Q1 2020 Earnings Call
Good morning, ladies and gentlemen, and welcome to the Osisko Gold royalties Q1, 2020 results conference call.
Other presenters Sean will conduct a question on sufficient if you will see question. Please be called <unk> I'm, sorry, followed by the number one on your telephone keypad.
Please note that this call is being recorded so they may 13th 2020 <unk> to sign.
So the Nicole we also especially Brazil chair of the board of Directors <unk>, Chief Executive Officer, So well see school gold royalties.
Sundeep skin.
Seeing president of will see school gold royalties on Suffredini Creo, Chief Financial Officer on Vice President Finance.
Oh sure modems in Ms should it be evident on that because the whole Stephens your thoughts you putting it pretty much done it doesn't mean some do it does also we sell well see squalamine eye.
Pent up or sometimes you'll notice a dual NCL sticky people see what did you like was it just you'll see a decor shingle Colombian interested if one appreciates your loved to shift one the street Beach anymore.
Upon looked good set up that Oh, we should play well show three the times are made them as long as you sell did this level. She was left the additional treat Michelin Muslim which I don't recall say doesn't mean, it's cost show it shifted out she likes you won't do it is also we still see school vicious some people think especially the older. What they've also we still see school in Michigan Ideally Korea.
Shifted as he likes young female yeah, it'd be especially those you know Jimmy alignment and also do not <unk> Mr., Sean wasn't they'll see all they seem issue.
That's the operator I yeah, they do it to them all that at that conference held up pretty neat reynosa didn't move them for all Osisko gold royalties well, what's it's very similar ship the seed web doses go go royalties and powerpoints electrical up you know that's also very Asia. They come off people wouldn't Monday, the there's gotta love.
Forward looking statement Qiss approved offset the Powerpoint.
Okay, let it sit up from 18 S.
Yeah.
Jimmy that excuse me.
Welcome to the Q1.
A reporting call for Osisko gold royalties everybody. Thank you for taking your time this morning, I'm pretty good quarter, because Oh, we've we've had obviously some challenge in the second quarter with everybody else with the Corbett 19 crisis.
So I wanted to start on page three and I would refer everybody.
To look in and read the forward looking statement, because we will be making.
Some forward looking statements throughout this presentation.
This presentation has found on our website under Osisko gold royalties.
For a first quarter results for 2020.
I'll start on page three with the highlights from Q1 of 2020.
We had gtlds gold equivalent ounces of 18159 ounces, creating a revenue from royalties and streams of 37.8 million.
Dollars Canadian and cash flow from operating activities with 23.
Point 8 billion with a non cash net loss for $13.3 million, mostly relating to the impairment.
$26.3 million.
Which 19.3.
What is to the Rennard Diamond stream net of taxes net adjusted earnings of $7.5 million or five cents per basic share.
I also do the pandemic.
Well, it's Ron the 2020, a production guidance a as many of our associated companies and projects.
We are investor didn't have also withdrawn there's and we will come back to guidance.
As our partners continue to update their guidance as we get further.
So the year and this pandemic a.
Crisis becomes more.
Evan as to what the effects are going to be mid to long term.
On the projects, our cornerstone assets the Canadian Malartic Mike.
It was that a shot was affected by Corbett 19.
Including a a shutdown for care and maintenance on March 20 cents to April 15th.
It is currently by ramping back up.
We look forward to machine that mine back in full production.
What I was be specific on our cash operating margins are net of some offtake agreements we are operating at 91%.
Gross royalties, there's been some misinformation in the market.
About what our royalties are but we'd have a small offtake.
Agreement the left in our portfolio that does skew that a bit.
But our real royalty at margins are 91%.
Throughout the quarter. We also acquired got just under 430000.
Common shares through our normal course issuer bid process.
For an aggregate of $3.9 million Canadian and the average price per share that we purchased 7 billion ship was at $9.
And 15 cents to share with the current with the stock currently trading about $13, a and 30 cents. We also declared.
David and a five cents per share.
This is consistent with our dividend policy that's been in place since 2014.
We continue to be one of the biggest a dividend payers in the space on a yield basis.
Got a well over one of the half percent on average.
Subsequent to Q you won a we had a a financing non brokered.
We carried out with investment cut back and we'd like to thinking about smoking back.
For stepping forward, we did a non brokered premium to market deal for $85 million.
To bring in a great cornerstone shareholders that now brings a.
Small cut back to about a 5.5 north of 5.5% will be overall company and 6.2% off on a full point fully diluted basis.
Very happy to have a investment cut back as a cornerstone investor in the company.
In terms of allow other activity, we did increase our exposure to the Gibraltar mine by investing $8.5 million to reduce the transfer price.
On a silver per Alex down by $2.75.
