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Take physic, pomp

Streaming royalty companies have a date with the law of diminishing returns

This in my inbox this morning:

MONTREAL, QUEBEC–(Marketwired – Sep 16, 2014) – Osisko Gold Royalties Ltd (the “Company” or “Osisko”) (OR.TO) is pleased to announce that it has entered into an agreement with National Bank of Canada for a $100 million Revolving Credit Facility to be used for investments in the mineral industry, including the acquisition of royalties and the funding of precious metal streams. The facility may be increased by $50 million at Osisko’s request. 

The Revolving Credit Facility will be secured by the Company’s assets and will have a two-year term, which can be extended by one year. The facility is subject to initial standby fees of 0.30%. Drawn funds with base and prime rate advances will bear interest at a base/prime rate plus between 0.50% and 2.50% and LIBOR loans will bear interest at LIBOR plus between 1.50% and 3.50% depending on the Company’s leverage ratio. 

Sean Roosen, Chair and Chief Executive Officer of Osisko, noted: “We are pleased yada yada continues here.

So what happens when the larger mining sector sees one small sector of the mining world making a crapload of money?

a) It ignores the smaller sector, congratulates them, wishes them continued good luck, gets back to work on its unprofitable business model. 

b) It copies the moneymaker.

Yup, you guessed it. The OR.to news this morning is bad news for the streaming companies run by mediocrity. Yup Nolan, we be lookin’ right atcha.

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