Q3 2020 Osisko Gold Royalties Ltd Earnings Call
Okay, Oh, Cisco gold royalties Q3, Twentytwenty results conference call.
After the presentation, we will conduct a question and answer session if you'd like to ask the question. Please pick up your receiver and press star followed by the number one on your telephone keypad piece.
Please note that this call is being recorded today November 10th Cookie 2010 am eastern time.
With me on the call, we have Mr., Shanghvi chair and CEO of Osisko gold royalties Mr.
Mr. Singh, President and Mr. typically tran.
Chief Financial Officer, and Vice President Finance.
I would now like to pay the meeting over to your host for today's call Mr. Chen with Citi.
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The post close you'll go up I do about the victory bar Sandeep, saying, Oh welcome to our third quarter Conference call.
We will now be Florida format. This morning, with a Fred we're all presenting our.
Our financial results as reported.
And then Sandeep, saying, our president Oh and to be a C O will be coming on.
The rest of the corporate presentation for today, we will be referring to some forward looking.
Oh event.
And we haven't really presentation on our website titled Q3, 2020 results all that you can follow a this morning.
I won't give up quite small preamble. This morning, and then pass it over as you know we are.
Evolution of the Osisko story or with the purification other wealthy model for Osisko gold royalties through.
Through the spin out all the Barker Bill and San Antonio assets into the new ANSI Odell.
That vehicle will probably start trading in early December and some more work left to do on that as we get into it.
And that should that simplify the business of Osisko gold royalties on a forward basis are quite excited about the evolution. There are aspects of what's happened with the old have asked such important barking on San Antonio.
As we move forward and I think it goes well to explain why we believe Osisko gold royalties has the best business model in the space with a sidecar accelerator business.
Providing unequaled opportunities to Osisko gold royalties as we evolve in the space and continue to execute our business plan.
To build the best business around the world the model in the sector.
On that note I will right handed over to Fred well to give you the financial highlights and.
And then Sandeep will it will take over after that spreads over to you.
[noise] Nazi Sean good morning, everyone. Thank you for joining us today.
A strong quarter, a strong quarter for Cisco with production, we bonding family wells from Q2 into cold It impact we heard and 16739 deals in Q3 generated record revenues of 41.2 million record operating cash flow was 36.1 million and operating margin.
On our royalties and streams over 96% net earnings were 12.5 million or eight cents per share.
While our adjusted earnings were 17.5 million or 11 cents per share.
We also acquired during the quarter the remaining 15% ownership. When you can use in precious metal would why you will see portfolio, which includes royalties on the island gold and luck mine. We also announced a strategic partnership with Regal is for 12.5 million U.S. and of course as you. All know we announced in October to spin off transaction and the creation of a fiscal <unk>.
[laughter] on page four of the presentation, we show a production by assets in bike products again can even monolithic mine delivered strong results and Victoria continued to increase the deliveries in Q3, 70% to why production came from gold and 27% from silver.
That's because then I was presented them or page five of the presentation. We recorded record revenues from royalties and streams off that 41.2 million compared to 23.9 million in Q3 2019.
Cash flows from operating activities reached a record 36.1 million compared to 28.3 million last year.
If we go to page six we have a breakdown of our cash margin for Q3 and year to date the cash margin on our royalties then.
I don't know what royalties increased in Q3 to reach 20.1 million compared to 23.4 million last year.
The first nine months of the year the cash margin on royalties reached 76.5 million an increase of 5.9 million compared to Q3 2019, despite the cold and impact on all deliveries during the second quarter.
The cash margin and our streams was 9.6 million in Q3 compared to 7.4 million in 2019, and 25 million for the first nine months of the year.
4.5 million higher than 2019.
[noise]. This resulted in a cash margin on our royalties and streams over 96% in two or three in fact, 96.4% compared to 91% in two or three of last year. Our total cash margin reached 40.5 million 8.7 million higher than last year.
Year to date total cash margin was 100, and 304 million an increase of close to $10 million.
On page seven we have a summary of our earnings and adjusted earnings net income was 12.5 million in Q3 or eight cents per share compared to a net loss of 45.9 million last year to 32 cents per share the loss in 2019 was due to impairment charges adjusted earnings for Q.
Free reached 17.5 million or 11 cents per share similar to last year.
On page eight of the presentation, we have a summary of our results for Q3 and year to date Geos from gold production will award this year, partly due to the sales improved shack offtake into Threeq 2019, and the remaining impact of called it but this was more than offset by strong silver deliveries the decrease in our total revenues from.
Hundreds and 9 million to 56 million was also due to the sale of the boost check off like last year, partially offset by higher realized price on gold our average gold price per ounce sold amounted to a record <unk>.
Thousand $545 can easy in two or three of this year compared to nine $1952 in Q3 of last year. Our gross profit for Q3 increased to 30.8 million from 20.9 million in 2019.
On page nine we have a summary of our strong financial position or cash balance at the end of Q3 was the only one in 61 million our death amounted to 400, Intuity 22 million unchanged from Q2, including the 100 million accordion available under our credit facility the facility as well.
Over 400 million available at the end of September, allowing us to quickly deploy capital as needed.
Finally on page 10, you may find our updated guidance that was released in early August we expect Jio. So between 23000 25000 in the second half of this year with the cash margin on royalties and streams approximately 95%.
We anticipate the continued upward trend in June deliveries in the fourth quarter and believe that we are in an excellent position to meet our forecast for the second half of 2020 Oh.
Oh passed the Buck to Sandy for the rest of the presentation.
Sleep to you.
Thanks, a lot Brad and good morning, everyone, It's sandeep, saying here.
Well, hopefully what youve taken away from from friends presentation. In our Q3 results is that this was an excellent quarter you know records in terms of cash flow. Despite the fact that.
