OR Royalties Boosts Credit Facility to $850 Million for Strategic Growth
Montréal, June 9, 2025 – OR Royalties Inc. (OR: TSX & NYSE) has secured an expanded credit facility, increasing its financial firepower to $850 million. The amended agreement, which converts the facility to U.S. dollar denomination, positions the company for strategic acquisitions and growth in the precious metals sector.
Details of the Amended Credit Facility
The amended credit facility grants OR Royalties access to $650 million, with an additional uncommitted accordion of up to $200 million. This represents a significant increase from the previous Canadian dollar-denominated facility, which had a maximum of C$550 million and an uncommitted accordion of up to C$200 million.
Interest rates on advances under the amended credit facility will be based on the Secured Overnight financing Rate (SOFR) or Canadian Overnight Repo Rate Average (CORRA) plus 1.45% to 2.75% per annum, contingent on the company’s leverage ratio. The credit facility matures on May 30, 2029, providing a four-year term for strategic deployment of capital.
Did You Know? The SOFR rate is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, providing a robust benchmark for financial institutions according to the Federal Reserve bank of New York.
Strategic Implications and Management Commentary
Jason Attew, president & CEO of OR Royalties, emphasized the significance of the expanded credit facility. “The expansion of our credit facility underscores the strength and quality of our asset portfolio and reflects the confidence in OR Royalties’ long-term growth prospects,” Attew stated. “Combined with our current cash balance, the enhanced financial flexibility provided by the upsized facility positions us well to pursue strategic and accretive growth opportunities.”
Attew also highlighted the company’s positive net cash position, a result of robust operating cash flows and disciplined capital allocation. This financial strength further reinforces OR Royalties’ ability to capitalize on market opportunities.
MAC Copper Acquisition Impact
in a separate development, MAC Copper Limited announced on May 27, 2025, a binding scheme implementation deed with Harmony Gold Mining Company Limited. Under the terms of the transaction, Harmony Australia, a wholly-owned subsidiary of Harmony, will acquire 100% of MAC Copper’s issued share capital for $12.25 cash per share.
As of june 9, 2025, OR Royalties, through its subsidiary OR Royalties International Ltd., holds 4,000,000 shares of MAC Copper. This translates to a value of $49.0 million under the acquisition terms. The all-cash acquisition by Harmony is expected to further bolster OR Royalties’ balance sheet upon closing, anticipated later this year.
OR Royalties’ Portfolio and Focus
OR royalties Inc. operates as an intermediate precious metal royalty company, managing a north American-focused portfolio encompassing over 195 royalties, streams, and precious metal offtakes. The portfolio includes 21 producing assets, anchored by a 3-5% net smelter return royalty on the Canadian Malartic Complex, one of Canada’s largest gold mines.
Credit Facility Participants
The amended credit facility was led by National Bank of Canada and includes Bank of Montréal, Royal Bank of canada, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, The Toronto-dominion Bank, Bank of America N.A. (Canada Branch), Export Development Canada, and Fédération des caisses Desjardins du Québec.
| Metric | Value |
|---|---|
| Total Credit Facility Size | $650 million |
| Uncommitted Accordion | Up to $200 million |
| Total Availability | Up to $850 million |
| Maturity Date | May 30,2029 |
| Interest Rate | SOFR/CORRA + 1.45% to 2.75% |
What impact will this expanded credit facility have on OR Royalties’ future acquisitions?
How will the MAC Copper acquisition affect OR Royalties’ financial strategy?
Understanding Precious Metal Royalties
Precious metal royalty companies, like OR Royalties, provide upfront financing to mining companies in exchange for a percentage of the revenue or production from a mine. This model offers diversification and reduced operational risk compared to direct mining operations. The royalty model has gained traction as a flexible financing solution in the mining industry, allowing companies to fund projects without diluting equity or taking on debt with restrictive covenants according to Investopedia.
The market capitalization of royalty and streaming companies has grown substantially over the past two decades, reflecting the increasing acceptance and understanding of this business model. These companies often trade at premium valuations due to their lower risk profile and consistent cash flow generation.
frequently Asked Questions About OR Royalties
- What is a net smelter return (NSR) royalty?
- A net smelter return royalty is a percentage of the revenue a mine generates after deducting refining and transportation costs. It is a common type of royalty agreement in the mining industry.
- What are the primary risks associated with investing in royalty companies?
- Risks include fluctuations in commodity prices, operational challenges at the underlying mines, and changes in regulatory environments. However, royalty companies generally have lower operational risk compared to mining companies.
- How does OR Royalties generate revenue?
- OR Royalties generates revenue through its portfolio of royalties, streams, and offtakes from producing mines. The company receives a percentage of the revenue or production from these mines.
- What is the significance of OR Royalties’ positive net cash position?
- A positive net cash position indicates that OR Royalties has more cash and liquid assets than debt, providing financial flexibility and stability.
disclaimer: This article is for informational purposes only and does not constitute financial advice.Consult with a qualified financial advisor before making any investment decisions.
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