Osisko Gold Royalties Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 11, 2023

There are 8 speakers on the call.

Operator

Morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q1 2023 Results Conference Call. After the presentation, we will conduct a question and answer session. Please note that this call is being recorded today, May 11, 2023 at 10 am Eastern Time. Today on the call, we have Mr. Sandeep Singh, President and Chief Executive Officer and Mr.

Operator

Frederic Ruel, Chief Financial Officer and Vice President, Finance. And I would like to turn the meeting over to your host for today's call, Mr. Sandeep Singh.

Speaker 1

Good morning, everybody. Thanks for being with us. It's myself and Fradouella, as you just heard, that are going to be walking you through the quarter, an excellent start to the year for us. So happy to be giving you that update. The presentation is available on the website as well as through the webcast as of this quarter.

Speaker 1

So hopefully you have that in front of you and we'll be referring to page numbers as we go through things. Starting perhaps with Slide 3. As I said, an excellent start to the year. On the left hand side there, all those High level metrics have already been released. And again, Fred will walk you through some of the more specifics And a second, over the quarter, we continue to build up cash and decided to share some of it By increasing our dividend by just over 9%, we've said it over and over that we continue to prioritize returns to shareholders And look for opportunities to do that and find the right balance in doing that.

Speaker 1

So very happy to kind of hit the button On another increase, after a small hiatus where we were more active on the buyback. So that's positive as well. Very happy to add nominate Norman McDonald to our Board of Directors, phenomenal individual, Phenomenal resource investor in the space for 25 plus years, who many of you would have known through his prior work, Whether at Invesco or Teachers or Butel Goodman among other places. So a phenomenal addition When he joins in due course after the AGM, and look forward to having him on the team, but also want to thank Charlie Page, He was reaching the tail end of his tenure based on our policies and decided not to stand for election. He's been Great steward for the company since the creation of a Cisco royalties and the tail end of the Cisco ONE days.

Speaker 1

So thank him for his contributions And look forward to adding Norm to the team. Norm would make the 7th new Board member in the last circa three and a half years as part of our Board renewal process and again strong addition to the team. So with that, I'll pass it on to Fred for the first section to walk you through the quarter and then I'll pick back up a little bit later on. So Fred, over to you please.

Speaker 2

Thank you, Sandy.

Speaker 3

Good morning. Thank you for joining us today. I'll be brief. The numbers speak by themselves. Let's start with some highlights on slide 3 of the presentation.

Speaker 3

Slightly above 23,000 GEOs in Q1 2023, an increase of 27% over the Q1 of 2022. Revenues of $59,600,000 compared to $50,700,000 in Q1 of last year, which translated into cash flows from operations of $45,500,000 compared to $40,500,000 last year. Our cash margin was stable at 93%. We have repaid an amount of €15,000,000 on our revolving credit facility. And despite that repayment, we ended the quarter with a cash balance of €119,000,000 compared to €91,000,000 on December of last year.

Speaker 3

On Slide 4, we present our GOs by asset and by commodity. Gold represented 65% of our GOs in the first Quarter silver 22% and diamonds and other commodities 13%. On Slide 5, We present the growth in our revenues and our operating cash flows mostly as a result of increased deliveries under our royalty On slide 6, net earnings were $20,800,000.11 per share compared to $16,800,000 or $0.10 per share last year. Adjusted earnings were 32 point $6,000,000 or $0.18 per share compared to $24,800,000 or $0.15 per share in Q1 of 2022. On slide 7, we have a summary of our quarterly results in details including 23 On Slide 8, we have a breakdown of our cash margin.

Speaker 3

The cash margin from our royalties reached $39,000,000 the cash margin from our streams amounted to $16,500,000 for a total in Q1 of €55,500,000 compared to €47,500,000 last year. And on Slide 9, We have a summary of our balance sheet position, our cash balance stood at €119,000,000 We held equity investments Valued at €494,000,000 the revolving credit facility was drawn by €124,000,000 for a net debt position of €15,000,000 at the end of Q1 compared to $57,000,000 at the beginning of this quarter. Our available credit under the revolving credit facility was And finally, as a result of our strong margins and cash flows, We increased our quarterly dividend by 9% to $0.06 per share starting this quarter. I will now turn the call back to Sandeep for a company review of our assets and the near term catalysts.

