Osisko Gold Royalties Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 9, 2024

There are 8 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q1 2024 Results Conference Call. After the presentation, we will conduct a question and answer session. Please note that this call is being recorded today, May 9, 2024, at 10 am Eastern Time. Today on the call, we have Mr. Jason Atoo, President and Chief Executive Officer Mr.

Operator

Frederic Ruval, Chief Financial Officer and Vice President, Finance Heather Taylor, Vice President, Sustainability and Communications and Mr. Ian Farmer, Vice President, Corporate Development. I would now like to turn the meeting over to our host for today's call, Mr. Jason Otoo.

Speaker 1

Good morning, everybody, and thanks for being on today's call. I'm Jason Atoo, President and CEO of the Cisco Group Royalties. Procedurally, I along with Heather Taylor will run you through the presentation and then we'll subsequently open up the line for questions. For those participating online via the webcast, you can submit your questions in advance through the webcast platform. Today's presentation will also be available and downloadable online through our corporate website.

Speaker 1

Please note, there are forward looking statements in this presentation from which actual results may differ. Also please note the base of the presentation will be in Canadian dollars unless otherwise noted. I'm joined on the call this morning by Frederic Ruall, the company's VP Finance and Chief Financial Officer and Heather Taylor, Vice President, Sustainability Communications amongst the others as indicated on Slide 3. On Slide 4, when looking at Assisco's 1st 3 months of 2024, we are off to a predictable start as it relates to gold equivalent ounces earned, cash margin, cash flows as well as overall debt reduction. Sysco earned 22,259 GEOs in the Q1 of 2024, which puts us on track to achieve our previously published full year 2024 guidance of between 82,092,000 gold equivalent ounces.

Speaker 1

Revenues for the period were strong in Q1 at $60,800,000 Even though gold and silver prices in Q1 were robust with average realized prices of US2,073 and US2,378 respectively, a precious metals complex only saw a real appreciation after our last sales concluded for the quarter. In other words, today's spot gold price is approximately $2.50 higher than our realized price over Q1. In addition, Assysco's cash margins were 97% in the quarter. This is just shy of the company's record quarterly cash margin of 98% booked in the Q3 of 2017. Osisko ended the 1st quarter with $70,600,000 in cash and net debt of just over $8,000,000 after the company continued to pay down its revolving credit facility during the period.

Speaker 1

So far in Q2, the company has repaid an additional $18,600,000 on the facility, further increasing our financial flexibility in order to be able to transact a new accretive opportunity as they present themselves. With respect to our ongoing commitment to return capital to shareholders, the company declared and paid its quarterly dividend of $0.06 per share in Q1 marking its 36 consecutive dividends with over $279,000,000 returned to shareholders to date from these distributions. Subsequent to the quarter, the Sysco Board of Directors approved an 8% increase to the base quarterly dividend of $0.65 per common share payable on July 15, 2024 to shareholders of record as of close of business on June 28, 2024. This is a testament to the tremendous confidence we have in the consistency and the predictability of the cash flows underpinning our business. With respect to our opportunity set, the company's pipeline continues to remain more robust with our corporate development team busier than they ever been, we remain optimistic that we'll get at least 1 or possibly 2 meaningful transactions across the line this year.

Speaker 1

Finally, as some of you know, on April 10, Sysco published its 4th edition of its sustainability report, Growing Responsively. And I'd like to bring on Heather Taylor to talk about this key achievement in more detail. Heather?

Speaker 2

Thanks, Jason, and thank you to everyone who's taken the time to join us today. Subsequent to the quarter, we published the 4th edition of our sustainability report Growing Responsibly, as Jason mentioned. It's guided by the highest standards set by GRI, FASB and IFRS climate related disclosures. This publication marks another year of substantial progress made with respect to our governance, environmental and social initiatives. I invite you to explore our achievements in greater detail in the report, which is posted on our website.

Speaker 2

Starting with governance. This past year has seen us Cisco make significant strides. We've enhanced the leadership of our Board by appointing an independent Chair, reinforcing our commitment to robust oversight and accountability. We've also maintained our commitment to diversity with women continuing to make up over 30% of our board members. The integration of my now not so new role as Vice President of Sustainability and Communications ensures that we have a dedicated individual focusing on our ESG initiatives and continuing to drive these forward.

