Q4 2020 Osisko Gold Royalties Ltd Earnings Call
Good morning, ladies and gentlemen, and welcome to the Cisco Gold royalties Q4 and year 'twenty 'twenty results conference call.
After the presentation, we will conduct a question and answer session. If you would like to ask a question. Please press star followed by the number one on your telephone keypad. Please note that this call is being recorded today February 26, 2021 at 10 am Eastern time today on the call we have missed.
Sandeep Singh, President and Chief Executive Officer, and Mr. Sidney Covid Chief.
Chief Financial Officer, and Vice President Finance I would now like to turn the meeting over to your host for today's call. Mr. Sandeep thing Mark.
Zoom is here.
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Yeah.
Thank you operator, good morning, everyone boardwalk to us a multiple net that Donald Coker off Telephonics and Matt. Thanks. Thank you for taking the time for an update on our Q4 and 2020 full year results.
As you see Sandeep thing because Doug Shepard I took CRC just to back up I need to Covid here for you as CFO is that not because it does cost say, Sean Roosen, So Fred and I will walk you through the results.
This morning, and then Sean will also be available.
During the Q&A.
The presentation I'm following is on our website. So please if you haven't already you can pick it up there and I'll do my best to refer to the page numbers as I'm going through it starting with the forward looking statements on slide two please be mindful that we will be making forward looking remarks.
On slide three.
Just kicking into the highlights for the year I would say to start off with despite the obvious challenges with respect to Covid this year.
For us and more importantly for our operating partners, we ended up having a very strong you're.
Earning just over 66000 ounces.
For the year above our revised guidance taking into account the shutdowns that we experienced in Q2.
And ended the year.
Kind of back where we started in terms of a run rate with all our assets now.
You know chugging along.
At their full capacity we believe.
That led to record cash flow is obviously, an revenues buoyed by the fact that the.
The decrease production per.
The year was compensated by higher gold prices and we look forward to higher gold and silver price as we look forward to a continued positive outlook from our gold and silver perspective going forward our margin stayed high at 94% the highest in our peer group.
Virtue of having more ROI.
Our royalties and streams are more free ounces than cheap ounces, if you will.
And generated a significant amount of adjusted earnings over the course of the year at <unk> 27, a share on a basic share basis.
And Fred will walk you through some of the more detail around that.
I think worth pointing out.
For the quarter, a lot of what Youre seeing and I think many of the analysts who cover us from already picked up on this.
Is some slight bit of noise due to the the Cisco development spin out transaction that concluded in Q4 and a low.
But other consolidates around that but when you take into accounts some of those onetime items many of which were non.
Cash oriented or also.
Disproportionately picked up by a Cisco development.
Yeah, we get to a point, where we're quite happy with the quarter that were coming out of today.
And again, Fred will will go through that in a little bit more detail.
We did acquire <unk>.
Hi back some some shares at the worst of Covid, we did buy back some very cheap stock during the year for a total of about just under $4 million and we declared a quarterly dividend dividends summing up to 20 cents a share still.
Still the highest yield than our peer group and something that's very important to us as we go forward.
With no disrespect to the accounting someone goes I think more importantly.
And then any other noise in the financials is the fact that the business as the new Guy excellent shape as we enter as we enter 2020 and as we start 2021, our producing assets are outperforming almost without exception our development assets are advancing steadily.
Our exploration or earliest stage development assets as well are delivering several positive surprises.
And we expect that to continue to happen as more and more exploration dollars are being spent in the sector. After several years of.
Restrained spending on that side, we expect that catch up to benefit our portfolio quite disproportionately.
And then again Q4 marked the end.
The last quarter of our spend on Barker Bill our direct spend on Barker Bill that was a finite period of time it lasted.
Between the North spirit transaction to the Cisco development.
It's been out a year.
And certainly created a lot of value in the process.
Skipping over to slide four to finish that thought a 2020 was an important strategic year for us are the culmination of that north spirit transaction into a Cisco development within the span of roughly a year and again as I said, creating a significant amount of value that we now look forward to getting.
The credit and value for.
Since that's been out.
Sean Cisco development has raised a circa $250 million.
To unlock a significant amount of value in that asset base from the benefit of a Cisco development, but also the benefit of ore and we look forward to that process continuing as a public company is really just gotten on its feet here at the start of the year.
In that process, we also acquired.
As you already know the San Antonio Gold project, where the stream on the San Antonio Gold project in Mexico.
From my perspective, that's the cheapest not 9000 ish out stream I've seen anyone.
Anywhere.
Obviously that asset needs to go through permitting in Mexico.
And the team is pushing that forward substantially at Cisco development, but you.
What we see there.
On our stream is the upside potential.