Speaker 1

Thanks very much, Fred. So look, I will be brief, not going through all of these slides. I realize today is a busy day for most people. And some of these slides you're used to seeing from us. I will pick out a few things that happened during the quarter that I think are relevant And talk about and then make way for questions as soon as possible.

Speaker 1

In doing so, I'll skip past slides 11 and 12 If you're following on the deck and pause on Slide 13 for a second to talk about Canadian Malartic. So Overall, in the quarter, I would say a little bit lighter in terms of our deliveries from Malartic in Q1, Certainly made up by other assets overall, that great quarter that Fred just walked you through. I think some of that has to do with just the underground, the first stopes in the underground being later in the quarter than expected. The first production blast at Odyssey South was in late March. Agnico, our partner, is expecting 50,000 ounces of underground contribution this year.

Speaker 1

Other progress includes the shaft sinking, which has now commenced. So good progress there overall. And we expect good news over the course of the year. I would remind people that from a global perspective, Yes, throughput has been reduced down from circa 60,000 tons to 51,000, 51,500 tons per day By Ignico intentionally to kind of optimize the transition now that the last truck of ore has come out of the Canadian Malartic pit And mining has transitioned completely to the Barnett pit and the underground. We hope that that transition back to full run rate Is in the near term.

Speaker 1

I think they last talked about it being 2024, early 2024. We'll See how that progresses, but overall, still a phenomenal asset doing phenomenal things for us. That's on the day to day side. More in terms of the future of the asset, you've heard us talk about it. You're hearing some of those same updates, which are phenomenally important for us in terms of Filling the mill, growing the resource, looking at new mine plans.

Speaker 1

So in terms of the rest of this year, it's amazing that we're already in May, but Looking forward to that update, a site visit by Agnico that's being run, which many of you probably will be on in June. So looking for the exploration update and kind of broader update that accompanies that event. And then later in the year, the new study, which will hopefully start to fill in some of the puzzle pieces with respect to how exactly that mill and that complex Are going to be optimized and maximized. So a lot of good news, a lot of news. We expect that news to be good Touching on some of the other core assets, starting with Mantos, a good quarter overall, I'd say at Mantos, we saw Capstone, our partner, talk about some preventative maintenance that they undertook in Q1 to increase reliability.

Speaker 1

Over the quarter, throughput averaged just over 16,000 tons a day versus just over 15,000 tons a day in Q4. Importantly, there was good signs of that progress in February where the average was 19,000 tonnes a day. So I think we're getting there, our partner is getting there. And importantly, in our last discussions and in their last public disclosure, they talked about expectations to get to that steady state consistently And I'm quoting now in the very near future. So hopefully that maintenance that was undertaken in Q1 sets them up for a strong At Eagle, it was a good quarter, a good Q1, just shy of 38,000 ounces produced versus 24,000 ounces in the same period last year.

Speaker 1

So the Q1 where they ramped up to stacking year round. So and I think they showed that they can do that successfully. So that's a big step forward for the asset in terms of reaching steady state. And with a good Q1 behind us, that bodes well at Eagle. That bodes well for the rest of the year.

Speaker 1

So kudos to the team there. And similarly at Eleonore, a good Q1, 66,000 ounces produced there in Q1 versus 46,000 last year. And really, I think the upshot of that is an increase, not focus, but increased Success rate, I guess, in terms of recruiting and less absenteeism resulting in just higher mill throughput, I think that was an operation, A fly in and fly out operation that was significantly more challenged than perhaps others throughout the COVID period and the overall flux of people in the mining sector from an employment perspective. So good to see them I can get a handle on that and hopefully continue to drive forward. I will jump now to Slide 18 to touch on a handful of the positive developments in the development portion of the portfolio Or the new assets perspective as well, maybe starting with CSA.