Our operators assets were largely still ramping up over the course of the quarter post coal bed the asset base is performing extremely.
Extremely well overall as I as Fred mentioned, your <unk> production bounce back well.
Well with no further upside expected in Q4 are you able to touch on that a little bit.
We've talked about timing you know deliveries are in the last quarter in our press release for instance, CB or we didn't get any else is delivered to us in Q3 are they're certainly producing in Q3. So that was kind of the the hangover of co bid, where we didn't get that impact in Q2, we got in Q3 island as well.
Mine is doing extremely well as everyone I'm sure knows that our ounces were down in Q2 that that's kind of behind us as well.
And I'm looking forward to kind of Ah getting over the hump on those types of issues Malartic, obviously, our flagship asset.
A good quarter or by every respect but also included some processing of low grade stockpile that they look for increased flexibility Intel Barnett or the Barnett hybrids on starts contributing it did a little bit in Q3, we certainly hope that that will continue and then Victoria is the the large asset for us wrapping up the.
Here, it's still ramping up and deliveries are going to us all the time I'll touch on that in a little while.
I'm still looking at like 10 by the way if you're following along in the deck and Oh Gosh as Fred mentioned, you know meeting our guidance.
About a equates to about 16 to 18000 ounces, a just a touch above or below the low to the high or in terms of Q4, and we certainly think given the dynamics. We just mentioned I just mentioned, but you know we don't see any any risk of that obviously the assets will do what they do but we feel pretty comfortable heading.
Heading into the last quarter of the year.
In terms of growth during the quarter, we spent about 67 million Canadian on a royalty and stream growth in the quarter between the acquisition of the case portfolio, a 12 and a half million and be San Antonio Screamed Fund, you know basically facilitating that transaction, which delivered us the San Antonio screen.
Yes that between those two transactions, there's immediate growth on assets that we already own.
Exactly right in that case portfolio that we like and not have big upside and then the additional stream. We think has the potential for a significant contribution in the near term as well.
Look at Slide 11, well next two slides I will touch on the important transaction that we announced post the end of the quarter and want to make sure everyone understands the impact on us I'm sure everyone doesn't understand the transaction structure by now you've had a chance to talk to most of you about it.
As Sean mentioned, it remains on track or or the trading of Oded remains on track for early December we're just going through the last of the listing process now.
And that bodes bodes well again I won't go through the transaction particulars I'm sure, they're all well understood in terms of the the financing I will say that it was a good result.
In what's been a choppy market generally speaking leading into the U.S. election, a good demand a good set of shareholders that Sean and team will take forward and Osisko development and a significant interest in that and that company, even though the structure was a little bit complex for for some groups to be able to participate in so we think there's a good.
A good launch in store for us on the old Dev side, and some meaningful catalysts in the next in the next six months that the team will be able to unlock value with.
In terms of the you know maybe I'll touch on it because the pre unpopular question a little bit the only real question, we get left from an or perspective is on the retained ownership.
Obviously, 88% in the end the one that the ER is not a sustainable level. We are structured in such a way that we wanted and we want that retained upside as a the ODAC team moved to the assets forward, we will be diluted EPS, we expect a the team to move the assets forward quickly to meet those.
Catalyst and then as well as I've mentioned before we'll look for opportunities to reduce as well, but the price. There is a significant amount of value. So we're going to have to look to do that in a in a smarter way as possible.
On slide 12, I think it's.
Worth Reemphasizing, one more time I think it's a win for both sets of assets or frankly, Ah I think we've set up the skill development well as a strong portfolio well funded or on its way to becoming an intermediate company solely with asset based in North America, a win in production and a good mix of near term or near.
Turn production potential Oswald the flagship asset obviously the team we have the utmost confidence in terms of unlocking that value.
On the ore side, you know I think.
<unk> quite a lot frankly, I mean, its a lift we got her shoulders, a lift from what's been invested into the the asset base, there which is significant with.
Our supplies the value of those development assets are now off of our balance sheet they'll have a see through value. They have one based on the financing they'll have one everyday thereafter, a which we think will be beneficial to our over our shoulders.
We reduced or you know, we'll be eliminating the spend in terms of the asset exposure in Q3 that was roughly.
Roughly $60 million on caribou, so in keeping with previous quarters or.
When you flow that through that that's almost a that's about 10 cents a share for the bottom line, we've also reduced or or will be reducing our gionee as part of the transaction that essentially the full team required to run both companies was was in place and we're just segmenting them between the two.
And not <unk>, you know the last but not least we we secured and fashion at least you know 20000 ounces of deals for Cisco subject to unlocking value on those assets, but Ah Ah that's a hugely significant chunk of growth that we got a pay to take in the end so a rough ride perhaps to go.
Yet there, but ultimately happy with the with the end result, and.
And we certainly feel like we are.
Set the company up for a significant rewrites you know the assets the royalty portfolio that is enough scale royalties today deserves a better valuation.
And and has a pretty substantial growth profile that we don't think we're getting proper value for us. So that's our job going forward is make sure. We can unlock that for the benefit of our shareholders. I think we've done a lot of the heavy lifting and that will continue down that path.
Slide 13.
The growth profile I touched on a little bit before.
You know essentially the ability to more than double production organically with things that we've already bought and paid for some of those contributing this year. Some of those contributing next and a and a good pipeline of assets that are coming on behind so we feel pretty comfortable.
In terms of where we sit currently and a and this provides us the ability to be disciplined and what certainly can feel like a bit of a a heavy you know transaction market out there, we'll look to pick our spots when we see value. If we don't we'll we'll sit on the sidelines given the the dynamic I just mentioned.