Cisco do all of that has already acquired a crushing circuit that can produce that can that can run about 15000 tons per day. If you start to talk about those types of run rates or anything close to it it's a substantially higher scream that what we've been talking about so we look forward to that coming into the mid term of our of our pipeline.
Also throughout the year, we did some other things that we think added significant value we improved the silver stream on Gibraltar at the right time that mine continues to benefit from significantly higher copper prices. So we're happy with our added exposure to Gibraltar. We also acquired an additional 15% of our royalties.
Packaging that we already own.
Predominantly on the island gold and low back minds, so adding to our royalties on those two mines I think it's safe to say it was a it was good timing as both of those are now going through some pretty important.
Exploration and.
Net expansion phases.
We also announced the strategic partnership with Regulus.
Goodbye.
Added a significant royalty that paid for that transaction off the bat on what is a large.
Large asset today, one that is only getting bigger and ultimately we think a large company assets.
Being important copper price environment and also gain exposure to additional royalties up gave me buybacks over time.
And as you all know concluded the.
The financing with the industrial market back in April it was done at a premium during the worst of Covid. So strong endorsement from our partners there.
If you move to slide five just a recap of the producing asset base again, I'll reemphasize that it's doing extremely well some of you cover on the analyst side and for somebody to cover. These other names you've been picking up on the positives that have been coming out of their Q4 disclosure of their resource update some of that has already come out.
Others are yet to report, but almost across the spectrum, we're seeing good news.
Starting with obviously on our flagship asset Canadian Arctic Ware.
That mine has gone from.
Open pit.
Towards the end of this.
This decade to now talking about production 2030, plus plus.
We look forward to our flagship asset being our flagship asset for decades to come.
I'll pick up on some other positive.
Our advancements in a little bit later in the document.
And then you see a <unk>.
Split.
Of our production for 2020 by commodity as well.
We are gold and silver dominated.
That's a core part of our.
Our portfolio and for any.
Anybody that has a blog feel free to point out the the level of contribution that we add.
24% within the company in 2020.
On slide six just a little bit more on where we've come from and I guess, where we're going.
You'll notice the production annually for 2019, 2020, and then our guidance of 2021.
Yep.
Ranging between 78, and 82000 ounces so midpoint of 80.
But again still expect it to be the highest cash margin in the business when you exclude the optics.
I think it's worth pointing out though.
It might feel like getting back to 2019 levels, but I would remind everyone that our 2019 production included a significant amount of Bruce Jack Contra.
Contribution.
That stream and off take was bought back we got paid for it but it did take down our production levels. It also included Bernard which we're now intentionally keeping off to the side until we can fully benefit from those cash flows so taking that into accounts.
<unk>.
2020, we're back at the same level of production.
With those ounces gone and with many of our mines shut down and now we look forward to kind of a 20% increase whether you look at 2019 or 2020 off the same asset base. So a fair bit of growth to compensate for those other factors and then more importantly, as you look to the right.
Some significant assets that are in our pipeline that are maturing.
Coming along at a pretty steady pace.
I would say all maybe with one exception here moving forward.
Steadily and we look forward to this paid from a growth coming into the company.
At a time when new transactions in the sector on the royalty and streaming side have gotten I think it's fair to say more expenses and as a result, a little bit riskier.
We look forward to this page four pipeline strength to deliver for us.
And the.
Our guidance numbers for 2021.
I think we've made the point in the press release that mantle cell has gotten deferred a little bit we're talking about a few months delays.
When you take into account Covid I think that's frankly, a pretty de minimis. So.
So it doesn't bother me in the least that that Mantas expansion has been pushed into 2022 as opposed to catching some of 2021 I think people were news is all of this is still in front of us and all of its still progressing quite well.
With that said I will pass it off to Fred on slide seven to walk you through some of the more detail oriented aspects of the quarter and then I'll pick back up thereafter, so Fred.
Thank you Sandeep good morning, everyone. Thank you for joining us today.
As you know busy year for sysco with Covid, where some operators shut down or reduce their operations, mostly last spring and of course, the completion of the RTL transaction in November creating a Cisco development all raised over $250 million in the last months.
We earned 18000 802009 GL was in Q4.
<unk> Sandeep explain the Geos earned from Deer Hunter all documents training for $4 eight total in 2020 of over 66000 NGL was exceeding our revised forecast in Q4, we generated record quarterly revenues of $48 8 million from royalties and streams will for everything.
Cash flows of 39 million and operating cash margin on our royalties and streams of 94%.
And the amount of $15 million U S was also we paid in Q4 and the credit facility.
As presented on the slide seven of the presentation, we recorded record revenues from royalties and streams of over 156 million last year.
Compared to $240 million in 2019.
Cash flow was from operating activities reached a record $108 million compared to $92 million in 2019.