Speaker 1

Good progress on that transaction closing over the course of the last couple of months, in particular, if you're following the metals acquisition story, they've Now filed, there are 4 statements, which, I believe is fully blessed By the SEC or will be imminently, they've announced their pipe financing, which they can continue to grow, but at least has The basics of what they need to get a transaction done and our understanding is we'll be announcing a shareholder vote date in the extreme near term. So everything they're driving towards a successful outcome for them and obviously then for us. So we look Forward to that transaction taking shape here still over the course of Q2 is our expectation. At Windfall, Very successful transaction with the joint venture that was announced, Goldfields, A huge endorsement of the project by a senior company, significant derisking of what is a very important asset in our development portfolio. And we've said, I've said for a long time, that windfall is an asset that matters in the sector.

Speaker 1

There at times have been Doubters or question marks about that, but the size, the grade, the upside in Canada, as I said, all that matters. And so it's good to see others 2 things the same way and good to see a fully financed asset in our portfolio moving forward. I think as well the combination of skill sets there Build, operate, explore permit, both well given that there's still a very underexplored And it was positive to see Goldfields seeing it the same way, talking about a lot of upside On the immediate deposit, but also on strike and at depth, but also on the broader land package. So overall, a win win win, And we look forward to seeing that partnership develop and hopefully intensify their work there on the asset. Maybe next touching on Hermosa a little bit.

Speaker 1

We're still driving towards an FID point this year on Taylor. Hermosa is made up of Taylor and Clark. But worth noting that Hermosa was added to the FAST 41 list by the DOE, Department of Energy. FAST stands for Fixing America's Surface Transportation Act. So essentially an expedited review.

Speaker 1

Worth noting that Taylor is largely permitted. It has It's water use permits, it's aquifer protection permits. It needs other minor permits along the way, It's largely advanced in that process, but what we see there as a positive is obviously in relation to things like Clark, Which is the battery grade manganese separate portion of the deposit, but also in time, I think just the expedited review Potential for all of Hermosa in time, I think leads to a better pathway forward to the Forest Service ground, Which is another layer of upside there on the broader land package. So all that is good news. And as I said, the biggest catalyst point there would be the FID point, But a significant amount of investment being made by South32 there, even prior to that this year.

Speaker 1

Maybe jumping to Slide 19 to touch on casino a little bit. If you hadn't been following that story in early April, Western Copper and Gold announced a circa $20,000,000 investment by Mitsubishi Minerals Materials, excuse me, For about 5% of the company, Rio Tinto maintained their pro rata with a small top up to keep them at 8%. So good news there in terms of the broader collective that is supporting That asset and that company uses a very good copper gold porphyry that can be built and in my opinion should and will be built. These investments don't Ticked that box fully in terms of shoveling the ground or anything close, but certainly it's very promising to see that collective forming around Western And copper hopefully in time a coalition is willing. So that's an important asset for us that's moving forward in the background.

Speaker 1

I guess with that, I will just highlight Slide 21, which you've seen versions of in the past. We've updated this slide more recently, so I'm not sure everyone's The updated version to take into account another 1,100,000 meters of drilling in 2022. So 6th year in a row, if you squint and round, where we've been on average over 1,000,000 meters or at a 1000000 meters, depending on how you want to look at it. And obviously, I touched on some of the highlights that are coming out of that work, but there are many, many others. And if you look at Slide 21, you see a story of A year ago, it was significant additions to the resource base.

Speaker 1

This year, it was significant movement And the quality of those resources with a lot of ounces moving from M and I to a significant P and P increase. So we'll continue to see that ebb and flow, but Just a lot of good work being done by our partners that we are and our shareholders are benefiting from. And then on Slide Just a recap of where we're trading. We've had a good start to the year, Not one we're satisfied with, but we've got a good start to the year. We've outperformed, but really we're still just making up ground in our minds.

