Orogen Revenues up as Market Focuses on Key Royalty
Contributed Opinion

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).

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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.
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