If we go on page eight we have a summary of our earnings and adjusted earnings net income was $16 9 million or <unk> 10 per share compared to a net loss of $224 million in 2019. The loss in 2019 was due to a significant impairment charges adjusted earnings.
<unk>.
$43 7 million or <unk> 27 per share compared to $41 9 million in 2019.
On slide nine we present, our quarterly and annual results Gilles was from gold and silver production, where are you in Q4 as all mines have returned to their pre COVID-19 level Geos from diamonds of decrease as I said, we are we have excluded the geos from Delano stream.
Starting in Q4.
Revenue was increase in Q4 from $51 million in 2019 to $64 6 million in 2020.
And you'll notice a decrease in our annual revenues, but this was due to the sale of to boost jackups stake in September of 2019, which was partially offset by a higher realized price on gold and silver.
Our average gold price per ounce.
Sold amounted to $2444 can easy and in Q4, 2020 and $2273 for the unit significant increase over 2019 gross profit for the fourth quarter increased to $32 8 million up from 23.9 million in Q4.
For 2019 for the year, our gross profit was $104 million up from $83 million in 2019.
Our net cash flows from operating activities reached $32 6 million in the fourth quarter of 2024, a record $908 million.
For the old year up 918% compared to the.
Previous year.
Adjusted earnings in Q4 amounted to 12 million or <unk> <unk> per share.
Reflecting a tax expense of $5 8 million, Kenny Zen or U S $4 5 million on the acquisition of decent insurance San Antonio Street.
Tax expense will be paid by Cisco development in Q1 of this year, but is of course included in our constantly to consolidated results for 2020.
Excluding this one time tax expense adjusted earnings would have been $17 8 million or 11 cents per share.
I'd like to remind also that additional expenses of approximately $4 million relate to the <unk> transaction are included in our operating expenses in 2020, including a noncash listing fee of $1 8 million. These expenses was shared between the Cisco gold royalties and our Cisco <unk>.
But are all included in our consolidated two Drizzles. These expenses were of course onetime items if.
If we go on page 10 of the presentation, we present, a breakdown of our cash margin for Q4 and the whole year.
Cash margin on our royalties increased in Q4 to reach $34 3 million.
Paired to $26 3 million the previous year for 2020 to cash margin on royalties reached 111 million an increase of 14 14 million compared to 2019 the.
Cash margin on our streams amounted to $11 3 million in Q4, and $36 3 million for.
For the year up from $9 1 million and $29 5 million, respectively. In 2019, resulting in a cash margin on our royalties and streams of $93 four 5% from Q4 and 93, 9% for the full year 2020.
Our total cash margin reached $46 3 million in the fourth quarter $10 6 million other than the previous year for 2020, our total cash margin.
Adrienne and $15 million, an increase of $20 million.
And finally, if we go to slide 11, you will find a summary of our financial position our consolidated cash balance was $303 million at the end of the year, including out with <unk> 5 million from our Cisco gold royalties and other within $97 million for Cisco, Dave Loveland Cisco go.
Royalties out investments, having a value of $216 million at the end of December in addition to our investment in the Cisco development valued at over $750 million for a total of $1 billion in value.
Our debt amounted to 400 million on December 31st we have repaid an amount of 15 million U S. In Q4 under our revolving credit facility in Q1 of this year, we have also repaid our.
Our $50 million debenture with notice from that cubic.
Our credit facility, therefore, reducing our interest payable by approximately one 5% on that debt, including the accordion available our.
<unk>.
Well about credit from the facility is over $385 million as of today.
Thank you Sandy.
Thanks, very much Fred.
Skipping forward to slide 12, and obviously spread will be around Friday detailed questions thereafter moving.
Moving to slide 12, and picking up on Canadian <unk>, obviously, our flagship asset is doing exceptionally well from <unk>.
Open pit perspective based on guidance.
Provided by the operators, we're expecting our best year yet.
From the open pit, obviously benefiting from the higher grade contributions of Barnett, So expecting north of 35 million almost 36, sorry, 36000 ounces of Geos. When you account for the silver contribution as well.
And the biggest catalyst there and the biggest catalysts in our sector.
Our portfolio, obviously would be on slide 13.
The underground construction decision by Agnico, and Yamana as well as the first set of economics underpinning that.
Put out just a couple of weeks ago.
Huge catalysts I think it's fair to say for US we've had a flagship asset that was finite and life. Otherwise 27, 28 29, whatever people's expectations were of the open pit mine life, that's now turned into.
Two decades plus <unk>.
Importantly, only with 50% other reserves and resource that amount to about $14 5 million ounces right now embedded in that mine plan. So still a lot of upside to come based on everything we're hearing from from our operating partners.
Added to that that upside I think seems disproportionately on the east Goldie zone, where most of the current ounces are.
Seven rigs focusing on that area.