Speaker 1

Importantly, the underlying NAV Keeps growing based on our partners' efforts, some of which I just highlighted, as our asset base continues to improve, and our as our assets are hugely important to most, If not many or all of our partners, who are advancing them. So, that's the end of what I wanted to touch on at least formally. And certainly, operator, happy to take questions this time around. We do have some questions on the webcast. If it's all the same, you can put your questions through the call.

Speaker 1

If you put them through the webcast, you have to type them in. We do see them. We'll probably get to those after those that are on the phone live. But operator, over to you to see if there are any questions on the live call.

Operator

Thank you, sir. And your first question will be from Ralph Profiti at 8 Capital. Please go ahead.

Speaker 4

Thanks, operator. Thanks for taking my questions, Sandeep. Just firstly on the MD and A disclosure about Stronger GEOs through the rest of the year. And I just want to kind of see if I have it right that the combination of CSA plus Mentos Blancos plus Malartic It's kind of covering the bulk of where we're trending in terms of the first half, second half split, if I have that right or if there are any other assets that you see that could Sort of complement that stronger GPO as we get to year end?

Speaker 1

No, look, I think that's largely correct. I would include Eagle in that mix, even though they had a good quarter, seasonally, it wasn't it's still going to have a stronger rest of the year, we believe. And if you look at things like, CB, that was one that had a tougher Q1. They had some equipment issues that have been resolved. So we expect I see some progress there, but overall, I think the crux of what you said is accurate.

Speaker 4

Okay, great, great. Thanks for that. And I wanted Maybe ask a question on deal pipeline. Sandeep, we've seen this kind of $2,000 an ounce gold price uptick. We don't know if it's sort of If we do, would you expect to see some go ahead decisions on growth projects To fund M and A as a mechanism for the next few deals in the pipeline.

Speaker 1

Look, I think it's both. I think it's all of the above and others. Certainly, a $2,000 gold price is nothing to whine about. So we're optimistic about the But I think we're very comfortable with where the price is now. It does lead to exactly what you said, which is go ahead decisions on assets, So basically funding for the right assets, maybe not all assets in this market, but the right assets.

Speaker 1

You've seen deals, Winfall is an example of that. Development company M and A transactions haven't been in vogue for a while as people are focused on production. But I think in a world of finite assets, we're seeing that start to change as well. So yes, no, I think that does bode well. I think the other thing I would add is just generally, whilst you're right, I still think even at $2,000 gold in the mining sector and in the entire economy, I We're seeing a tighter crunch on credit and access to credit and access to debt, both access to and cost of, And that's pushing people back towards us in our business as well.

Speaker 1

So we're kind of in a sweet spot here where not only are commodity prices Very attractive, but there's still just not that much capital, both equity and debt to Fund what the sector needs and that's what historically the royalty and streaming sector has bridged for. So I do see that pipeline getting better not worse.

Speaker 4

Okay. That's good context. Thanks very much.

Operator

Thank you.

Speaker 1

No problem, Rob. Thank you.

Operator

Next question will be from Adrian Day, Investor. Please go ahead.

Speaker 5

Yes. Hi. How are you? I have two questions, if I may. The first one, a broader question.

Speaker 5

I think I heard 67% of your revenue from gold. Are you comfortable with that kind of mix or How low would you be comfortable with gold going? That's the first question. And then the second question, I just wanted to clarify something, if I may. Your royalty on Malartic, is it actually on Malartic, the ground or does it cover other throughput from the mill?

Speaker 1

Okay. Hi, Adrian. Yes, happy to cover both those questions. Good question. So look, with respect to the metals mix, yes, it was 65% for the quarter.

Speaker 1

That was roughly consistent. When you look at Gold and silver, you add another 20 some odd percent. That's the crux of our business and that's not changing. Overall, if you look at us kind of on a near term basis or a longer term NAV or longer term production basis, you kind of end up in the 70, twentyten type of split, 70 gold, 20 silver, 10% other. Right now, that 10% other is made up of diamonds.