So that we had no longer have a transfer price there. So it's really become more like a royalty.
We also declared our dividend as we said a five cents per share which is payable on July 15th to shareholders, who are on the record as after close of June Thirtyth 2020.
On page four Ur Cobot, 19 impact and I hope everybody staying safe today.
So you hear and come back in in Montreal, a we've we've had our challenges.
And now we want to thank all of our front line.
And first responders and doctors and nurses, who been working so hard to keep the arc our community safe.
And as we advance that through this crisis, we look to honor those people.
As a as this a unfolds in the and meatballs a into what we hope will be a manageable situation shortly.
The transition or for US involves go shutting down a the day to day office here in Montreal.
Everybody has been equipped with printers, and laptops and communication equipment that they need and we're fully active and Oh, we're working seamlessly from home.
And we will continue to keep non essential office people at home throughout the crisis.
And with limited our exposure as much as we can and doing everything we can to support those people who have to go to work or have to be ER and the public.
On the partner side, we have several mind. So there was a qubec wide shutdown not for mining which was subsequently.
Been lifted in part and then hopefully in full soon and we'll see most of the two back mines go back to work.
And we'll have better guidance as those as those regulations evolve.
And people are able to go back to somebody remote fly in fly at sites safely.
One thing to note that.
For us in the mining industry, Oh, we didnt Miss any business, it's a deferral of revenue.
The the resources are still on the ground.
On the social front, we've done a fund raising a with our employees were Cisco is matched up to $50000.
For most all Montreal, Oh, Wanna, Canada's largest food banks and we continue.
To rally for support for that a that great organization.
We go forward I feel where employees a agreed to sharma shown here and photo as join the a the revolution of three D printing.
And is put into printing protective advisors, a with a couple of printer saw undergo 24 seven.
So were contributing to some other efforts on ongoing basis as he the crisis evolves.
Page five you know as a summary of what we just cover.
The $85 million private placement really goes to bolster the balance sheet.
In a time Oh crisis, this $85 million brings our cash balances.
Up to about a 200 and.
Uh huh $30 million, so on hand, and that allows us some flexibility in these times and also on page five you can see a bit of a summary on the to CECO Offtake agreement.
A this is a a great mine with a 17 year mine life located in British Columbia, not that far away from the Barker Bill project.
And that continues to be a great minus operated for a long time.
Based on his primary copper producer.
Open pit at 85000 tonnes per day mine.
We think because a lot of potential and to see caused a group.
Has an awful lot of good projects.
No we're very odd mcgough.
That management team's ability to operate that mine and the cost cycle that they have and they continue to tap robust operations or even at these lower copper prices.
On page six or I wanted to go through.
Our assets dominantly a gold exposure, we have the most the bonus of gold.
Revenues of all the royalty and streaming companies in the space.
We've shown you hear the Q1 goes by asset base, obviously Canadian Malartic.
Still our biggest cornerstone a shareholder followed up by Eleonore GB and most recently Eagle and on island.
I will talk little bit more about Eagle as we go on but Eagle is the Victoria goals are you calling mine the latest gold mine to go into production there. So they're enjoying significant success having worked through the.
The winter at 64 and half degrees latitude.
And delivered the project into into production in a their pursuit, there and this and they're pursuing commercial production.
As we speak in had a very good.
Very good results yesterday, and we congratulate the Victoria Dean team on a on being able to continue operations Oh throughout not only they are the cold winter, but also through the club and crisis.
It's very exceptional management team, that's been able to bring that project.
To fruition a in these a in these difficult conditions.
Also we showed you are silver production with Mentos being are most important silver asset.
Previously and Anglo American.
It's a copper mine in Ah operated by right now.
Exceptional asset with long life, and we continue to see lot of these outside so continue to grow obviously, we got a little bit of diamond exposure with Oh about 2000, Geos coming from Bernard.
Obviously diamond sector, if they're a little more challenging.
As we as we get into the piece, but institutional changes we saw in 2008 nine.
Diamond prices did rally after a bit of a financial crisis.
At that time, so hopefully, we'll see that happened in the diamond space as well.
I'd like to introduce you to spread well who's going to take that's true pages seven through 11 of Fred has taken over the role as CFO.
As of January 1st I'd like to congratulate Fred on having had its first quarter a somewhat trial by fire.
Fred and his team have been Oh been able to give it are reporting true and continue on.
Even with the club at 19 crisis. The challenge is obviously in the accounting department being somewhat significant so Fred over to you.
For page seven.
Thank you Sean Good morning, everyone, just one quarter for Cisco in terms of revenues cash margin and operating cash flows.
Despite the disruptions on activities for some of our main operators the strong gold price more than offset the reduced deliveries at the end of March.