Almost this year double the amount of the exploration that's been put into the asset to date an aggregate.
So we still expect a lot of potential positive income from that we're missing a little bit of detail between what falls on east.
What falls within our 5% and 3% ground on East <unk>.
But I think with the.
A little bit of accounting for that you can you can kind of approximate four 5% MSR overall throw us on the entire project. So.
Can't underscore the importance of that our flagship asset has essentially doubled in value.
More than doubled in duration.
And we look forward to continued positive news on that front.
If you flip forward to slide 14, our other significant producing assets.
They are doing quite well at Mentos. The expansion, we're now expecting to tie in at the end of the year. So we havent given ourselves really any credit for that in 2021.
And I think delays measured in a matter of a few months when it comes to Covid in South America should be seen as wins. So we look forward to that significant increase in silver production to kick in for US next year and every year thereafter.
On the Eagle side.
Quite happy to see positive fourth quarter for Victoria Gold, where production was up over 42000 ounces, a 20% increase over Q3 again I don't want to sound like a broken record, but we didn't get the benefit of that in our Q4, obviously, we always have a bit of a delay. So we look forward to that ramp up continuing to benefit us and the operator.
<unk>.
They are into the coldest winter months, so they have been for some time now.
And as per plan not staffing as a result, but completing and importantly, much of their optimization efforts during that timeframe. So we look forward to continued step change improvement.
From Eagle.
And much like everywhere else in our portfolio. There's a lot of positive exploration results they've already put out and we look forward to that trend continuing.
Eleonore.
I'd say, a steady state or frankly slightly better than steady state that day.
Guided towards which was 250000 ounces per annum guidance of $2 70 and.
Returning focus on exploration.
I read a read through a fairly.
Fairly positive.
Exploration tone to their last set of disclosures. So we look forward to that starting to benefit us in the mine.
But frankly steady state after the last couple of years are valued and where I think is also considered a win.
From my perspective at least.
On slide 15.
I won't go through.
All of these next pages in detail, but I think they're they're available if we might come back to any specific questions on assets importantly, I set up for all state again, the producing assets could not be doing better as a whole.
We see positive news across the spectrum on this page I'll pick up island gold.
Only because almost is the most recent to put out results.
And island continues to get bigger reserves increased resources increased significantly.
Further justifying that expansion that they announced last year, which to remind people, it's about a 70% increase in ounces.
And we benefit from that on our one 4% royalty ground, but importantly, a lot of the recent exploration results to the east and adapt our onto our two and 3% royalty ground a significant portion of what we can see in that new inferred category, that's almost 15 grams per tonne.
As onto our two and 3% royalty ground so that is a.
Significant asset getting getting better all the time and I believe there is a 25 circa $25 million budget plan for this year and the commentary from from Alamos has been excellent in terms of potential for further growth. That's one example.
I think that story is playing out across the spectrum.
On slide 16.
Of the growth assets development assets I should say.
Again, all of them progressing quite well.
All of them moving forward at least on this page we look forward to a lot of catalyst.
On the Cisco development story, which comprises obviously as everyone knows caribou in San Antonio.
Yeah.
We will get a little bit we'll get small production I guess from each this year from the satellite the caribou as well as from stockpile at San Antonio, but those are not the the more important facets of either of those stories.
It's nice, but obviously we expect.
The focus within those that company to be on the larger projects.
At Caribou and San Antonio.
Importantly, as we said earlier.
Sean and the team there are exceptionally well funded right now to push hard and we are entering into a catalyst rich phase for Cisco development with respect to drilling.
This update.
<unk> and permitting so we look forward to that that news flow this year.
On windfall, which is the Cisco mining flagship asset in Quebec.
A pretty unique combination of grade and size.
With the total resource now up at 6 million ounces based on their last report.
And I have about $1 nine I believe it was inferred the rest of the way to get you to six.
And the grades continuing to not stay steady frankly improve so we look forward to.
Not only continued exploration results there.
Continued infill drilling that will increase that MNI, culminating in a feasibility study and advancement of that project and even on the Horne five which is a significant resource 6 million ounces of reserves gold equivalent circuit 10 million ounces of resources.
We get eventually the silver off that that mine, which is obviously increasingly more valuable.
And what we've what we've modeled in the past.
It's an important year for VAALCO.
They've made good strides with Glencore last year, we look forward to that trend continuing.
And then breaking the back of a of a path forward.
For for that mine.
Slide 17, again I won't go through these individually, but just other large assets that are moving forward in hermosa.
Look forward for we look forward to a peak pre feasibility study from from sell 32, there which will.
That's my as across in Ts in terms of the understanding of that deposits and the path forward for it but it's the one of if not the best.
Undeveloped pulling the telecast in the world Pine point as well moving to maybe some other boring phases of mine development, but phases that matter.