I'll spend a little bit of time on slides 14, and 15 talking about them locked underground you know given that it's a.
Huge catalyst for us, we hope and we certainly expect over the course of the next the coming months not just for us, but obviously, our joint venture partners Nikko and humanity, we're doing a tremendous job with the asset the open pit continues to deliver.
Like Clockwork sole focus you on the underground I'm sure all of you who follow those companies are aware of the underground.
Underground work that was announced in Q2 in terms of ramping down the world work that's underway now almost complete and the two years' worth of wrapping into your school, the Odyssey and East Malartic.
In Q3, a lot of the discussion was out was around drilling update any school, the which should translate into a new resource early in the year, followed by a P.A., which we I'm sure the market Oh, we look forward to.
The drill results were nothing short of a fantastic frankly with with Andrade, increasing if.
If you look at the bottom right, you'll also notice and.
And the continuity has never really been an issue, but it continues to be reinforced and I think it goes a long way towards adding confidence to the operators to push that out that Ford, including a potential shop decision off the back of the P. a year and if you look at the bottom right as I was trying to say you know east Goldie and East mill Arctic dipping toward.
Each other with certainly a yield the potential of those two converging at depth well open in open at depth to help benefit that so lot of good news.
Electric perspective in electric underground perspective, and we look forward to that getting a further advanced by our partners. If you look at slide 15.
Just a little bit more on the exploration update.
<unk> turning at the school the generated 38000 meters of drilling in Q3, a that takes us to about 70 778000 ounces that smart meters I think for the first nine months and a similar kind of Q3 Q4, a level of drilling so intense drilling and certainly we expect that to lead to a significant increase in.
Resources by the time, they update that in the new year as I mentioned, you'll you'll notice a snapshot at some of these results here.
Ah you know nothing short of exceptional frankly.
Fantastic continuity or average with a if I remember correctly north of 10, I think it's 11 meters.
Averaging greater than three grams per tonne in D. school will be portion so.
So this is going to be one of the core facets one core catalyst for US. We've always felt this year that this was shaping up to be the best development project, maybe in the sector are certainly one of a it's true. It's it's continued to trend that way and I and our view is the more of the operators or do.
Do their work the more they're comfortable talking about it early in the year the better be for all of us at the shareholders. So we look forward to to that ongoing work.
If you move to slide 16, just other some of the other producing assets to touch on a little bit and then if I Miss something we can certainly pick it up in the Q and a.
Eagle I touched on earlier wrapping up continues to wrap up well like I said the wrap of continues or if you follow Victoria you would've heard of some bottlenecks on the processing largely crushing side that are being addressed through a variety of of optimization work importantly, I think the grade the recovery if you listen to the operator reconciling quite well.
So it's just really a methodical march.
Up in terms of tonnes being stacked and so we are quite confident that the team is doing the right thing there and keep a close eye on it and look forward to that production growing it's growing to us all the time and then from an exploration perspective, you know everyone's been focused on me out on the production there as they should be but.
We're starting to see some really good stuff come out of a.
Victoria on the exploration side, including most recently on the Raven target a drill hole about 65 meters and just shy of three grams, which was a large step out hole. So again, you know speaking to character and the potential of a large very large prospective land package.
Oh man dose.
Again, a strong contributor in Q3 for us are performing quite well, even with all the challenges of a of Cove. It in South America, Chile, especially so we commend them for that and in terms of the expansion I.
I think we say your mid 2021, there could be some small delays again called unrelated but does that push that into the second half of the year, but still overall were quite pleased with the updates we're seeing in terms of their their expansion work and how little impact cobot has actually had on them.
Oh, you know or again it was a it was a cool that impact in the quarter a slower ramp up there I.
As I guess, they're being a little bit more cautious and lower tonnes mine, but we expect them to continue to make progress on their they're being <unk> full potential program. So hopefully this is one that they can continue to improve.
And ER and add ounces to us.
On slide 17, I touched on on the assets being contributed through Odessa to us.
So I'll go through this relatively quickly caribou look its a.
Significant scarce meaningful whatever adjective you want to use resource at caribou Ah, there's an aggressive drill program underway and we expect that to continue under the Odell batter lots of exploration success over the course of the year that the team will be following up on to turn you know discoveries into resources.
And a meaningful reserve update as well that will feed into the feasibility study in mid 2021, and an ongoing path towards permitting recently, yeah I'd be a sign but the key first nations a little Taco Denny a nation, so significant investment from that perspective, as well and from what we can see permitting is obviously a.
Lot of hoops to jump through but the team is doing a great job.
Doing just that.
And on the San Antonio side really great starter pack with a million ounces of high grade 1.2 grams.
Oxide heap leach material large land package really untouched and then kind of forgotten.
Work to do there in terms of permitting infield drilling expansion drilling studies et cetera, but a great address than a great starter pack as I mentioned, Sonora with significant upside overall and a lot of good near term opportunities that Sean and team will be attacking.
Slide 18, just highlights maybe slight 18 or 19 highlight some of our other assets I won't go through them all in detail a windfall or most are horne five significant contributors to growth.
At Osisko mining sizable high grade 5 million ounce resource.
Continue to you know.
The press releases was out a pretty funny title <unk> more of the same but that more of the same is if some of the most exceptional girls dealt in the sector I present. So we look forward to that continuing to add meaningful ounces as they work towards their own feasibility study in 2021.
And I felt go and weren't five a very important announcement third transaction with glencore or where they provided a convertible debenture structural an offtake, which they always had the right to and then frankly got some skin in the game.
And as they continue to work towards the last technical diligence, they're doing and and the team myself they've done a phenomenal job Ah.
Getting the relationship with Glencore to the point, where it is so we look forward to them, finishing that exercise over the next the short while and then again.