Revenues from a royalties and streams reach a 37.8 million in Q1 up 4.3 million compared to last year, an increase of 13% cash flows from permitting activities were slightly the war by 1 million and you want it this year, but excluding the impact of the changes in noncash working capital items.
In cash flows were 27.9 million compared to 22.6 million into one of last year, an increase of 23%.
On page eight or would it be presentation, we show a breakdown of our cash margin for Q1 cash margin on our royalties increased by 2.3 million to 25.6 million cash margin on our streams also increased by 2.3 million to 8.8 million, resulting in a cash margin or not.
He isn't streams of 91% into one of this year compared to 89% in Q1 thousand nine.
Our total cash margin reached 35.3 million in Q1, including $800000 generated from our offtake agreement, an increase of 4.7 million or 15% compared to last year.
On page nine of the presentation, we present, the summary of our earnings and adjusted earnings we add in net loss of 13.3 million in Q1 was nine cents per share compared to a net loss of 26.5 million in Q1, 2019 or 17 cents per share excluding impairment charges net earnings would have been 6 million in Q1.
This year compared to 2.1 meal than last year.
Adjusted earnings were 7.5 million five cents per share compared to 5.8 million or four cents per share in 2019.
On page 10 of the presentation, we have a summary of our results for Q1 GE olds from gold production were lower this year, partly due to the sale of the Brucejack uptake in Threeq 2019, and the impact of cold, but this was offset by <unk> realized price.
On the goal our average gold price around sold amount to June $2125 Canadian compared to 1007 on but in 31 dollar kidneys and in Q1 2019.
The decrease in our total revenues from a 100 million to 53 million was also due to the sale of the Jack Offtake last year gross profit increased to 21.6 million from 18.2 million last year.
On page 11, you'll find a summary of our financial position our cash balance was 158 million at the end of Q1, and 243 million considering the 85 million equity financing competed with and that's not get back on he prefers.
Debt amounted to 423.5 million, which includes a dropdown of 50 million U.S. in March on our revolving credit facility as a cushion every measure.
Including the one I've been Midland accordion available credit hour available credit on the facility was over 400 million at the end of March our net debt position, including the eye to financing amount to 280 million. In addition, our equity investment portfolio was kinda to you thought you wouldn't have over 20 within 15 back to.
Sure.
Thanks, very much for that Fred and.
I think it's just worth highlighting that our net debt position.
As quite manageable at a 180 million.
Dollars and ER, our our equity portfolio has been performing quite well.
Obviously and he has increased.
Gold prices. So all in all things are going pretty well in a lot of liquidity lot of fire power on the balance sheet to work with them. This time in this.
Interesting market times since they say Oh on page 12, and just to recap of our portfolio over 135 royalties and streams and precious metal optics.
Acquired since we started this company in 2014 with one producing loyalty and four on Nonproducing royalties.
We've gone pretty quick in terms of.
Getting access to quality assets throughout the space at a very competitive space and we've created the accelerator model, which is somewhat unique to us and we currently operating at the highest a cash margins have anybody.
In the Washington stream space at 91%.
With an exceptionally low geopolitical risk with the over 68% of our assets being in Canada the 86%.
Here in a in North America by geography, and it's a you know tickets credit to our partners Agnico Eagle Yamana and Newmont, who are quality top quality operators.
On the asset base that has a clear most exposed to and we'd like to shadow too.
Agnico Yamana Newmont a in this time of crisis, we really appreciate their efforts at all those management teams.
Made to keep these assets are in good stead throughout this ER This challenge.
Onto page 13.
In terms of dividend yield. It you know we're at the top quality of the investment cycle or if we were looking at this dividend yields a 1.5%.
Being more than all the other royalty and streaming companies in the space I'm. So therein lies the opportunity as we see it in the second line on a p. now trading multiples are were trading at about one times any maybe based on consensus.
And therein lies the opportunity for investors today.
It's too to look at that and we feel that as we get further into the year ER and the asset base continues to strengthen.
And also we should see some some simple catalysts in the portfolio such as the Canadian Malartic underground.
Resource that's evolving and also the evolution or quick evolution, we're seeing on barks at all.
That asset continues to strengthen.
Really show its quality in the portfolio.
We also have one of the highest liquidity ratios in the business trading at $18.5 million per day.
Which I think it goes to the fact that this is an asset that a that the company. This isn't as well follow and hopefully that sets the stage for us to to increase value as we meet these are these criteria that we want wind in our catalyst for this year.
Again, the strong balance sheet with over $900 million and total financial.
Capability and a positive.
Net debt balance sheet sitting at a well north of let's say of $60 million.
In terms of our shareholder base, a very diversified shareholder base with the case depot.
Sitting at around 12% and they're about smoking back sitting at 5.6, and some other based on portfolio and such as a spot.
Investment fund.
And some of the bigger.