We look forward to that continuing this year and then on regarding the mall Saar, we talk about quite a bit I'm sure. We'll talk about them again later on.
The two big option value assets for us.
We're a year into those.
Restructuring phases.
And I would say on both frankly ahead of where I expect it to be within a year on the diamond side diamond prices for our to bounce back to $80 a carat so far north of where they were pre shutdown I think the safe to say the Argyle shut down and the removal of 15% of damage supply globally is starting to play out and importantly, it's not.
Just for Renard, it's across the space, so hopefully that diamond sector becomes a little bit healthier.
Which can only benefit Bernard and then on the malls are.
We say here half more than half built but it's significantly more than half built.
There be the trick is is access and our path forward.
But.
The team on site has had on further unfettered access to the site for months. The government wants to I think to see that as a go forward. They certainly need foreign direct investments. So we look forward to.
Hopefully some progress on that front this year.
On slides 18, and 19, we have kind of other layers of earlier stage assets.
Or in some cases earlier stage assets to talk about I won't go through them. The point of this is and it's frankly not exhaustive. These two pages of the point of it is it's a really deep portfolio and it is getting a significant that increasing amount of exploration dollar spent on it.
And it's proving itself across the board. So we look forward to.
Continued success by our operating partners on those fronts.
Maybe on slide 19, the one or two that I'll pick out.
To talk about.
El Dorado, we have.
The 1% MSR on the low Mac mind, seeing a maiden resource as significant as it was at or Mac.
800000 ounces of just shy of 10 grams.
Within a year of discovery hole, if I'm not mistaken that's a positive, especially when you take into account that the mill. There at Sigma is is quite under fed certainly there's ability to increase capacity. So we look forward to that story playing out and then Eldorado's proposed acquisition of Comex I think also benefits us as we have not.
A 1% on a saar, but at two five per cent of SAR on that ground.
And look forward to increased.
Exploration work Bye bye Eldorado once it's in there stable.
I think I'll pause there.
Except to say that for a reset year 2020 worked out quite well in my mind, a lot of advancement the portfolio doing quite well.
We remain focused as we start 2021 on getting paid for that existing portfolio Theres a lot of value within it. We don't think we're currently getting credit for that is our main priority.
We will remain disciplined.
Thereafter, and try to pick our spots in terms of improving it.
But we think we did a lot of the hard work in 2020 I think many of you have heard us say that heard me say that.
And I think.
I think we have a lot of room to catch up this year. So with that said operator, we're happy to take questions.
Thank you as a reminder to ask a question you will need to press star one on your telephone keypad to withdraw your question. Please press the pound or hash key please standby, while we compile the Q&A roster.
Hey, Joe.
So net to us.
<unk> are still the clergy telephonic.
I believe what's I guess.
So there's yes.
We've got plenty of cash still.
The other letting the customer Chu CIBC. The first question comes from Cosmos <unk> from CIBC. Your line is open.
Hi, Thanks, Sandeep, Fred and team.
Maybe my first questions on your 2021 guidance here. It was certainly good to see that it's increasing by quite a bit from 2020 levels, but can you give us a bit more color in terms of how it could look like on a quarter over quarter basis. The reason why I ask is you know Sandeep as you mentioned for example, the Eagle mine here right.
Now it's on the coldest months not stocking while at the same time, you know we didn't really get the full benefit out of Q4, given that theres timing differences. So you know how should we look at it in terms of I guess more specifically eagle and how that could impact your overall production quarter over quarter, we are expecting lower in the first few.
Orders in our higher end into later quarters, because you could you give us a bit more color sandy.
Sure I can try cosmos.
Look I think.
That's a fair assessment, but I think overall.
We didn't get the benefit of that Q4 number so that will drift into Q1, there's always I mean, it happens on all of our assets Theres a bit of a lag in terms of when ounces are produced and when we get them from the refineries.
At the end of the day I think that generally tends to wash wash itself out Eagle is one exception, where as it starting to get to its full run rate will continue to have that story play out.
Short delay.
So youre right there may be a little bit of volatility, but overall I think even with the colder months here and the lack of stacking I think theres been a lot of improvement at the mine I think they've taken the opportunity to.
Whatever you want to call it a debottleneck or work on the optimization efforts.
So hopefully there isn't that kind of.
A dip after Q1 into Q2, and we see continued improvement towards the end result, so it's premature for me to say because it's not in our it's not in our control, but I do look forward to maybe or maybe a little bit of variability on that one quarter over quarter, but generally I expect that variability to be positive if that makes sense.
Sure and then San.
Sandeep can you remind us what's the usual lag here at Eagle and when would you expect them to start stocking again net at the mine.
Yeah, So maybe I'll take the other the second question first and Fred I don't know if you have a specific answer month wise off the top of your head on Eagle.