Speaker 2

On the environmental side, supporting Osisko's mandate to align capital allocations with ESG principles, we formalized our investment due diligence process by developing an ESG screening and monitoring tool. The tool is aligned with industry leading practices and allows us to assess the ESG performance of potential assets and mining partners across multiple topics prior to investing and subsequent monitoring post capital deployment. In our commitment to address climate related challenges, we conducted scenario analysis to gauge the exposure of key assets to climate related risks and opportunities. This analysis helped inform the development of an inaugural climate change strategy for the 2024 to 2027 timeframe. We also enhanced our transparency in reporting scope 3 emissions and have entirely offset the company's 2023 office based emissions with the purchase of high quality carbon credits.

Speaker 2

Lastly, on the social front, we have deepened our commitment to our employees and the communities we impact. We implemented comprehensive training focused on diversity, equity and inclusion, health and safety and human rights. Additionally, our teams have actively participated in volunteering events that support and uplift our local communities. We deployed over $325,000 towards community donations aligned with our newly formalized community investment guidelines. Our efforts have been recognized externally with Osisko receiving a AA rating from MSCI and high rankings from Sustainalytics including top rated regional and industry badges.

Speaker 2

These achievements we should be immensely proud of. These accomplishments reflect our strong performance relative to Precious Metal peers and underscore our dedication to leading ESG practices. As we look to the future, our commitment remains firm. We will continue to integrate ESG principles across the organization and into our corporate strategy ensuring that our actions benefit not only our shareholders, but also the broader communities and environment which we conduct business. With that, I'll pass it back to Jason.

Speaker 1

Thanks, Heather. We'll now pivot to the company's financial performance for Q1. Quarterly revenues effectively tracked higher year over year commodity prices when comparing to Q1 2023, which was also partially offset by less gold equivalent ounces versus the same period last year. The decrease in Q1 2024 is to the stoppage of operations of Lennard Diamond Mine at the end of 2023. Net earnings of $0.08 per basic common share for the period represented a modest decline versus the Q1 of 2023.

Speaker 1

However, this delta largely reflects a non cash share of Lawson Associates, more specifically, the fiscal development and to a lesser extent a modest non cash foreign exchange loss during the period. Most importantly though, Q1 2024 saw a year over year improvement in both cash flow per share as well as quarterly adjusted earnings of $0.16 per basic common share. During the Q1 of 2024, the company had 19 producing assets. Our GEOs earned come predominantly from Canada and we derived over 95% of our gold equivalent ounces from precious metals. Gold just under 71% and silver at 25% with the remainder coming from other metals.

Speaker 1

As I noted previously, the recent shutdown of Barnard, Diamonds will no longer be contributed to Osisko's GEO's earnings going forward. Putting the company in position to effectively be 100% precious metal until some of the company's base metal exposure begins to expand with the first material contributions coming from the CSA copper stream and the effective date of that copper stream is June 15 this year. Some comments on specific mine performances during the quarter before speaking about a couple of the more material assets in greater detail. The Canadian Malartic had yet another impressive start to the year with Agnico booking record quarterly production from the mine. The asset remains Assisso's most important contributor to our GEOs earned by solid, solid margin.

Speaker 1

Performance from Victoria Gold's Eagle Mine during the Q1 of 2024 fell somewhat short of above this expectation. Victoria has noted our risk that gold production in Q1 2024 was lower year over year due to lower grades related to mine sequencing of the Eagle ore body, the timing of placing stacked tons under leach and lower planned stacking rates in Q4 2023. Despite the slower start, the company still expects to achieve 2024 gold production guidance of 165,000 to 185,000 ounces, with summer and fall season typically being the month's strongest operating period. Performance from Capstone's Mentos Lango's operations or milling rights continue to lag Phase 1 expansion sign levels was effectively flat versus the prior period in Q4 2023. Pacifico will continue to monitor Manco's performance through 2024.

Speaker 1

We remain optimistic that Capstone continues to point to a mid-twenty 24 resolution of the plant issues following the delivery in June 2024 installation of new pumping infrastructure related to the fine tailings and water management. If things go well from there, Capstone is able to consistently achieve its main plate throughput capacity of 20,000 tonnes per day and at Cisco will reap the benefits of this achievement in its 2025 year with Mantos Blancos representing the biggest driver of the Cisco's step change in gold equivalent ounce growth in 2025 versus 2024. As I mentioned earlier, the number of currently producing assets in our portfolio stands at 2019. We anticipate this number to increase by 2 production assets in the second half as we expect both Nandini and Focantasino projects to be pouring gold before the end of the year in addition to the start of the CFA copper stream. Moving to the next slide.