On that and.
And and Fido working to round out our top 10 shareholder list.
Our business model on page 14, obviously this is Oh. This is somewhat unique to us and I think in this increased gold price. It obviously sets the stage for us to be up a pretty loud and proud about what was accomplished with our business model. We are hybrid and that we invest about 75% traditionally in our core royalty and streaming business.
Which obviously, we've seen a that happened with the most are the largest acquisition of recent times.
In that business was the the royalty.
On the Victoria asset Eagle.
We paid $98 million.
For a 5% royalty, which is now Canada. Most recent entered into production.
And then somebody earlier stage businesses.
That we've been involved with obviously O.S.K. a is the most successful of the Osisko family accelerator companies today.
And we congratulate Cisco team and John Ah on all day fine job that they've done a really take windfall to another level.
At a speed that's a bit breathtaking to watch over 1.2 million meters get drilled there over three and a half million feet drilled on that asset.
As we go through we also will talk about caribou, a little bit later, nor spirit discovery group a is our subsidiary.
That's looking to finance the the evolution of the caribou assets as we go forward.
And that are set has gone up significantly in values. Since we purchased at last year Olin. The gold price was mid 1400, and obviously with Golden 1700 now.
The two significant amount of value increase.
And that asset.
What were to page 15 are we seeing solid growth in our geos.
Since the beginning of the company in 2014, and we see that to continue for a long time to calm are paid for royalty growth portfolio allows us to get to 140000 ounces per year and that is things that are 100%.
Finance and paid for already by the Osisko gold shareholders and that would exclude things like the horn five silver stream, where we still have some cash investments, let's just purely what's already been paid for.
As we go forward, we see these assets evolve.
So I think it bodes well for us in the future.
These are competitive marketplaces, but we've been able to create a organic pipeline.
That we believe it's somewhat unique.
In the space in terms of not only being on significantly gold assets up for the most part.
As opposed to byproduct from copper mines.
This is a this is a portfolio that dominantly Canadian as well and as we've seen with Canadian Malartic, which we can slip over to on page 16.
It can enable Arctic when we sold the company in 2000, and a 14 year banner Veeco purchased it and that's been one of the Allstar assets and in both those companies portfolios.
But we've also seen the underground resource here.
Essentially double or what was there before with over 10 million ounces, having been identified.
Measured and indicated and inferred categories in this asset.
We had drilled some of the stuff on the Odyssey zone.
During the 2014 spring.
But they've taken into Holden level that we congratulate the I get going your management team on the exploration success that anybody generated here.
And obviously.
There has been some discussion around this aspect of it.
In terms of the significance of this but it's not really priced into our stock right now, but obviously at 1700 a plus.
Gold price. So all these ounces are exceptional and they're located near kind of the most efficient and lowest cost cold mill or the Canadian Malartic mill and we are we look forward to seeing a this value unlock does as our partners technique on the amount of go further.
To develop that underground aspect page 17.
[laughter] again, a quick chipotle of Victorias.
A new Eagle mine located in a in the U. Conn, it's the largest gold mine ever built in the U. Conn ramping up to an annual production of 220000 ounces per year.
And as I said in the preamble or they were able to operate that mine throughout the winter. It was an exceptionally cold winter. This year she temperatures have little minus 58.
And they've been able to keep this mine running and is now starting to hit its stride and really congratulate an extraordinary effort.
To keep that project on Ensco and wish them luck with the commissioning.
As they get it as they move forward here and congratulations on the results this week or seeing significant amount of gold production.
From April.
Elliott or.
Was acquired though.
When newmont or did the acquisition of Goldcorp Ah. So were welcome my Newmont to our portfolio a very happy to be partnered with Newmont, Oh, we have a long history with newmont and not really consider them to be an exceptional company with exceptional people.
As we go forward, we look a we look to see newmont bring that mine, a backup and to a into pushing aggressively.
As we move forward with.
We've mentioned Mentos earlier.
As a 100% silver stream and you got to the gas or Chile.
Belts another long life.
Mine and the great jurisdiction or moving forward on page 18, Oh.
A couple of things have gone on a windfall.
Recently that were were interesting from a science standpoint, with the with the team, they're having drilled channel the deepest diamond drill hole ever.
Just under 3500 meters.
Graduations, two major drilling into the.
The team at a landscape for that more exceptionally has been the 5 million ounce resource It was published.
With.
Within the within the drilling that's been done there and an additional 250000 meters of drilling plan for 2020 continues to be one of the most impressive.
Drill outs in current exploration and development World I don't think there's any other site in the world right now that's operating the 20 core rigs.
So congratulations to our that team for having really move things forward.
We did increase our royalty there recently.
So we now have a 2% to 3% royalty, depending on which part of the deposit.