But I would say soon in terms of stacking again I don't know if that when that means if that means in March I remember it was a 90 day proposed shut down from a just a staffing perspective, they continue to mine minus the coldest days, where they're worried about.
You know just the inefficiencies of trying to do things so.
So I would suspect there'll probably be most of the way through that maybe that carries into a little bit of March.
But that's a.
It's a 90 day period of the coldest part of the year or so.
I'm speculating a little bit, but I think it's pretty fair to say that we're through most of that by now and Fred I don't know if you have an answer if you don't we can get back to Cosmo, but do you have an answer in terms of the typical delay month why is that eagle.
Well I would say it's between one and two months usually you see we've received for example, a <unk>.
A good delivery on January four 2021 that was of course related to the production of our.
And end of November and December sales.
Sometimes there is this is this one to two month delay that can.
Create some volatility.
One month twin out one quarter of twin other but.
But that's that's usually within one or two months.
That will receive our.
Our delivery for other royalties royalties.
Great.
Maybe maybe switching gears a little bit here.
Sandy you mentioned what are the highlights many highlights I guess, but one of them is the alamos and their discovery other increase in inferred ounces here at island gold. So my understanding is that a lot of those inferred ounces higher grades came from island gold East.
Just to confirm as you mentioned I guess are you are the MSR over there is higher at 2% to 3% day.
Yeah, that's correct and look I think.
It's tough to say exactly we have our own views, but they're based on our views, but I think definitely as you go to the east.
You get into our 2% ground as you go deeper including some of the deeper inferred ounces that are currently in the mix you get into both our two and 3% ground. So yeah.
We have our internal views as to what the.
That's.
Average is out to.
But at the end of the day, what it is positive.
And then and then you know.
I understand that Alamos recently acquired Trillium mining, which is you know again to even further east than island gold East.
Do you have any kind of a royalty on that ground by any chance.
Not to my knowledge I don't think we do a pretty fair assessment that day that we don't but I think overall.
I think all of that is positive for.
For the most part I think what we're what we're seeing per Alamos.
Dating back to their their acquisition of one of the other royalties that was on the ground.
The exploration effort they put into it they keep breeding results the $25 million roughly I believe I believe its exactly but roughly $25 million exploration budget. This year that acquisition of other ground in the area just show the importance of that asset within the portfolio. Its obviously been working out exceptionally well for them and we hope that kantar.
<unk>.
Overall to their benefit obviously disproportionately, but also with ours.
Of course.
And maybe I'm going to Eldorado's law Mac as you mentioned you know they made a recent.
They made the discovery last year actually but the inaugural inferred resources at or a Mac here.
I think if I look at it some.
Some other further of course, there is still expanding or Mac, but they're also looking at.
A new sort of areas Fortune is one they're also looking at the area between or Mac and a parallel zone.
I just wanted to get a better understanding in terms of you know youre ground for that royalty here and we know what it include everything that's expansionary.
And then also at some of these new zones as well like fortune in this area between or Mac in parallel.
Yeah look I can definitely go back to double check for you Cosmo in there, but if I if I misspeak I'll correct myself, but I think the answer is yes.
On the one per cent ground and then what is incremental to that as the 2.5% ground that we have on it. It has a little I think it misses a couple postage stamps, but on the comex ground, particularly it's two 5% on everything of consequence, including the <unk>.
Area so.
I think it's pretty safe to understand it is 1% on everything that Eldorado has today and then two 5% on anything they acquired through <unk>.
And then Sandeep, maybe if I can one last question here you know as you mentioned in your opening remarks, you talked about looking forward to it'll higher gold and silver prices, which is great.
In that context could you maybe comment on how that could potentially impact you know the overall sort of new streaming new royalty financing acquisition market and then and then maybe bigger picture how is that market right now.
Sure no. It's a good question.
And we've talked about at Cosmo I think.
We talked about it with with many of you on the phone.
Look I think.
It's safe to say I said it earlier the market for new transactions.
That has gotten tougher I mean with equity markets open with that available with new new new players on the smaller end private equity very active on the on the middle at the larger end.
Operators buying back royalties in significant ways in 2020.
If you think about almost as acquisition do you think about.
Newcrest on London Gold, So I think anybody who tells you there isn't more competition in the sector is line so.
So I think that's fair.
Happens in the sector I mean, it ebbs and flows are certainly periods of time when our capital is the royalty companies more required.
And you have to you have to wait for those those moments I think is our view I'm certainly happy that Sean and the team have been investing in growth building. This portfolio over the last seven years, such that we have so much growth that we've already paid for and lower commodity price environments that we can benefit from not only that we can benefit from as it comes online but also that.
More open equity markets can push those assets faster than they have been pushed in the past couple of years I think.