Speaker 1

While we've spoken this slide an enumerate number of times, I think it remains as relevant today as ever. As our company continues to distinguish itself from the rest of its relevant peers in the subsector as it relates to jurisdictional exposure, Atvesco is the leader when it comes to both net asset value and gold equivalent ounces earned from what At Cisco defines as Tier 1 Mining Jurisdictions, which include Canada, United States and Australia. Of note that if we were to add Chile to that list of countries, we would be by over 95%. In terms of Canadian Malartic, the mine realized record the mine realized record quarterly gold production driven by higher tonnage and gold grades, thanks to contributions from the Odyssey underground. More specifically, ramp development continues to exceed target, reaching the 1st production levels of East Goldie in February 2024 and at a depth of 765 meters at the end of March.

Speaker 1

Shaft sinking improved during the quarter with an average sinking rate 2.4 meters per day. The temporary loading pocket previously planned at level 102 will now be built at level 64, which is expected to provide hoisting capacity by mid-twenty 25, 6 months earlier than previously planned and will provide added development and production flexibility. We were obviously also delighted to hear our operating partner continues to make reference to plans around a potential second shaft of the Odyssey underground, a story to stay tuned to. Within the next slide on CSA, just a few weeks ago, our operating partners at Metals Acquisition Corp announced an updated mineral reserve and resource statement based on drilling completed at CFA only up to the end of August 2023. Highlights included a 57% increase in mine life to 11 years, in other words to the end of 2,034 based on mineral reserves only compared to a 6 year reserve mine life outlined previously.

Speaker 1

The updated mineral reserves only extends 95 vertical 95 meters vertically below the current decline position and metals acquisition closes continue to drill beyond August 2023 cutoff date. So we clearly expect that there is more to come from this team in relative near term. Recall that the CSA copper mine has been producing for almost 60 years with very limited exploration away from the known deposits and there is clear potential to further optimize metal acquisition for April 2024 life of mine production plan. Exploration in the top 850 meters of deposit is just starting and initial results highlight strong potential to open additional mining price. Moving to the next slide, Isle and Magino.

Speaker 1

In late March 2024, Alamos announced the friendly acquisition of Argonaut Gold and its Magino Gold Mine and Mill located immediately adjacent to Ione Gold. This transaction is expected to close in Q3 2024. The previous Woodland Phase 3 mill expansion construction work at Highlands will no longer be required following the announced acquisition of the 10,000 tonne per day Magino Mill, which is located approximately 2 kilometers from the Island Gold Shaft. The larger mill and tailings infrastructure at Magino will now accommodate the rapidly growing mineral resource and rope resource base at Island Gold. The expanded and accelerated mine plan is also anticipated to transition a greater proportion of production towards Asifka's 2% and 3% NSR royalty boundaries earlier in the mine plan as opposed to the mineral inventory covered by Assysa's 1.38 percent NSL royalty.

Speaker 1

In addition, a small fraction of the eastern limits of the Nagino pit is covered by a 3% NSL royalty, with production expected later this decade. The underground exploration potential previously highlighted by Arganite Gold on this claim is located less than 300 meters from the existing Island Gold underground infrastructure. Moving to our guidance and growth. After the Q1 and as previously noted, the company remains on solid footing with respect to being able to achieve its previously published 2024 GEO delivery guidance, especially with 3 material contributors expected to deliver new gold equivalent ounces to Osisko in the second half of twenty twenty four being the CSA Copper, Stream, Atoka Dansino and Nandini. While this year's guidance number was always going to represent a modest step down versus last year's, it is worth reminding everyone that with Bernard no longer in the picture, cash margins have increased.

Speaker 1

And given the write downs that have already taken place in the asset, tax pools have been created, so Pacifico is not expecting to be cash taxable in Canada for 2024. Unsurprisingly, at this point in time, the company's 5 year outlook for 20 28 publish in mid February remains unchanged. As we remain very confident that both the expansion and our development assets will fuel the 30 plus percent purely in growth with no continued capital or any capital calls required. Moving to our catalyst slide. Underpinning this updated growth profile is a long list of near term catalysts that we provided on Slides 1415.