For most of US continuing to move forward exceptional polymetallic high grade zinc deposit 10.4%.
I think grade a equivalent zinc grade.
Multi decade life really another exceptional discovery.
So 32 is moving that to pre feasibility.
He is on track for the second half of 2020.
Retain a 1% royalty on that project.
Pardon five a under Falco resources led by loop or very old Lucas are.
Currently at 6 million ounces of GE chosen reserve another 3 million ounces of reserves. This remains one of the largest the underground open pit ore underground a bulk tonnage deposits that so that's in the development pipeline here in Canada and in North America, and with a full feasibility study and reserve status here.
There's a lot of work has been done.
To complete the agreements with our partners there and we look forward to.
Getting that permitting underway.
In a significant way this year and a in early next year, hopefully I've to have completed that cycle.
But I really as an exceptional asset.
And it's a vms deposit that the that goes down what there's another kilometer of undrilled potential at depth and we see that as one of the big assets you're in come back that a there will be generational that's weird a fast forward 10 years from now.
We would see probably windfall and felt goes a horn fives and knievel Arctic underground as the biggest assets here and come back. So we are staying close to home tobacco is our premium jurisdiction.
And a b C is our other go to jurisdiction on page 19, one of the do a brief touched down.
On the Caribou project as you can see here in the image the underground workings.
From the BC vein and you can see some of the clear cuts in the background.
Work is ongoing on this project.
And we have in mean less than four kilometers of the known trend.
Outlined 4.4 million ounces.
Of underground resources in our PK study was published in a in September of last year. This company is currently 100% owned by Osisko Gold royalties and obviously time has been our friend on the gold price with the gold price having gone up.
Nipigon list since we bought this project back in September and we're evolving to work the permitting timeline on that with a couple different things on the goal, but we'd set the stage to look at a plus 4000 tonnes a day operation, which would set the table for over 185000 ounces. Your phase one development of this project, but make no mistake.
But at this is a mining camps not just the project with over 83 kilometers of mineralized trend identified in this project on North of a 2000 square kilometer a land package. This is one of the big projects a that is out there.
And we think that this is generally SHL asset what are what we were hoping to see is a scaled investment one of the advantages of this project is it has existing infrastructure with the QR mill in place.
And we think that it can relatively simple ramp up.
To go to 4000 tonnes, a day using worse order and flotation technology, coupled with existing infrastructure Oh, we have a pretty straight forward mine with relatively low capex from the beginning.
And we will be there with our royalty currently.
At 4% to 5%.
So it's up.
It's high times, Oh for permitting and Embarcadero as we move forward towards the the conclusion of that a project subscription.
And the team is fully functional and pushing hard not to get that done we did spend about 5 billion dollars' worth of our budget on exploration drilling there, which have yielded some significant forward motion on infill drilling.
For the deposit that project continues to strengthen nicely.
As we move into the year or it was concluded a transaction than we did spend some money on the transaction closure and we've also invested the or about a $10 million between the transaction closer and preproduction.
And and environmental contact water management systems that'll that'll set the stage for use during the production period as well.
Page 20 high exposure to gold prices with us so being at 81% gold exposure and mostly driven from pure gold bars.
Which is somewhat unique in the space.
So we're quite happy to be there obviously during this this gold price.
On page 21, really a cycle through our business plan.
The Optionality that accelerator model is brought to us we've been able to incubate Oh, one or more accelerator companies.
With the Osisko group or on a per year basis, since 2014, and really the goal is to take a highly talented exploration and development and mine building teams that put Canadian malartic together and created.
$4.3 billion value in that company, which shareholders made a profit of over 3 billion.
And to take that team and deploy them into other assets that can duplicate the success.
That we thought Canadian malartic, but hopefully to do it more in parallel rather than one asset at a time.
We listed for you here, Osisko mining, which we own a 16% equity ownership and we generated work either a sliding scale. What do you have 2% to 3% Osisko battles run by Bob wears.
And as it currently around supply and plant project, we have a one that I percent well do their 18% equity ownership at Falco with the Horn fly project, and we talked about and a new well new a accelerator company that we've invested in a headed up by Terry hardware I want to where exceptionals exploration structural geologists and here.
His team Talisker resources.
Currently working on the Bralorne project in Central BC.
And mineral Alamos.
Which has been moving well with the heap Leach asset Santana.
In Mexico. So we see these is early stage opportunity is really evolving and creating our own or our own.
Organic world in terms of doing deals earlier on and then being there to help those projects are with project financing as we get further.
Into the value creation process of those projects as they move into production.
On page 22 brief summary of things.
Just a over 18000 ounces cheetos earned in the quarter cast margins at 91% the highest in the sector.
Over 23 million $23.8 million.
In terms of cash flow.
$169 million of investments as at March 31st 2020.