It doesn't make it more more competitive yes at the same time, the pie grow when new assets, our advanced new assets or constructed it does so I think.
Generally speaking, there's probably been a lack of equity dollars.
To fund many of these projects and an over reliance on debt and streaming.
Which can benefit us as royalty and streaming companies, but it can also hurt us when things go wrong. So I think finding the right balance within that and having generally more equity dollars and the mix is a good thing. It's certainly a good thing for our portfolio. The way it's constructed with as much growth as we have on the come in the next several years.
And because of that we can afford to be I think a lot more disciplined maybe more disciplined than anyone in our sector right now I certainly wouldn't want to be building a portfolio from scratch I'm happy we have the one with you.
Great. Thanks, Sandeep and those other questions that have been looking forward to the remainder of 2021.
Thanks, so much for asthma.
And the next question comes from the line of Jackie per velocity from BMO capital markets. Your line is open.
Thanks very much.
One question I guess.
More strategic for you.
You mentioned this at the beginning but I just wanted some clarification on your North Spirit vision now that you restructured which ODB is north spirit still something that's active and separate.
Sure for yourself are you still pursuing that.
That avenue with private equity or is that sort of mission has been accomplished with the creation of OLED.
Yeah. Good morning, Jackie Thanks for your question no its the latter.
And hopefully we were clear with that when we did it I mean, north spirit was the working name I guess when when when the transaction was announced in the fall of 2019.
North spirit in our mind was renamed the Cisco Development Corp, and <unk> and.
And it started life in the fall of 2020 so.
So yes, that's very much a north spirit reincarnated, if you will I think so.
That's hopefully answers your question on that Brian.
Tangential to that if the question is are we still looking to do.
Traditional accelerator type business, I think I've been pretty clear with everybody that that business has been in its purest form.
Wildly successful for us not only on a financial perspective.
But also in terms of building out the pipeline. So if we can find continue to find.
You know avenues to deploy five or $10 million to turn them into 50 50 in hundreds and kick back volume valuable royalties without competition or with far less competition as opposed to having to pay up for them.
Picking up on the last conversation.
We had.
I think that that's something we will look to do all day, along the gating item on that is not interest.
Its availability of assets that we actually like so the.
On the bigger and to your point, we've found the right home for broker Bill that was always the intent when we announced the transaction.
It was too.
Put that right put that back into the right vehicles. So that they have value for us that value I think is undeniable in terms of how it's gotten created.
And we look we're happy being back in our in our lane so to speak of the royalty company.
I guess I guess.
You answered exactly I guess I was I was.
Kind of wondering if you would use that north spirit.
A vehicle to do other accelerator model type.
Type transactions, but I think I think you've answered that perfectly. So thanks very much for that I think cost covered all my other questions. So I will leave it there and I'll talk to unit.
Thanks, very much Sandeep no problem no problem look forward to talking next week Jack.
And the next question comes from the line of Ralph <unk> from eight capital. Your line is open.
Hi, there.
Good morning, Ralph.
Yeah, I can hear you it sounds like you're in a tunnel or something but I can't hear you speak up.
Yeah, I'll do that I want to come back specifically to the 2021 guidance.
And maybe we can exclude Bernard because there seems to be some good disclosure on the potential contribution but.
Sandeep can you can you tell me, which assets you're comfortable saying that there is upside versus current expectation.
Morbid versus guidance, because there seems to be a fair amount of conservatism baked into.
2021 guidance.
Is it.
From mantle cell, where you could see some contribution where there is none.
Sure happy to do that Ralph to the extent they can obviously look I think.
Conservatives is probably a fair word and it was intentional I think.
With Mad dose, we per our guidance perspective, we'd kicked out into next year.
Just didn't feel it was worthwhile trying to quibble about a month here or there.
Initially.
It happened in phases, but initially that that that expansion it would do to get completed mid year.
And then as soon as Covid hit.
Normal.
Normal.
I'm, sorry, buzzing distracting, but normal construction delays plus thank you so much plus.
Covid related delays.
You know pushed that to the end of the year I think.
Saying at the end of the year end and getting the benefit of it in 2022 is fine by me I think we've also been a little bit conservative on the Eagle side.
Last year, we are.
We like everybody else budgeted more and did receive it. So I think we've taken a slightly conservative track on that side and hopefully there's some upside there and then also on things like <unk>.
Like like San Antonio.
Said.
Really only given ourselves the benefit of a trickle of stockpile production really at the end of the year.
Rise there is the bigger the bigger asset but.
Despite the desire and what's happening is pushing that forward.
Pushing that out support faster.
It's still reliant on Mexican permitting and bureaucracy, which within Covid I think you've probably seen throughout the sector has gotten gotten pretty delayed. So I think overall, we've taken attack, including with Bernard I mean.