Speaker 1

But as we've talked about in the past, those are shorter lived and less important to us. And those will as they fizzle out, they'll be replaced by 10% 10% other that is made up primarily of base metals and copper. So that's the split we feel comfortable with. That's how we're made up right now. And our focus will continue to be on those primary objectives.

Speaker 1

With respect to Malartic, And you can pick up some of this on Slides 13 and 14. We have both, I guess. So we have a royalty on Malartic That is 5% of the open pit. On Slide 13, on the bottom left, you'll see what it translates to on the underground deposits. But based on the current mine plan that Agnico has put out, it's about 4.5% on the underground.

Speaker 1

And the more East Goldie they find, the more that will trickle up As well, but 5 on the open pit, 4.5 on the underground is a fair way to look at it right now. Outside of that, we do have a royalty on the mill. So we have those royalties that I described on everything that is Malartic that was sold to Aneko and Yamana 8 years ago. Anything else that goes through the mill That they're talking about, we would get a $0.40 per ton mill royalty on. And when there is 40,000 tons of free capacity in the mill, that's That's useful.

Speaker 1

But importantly as well or more importantly, some of those sources of extra mill feed that they're talking about putting through there Include Upper Beaver, potentially other resources like Upper Canada in Ontario. And on UPREVIVRA, we do have a 2% royalty as well. So we'll get the double dip on the mill royalty and the 2%. So, a lot of maybe a lot to unpack there. But the good news is on the in aggregate 15,000,000 ounces that have been delineated in the underground so far, We would have an aggregate 4.5% royalty and we have other sources of Of catalyst that we put additional material through that mill.

Speaker 1

So hopefully that clear Adrian answers your question.

Speaker 5

Yes. No, that's excellent. I honestly didn't realize you had the royalty on the surcharge on the mill throughput, so that's great.

Speaker 1

Yes. Look, I mean, it was clear even to the team 9 years ago that, that mill, a 60,000 tonne per day mill in the Abitibi is a valuable Resource hasn't had a day of spare capacity or a ton of spare capacity in the last 10 years of mining the Malartic mine. But in time, it will. And we, like Imiqua, fully believe that it will become the center of gravity of the Abitibi For anything that either is not viable on its own or just would be made more viable if it didn't need a standalone mill. So Yes.

Speaker 1

No, it's all good news. And as I said earlier, the updates that we're expecting and kind of expecting pretty soon now, the year does fly by In June and at the end of the year, I think will be good gates to go through in terms of how Aimico is thinking about that whole picture.

Speaker 5

Okay, great. Thank you so much.

Speaker 1

Pleasure, Adrian.

Operator

Thank you. Next question will be from Kerry Smith at Haywood Securities, please go ahead.

Speaker 2

Thanks, operator. Sandeep, do you think Based on your analysis that you will be funding that copper stream on the mine with

Speaker 6

Or how are you sort of

Speaker 2

doing that today?

Speaker 1

Yes. Look, I mean, my analysis is less important. Their analysis matters more. They're right. As a backstop, in all of our conversations, so with that caveat, I would say in all of our conversations, We see them valuing that copper stream, I.

Speaker 1

E, valuing the existence of it in their funding stack. And we do see them taking some of it. Now that remains to be seen and it remains to be seen how much they take. But yes, I'm optimistic that we'll be able to fund a good chunk of that. And either way, that determination will happen here in the very near term.

Speaker 2

And do you think that when they decide that, that would be our closing or do you think that would be a subsequent event? I guess it would be our closing probably would be your expectation.

Speaker 1

Yes. So the gate they need to go through is their shareholder vote, which as I said, they're going to be setting a date here for imminently And expect that date to be basically very early June, barring any kind of unforeseen circumstances. Once that vote happens, they'll know what the redemptions have been in the SPAC, they'll know what their pipe is by then and then the gap, If there is one, we'll be made up of other sources starting with the copper stream. So, yes, it's all going to flush itself out here in the next Several weeks.

Speaker 2

Okay. Okay, that's helpful. Thank you.