And $158 million cash.
As of March 31st.
Ongoing and ER, obviously current cash balances and hence the subside since that so to simplify the the story a this is a very good exposure to gold pays a dividend while you were invested in gold.
What's the significant a lot of upside with over 1 billion meters, having been drilled on the share on the royalty lands that the osisko royalties shareholders are already exposed to.
Last year in the year before without having to invest any further money our land a royalty lands are more important exploration wise than most other things worldwide because of the flow to share a system here in Canada.
Which encourages exploration or or R&D, if you will which is usually the lifeblood of all value creation and every sector.
His research and development and we consider exploration to be that R&D factor or the differentiates us from other gold investments in the space.
In terms of where we are right now obviously, a our hybrid.
Business model as a has been a little are a little less valued in the marketplace in the past, but we think that that were well geared.
For this market and certainly with the evolution of the accelerator assets within the company within the project, a we're seeing more and more value being ascribed to those.
Through the cumulative through the analyst community.
And we think that as we get further into this year a lot of that value star sidewalk and hopefully we can now turning a corner on evaluation process and see a higher share price for our supportive shareholders and on that note I'd like to thank everybody for participating the call and open it up the Q and stuff like that.
[laughter], they remind us plastic film you don't need to principal one on a penny from suite brilliant gem. Please press the pound.
Please standby why when compared to Q1 English.
Oh I'm pleased to propose even gets you'll see a previous you want CVG seems to me from White label tickets Jones, Yes, you did see I see I'm, a bump on bone couldn't compete only calcium.
Your first question comes on the line of Kerry Smith of here Whats Securities. Please go ahead. Your line is open.
Thanks, Operator, [laughter], Sean a couple of things I'm Caribou could you give me.
What are your current thought process on the timing of the permitting process.
And and also bringing in a partner what your time your expectation on timing is to have concluded that sort of a tad investment.
Yeah, George well, obviously, a you know we've been in an uptick marketplace here and in Barker Bell has gotten an awful lot of attention.
As of late from from various partner. So we are working very hard.
With those partners.
Optimize the investment that via Cisco shareholders have made into this project.
Terms of timeline on the permitting we see a you know really haven't construction or east released hopefully in 2022.
Probably later on.
But we've been moving well.
Within the new framework, a b C as outlined.
Yeah, we're quite happy with.
With the way the process is going in our first nations partner.
In very supportive as well.
Most recently a prior to the cobot banking crisis.
We had the mine minister and major projects, Oh coordinator come and visit the site and obviously, we think that given the economic outcome.
Have a lot of different industry is right now on gold mining in the caribou, which is a brownfield site.
It's going to be a priority investment and we have the ability to create significant amount of jobs. Both during the construction period with the probably seven to 800 jobs. During construction and then a full time a workforce so somewhere between four and 600, a as we continue to ramp up and build out that project from the partnership you know we see a was correct.
Very high quality partners that are interested in this project because of its scalability and because it is a campsites project.
So Sean is your your target to then try and have a partner for that project by the end of this year, let's say or is that a 2021 event.
No I think we'll we'll get a partner.
We are in process right now carries a obviously covert 19 or is it created challenges for a lot of different people. So I'm hesitant to put timelines on things, but I don't see why we wouldn't get to a deal gone in the current market conditions that were in BC has a as dealings.
Mining as a.
As a necessary.
Service. So it has not been shut down and then in the Ministry there continues to work.
Do we.
And the team there has really you know move things forward as we as we got going there.
So don't really see anything that would inhibit us from getting to feel done hopefully in all over the course of this summer.
Or certainly by the entity or.
Okay, and then just on the permitting side when would you file the documents with the regulators and if you want to have the permitting done in 2022.
Well the process has already begun Korea, and we have submitted projects descriptions are last year.
So we're optimizing those on whats call IR Tees information request.
Transfers and we are in the process now and hopefully you know being going back and forth a bit more but we're we're in constant motion on the permit as we speak today and that process is engaged.
Okay, Okay. Good sanction.
Thank you Gary.
Again, so I'll quickly film Please press star one on your telephone.
Your next question comes on the line of Josh stopping all seen those trend I am. Please go ahead your line open.
Great. Thank you.
Hello, everyone.
I'm showing on the $10 billion to be spent this year to Canada boot gold how much will be done so.
Expansion and how much is going to remediation.
Oh the budget right now is a $5 million for drilling.
So we'll be doing some tidy up in fillers, we've we finished up with that that geological model.
So anywhere where we've identified a that we need a higher density of infill drilling will go back and tidy that up.
We have made an investment into the contact water treatment facilities that are a really you know for sort of pre capitalizing the infrastructure that we need to go Marty.
And then in terms of a remediation work, we it's mostly being done in function of the BC.