Speaker 1

We've already discussed many of these already on previous slides on this presentation, so no need for me to add anything further to today. That said, I would suggest you take the time to go through this impressive list yourself. And if you have any questions or would like to discuss further any of the remaining line items highlighted on these two pages, I encourage you to reach out to my colleagues here at Assisco for more information. Turning to the balance sheet. Finally, we'll end the formal part of the presentation on Slide 16, which outlines the current state of Assisco's balance sheet.

Speaker 1

At quarter end, we had a total debt of just over 150,000,000 and net debt of only approximately $80,000,000 As we stated previously, the covenant performance was exceptionally strong with a 97% cash margin experienced in the Q1 of 2024 expected to continue throughout the year. As noted previously on this call and noted as a subsequent event in our MD and A, we've now also repaid an additional $18,600,000 against our revolver credit facility, further strengthening our financial position, which by the way, frankly extended the facility for another 4 years. In addition, if commodity prices specifically gold and silver sit above US23100 dollars and US27 dollars respectively sorry, US25 dollars respectively, we forecast to end up in a net cash position at the beginning of the Q4 of 2024, no significant deals are closed by that time. This is important as Osisko doesn't expect to sit in its hands in 2024. And our much improved balance sheet provides the company with the financial capacity and flexibility to continue its strategy of disciplined allocation in the pursuit of high quality accretive precious metal streams and royalties that will bolster the company's current near term geo deliveries and cash flow that should accrue our shareholders' benefit.

Speaker 1

And with that, I'd like to thank everyone for listening today. We'll now open up the line for questions as well as questions posted on the webcast. If we don't get to all the questions on the line, we will make sure to respond offline to those that we don't cover on this webcast. Operator?

Operator

Thank you. Your first question comes from Ralph Profiti with 8 Capital. Your line is now open.

Speaker 3

Thanks, operator. Good morning. Jason, thanks for taking my question. 2 of them, please. Firstly, the degree to which you can without giving away too much, you mentioned 1 to 2 transactions hopefully be able to close this year.

Speaker 3

Can we get sort of a broad range of the sizes of that you're looking at? And maybe more importantly, whether or not these are sort of competitive processes? Or are you leveraging existing or new relationships where we would consider these opportunities more exclusive?

Speaker 1

Thanks, Ira. Very good question. And then obviously, we'd love to give you more information on the opportunity set that we have, but obviously there's a lot of confidentiality associated With respect to the opportunity set and the size of the ticket or the size of the transaction, again it varies obviously due to the transactions that we're looking at, whether it's royalties or streams as well. It certainly varies in terms of the transaction. There's not a lot of details that I can give you.

Speaker 1

However, what I would say is, again, the team is very much focused and have the team very focused on a smaller number of high conviction tests that again, we're hopeful that we can get 1 or 2 transactions announced spotlights by the end of the year. And transaction size, you can think of anywhere between US50 $1,000,000 up to US300 $1,000,000 That's what we're essentially looking at. In terms of the competition, it is still a very, very competitive process, competitive environment as I think you can appreciate. We've got a lot of peers as well as the private equity groups that participate in those processes. We do have some very strong relationships.

Speaker 1

So and so we are also moving forward with a number of bilateral type transactions that are outside of any sort of process. But any more detail that we can provide you Ralph, obviously we need to be bridging confidentiality. We look we're very excited to hopefully again be able to announce 1 or 2 of these by year end and then you can analyze this in terms of what the overall returns are because we'll be incredibly disciplined to ensure that these are accretive deals and accretion will accrete to our shareholders.

Speaker 3

Yes, certainly. I appreciate that, but very helpful comments. And then secondly, I wanted to break down the incremental benefit at Island Gold with Magino? And just can we quantify sort of bringing forward not only the actual production by not having to bring in that mill, but also the encroachment on the more advantageous 2% to 3% NSR? And if you're running at sort of 5,000 ounces gold equivalent, just wondering if you can quantify, say, over the guidance period, whether or not we're going to see any incremental GEOs from that?

Speaker 1

Well, thank you, Raul. I'll start and ask Guy to provide some his expertise around the technical nature of the assets. I would say his first comment is the transaction has not closed as of yet. And obviously, the best source of information when it does close is with respect to the Alamos team. Obviously, the proximity of the two assets has been something that's been contemplated for some time.

