U.S. private equity firm Orion Mine Finance Group is in talks to sell a portfolio of 87 mining royalty, streaming and offtake assets, Orion portfolio manager Douglas Silver said on Tuesday.
Silver declined to comment on a sales price but people familiar with the matter said the portfolio could fetch as much as US$1 billion.
The companies Orion is talking to include Toronto-based Franco-Nevada Corp, Vancouver-based Silver Wheaton Corp and Denver, Colorado-based Royal Gold Inc, said the sources, who spoke on condition of anonymity because the discussions were private. Silver declined to identify possible buyers.
The portfolio includes 71 royalties, eight streams and eight offtake agreements on gold, silver, base metals and diamond assets spread across 16 countries in North America, South America, Australasia and elsewhere, Silver said.
An offtake agreement is a contract in which one company agrees to purchase a producer’s future output.
As an alternative, Orion is also considering an initial public offering of the portfolio, the sources said. Silver declined to comment.
“Our fund has a seven-year life. At the end of 2016 we were done with investments. We are now in harvest mode,” Silver said when asked why Orion was selling the portfolio. He said the sales process was launched at the beginning of January.
The last time a large royalty and streaming portfolio was put on the market was in 2010 when Orion sold International Royalty Corp to Royal Gold, Silver said.
Vancouver-based Sandstorm Gold Ltd, Montréal-based Osisko Gold Royalties Ltd and Triple Flag, a new mining financing firm founded by former Barrick Gold Corp Chief Financial Officer Shaun Usmar, are also among the suitors in talks with Orion, said the people, who spoke this week.
Royal Gold, Silver Wheaton and Triple Flag declined to comment. Franco-Nevada, Sandstorm and Osisko did not immediately respond to requests for comment.
Orion, one of the world’s biggest mining-focused private equity firms, was founded in 2013 by U.S. mining investor Oskar Lewnowski, a founding partner of mining hedge fund Red Kite Group.
Royalties and streams are upfront payments made to miners by mining finance companies such as Franco-Nevada and Silver Wheaton, often to help fund the development of new mines.
These types of alternative mine finance have gained popularity in recent years when miners struggled to raise traditional equity and debt funding due to weak metals prices.
By John Tilak and Nicole Mordant
(Additional reporting by Matt Scuffham; Editing by Sandra Maler and Matthew Lewis)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Osisko Gold Royalties Ltd