Being development, but it won't be that much the $10 million is really to go to drilling.
As we go forward and will be a little bit opportunistic George has could we see opportunity.
To do things that are going to de risk the project and moving forward and we can get the permits to do them.
We made who May go and do that and then also will be something like subject to our financial partners. A few other project as well as we get further into it.
Right and then for 2021 do you have a a thought on how much it might spend there.
And the you know admitting that might change if you have a.
Another partner to involved with his own so that everyone thought.
Yeah, I think where we are or not to argues that are probably three answers. If we go it alone or.
You know, we would probably be fairly a fairly conservative the mid tier or you know certainly that we're we're driving hard to do everything we can.
To facilitate that construction release Asap and then the third one as a you know assuming that.
We want to get aggressive not only on that but we also want to increase the drill out that and what that partnership that we would initiate a significant drill program in 2021, So I'll come back to you a little bit later on the year as we as we fill out those.
Its goals, but I mean, you can assume that it's probably going to be you know a minimum of $20 million to $30 million.
And then upwards from there depending on how aggressive.
We get on the exploration and underground development Oh aside.
Got it and then them just lastly, just switching over to Diamond. Some I mean, obviously, the with the India being shut down no it's coming back a little said.
Have you heard then the a industry updates on blue Diamond market. So they might recover from many of the commodity specialist.
Yes, we have I know you know there's a couple of different viewpoints up if you look back to the last financial crisis. So obviously it didnt have the same ramifications of of shutting down the diamond polishing centers in India as Cobot 19 has.
There is pent up demand that we're seeing that retailers in China, who have open back up have seen significant demand.
And first indications are that the month of April a was somewhere between 60% to 80% of what the 2019 April numbers were so you know that demand did come back fairly strong and you've seen down shutdown a indoor shot in the of deferred mines in this space. So there is a supply demand.
Aerial building.
However, there will be a bit of an inventory clear through.
As diamonds go back out in the space.
But we are optimistic that <unk> diamond prices will respond like they did in 2000.
Eight nine but with that pent up demand coming back into space.
Right.
I think a read all of them in would your budgets be maybe Q4, this year or thereabouts would really be re stuff.
Its going to be a bit speculative on my part George but obviously I certainly would hope I'm that we can we can do that you know there would be the mine is on.
On a dry shut down right now as we model is situation.
And we'll will review that fairly regularly with our partners.
As we get further into the piece.
But the minus you know as well well well groomed and well built in it. So I was just starting to hit its stride a wasn't a diamond prices started to pull back.
We are ready and waiting to put that mine back to work.
As soon as the time is right.
Right.
Thank you.
Thank you very much shorter.
Your next question comes on the line of chunk to muzzles off some of those seems dependent. Please go ahead. Your line is open.
Oh sure congratulations on the progress on those so many fronts.
Well I appreciate that John and I hope, you're keeping well unsafe I know you you live in a place to try to its challenges as we have that here.
Yeah I just.
Keep looking at my computer and are working the garden and I discovered the whole selfish markets the fisherman can't sell to.
Restaurants, and there's great fishing around here so.
Isn't all in the Canadian North, there's a little bit could here.
Could you update us please concerning.
How your investment criteria have changed as the markets.
<unk>.
First have you raised your gold price.
Basis, and doing analyses the $400. Your so that the spot prices gone up some of the majors.
It's kept their criteria the same as a year or two ago.
Second.
Have you raised your discount rate assumption because a couple of projects.
Charges this year last year the year before third how much do you raise your discount rate.
Outside of Canada.
And force.
How do you prioritize between these dozen or so wonderful projects at all appear promising where some of them don't have a million meters of drilling like windfall.
Earlier stages.
Okay, all Oh, I'll try and tackle a the costs laid out before me here John.
You know in terms of our gold price right now, we're probably somewhere around 1400, U.S., Oh, which I think its bank consensus and we'll obviously run sensitivities.
Based on the asset and what we think the ability of that asset is to perform and lower.
Lower gold prices I'm, a big believer in the ratios between cut offs and a in mining great. So that's probably a higher criteria for me on an individual basis.
But we do look at internal rate of returns.
And then on discounts or rates up we tend to focus a lot on the geopolitical risk into my and the life of the mine.
You know in terms of where we are in the world.
So you called it 19 as change the geopolitical dynamics and a lot of environments a lot of countries.
If you can't fly their or go there it makes it much harder to monitor things and I do like my Maple syrup, and putting a so we've been sticking to your okay, Canada with that come back.
And B C being are dominant jurisdictions that we've been deploying capital in and obviously, where we had the most success at the drill bit.
And in terms of you know they earlier stage accelerator companies.
Because of the flow through share and quote and and charity flow through share program here in Canada.
In the low cost of drilling here.