Speaker 1

We're obviously excited is obviously you have an operator that's moving into this taking over an asset and specifically it's all about mill optimization as I think you know that's got a deep set of experience in terms of both operational acumen but very deep balance sheet as well. So again, we're quite excited about the transaction. We do think that it's going to be beneficial for our royalties both at the Island Gold as well as the Gino over time. But I'll ask Yi to comment if he has anything further.

Speaker 4

Yes. Sure. If you look at the most recent disclosure by Alamos, you'll see just naturally where the mines of the center of gravity of the mining is going towards the edges of where they've been recently and that in general you can see that as going towards the 2% and 3%. The Maginot acquisition or potential acquisition doesn't really change any part of that plan. The thing that it does do is derisk some of the construction that is that was required, the mill expansion, tailing facilities.

Speaker 4

And so that's if the acquisition goes through then those items are derisked. And then the other portion is below that pit and you'd have to go back a couple of years to see some of the Argonaut disclosure on underground drilling that were really quite spectacular intersections. And those were not necessarily orphaned, but a lot less accessible except for now in the hands of Alamos, it's a lot easier for them to drift over and further test those and see if they're economic and make sense to bring into the life of mine plan earlier. But that's yes, it's hard to quantify what that could look like. All

Speaker 3

right. Helpful. Thanks, Jason. Thanks, Guy.

Speaker 1

Thank you, Ralph.

Operator

Your next question comes from Kerry Smith with Haywood Securities. Your line is now open. Thanks, operator. Jason, just two questions. Firstly, what is your sort of targeted debt level that you'd like to run with for the company?

Operator

You keep paying it down pretty aggressively and you're generating $45,000,000 to $50,000,000 a quarter of cash flow. So the debt's pretty modest in that context. I'm just wondering if you have a target number there.

Speaker 1

And your second question, Kerry? And

Operator

my second question is, how is the agreement structured on the Alamos royalty in terms of how you actually figure out what your payable ounces will be from the island tonnage because the recoveries from Magino will be considerably lower than the recoveries they'll get from the island or just by virtue of the grade. I'm just wondering how you monitor that?

Speaker 1

Thank you, Carrie. With respect to the leverage level, you're absolutely on point, being a real focus, Fred, and the whole of Cisco executive team to continue to pay down our facility. You heard what I had to say that Darragh with respect to the opportunities that we do think that there's possibilities for which we can be deploying this year $300,000,000 $400,000,000 And so the way we think through things in terms of the net debt to EBITDA level, I would suggest that we can do producing assets and it really again depends on the type of transaction that is done because if you're doing a transaction that gives you immediate cash flow, it's obviously that better. But in general rule of thumb, Kerry, we don't want to be for any long period of time beyond a net debt to EBITDA ratio of 2x. We could go through it and obviously we've got lots of covenants and there's lots of room within the covenants of our facility to do that.

Speaker 1

But generally speaking, we'll look them at the management team. We think it certainly has eased commodity prices 2 times net debt to EBITDA would then we'd be back into as we have been over the course of the last 12 months to 18 months just repaying facility down to the cash flow while repaying it back through another method. I'll turn the question with respect to Island and tonnage Island Golden tonnage to EEC, if you can answer it a lot better than I can.

Speaker 4

Yes. So the distribution of ounces and the relative coverage, we can have a separate conversation if you want to reach out. But there are clues in the most recent technical report in terms of the royalty percentage with time in some of the graphs that they provide. And with respect to the recovery of the Island Gold ores that would go into the Maginot mill, if you listen to conference calls that were given by Alamo following the announcement of the transaction, this was raised on those calls. The process the specific process to use at Maginot and at the Island Gold Mill are the same.

Speaker 4

The expectation is that the recovery will be equal. And I expect that Alamos will be highly sensitive to any gold loss, especially you look at the differential and grades there, it's they'll be very sensitive and they'll always have well, for the beginning period anyway, they'll have the opportunity to run test scenarios and run some of the mill throughput through the existing mill there. But I'm not we're not concerned about that scenario.

Operator

Okay. Okay. Thank you.

Speaker 1

Thank you, Gary.

Operator

Your next question comes from John Tumazos from John Tumazos Very Independent Research. Your line is now open.