Just to touch on Horne, five as well, which is a screen that we fund based on success, but can be a meaningful contributor depending.
Depending on your gold silver prices circa 20000 ounces of gold strike right there.
And and so the recent announcements a positive one towards that our stream as I said its funded on success, but if you just look at the the monarch transaction recently congrats to those folks for I think circa $150 million in the neighborhood. We certainly think that's a very positive read through on value for 6 million ounces of reserves and 10 million ounces of overall gold equivalent.
Resources.
I'm on slide 19 against other examples of how the portfolio is doing well I touched on an island, obviously a ton of success there for the animals folks in terms of of that mine in terms of production and cash flow, but also on the exploration side.
And some of that drilling, especially over to the east now drifting over to our higher grade royalty portion. So we look forward to their continued work towards expansion and obviously.
Continued exploration success.
CV I touched on earlier deliveries have restarted for us in October so that's a that's behind us and we look forward to their they're catching up fill a great high grade mine.
An asset for us and Canada.
Gibraltar and that the CECO folks I think the upshot of that if they did quite well through cobot manage that exceptionally well. Despite a large a such a large land. It's our workforce kept cost down brought costs down frankly, and now the copper price is in a much more supportive place. So I think that's a good news story, we obviously improved there.
Screen earlier in the year.
To assist and frankly opportunistically for us.
And on SASSA again, a really important contributor.
Contributor on the silver side, obviously, unfortunately, there was a a tailings issue with the only bleak during.
During the quarter that those remediation plans seem to have gone well and have been well accepted there's still a finishing that exercise and hopefully that that gets sorted out soon in the meantime production at back at full capacity. So I'm hopeful that that issue gets resolved those behind them.
And then I guess ending on slide 20, I will just reemphasize again, you know, we think it's frankly and its an excellent quarter coming out of coated and sets us up for a strong finish to the year and at current gold prices, even with the last day factored and we're still making making money hand over fist and.
Hence the the records that we saw from Mcafee revenue more importantly, cash flow perspective, but of course the Q3. So hopefully we can keep that trend going on there.
There certainly are a lot of strong catalyst across the asset base over the next three 612 months pick your time frame.
And what we think is fairly sector, leading organic growth that we should start to to chip away at.
I'm in the process, we think we've simplified the story this quarter.
And and as we get out and tell that story, we certainly expect to undo.
The meaningful trading discount that we still think our assets deserve a better a lot in life on so well.
With that I will conclude and Ah open up for any questions. You may have have a myself, Brad and Sean.
Thank you at this time I would like to ask a question press star followed by the number one I guess, one I phone keypad to which I have question consistency.
And your first question comes on line ups Ralph.
<unk> capital. Please go ahead.
Hi, there and good morning, everyone. Thanks for taking my questions.
Sandeep two of them if I may firstly.
You talked about the transaction market you described as being a heavy transaction market. Just wondering kind of what you meant by that are you seeing a significant pickup in activity or a more competitive environment or both and in that context.
Under the new structure, how would you kind of our key priorities.
How you would actually fund.
Actions.
Sure happy to touch on that Ralph and good morning, Oh look I think in terms of your first question in terms of the key growth market I think I said heavy or I meant to say <unk> I meant to say heady not heavy but look at it. It's clear there is a fair bit more competition out there you know I don't think we've been shy the going rate for things at times.
Times we've.
Chosen to not pay a we've tried to grip.
For for variety of reasons, we have significant organic growth as I mentioned earlier, and we've tried to fashion new growth in different ways and uses could develop and transaction is one example of that but there's there's more people out there looking for for royalties. So you'll you'll find that at times.
But there is also more royalties and streaming opportunities are coming around all the time I think.
You know that ebbs and flows it's a capital intensive market.
I think roll through royalty and streaming we provide collectively a competitive cost of capital.
So there's still a lot to do and things popping up or kind of here and there all the time I would describe our pipeline as good.
Yeah, we still see things that we can do that at a you know moderate type transactions that add meaningful growth to our size. The portfolio that we you know we think are still good value and those types of things. We're focused on so hopefully that answers. Your first question and then again flowing into your second in terms of allocating priorities again.
I think for US it's it's a given what I just described its having discipline and showing discipline in terms of of what we reach where we see a good value out there we can reach for it we can do almost any transaction, we want to in the sector, but but time that's been a big if.
So we'll look we'll look to pick our spots. The fact is job one is to get paid for our current set of assets and Ah and then obviously you have the organic will kick in if we can supplement that with smart transactions. We will we've got as we owe you and I've worked with many of you have talked about the fact, we've got a large development portfolio.
This transitioning.
Already and we'll get the benefit of those ounces really as they do transition from development to producer status. So you know the focus is on yeah. We have to look at things on a case by case basis, So that says.
You can't be too to stuck in your ways, but the focus certainly is on near term either cash flowing or near term opportunities that said when we see an attractive asset like we structured with regulators in Peru, with which is big and getting bigger all the time well reach for those as well. So hopefully that gives you a bit of.
A bit of color. Its effect you know if I can just there's still that there was a lot of words, but if I can just build them into two it would be a disciplined and balanced.
Fair enough yeah, I appreciate that if I could follow up on Renard can you give us sort of your views on the ramp up and milestones that you're seeing it's not included in the guidance how much upside could we see from I see a materiality perspective.
Yeah look we've been Renard, it's still important to US we took it out of the guidance out of the overabundance of caution while it was on longer care and maintenance through co bid and then obviously the luxury good market yeah, not not wasn't our expectation would be the first thing to come out of Covance, but that being said I think.
We've been.
Positively surprise, so the mine is back up and running.
