With rising inflation likely to be a key theme for 2022, both precious metals focused and diversified mining royalty companies are likely to benefit from higher metal prices during the year.
December saw the mining royalty and streaming sector once again move into positive territory, with the average share price up 1.1%, with 62% of the sector experiencing positive share price movements.
For the year, the average share price was up 10.6%, a nice return for anyone with wide exposure to the sector, but with 50% of companies experiencing positive share price movements, stock picking has been key for investors seeking above the market returns. Of that 50% of companies that had positive share price movements, the average share price gain was 39%, demonstrating the importance of quality and not quantity.
The Mid-Tiers were the best performing subset of the sector during December, up 4.5%, as share prices in this subset recovered after dipping in November. The Majors and Large-Tiers also performed strongly up 2.8% and 2.0, respectively. The Juniors were the only subset to see the average share price fall in December, down 0.4%.
Despite the December fall, the Juniors remained the best performing subset of the mining royalty and streaming sector during 2021, up 19.1% on average. This compares to the Majors, which were up an average of 4.0% for the year, the Large Tiers, which were the worst performing subset of the sector, down an average of 3.3% and the Mid-Tiers that were up 1.7% on the year.
December
Majors
Royal Gold, Inc. (TSX:RGL) was the best-performing major, up 5.2% on the month (↑10.2% 3-months) as the company began to step up its marketing events with a non-deal virtual roadshow. The company is also in the process of changing its year-end from 30 June to 31 December to bring it in line with the other majors in the mining royalty and streaming sector, allowing investors to assess its relative performance to peers in a much more streamlined way. Royal Gold now has interests in 190 properties on five continents, including interests in 44 producing mines and 16 development stage projects.
Franco-Nevada Corporation (TSX:FNV) was the worst-performing Major for the second month in a row, up 0.6% on the month (↑6.5% 3-months) despite no news flow. Franco has had a standout year, as the best performing Major, so shareholders will forgive the slower finish to the year.
Large-Tiers
Deterra Royalties Limited was the best performing Large-Tier for the second month in a row, up 3.9% during the month (↑17.8% 3-months) following the recovery in the iron price during December. Iron ore prices rose 19% during the month, to US$112.5/t. Deterra is one of just two mining royalty companies with significant exposure to the iron ore market, the other, Labrador Iron Ore Royalty Corp, also performed strongly in December, up 3.5% (↑6.6% 3-months).
Sandstorm Gold Ltd (TSX:SAND) was the worst-performing Large-Tier, up 0.2% on the month (↑7.6%…