Speaker 5

Thank you very

Speaker 6

much and congratulations on all the progress on so many fronts. I was sort of brainstorming. I was thinking it would be an interesting package to put up for sale. If you were to bundle all of the Osisko legacy royalties together as a package Cariboo, Tintiq, Horn 5, Falco, Windfall and 39.6% of OTV and sell it as a block as an asset package. It's a nice North American package, a lot of good Canadian gold.

Speaker 6

And the proceeds would probably all book straight to equity, because there are assets that you didn't pay much for that probably aren't on your books for very much. Would probably all be tax free because you have some accumulated losses And it would improve the perceptions in the market and we wouldn't have any more equity losses from OTV. What do you think of that, Jason? Would that be a nice way to pay down some debt or fund the stock buyback?

Speaker 1

John, I appreciate the comments and the color and look, obviously a very interesting concept. What I would say, however, is with all the assets that you mentioned, there are obviously some we really do believe that there's the royalties and it's so tough in this competitive market to actually acquire royalties, but these are some very, very good royalties that we think from a shareholder perspective, which I know you are 1, it is much better for us to remain in our portfolio. As I think you're aware, it's very, very rare for royalty companies, streaming companies to be selling off assets like this. And specifically funneling all the ones that you mentioned, I would argue in this marketplace that we wouldn't get the same value if we just patient and wait until these assets do come on and start generating some very good gold equivalent ounces in the fullness of time. But I appreciate the comment.

Speaker 1

We are again, we are very supportive of obviously all the companies that are associated with these companies moving the development forward because we do think in the fullness of time that our physical royalty shareholders will accrue the benefit for more so than if we were to essentially monetize it as we suggest today.

Speaker 6

Thank you.

Operator

Your next question comes from Tanya Jakusconek. Your line is now open.

Speaker 7

Great. Thank you. Good morning, everyone. I just wanted to come back to Rob's question on the transactions that are out there and the ones to 2 that you've talked about that can potentially be done this year, Jason. I just I'm trying to understand whether it's similar to other deals in the market, which are either to fund the mine build to help buy out some of these Newcrest sold assets and or other by Newmont.

Speaker 7

So first of all or is it balance sheet repair? Like I'm trying to understand what sort of deal semantics they are?

Speaker 1

Yes. Thanks for your question, Tanya. And again, kind of the same overriding comment with Ralph. Obviously, all the conversations that we're in are quite confident. We'd love to open up and show you the opportunity set because I think you'd be quite impressed with it.

Speaker 1

With respect to the type of transactions though and you probably you're aware that Q1 was a very quiet period for any sort of transactions by not only about basically the whole subsector, the whole sector of royalties and streams that were really nothing material as you know. And so in terms of the type of transactions that we're looking at, you're absolutely on point is transactions for which senior companies are selling assets and mid tiers are effectively looking at this as a financing possibility or vehicle to essentially get the funds to bring that into their portfolio that hopefully will improve the portfolio. There are very few, I would say, opportunities with respect to balance sheet repair at this point. Typically, again, if the assets are supporting what they're doing currently, unless they have a large portfolio with one asset that's materially better than the others and then we obviously need to structure to ensure that our interests are protected if we're assisting with 1 of the lesser of assets. So we're not really looking and working on anything with respect to balance sheet repair.

Speaker 1

It's more on companies either acquiring good assets that for the most part are production and or some very high quality development assets that will come into production within our 5 year outlook with very, very competent teams, management teams in very good jurisdiction. I think that's all I can say for now, Tanya.

Speaker 7

Okay. That's fair enough. And maybe, Jason, would you be interested in, let's say, some of the bigger size deals that may be syndicated? Would that be of interest to you if you were syndicated in that $60,000,000 to $300,000,000 range that you talked about?

Speaker 1

Because it's always of interest to us being the 4th or 5th largest company in terms of public companies, royalty companies out there. If again, we have deep relationships with all our peers, those are always of interest to do something. As you can appreciate though, there hasn't been that many transactions. So that sort of nature that's been done in the past for the reasons that again if have a high quality asset, obviously, you want to do a transaction that accrues to your shareholders as opposed to keep sharing these economics with others. That said, we do have conversations.

Speaker 1

We do like the concept. We're open to that concept and we'll see where it goes.

Speaker 7

Okay. And then my last question on these transactions. Are we looking at sort of your transaction being very simple and structure, I. E. A royalty or a stream or should we be thinking that they would be more complicated with equity investments and or debt components?