Speaker 1

No problem. And look, I Fully admit, and this is to no fault of anybody, this has been a long transaction. The team there at Mac, Mick McMillan and his team have done a phenomenal job of stick Diff would be an understatement. That was felt over the course of 2022, but it's really nice seeing this I come out of that extended period at the right time for them, at the right time for us and look forward to getting that done.

Operator

Thank you.

Speaker 1

Thanks a lot,

Operator

And your next question will be from Cosmos Chiu at CIBC. Please go ahead.

Speaker 6

Hi, thanks Sandeep, Fred and team. Maybe first off, two questions on taxes. It sounds like the global minimum tax may actually Happened, maybe sometime in 2024. Have you run through an analysis in terms of What the potential impact could be for Osisko Gold Royalties and anything that you can potentially share with us?

Speaker 1

Sure. Hi, Cosmos. I can start and do my best tax Impersonation and Fred you can shout me down afterwards. But look we have obviously been tracking that file For the last, I mean, how long has it been, 2 years, 18 months at least. And 1st and foremost, as you would know, we have the least I mean, we just have more royalties than streams.

Speaker 1

So by fact, we have the least amount of stream international stream exposure. So if it were to apply, it would have what feels like a pretty minimal impact to us. But more importantly, we do not meet the minimum threshold To be caught in that 15% global minimum tax, it's based on one of the pillars is based on revenues of at least €750,000,000 And whilst we hope to get there one day, we are not there yet. So it looks to us like It trips up some of our larger peers, but not us. If that changed, as I said, I revert back to the start of my comment, But right now, there have been no discussions to change that threshold, that pillar.

Speaker 1

So we don't see it impacting us the same way it would be impacting some of our peers, As you rightly point out, looks like in 2024. Fred, did I miss anything important there?

Speaker 3

No, you're 100% correct, Sandeep.

Speaker 6

And even with the potential silver stream from CSA and the copper stream potentially from CSA, you would still fall under that number?

Speaker 1

Yes. Look, what are we at, Fred? 200 and some odd, 220, 225. We would need to have quite a bit of success from a revenue generating potential to be at €750,000,000 Don't discount us, but it might take us a little while to get there.

Speaker 6

I believe in you, Sandeep. You'll get there. Sure. Appreciate it. And then my second question on taxes.

Speaker 6

I guess last night, you recorded an expense income tax expense of 8,400,000 But in terms of your adjusted earnings, you adjusted out $7,460,000 a big chunk of it. Could you maybe remind us of the rationale for that adjustment once again? I think you do it every quarter. I just want to get a reminder.

Speaker 1

Sure. Fred, I've exhausted my tax impersonation. I can if you want to pick that up. Essentially, I mean, essentially, Cosmos It has to do with deferred taxes, but why don't you go ahead, Fred.

Speaker 3

Okay. Yes, exactly. We adjust the adjusted earnings for deferred taxes Right now, so these are not cash taxes. We had approximately $900,000 of cash taxes Paid in Q1 mostly on withholdings from foreign revenues. So that's you're correct.

Speaker 3

That's an adjustment that we've done in the past to Exclude the deferred taxes, which are not right now taxes payable, but more an accounting Ping?

Speaker 1

Yes. And that will continue to be the case for what looks like the rest of this year at least. Maybe by the tail end of this year, we might have some minimal taxes payable to borrow new investments that are made, and then that starts To change a little bit, 2024 and thereafter, but yes, that's the answer for now, Craig. Sorry, Cosmos. Yes,

Speaker 6

great. And then maybe just switching gears a little bit, Sandeep, great to see that you've increased your dividend by 9.1%, That kind of shows how strong the company is. My question is, if I work it out correctly, your share price has gone up this year, as you mentioned. I still work it out of 1% dividend yield. I'm just I forget, is there a number that you're trying to get to in terms of dividend yield?

Speaker 6

How do you look at increases frequency of increases to dividends and whatnot?

Speaker 1

Yes. Look, your math is about right. Maybe just a tick above that. But we were due for an increase. We've got The cash flow is growing.

