Orogen Sells Royalty, Rest of Company To Be Spun Off
Last week, Orogen Royalties Inc. (OGN:TSXV; OGNRF:OTCQX) announced an agreement to be acquired by Triple Flag Precious Metals Corp. (TFPM:TSX; TFPM:NYSE) in a stock and cash transaction valued at CA$2 per share. Global Analyst Adrian Day explains why he thinks this is a big win for shareholders.
Orogen Royalties Inc. (OGN:TSXV; OGNRF:OTCQX) announced it had agreed to be acquired by Triple Flag Precious Metals Corp. (TFPM:TSX; TFPM:NYSE) for CA$2 per share.
TFPM will $342 million in cash and shares (equivalent to $1.70 per share) and spin out to shareholders all assets of the company other than the Expanded Silicon Royalty.
These include a cash balance of over $20 million; a revenue-generating royalty on First Majestic Silver Corp.'s (AG:TSX; AG:NYSE; FMV:FSE) Ermita?o mine; and several other royalties on exploration projects, as well as other generative properties, 100% owned and in partnerships. The "newco" has a pro-forma valuation of 37 cents per share, which I believe is very well supported. This is a big win for shareholders, and I recommend voting in favor when the proxies are sent to shareholders.
To the extent you hold on to the Triple Flag shares received, then the transaction will most likely be tax deferred for U.S. shareholders until the shares are sold. I also recommend holding the "newco." TFPM will make an investment of $10 million into "newco" to own 11% of the company, and has entered into a generative alliance with Orogen covering much of the Western U.S., which TFPM will fund. Triple Flag shares have actually moved up (marginally) last Tuesday, so to me, Orogen is still a purchase.
At $1.80, most of your purchase price will be returned in the sale, giving a very low valuation to the spin go. Shareholders may opt to receive cash or shares, subject to the totals paid by TFPM being 50/50. The Orogen shareholder vote is expected in late 2025, with closing sometime in the third quarter.
There is a possibility of another company making a higher bid, particularly if a company believes that they will not win any bidding for Altius Minerals Corp.'s (ALS:TSX) larger Silicon royalty. Losers of that process may be prepared to pay up for the Orogen royalty. Once the transaction is complete, there will likely be some selling of the "newco" by shareholders who purchased Orogen solely for the Silicon sale. We shall be very interested in acquiring more if the price is right.
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As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Orogen Royalties Inc. and Altius Minerals Corp.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.Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.For additional disclosures, please click here.
Adrian Day Disclosures
Adrian Day's Global Analyst is distributed for $990 per year by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. www.AdrianDayGlobalAnalyst.com. Publisher: Adrian Day. Owner: Investment Consultants International, Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor's opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. (C) 2023. Adrian Day's Global Analyst. Information and advice herein are intended purely for the subscriber's own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.