It's very much in our favor I could continue to push on these brownfield stories.
That we've been able to focus on in Canada.
The most recent one being the Bray Lauren asset.
In terms of discount rates, a you know where we work with a 5% discount rate on premium assets.
And we would increase that discount rate depending on the commodity ER and also on the jurisdiction up too much is 12%.
In some cases in terms of allocating capital.
Obviously, we're trying to prioritize whatever we think is going to have the most effect on short term cash flow in terms of creasing geos.
For our balance sheet that as dominant or the dominant allocation of capital.
We do take a long term view on exceptional assets like like when fall and a hard five and Barker belt, where we feel it there's a bigger price to fight core.
But normally the criteria.
It would be nearest production America Geos I don't know if I got all your questions Don let it took a good run out Oh, we like the emphasis on long life and near production and Safe Places like Canada with all the double dip Sean expirations.
Thank you.
Thank you John.
Your next question comes on the line carry Macquarie off kind of continue eating. Please go ahead. Your line is open.
Hi, good morning, Sean.
Ordering Kerry maybe another question maybe another question on Barker Bill you know is there a scenario you know once you get.
To a construction decision where you find construction within Osisko gold royalties or do you think it's more likely at that time too you know either no sell the asset or you know put it in another vehicle.
Well, we'll have we'll have to cross that bridge when we get there I guess carry but I mean the.
I just want to make sure it would be clear osisko gold royalties as a royalty and streaming company. Our main business is project finance. All you know, we've got 25% of Al Qaeda correct incubation accelerator strategy, but yeah. Once our project gets to shove already fully permitted it falls back into our main strategy.
So if we see the numbers are right and then we can continue to invest there and meet our criteria are being a dominantly royalty and streaming company.
We're obviously going to take advantage of of the projects. We know the best and you know things that we've been actively involved in the evolution of would fit in that criteria. So we will be opportunistic for the osisko gold royalties shareholder. So we want to make perfectly clear to everybody that a royalty and streaming business is here to stay.
And they won't you know if we do go into any other mode. That's why we created more spirit close to a to having a platform that other capital I could come and invest alongside of us.
In that space and do choose the proper partner sound lock the most amount of value and the most expedient manner with that we think that a that is a proper strategy a in this market and we see a lot of capital willing capital is coming into the space right now.
And were unfortunate position, where we control a lot of.
Extremely high quality assets, especially things that could be 5 million ounces or more that have the ability to go three to 500000 ounces your production.
In the long run and have the Canadian moniker on them you know that's been our bread and butter.
And we I think are we really well positioned ourselves to take advantage of bad and with the Eagle victorious mine coming on line and then the core three other big Canadian projects that are sort of Oh within our program. We have the most exposure to big Canadian assets of any group out there at this point in time.
And Ah I think that we are well suited to take advantage that for our shareholders.
Okay, Great and then maybe in the longer term guidance of 140000 ounces. You can you just remind us what that big components.
Cut growth is relative to earlier today.
So we would see obviously a that label Arctic underground back 40 in Michigan, a we also see Mancos expansions are working hard for us.
And we see Barker, bill and cutting and a windfall.
Following a development track and hopefully well we did not included in that 40000 ounces. For example was falco or with the with the silver stream because we haven't finished paying for it.
So we've only included.
Assets were 100% payment.
By the Osisko gold royalties shareholders on the asset has been made so we have quite a bit of organic growth.
And those assets.
I mean, maybe one last one on Mentos.
Can you comment on how the expansion was going there and when you expect to see an uptick and.
<unk> ounces from from Memphis.
Yes, you know, it's a private company its very much on track right now and I think that the way that we see that asset is you know Ryan is or isn't it is a very good operator with deep pockets.
And we see it I'm pushing hard to get that next expansion under control management team there.
You know is very focused than a and driving hard and we think that by 2021 and 2021, new should achieve their goals.
But it's really a friend exceptional effort and that asset is really showing its true call. It two colors into quality.
Okay. Thank very much.
[noise] Derrick for him and I know.
There are no further questions at this time I turn the call back over to the presented.
Thank you very much in I'd, just like to I think sandeep, saying and and Fred who both stepped up to the played here in Q1 for a great effort as well as Oh, the rest of the members of the team who joined US make Spencer on our international side and farmer, let's take on the role.
Vice President corporate development.
And then why Rene who's joined US a into Montreal office.
On strategic planning.
The team is fully functional and and I'm very happy with the way that the team has been able to come together, especially in this covert 19 crisis and achieve so much in such a short time, thanks, everybody in the stay safe.
Ladies and gentlemen, this concludes todays conference call. Thank you for beating you may now disconnect.
Hey, dumped in Michigan.
So on the console and if when you do something messy to vote at Patheon. So you have for sure.
[noise].