We we chip then at least on paper right now not not fully to that provide a working capital facility with our partners were quite strong there with us just to make sure that there wouldn't be any fits and starts a there was a significant inventory of diamonds on the books already that they could dip into as needed a they've started to make some of those sales.
And the prices have been good kinda back to pre cobot type levels sooner than we expected. So so I think that's an important asset it can out a big chunk to our gold equivalent ounces work still in that kind of workout phase now its going ahead of schedule versus my own expectations at the start of the year.
And it's kind of on the cuts, but needing an extra little push from a diamond price perspective, whereby we can get back to the point, where we're making money on our screen now.
Now you know thematically.
The wrong word, but but market wise Argyle Ah you know Rio Tintos. Our goal is finally kind of a run.
Run out of a war and it's on the shutdown.
Shutdown pays long phase, but I think in time.
In their last deliveries a that is 10% I think roughly of the global market importantly for us in the same overlap significantly I guess I'd say in the in the smaller fraction.
That Bernard lives and breathes and so you know we certainly hope that there is a model.
Moderate improvement that gets us back to our our stream its a significant scream for us ultimately the logic on that transaction was it is a chunky stream for us. It's a billion dollars of good infrastructure at the mine that runs well just needs a little bit of help on the diamond side, the price side and so far so good so.
I don't know if that answers your specific question, but but we're certainly happy with the progress there and look forward to a positive outcome eventually.
Hopefully sooner than later.
No answers it perfectly thank you sandeep thanks for the input.
No problem.
And your next question comes the line of Toni same with Industrial Alliance. Please go ahead.
Great. Thanks, you upped your exposure to either late in the quarter can you take us through the varying royalty rate on the mind of which areas are higher which carries a lower and how that works in terms of the expansion there planning at the mine.
Yeah, Hi, beneath a picture question.
So look at the mine just overall that we think is running exceptionally well again kudos to be almost team in terms of what they've done there obviously some of the.
Some of the the blueprint was was already there, but they've done a fantastic job with it since and the grades and with the continued to hit at depth are improving that situation. So it's an asset that we had 85% of that that portfolio. If you will that we bought from tech Kate <unk>. The last 15, so adding exposure to a mine that we already knew.
Well and liked would they got site was it was a bit of a no brainer.
Currently the royalty rate if I'm not mistaken is 1.38, just shy of 1.4%.
And that will continue to be the case for some time importantly, as they drill to the east they are drifting towards a what is I think between two and 3% royalty space for us.
So I don't have the exact answer for you in terms of when that transitions, but certainly for the if youd like can follow up with you with a better answer a as you know.
Post the call.
Okay, Great. That's good and then I guess my second question just on NAFTA.
See you put out a forecast or when the Debottlenecking project would be.
Be complete I guess are you still forecasting it to go up 2 million ounces of silver per annum. After its complete and how fast do you think the operator can get to that level.
Yeah look I mean, I think were pleased with the progress to date, I'd say, where we're happy that the you know what looks like minimal limited impact from the.
From the from Covance essentially both at the actual operation and then on the expansion side. So that all bodes well I think you know so that that's from a timing perspective.
Will that continue to be the case I'm not sure, but so far so far so good how that affects the ramp up will certainly want to see as well. So I think we're being well, we'll we'll stay mute for the time being but certainly we do nothing's changed I guess in our view of ultimately where it ends up.
A question of how long you've got to take to get there, but really the you know we might be talking months as.
As opposed to anything else, but ultimately our view there has not changed and we look forward to that and the contribution.
Okay fair enough. Thanks.
And your next question.
I'm sorry, and your next question comes the line of Mike just on the Bank of America. Please go ahead.
Oh [laughter].
Morning, Sean Sunday Brad.
A question on.
Oh, I'm, certain where you show a production going around 64, and a half thousand ounces to the midpoint there share 240000, Nigeria.
By some great that's not showing just wondering one what wouldn't be that data what are the key are such that.
Basically drive about.
75000 ounce increase more than 100%. Thanks.
Hi, Hi, Mike Good morning, Yeah look.
That that that is intentional and we haven't given a date for that again, mainly because it's not a it's not in our it's not in our control.
I will say this you know we're not talking about kind of off in the distance we might not be talking about the next two or three years, either but these are kind of in the next several years, we certainly see the ability for the asset base to grow to that order of magnitude.
In terms of the assets look it's we were supposed to be.
You know supposed to be I think the range was 82 to 88000 ounces for this year 85 being the midpoint pre cobot you know with Ah that included some some Bernard so look we certainly have the ability we were on track for growth this year with eagle kicking and beyond that.
We've got things like the expansion that we just talked about a mentos we've got windfall.
Her most a kilo being a big chunk there as well Falco is not in that number given up you haven't paid for it yet and then we've talked on a Cisco development, a kind of a place holder for about 20000 ounces a year or so those are those are some of the assets in the next several years each of those you might have a view on their their respective timing.
Ah, but importantly, all are generally all moving forward well with some minor exceptions, but most of those assets and getting good traction and advancing well and in what is a pretty conducive equity market out there. So hopefully that continues to be the case for those folks through the the development.
And and construction trial.
Well, our analysts that cover Souththirty two.
So her most maybe 2026 at the earliest.
And.
What about.
Windfall I I read their press releases I don't see any production or construction decision, yet maybe Oh Cisco sales, what's your view of what they could be in production because it's obviously a great discovery.
Yes.
In long Island, Yeah go ahead John.
You know I think right now we're pounding away on the installed going to finish the the reserve status. There we should be done in the drilling sometime.
In the spring.
And the other question is how big is it but.
We're obviously in good shape, the company's fully funded with almost $300 million available to it so easily take care of the equity component required to build it and a lots of Tailwinds support from both first nations and the government have come back and they were in the planned art area.
