10:15 AM EDT, 07/16/2024 (MT Newswires) -- Franco-Nevada ( FNV ) and Osisko Gold Royalties ( OR ) maintained their respective ratings and price targets at RBC Capital Markets after their joint US$750 million purchase of a gold stream on SolGold ( SLGGF ) 's Cascabel project in Ecuador, according to a Tuesday note.

Franco-Nevada ( FNV ) retained its Sector Perform rating and (US$127.31) while Osisko kept its Outperform rating (US$17.47).

RBC noted the transaction will be completed on a 70%-30% basis, with FNV responsible for

funding $525m and OR $225m. On impact, RBC sees the deal as "slightly positive". At spot prices, RBC calculates IRRs of 9% for FNV (including applicable OECD minimum taxation) and 11% for OR. It said the transaction is neutral to RBC's FNV NAV and could improve its OR NAV by near 1%.

"We view the transaction as a positive use of capital, supported by high returns for a gold stream, a higher likelihood of project advancement given Cascabel's world-class nature, and considerable potential upside available beyond defined reserves," RBC said. It added this is partially offset by the project's long timeline to production, the project's above-average jurisdiction risk in Ecuador, and buy-down provisions available on a change of control event.

RBC thinks both companies can "easily" fund this investment from existing cash on hand. It calculates that production from the asset would represent a material 8% of corporate output for FNV and 13% for OR in the project's initial five years.

Franco-Nevada's ( FNV ) share price was up 0.52% at last look to US$127.97, while Osisko's share price rose 2.23% to US$17.86, both on the NYSE.