Speaker 1

Last year, we took more of that and bought back stock that was just ridiculously cheap. We might do that again. So we're always going to find the balance in terms of capital allocation between investing in new growth, Raising dividends progressively and buying back our stock or just building up a cash buffer To invest. So we've got the strength to do any and all of that. Our balance sheet is pristine at the right time.

Speaker 1

Essentially almost 0 net debt or trivial amount of CAD15 1,000,000 Yes, we do have to fund that TSA transaction, but plenty of room on our credit facility that we will use disproportionately for the foreseeable future of that and our cash flow To fund transactions, so yes, no, we feel pretty good about it. The payout ratio, had we done nothing, would have Amongst the lowest that we've had in our history really, and we didn't We didn't think all that was fair. We want to continue to reward shareholders and their confidence in us and the dividend is one way to do that.

Speaker 6

Sure. And maybe one last question. I saw that in your guidance for 2023 in terms of geos, you've included the CSA stream since or Beginning retroactive to February 1, is that just part of the contract that you have in place? And then number 2, when it does happen, Am I going to see like a big bump like are we going to catch up February and then also March, so there's going to be a blank quarter where it could be 5 months' worth of GEOs and revenue coming in, is that how it works?

Speaker 1

Yes and yes. So it is the Silverstream has an effective date of February 1. So as long as the transaction closes, which we're highly confident it will, That's basically picking towards us. So whenever the Q1 is that the transaction closes and hopefully that's Q2, they'll basically be 5 months of production in that quarter.

Speaker 6

Great. Thanks again Sandeep and Fred and

Operator

And at this time, sir, we have no other phone questions.

Speaker 1

Okay. Sorry, let me manage this. I think there are at least a couple of questions on the webcast. I'm just keeping an eye on that. The first one, and I have to read these out, I believe, so bear with me.

Speaker 1

It's our first time doing this. Apparently, some people just don't like the art of an old fashioned phone call. But what are your Stock repurchase plan. So I guess this kind of funnels back into the last question as well. As I said, we've always tried to we don't have a strict mechanism or formula or equation you follow, we do track all of our options at all times and We decide what the best use of our capital is when we're looking, staring at what our opportunities are in front of us.

Speaker 1

So just because we increased our dividend This time around, it doesn't mean we won't come back to stock repurchases. We'll look at what the market gives us and Look, a lot of days, even with our recent outperformance, a lot of days, the best answer is going to be to get more exposure to Malartic and Mantos and Eagle And Windfall and Casino and Hermosa and go down the list. So that's just something we track as a team And we try to make the best possible decisions with the information in front of us. So I believe that was the only question on the webcast. But if I'm lying, someone please shout me down and I'm happy to To be told otherwise.

Operator

Thank you, sir. We do have another question on the phone from John Tumazos at John Tumazos Very Independent Research. Please go ahead.

Speaker 7

Good morning, Sandeep.

Speaker 1

Good morning, John. How are you?

Speaker 7

Well, well. So some of the different companies are having issues with cost This morning we saw Seabreej filed I think for another $150,000,000 royalty On top of the 225 they sold last year, I guess it's costing them a little more for their project. I was chatting with a Quebec exploration company the other day that shut down a camp in Quebec. The province requires every camp to have a nurse and their nurse quit, they were making 2 5 ks Newmont paid them more at Eleonore. It's getting kind of hard to figure out what costs of doing business are.

Speaker 7

Are you staying at your criteria or moving to Things already in production that don't have to build the factory yet or what's your best way of managing Construction cost timing and uncertainty.

Speaker 1

Yes. Look, John, I think there's It's an excellent question and there's a lot that is continuing to happen in the sector. It's If there's inflation in the world, I have always said, then it's worse than mining because mining is Two things, it's people intensive and it's energy intensive, a little bit of relief on the energy side so far this year, but I don't see that Those people issues are sticky ones, both in terms of availability of people, technical talent and also what it takes to retain them. So We see that in our portfolio, in our set of assets. Thankfully, our partners are doing a phenomenal job Dealing with it, you touched on Eleonore.