Yeah. So it's it's moving forward extremely quickly and last time I checked it was more than 2026, 27 rigs and maybe a little bit more than that turning on it right. Now. So we are in a go fast program.
With windfall and I'm not going to predict the the exact date of the production, but we're driving hard to set the stage for the final permits now and we'll be in permitting for 12 to 24 months.
Okay, Oh, thanks, Sean for that and good luck.
There hasn't these discoveries in Canada.
Yes, it's good to see you know I think have to drill rigs turning right now and and get back right now are at windfall Lake right. So pretty active place it looks more like a a deployment zone than it does have a mining project right now a significant amount of infrastructure on the go and.
You know we've been a leader on the go bit 19 program with the first a site that installed and onsite a loud that delivers results in three to six hours.
But we're setting up for the big player there and John's done exceptional job keeping that one well financed and and you know pedal to the metal and Matthews stepped in as president there definitely has the leadership capabilities to get us where we have to go on that one.
Okay, Yeah, and also like just I'm sorry, sorry.
Sorry, Mike Yeah, just to finish up I mean look you raise a good point I mean ultimately in terms of timing you know them well, we'll see how quickly those things move together move forward, but certainly were not bust when the operators, obviously two pretty different operators in terms of the assets. You mentioned there are but are have the wind at their backs they are finding more.
32, they're talking about taking longer to create their pre feasibility study, but thinking of it as a larger project. It's all those things are positive obviously, we'd love them to be in production today.
That will settle for the fact that they're getting bigger and better all the time and continually moving in the right direction towards production.
Okay, well, that's sort of a fortunately windfall Oh fine opening up.
Event, and yeah, I don't know if I do a.
It gets you to think for the core that John put up on there.
No one is there.
On block and have them by Bank of America [laughter] no. They they they continued to shoot the lights out from an exploration perspective, and again, yeah. I think let let like you were looking for it to them putting it all together for us.
But only been chartered for 33, 36 year, but I haven't seen a better peace accord and that.
Sean you all have a first year production, just sort of a core but that's right well.
Well that you know that is the kind of the underwhelming strategy here is to run the course shack for at least 24 months.
[music].
So maybe just going back to Odeon, you mentioned, bringing down your interest over time well.
Where would you where would all our b what kind of percentage would you hold say in three years from now on LG, but you'd be below 50% do you think.
Oh look I mean, I think I think certainly mean, when we've talked about and so on and in particular talked about what would be a north spirit, which you know this is really just north spirit renamed.
In public you know ultimately the idea was not could be 50% shareholder or the idea was to <unk>.
Set up the assets well benefit from the royalties and screens and then send it on its way.
There is you know to potentially two significant development. Yeah mine built there that will require capital anyone know Sean knows that these he's going to be active to unlock those cattle as quickly. So just you know.
Well I think when we talk about north spirit was meant to kind of come down to 2020, some odd percent I don't know when that will happen three years of the longtime hey.
Hey, My mind like so a lot can happen between now and then but ultimately you know we've we've structured it well now so we finished restructuring part of the transaction, which we said we weren't done a year ago and eventually we do need to start taking money off the table there, but you know, let we'll let the company take its first steps a year as a public company three years.
Feels like an awfully long time away.
And a lot I think a lot will happen between now and then.
Okay, maybe like all add to it you know it at 99% of the companies that you guys cover I'm most of them have too much liquidity into high afloat, not a big enough shareholder ownership base in any one on share all or were the 1% that they're actually go in full control of our float.
And we have a proper shareholder base to work with coming out of the chute and Oh, we don't have a you know any particular hang over from from previous adventures in this stock this thing as Christine and the first time in my career that I've seen you know as many institutional shareholders, calling me to worry about the size of the float as oppose.
Sales to worry about the size of the flow because it's too big.
So I think we're in a quality situation and I'm quite happy to be the 1% in this market.
Okay, well there aren't good luck with Odeon Sandeep good luck with Hillshire and that's all my questions. Thank you.
Thanks, a lot Mike.
And your next question comes from the line of Josh Wolfson with RBC. Please go ahead.
Thank you just wrapping up their stocks are a win.
When.
Is there any sort of guidance you can provide for some of the more near term catalysts added production.
The feasibility study.
Yeah, Hi, John and on that Josh we're going to let John Brzezinski answer those questions.
You know, we're a were 14% shareholder.
In the in the company and we'll we'll rely on Johnny come up with his guidance on those issues.
Got it okay.
And.
They kind of go forward perspective in terms of structuring transactions you historically Ah.
Accelerator model had utilized.
Equity you know in terms if it turns as a in terms of its transactions now that's been find out to oded.
When you look at the.
These types of accelerator model transactions going forward has there been any thought given to how you would structure, these and whether or not equity would still be a meaningful component to that.
Yeah. Thanks, John.
I think.
Taking a step back and then I'll answer your question, specifically, well got accelerator model and its true form has been hugely beneficial I mean, we wouldn't be talking about things like like the 5 million ounces at windfall.
Our our royalty on it had it not been for for that we wouldn't be talking about the her most.
1% NSR that we have and we can debate when it comes on but certainly appreciate having a 1% NSR on the south 32 scale projects. So I think you know that accelerator model and its true form of ceding companies taking royalties early without competition. Then for you. When you look backwards you know with the benefit of hindsight for cents on the dollar is good bit.
You know the the gating item is not our willingness to spend you know 10 $10 million to try to find a 10 bagger. It's it's really all those opportunities out there historically, we've we've done one a year essentially ceded one one of those companies year.
And again the easier done in a down market than it is in a more positive equity market, where there's more capital available for those types of stories. So well we can do it would be on the look out we think it's a great kicker to our model, but it is not the model and it's the kicker.
