or 92%, in cash margins in Q3/22. This was based on CA$ 53.7M of revenue generated, reflecting a 4.1% increase from the previous quarter.
Osisko received 23,850 attributable gold equivalent ounces (GEOs). Of these, 65% were gold, 20% were silver, and 14% were diamonds. The Malartic mine stream delivered the most GEOs during Q3/22, at 31% of the total.
Total Q3/22 GEOs were up 7.2% from Q2/22 but fell short of Haywood's estimate by 3%.
'Deliveries are expected to increase incrementally through the year as Mantos and Eagle continue to ramp up toward nameplate capacity,' Smith wrote.
Management maintained guidance for full-year 2022 of 90,000-95,000 GEOs, and Haywood forecasts 90,000 GEOs. At Q3/22's end, Smith noted, Osisko was trending toward the lower end of guidance.
Cash Flow Is a Beat
In Q3/22, Osisko generated CA$44.2M in cash flow from operations before changes in working capital or CA$0.24 per share. This was more than both consensus and Haywood's projections of CA$0.20 and of CA$0.22 per share, respectively.
'For 2022, we estimate cash flow of CA$0.93 per share,' Smith wrote.
During Q3/22, Osisko paid out its CA$0.055 per share dividend. At the quarter's end, the mining company had CA$300.5M in cash, a CA$550M undrawn credit facility with a further CA$200M accordion, and CA$300M in convertible debentures that mature at the end of this year.
Significant Upcoming Events
Osisko Gold has a handful of catalysts slated to happen in Q4/22. They are a reserves and resources report on Tintic, feasibility studies on the Cariboo mine and the Windfall Lake project, and the closing of Osisko's acquisition of a silver stream on the CSA mine.
Haywood has a Buy rating and a CA$25 per share target price on Osisko Gold, the current share price of which is about CA$16.75.
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Disclosures For Haywood Capital Markets, Osisko Gold Royalties, November 7, 2022
Analyst Certification: I, Kerry Smith, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer's shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.
Important Disclosures: Of the companies included in the report the following Important Disclosures apply:
Haywood Securities, Inc. has reviewed lead projects of this company and a portion of the expenses for this travel may have been reimbursed by the issuer.
Haywood Securities Inc. or one of its subsidiaries has managed or co-managed or participated as selling group in a public offering of securities for this company in the past 12 months.