Speaker 1

I think they had a good phase of dealing with it. So we're fortunate that our assets are Maybe starting with our existing portfolio. We're fortunate that our assets are so important to our partners. When you go down the list, they genuinely matter. So we're seeing a lot of investment, time and energy and money into those assets to resolve those issues.

Speaker 1

So they are issues, But we trust our partners. They're some of the best in class, and we trust their motivations because they're so important to them, that they will resolve them. Obviously, there's Costs associated with that, that they have to deal with, but the assets are good enough that they can withstand it. As we look out From here, I'd say a couple of things to your question. One is all that does to me is as a person who tries to simplify things is it justifies elevated commodity prices for some time.

Speaker 1

That's good for us in our existing portfolio In terms of pushing forward assets, our partners as well have always shown an ability to raise capital better than I'd say the aggregate Market and so our assets are being fed with the money they need to move forward. It's not always a straight line and it's not always as quickly as you'd like. But I think if you look at our portfolio, it's better set up that way than most. So good news there. And yes, as we look out, we always manage what we consider timeline risks.

Speaker 1

Those are our risks In the royalty sector, when there's extra costs, we don't suffer, at least not immediately or directly, but delays we do suffer from. So, yes, that doesn't hasn't changed our view, John. We've been pretty steadfast in the last few years that, Yes, we will take on and you've seen us take on some later stage assets when the returns and the asset quality is high. There's good room in our portfolio for an asset at any stage, but our larger dollars would be kept for Either production or near term or line of sight to production, so that hopefully you're on the other side of that. You're never always on the other you're never fully on the other side of that Mechanism, but that dynamic, but that would be, I guess, the first level answer to your question, John.

Speaker 7

I apologize Sandeep if I'm repetitive. I had a long winded CEO call me And I couldn't hang up and I missed the first part of your call. Could you give an update on the Amulsar project in Armenia, Well, I think you retain a 40% ownership stake in addition to the stream. And is it too much for the shareholders to hope that You get paid something for that 40% in the stock of the new owner or incremental royalty or cash or how do you

Speaker 1

It's not ground recovered, John. So happy to now we didn't get into it. With respect to Amulsar, I would say, as I've said before, we work diligently behind the scenes To find the last piece that is missing in the last 2 plus years, there's been unfettered access to the site. We've seen the Eurasian Development Bank step in with a big check. We've seen the blessing of the government.

Speaker 1

We've seen all the things that we need to get re excited about that asset, which is important Save the last piece, which is an operator and the last of the funding to take a project that's circa 70% built, Complete it and end up with a +2000000 ounces, 250,000 ounce a year mine on the other side. So we work on that path. It's obviously $2,000 gold and all of the other positive Developments that I mentioned are helping that. Until it's done, it's not done, but we continue to work on it. And it's an important Derisking event, one that it's one of those things that used to say it's a light switch that's off that we are very intent on turning back on.

Speaker 1

With respect to your specific question about the equity, our primary objective is to see that stream reactivated. Whether the equity has value on top of that, time will tell. That's the beauty of optionality in the gold sector. And with prices moving the way they are, we're not going to close that door. But 1st and foremost, I'd say it's fair to say that we're after value on the Which is why it was protected in that receivership process in the first place.

Speaker 1

Beyond that time will tell.

Speaker 7

Thank you and congratulations.

Speaker 1

Thank you, John.

Operator

Thank you. And at this time, Mr. Singh, we have no other questions. Please proceed.

Speaker 1

Okay. And I'm figuring out my technology and I can tell that there are no other Questions on the webcast either. So thanks everyone for your time this morning. And maybe as a public service announcement, just a reminder that Sunday is Mother's Day and as someone who has disappointed both their mother and their wife in past years, I plan on trying to break that streak. So hopefully

Operator

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.

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Earnings Conference Call
Osisko Gold Royalties Q1 2023
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