And so if it needs a little bit of equity to get the royalty or we'll look at those on a case by case basis as they've been pretty good to US you know so that that accelerator model. We feel we have no issues with we think it added a lot of value clearly, bringing in an asset in house fully even though we said that that wasn't the end result.
That didn't pan out as expected and so we're not looking to repeat those exercises, but you know spending tend to try to turn it into 100 and get a royalty. That's worth 100 at the same time or if we see them. We'll we'll look to act, but overall you know.
Yeah, I guess, that's how I would answer that question.
Got it Okay, and you mentioned expected cost reduction with the spin out of old Dad's Army gene AISC guidance.
Yes, the assumption is that we're going to be fully consolidated just given the ownership structure I guess, what would you what would you expect the GDP numbers to be entering it will basis going forward and will we be able to actually see that if it's all consolidated.
Yeah look we will be consolidating financials as a result of the ownership and it would have so that that's kind of one.
Ah you know still relatively muddy piece of the equation and will sort itself out in time or is that being said the actual savings are real you know so in terms of the spend that's no longer there on the asset that's real in terms of Gionee, having as I said most of the team available to the staff. Both these companies obviously some additional.
Public cost of running a company, but a relatively minimal in our minds. So so on the AR side, you know that that G and H or how good the technical team that's moving over is real I'd.
I'd say, a you know we want to let the company habits first few steps as a public company before we started guiding people, but we will get back to giving you a bit more color on that and frankly, it'll it'll shape up on its own and and we will certainly do our best even during the portion that we're consolidating Josh too.
Within the rules that we have to live by do a good job of segmenting as best we can whatever pure all our costs and what our consolidated all that cost.
Okay, and then last question.
All right got it okay.
Okay. Okay, I guess I am sorry last question on now on melodic and data yourself and perhaps Sean.
We might have some insight on this you know with the ramp up of burn that you know if I recall the older leases, obviously, a long time ago old Cisco My planned for the asset.
There were some obviously very high grades available that would've been a meaningful contributor to toll art today. The mine plant I think has shifted to some degree with the blending of Barnett overtime, but is there any perspective on what you have in terms of eat the progression of that grade profile I know you.
Aren't the operators today, but but any thoughts on what that grade will transition to become.
Look I'll I'll, let Shaun jump in as the Guy who built the thing or if he likes on other than to say that I think the end of your comment is right. So maybe Sean can add some context from when we were looking at it he was looking at it but you know we're not the operator is ultimately there.
Really nice kicker to the grade how they phase that in <unk> will be a up to them, but the good news is it's it's been you know they've gotten some production out of it in Q3 things twice on 1000 ounces of pre production. So they have access to it now and it does provide a lot of flexibility.
Going forward. So a good news when it gets phased in and how we get sales then I guess will we will depend a little bit. So we'll be at the mercy of the of the of the operators, but I certainly expect them to do it in a way that are ultimately maximizes the value of the asset Sean did you have any other kind of historical context Barnett you want to provide.
Typically we had modeled at around two grams, so you're a significant upside there and there is a.
So a few a few high grade pods within it that will probably be blended but.
The exact mine sequencing is going to be the key here and I would expect that they'll try to make up some grade.
To cover you know to pick up for the Qubec shutdown of the of the mines that we experienced earlier in the year or so.
I think they have the tool box in front of them to to go after that higher grade component in the near term. So we'll see what happens, but we don't have a day to day a mine plan to work from.
Yes.
Okay. All right. That's all my questions. Thank you.
Thanks, Josh.
And your next question comes from the line of John Tumazos, with John to mass and spares and become better research. Please go ahead.
Thank you for taking my questions.
Concerning the Malartic underground.
Clearly the shaft and the school is under planning.
And that's the higher grade area, but there's also eastern-west Odyssey and the smell Arctic.
Do you envision one underground mine by shaft into the highest grade zone.
Their potential.
For the exploration ramp into the other zones.
To be a second mine was two sources of underground feed for the mill.
Oh, just in general John I mean, if you can or if you're going to have to separate a working entities.
Rather than bottlenecking, you always take advantage of that and you know and in terms of agnico, they're very familiar with real there's and and a very efficient at underground mining what their experience at gold Acceleron.
I expect they'll take full advantage of both the both entry points and they'll probably try and set it up so that they can work in multiple development phases at the same time the bottleneck with shafts is of course is that.
Even though you might do the substation is when you go down on a level basis, it's very hard to run development.
From a shaft its an active development.
So they're going to want to take advantage of that there is some old infrastructure and the underground there that.
It hasn't been incorporated into the mine plan, yet I imagine there will be a few if you test to see if any of that old underground development work.
In there has any value to it or not but.
For your primary haulage ramps and chaps, you want to be in fresh rock. So, we'll we'll see but I think it'll be a couple of a couple of tricks to turn on the way down.
Yeah, and then John just to finish the thought I mean look I don't personally as a lame. Another group I don't think there and visiting two years of underground development work to that ramp to just be for the purpose of exploration drilling and a bulk sample I'm sure they're expecting that if they have success or that will be a longer.
From infrastructure, but I think good news is we don't have that long to find out how they're thinking about this a collective and the synergies between Ah you Scold me and the rest of the project.
[noise] second.
The regular this transaction is a little complex.
And I want to make sure my reading comprehension is up to snuff.
Is it correct to your pig U.S. 12.5 million.
For three different things 5.5 million warrants at Canadian or U.S. 225 first.
Ace <unk> three quarters to 1.5%.
Revenue royalty on 75% of the indicated and 50% of the inferred on the mean.
Oh Laura is on.
Plus the.
The opportunity to participate in more future royalties.
John I I'm not sure I could have said that any better myself, so yes [laughter].
So.
This is not a complete transaction.