Speaker 1

Yes, it's a great question, Fani. I would say every opportunity we look at is quite bespoke. There's obviously a set of needs for the partner of the inbound fee company that we're looking to assist either through a mine builder through an acquisition. And so we really do focus on the strength of the company, the cash flow of that company and try to be quite bespoke with respect to how we can assist whether it's royalty stream equity. We do shy away from the debt piece though.

Speaker 1

That's not really what we consider as part of our business. It's nothing that we've contemplated to date. And I would say right now with the opportunities that we have in front of us, it's nothing that we're going to contemplate in the very near term.

Speaker 7

Okay. That's very helpful. Thank you so much and good luck.

Speaker 1

Thanks, Tanya.

Operator

Your next question comes from Brian MacArthur with Raymond James. Your line is now open.

Speaker 5

Thank you for taking my questions. Just following up on Tanya's question though, I mean people talk about these $300,000,000 and $400,000,000 deals. Can we assume though the majority of that price will be streaming royalties? I mean if half of it becomes equity all the time, aren't the the same credit for it?

Speaker 1

So thanks, Brian, for the comment. Like I can only comment on, again, the strategy and how we're execute our business. I can't speak for obviously our peers and our competitors. What I can tell you is that the general point in terms of how we look at things, we do not want to be portfolio managers of equity positions go forward. We will, as I've said in the past, in certain circumstances for which financing is quite bespoke and it's the last capital in with respect to an equity check, similar to what we did with the CSA transaction that was required for them to acquire the asset from Glencore.

Speaker 1

But we don't eventually want to again be portfolio managers that effectively have an equity book. So it's essentially again as we think about from a fiscal royalty perspective the priorities in terms of funding certainly royalty streams, economic interest would be 1st and foremost, but if it's some equity is required and it's got to be right sized, that really assists with the catalyzing event either being an acquisition or for something that really gets a fully financed development asset. We will consider that and we have in the past and we have very likely do that in the future.

Speaker 5

Great. Thank you for that color. That's very helpful. 2nd question is just, I know you mentioned Renard and it's been taken out, but Wintham potentially has a call option to buy this thing and maybe in the future it comes back. Do you have any other I mean at times you've lent money into them and do you have anything else that comes back?

Speaker 5

I mean if this deal were to close and went forward, would the only thing you have be the 9.6 percent Diamond Stream or is there other claims you might have on some of that money that they put into acquiring Bernard if that transaction goes through? Thank you.

Speaker 1

Thanks, Brian. Excellent question. I'm going to turn it over to Ian. Ian, he's on the board, thrown away. He's been living this experience for the last 24 months.

Speaker 1

So he's probably the best person to comment. Go ahead, Mr. Renard. Yes, great question. Thanks.

Speaker 1

Look, in all likelihood if that winsome transaction materializes, the stream will be vested as part of that transaction and the only proceeds will be the winsome consideration being the cash or the shares.

Speaker 5

Great. Thanks very much for taking my questions.

Speaker 1

Thank you, Brian.

Operator

There are no further questions at this time. I will now turn the call over to Jason.

Speaker 1

Thank you very much, operator. Again, this concludes our call. Thank you for your attention today and listening to our Q1 results. Have a good week everybody.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Powered by Quartr

Key Takeaways

  • In Q1 2024, Osisko generated 22,259 gold equivalent ounces, reported revenues of C$60.8 million and achieved a 97% cash margin, ending the period with C$70.6 million in cash and net debt of about C$8 million.
  • The Board declared its 36th consecutive quarterly dividend of C$0.06 per share and approved an 8% increase to C$0.065, payable July 15, underscoring confidence in the predictability of cash flows.
  • Osisko’s corporate development team is pursuing a robust pipeline and aims to close 1–2 accretive royalty or streaming transactions this year in the US$50 million–US$300 million range to drive near-term growth.
  • The company released its 4th annual sustainability report, “Growing Responsibly,” featuring governance enhancements (independent Chair, >30% female board representation), an ESG screening tool, a climate strategy and full offset of 2023 office emissions.
  • Record production at Canadian Malartic, the CSA copper stream ramp-up from June 15 and two development assets slated for H2 support Osisko’s maintained 2024 guidance and five-year plan targeting >30% gold equivalent ounce growth with no additional capital calls.
AI Generated. May Contain Errors.
Earnings Conference Call
Osisko Gold Royalties Q1 2024
00:00 / 00:00