Rob McEwen and Joseph de la Plante: The Different Dynamics Facing the Royalty and Streaming Space
Rob feels that royalty and streaming companies are losing their competitive edge and will now underperform the market. He compares their performance to several junior mining companies with good exploration and development stories. Juniors are often prey to streaming and royalty companies, and management needs to be careful of listening to their siren call.
Rob says, “Being in a royalty or streaming companies from 2012 until recently was a reasonable place to be.”
He compares a group of streaming companies to juniors and shows a difference of 26% in terms of performance.
Rob says, “Management is weak that sells streams and royalties they give away the profit margin, they give away the reason why investors are buying gold stocks. Investors are buying gold stocks because they think they are going higher. By using these instruments, companies are sacrificing their potential upside to investors.”
Joseph discusses how Osisko is one of the newest royalty companies. Early on, they realized that a lot of CEO’s have a negative view of royalty and streaming companies and that they can be a hurdle to industry. A lot of investment has entered into streaming companies, and the number of streaming companies has grown. Shareholders are increasingly trusting royalty companies to allocate capital to the mining sector.
Royalty and streaming companies have evolved a lot since 2007 and become more competitive, which has improved the agreements. These are very flexible compared to bank financing as almost anything can be structured into these agreements. At Osisko, they take the role of being a financial partner serious and try to share their technical expertise to help make these projects strong. Royalty companies have been an excellent investment and can be important in a companies capital structure.
Talking Points From This Week’s Episode
• Rob discusses the downsides to royalty and streaming.
• He compares there performance vs. good mining equities.
• Joseph discusses Osiskoone of the newest royalty companies.
• Osisko’s approach differs from other companies.
Time Stamp References:
0:40 – Rob royalty and streaming has lost its edge.
5:00 – Rob’s summation
5:30 – Josephs intro to Osisko Royalty
6:30 – A lot of CEO’s don’t like Royalty companies.
8:00 – Much capital has been allocated to the royalty sector.
10:00 – More competition in the streaming space.
14:30 – Frank Holmes comments and questions.
16:00 – Rob discusses why you should avoid R&S
18:30 – Rob says if you can’t afford it… wait.
21:00 – Joseph discusses some examples.
Rob McEwen is the Chairman and Chief Owner of McEwen Mining Inc. He is the founder and former Chairman and CEO of Goldcorp Inc., which is one of the largest gold producers in the world. In 1990, Rob jumped from the investment industry into the mining industry. By 1993, he had begun a consolidation of five companies that would take eight years to complete. The resultant company was Goldcorp Inc., which has become a gold mining powerhouse. During the last thirteen years of Rob being Goldcorp’s CEO, the company’s market capitalization grew from $50 million to over $8 billion, and its share price grew at a compound annual rate of 31%.
Rob is a passionate innovator, marketer, and an avid recreational competitor. He is also a member of the Dean’s Advisory Board, Schulich School of Business; X Prize Foundation: Vision Circle and Board of Trustees; Global Advisory Council; ISSCR (International Society of Stem Cell Research); CEO (Chief Executive Organization) and WPO (World Presidents’ Organization).
Rob was awarded the Order of Canada in 2007 and the Queen Elizabeth’s Diamond Jubilee Award in 2013. He holds an Honorary Doctor of Laws and an MBA from York University and a BA from the University of Western Ontario. Also, he received the 2001 PDAC Developer of the Year Award, was inducted into The Canadian Mining Hall of Fame in 2017 and won the 2018 Bryden Alumni Award for Outstanding Contribution.
Joseph de la Plante is Vice President of Corporate Development for Osisko Royalty since June 2014. Prior to this, Mr. de la Plante held the position of Senior Advisor, Investment and Corporate Development of Old Osisko since November 2010, where he played a key role in the company’s investor relations and corporate development efforts, including certain aspects of the company’s long-term financial planning.
Before joining Osisko in 2010, he was an Analyst in BMO Capital Markets’ Global Metals & Mining Investment Banking Group in Toronto, where he worked in an advisory role on merger and acquisition mandates as well as equity and debt offerings for various producing and development stage gold companies. Mr. de la Plante holds a Bachelor of Mechanical Engineering from McGill University.