It is an expression of good face where as they restructure savings you're going to participate in more and you gave them a little bit of extra cash toward that.
No look the way I think of it is frankly just in terms of the initial it is a partnership there are a patchwork of existing royalties there that they've shown an ability to go back in and get and buy back some of them are contractual some of them that they did just shown the ability to negotiate those in our minds a what we.
We paid for the initial royalty on epic worry, a which is significant and all the bulk of the current resource as you highlighted.
Resource, it's only getting bigger as they drill 30 quite large getting bigger that in and of itself justifies the transaction to the extent that we weren't so U.S. are Canadian to 25.
They'd be Canadian.
And so anything else that we do as part of that if if they are in fact able to buy back anything else. We have the right to participate in that you know that would be a bonus we'd look at each one of those on a case by case basis decide if we want to play but.
But having that Optionality is good for us as I said, our view is a is that transaction already in terms of initial you know medieval royalty is if that's all we end up with we're quite happy.
With the Renard restart.
How much.
Revenue or Gi Joe's is that worse in the fourth quarter or do you even get any in the fourth quarter does it come in the first quarter.
Look so there the key difference we have in our guidance. This year. When we came back out with guidance John is we excluded Bernard.
It was on care and maintenance first and foremost and while we're benefiting by you know anything they produce they'll they'll use the repairs on our working cap facility.
You know, we're not we're redeploying our our screen back into the the mine for the time being as we kind of work our way through the the workout plans. So that's why we're not adding ounces to our to our guidance because we were benefiting from that purely as a stream.
Redistributing them back into the asset. So so we're not expecting any or any contribution from that over the course of a of Q4.
So youve waived your revenue too.
To reinvest and Capex for the mine.
And Youve waived your loan repayment or you haven't wavier loan repayment.
No we've not waived our loan repayment any dollar we put into the asset were expecting back.
And even the funding of the cap activate reasonably well, but we've just done is for we've been reduced or scream proceeds back into the mine for the time being so the outcome. There is we want to get back to you.
A pure stream that were benefiting from a you know without having to put that money back until or unless we do so we're not talking on to our guidance or incorporating it.
[noise] with regard to quote do you get a full quarter of the quote output.
Oh sure.
Yes, Saskatoon line CV excuse me <unk> no I got it Matt.
Fourth quarter or the first quarter.
Sorry, <unk> when do we expect Shannon.
Got more eggs when do you get the revenue.
Yeah. So look again Q2, we got we had I think probably a record quarter, even though they didn't produce Q3, we gotten zero, even though they were and as far as I remembered delivery started back early in October. So I would certainly hope and expect that the Q4 for us is kinda back than normal at Citi.
Thank you for your patience with my questions No appreciate them John Thank you.
And your next question comes online of Craig Barnes and equity Securities. Please go ahead.
Thank you Charleston, like so my question, so I take care.
Okay No problem, Greg Thanks for your time.
And your next question comes the line as Brian Macarthur Adnan James. Please go ahead.
Hi, Good morning, you talked a bit about focus so I just want to make sure I understand to focus situation now.
There is a 10 million dollar loan I think coming due at the end of December I, just want to check first that that's still staying in royalties because I know the shares are going to owe DB and secondly, amnesty Glencore is putting in 10 million for.
Advancement, but does that 10 million to give your 10 million back or what how does this actually playing out.
No. Good question, Brian and good morning, So first and foremost no. The the loan staying with Osisko royalties only the share position has been moved over to oded. So a friend to Falco kilo with somebody we we expect the back and you're right. The the money for Glenn from Glencore is meant to.
Advanced the assets finished the last of the technical work that's required hopefully at the end of that too.
To and ended with a buffer, but hopefully at the end of that give them all the comfort to tend.
Enter into a long term agreement to to move that asset for to the benefit of everyone and we do have a that debt coming due.
We'll look to yes.
Refinance that with Falco, However, makes sense again or our.
Our objective there is not a not that that necessarily obviously, if they can repay it a great that'll be up to them, but we'd be supportive because what we're looking to yeah. We have our eye on the prize and the price there is 20000 ounces videos.
And come back so that's a that's what we're looking to to.
To support and in our minds that that loan was a small price to pay and continues to be a small price to pay to facilitate that.
So there's still money, they owe us and and will Oh, I'm sure they'll they'll look to.
Sort that out when it when the time comes.
Great. Thanks, and just very quickly I know D.V. I mean, you mentioned there I think the bulk trade in December I mean to the vote in November 20, EPS, but that's sort of looks like it set up what else has to mechanically happened to get us to this number.
Yeah look it's not it's not much I mean really the only thing.
Thing is the listing process with the TSX venture the the boat as you mentioned of the Shell Company Borough low is on November Twentyth.
80, some odd percent I forget the number now of the boats have already kind of been delivered.
So that's a that's just kind of a a procedural step.
And and then its just as I said the completion of the listing process with the TSX. So you know as you can imagine it's a fair bit of documentation fair bit of paperwork.
And not so getting bounced around between lawyers.
On a daily basis, so hopefully that will conclude they can go to their committee and and.
No I wouldn't suggest that <unk> mail last few days of November were kind of hoping its first few days of December, but Ah, but that's kind of the timeframe we're guiding towards.
Great. Thank you very much risk, so really really just procedural.
No problem right. Thank.
Thank you.
There are no further question at this time I will tend to call back over to the presenters for closing remarks.
Great well look thank you everyone for tuning in on behalf of Shawn friend myself and the team I think we had a.
Pretty strong quarter, and we look forward to two to more of the same in Q4 with our assets continued to deliver a sliver quite well. So thanks for your time and Oh, great rest your day. Thank you.
That concludes today's conference call you may now disconnect.
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