We took the decision last year that until we're getting paid for those ounces, it's unfair to put them in guidance. So we've tried to take a conservative approach to everything hopefully you know what.
As it comes back and we are getting paid on it. It's a positive net surprise as opposed to something where we're putting out there and then trying to chase so.
I don't know if that.
And so as your question directly probably answered the directly as I can but that's the tack we've taken.
And I think it probably serves us well.
Understood No that's great I appreciate the color. Thank you.
My pleasure.
And your next question comes from the line of Trevor Turnbull from school.
<unk> Bank your line is open.
Yeah. Thank you.
Sandeep just a follow up on.
On San Antonio and I I May have you may have just addressed this with Ralph but I I didn't quite catch it.
Did you say San Antonio there are a few ounces potentially coming through but did you include that in the 2021 guidance.
I did and maybe I'll, let Sean speak for San Antonio himself as opposed to me paraphrasing for him but.
You know, even if we did.
Which we did Trevor.
It's small that's not the larger production story, there so us factoring in a little bit of it this year. It does not change the answer.
That much but Sean maybe if you're.
If you're on you can pick up on kind of the general plant per cent Antonio.
Yes sure.
Yeah. So I mean, there we expect a little bit of production at San Antonio This year, According to where we sit right now.
From the existing stockpile is about $1, one $1 2 million tonnes of stockpile that we hope to have under irrigation.
Sometime in Q4.
And you know, it's mostly oxide leach fairly quick, but I don't anticipate it to be a big contributor this year, but certainly two.
2022 looks like a great year for <unk>.
For the development. There is we're also pursuing the permit for the larger some pucci project, we have the necessary permits for the stockpile now.
But the big the big Kahuna here will be to get some pucci itself under Leach, which we hope to be able to build next year and we will.
Already secured a 15000 ton a day.
Crushing and screening circuit from the Britannica mine.
For that purpose and we're shipping out to Mexico, obviously.
And I think you just answered the second part of my question Sean So.
The permits only for the larger project and what you have on the stockpile that you'll be processing ports into this year.
<unk> is not dependent on.
Now getting that permit or or kind of getting delayed by COVID-19.
No it's already mined that stuff the big thing about the other.
Stockpile as we just have to restock it.
Honest purpose built leach pad.
So, it's basically load haul screen and a little bit of crushing and hopefully the equipment that we have in hand, now we can set that up and get that running as I say for Q4.
Okay perfect.
And then I have a bit of a financial question and I guess in some ways. It's also related to San Antonio.
You did mention I guess, Fred and Sandeep, both talked a little bit about the noise related to the transaction and how that's.
Come through on the consolidated financials.
Going forward do you think there is much noise left to shake out or will things be a little bit clearer other than the fact that they are consolidated in future quarters.
Maybe I'll start Fred and if you if I Miss something you want to add feel free I'd say, certainly we think it's mostly behind us Trevor I think that the transaction itself was pretty complicated had a lot of facets to it. So that's all been.
Been factored into our Q4 for the most part if I'm missing something but you can you can contradict me.
But going forward, we do see a clearer lines from that we try to incorporate as much of that as we could in Q4.
And yes, there will be continued.
Ongoing.
Noise.
With respect to the royalty business and the.
The mining business, we've done in these set of financials and the MD&A are best first effort of trying to separate that for you.
As analysts and investors and we'll continue to do that and hopefully get a little bit better at it smarter at it as we go but.
That's that's certainly the intent Trevor Fred did I Miss anything.
No no I mean all of the.
Oh cost related to the RTL to these one time items were accounted for in 2020, and we are not expecting.
Any additional cost related to the transaction in 2021.
And and Fred you I know you commented on this earlier, but specifically with respect to Q4.
What was the tax impact you said from San Antonio kind of on the earnings in Q4.
Yeah that was the it was a tax payment of $4 5 million U S. In.
In Mexico, when Theres, because if you'll recall that transaction was done just prior to the RTL.
Kyle.
So put XI, which is all being descent into new project was still a subsea direct subsidiary of a Cisco gold royalties. It's now a subsidiary of a Cisco development, it's still being consolidated.
But the project was within set pucci and when a Cisco Bermuda.
Our subsidiary <unk>.
A stream from the San Antonio project for a U S $15 million.
Does it 30% corporate tax in Mexico in the treatment of a stream. When you are receiving to deposits in Mexico was different than in Canada in Canada.
Taxes on that revenue will be deferred to the moment that you will produce the ounces in Mexico. It's taxed on day, one so generating a $4 5 million.
[noise] payments in taxes, and cash tax that will be paid in Q1, but of course, it will reduce the taxes payable by <unk>.
<unk> one day will start their production. So it's like a prepayment of taxes, if we want if we compared to what would be the treatment in Canada.
Okay perfect. Thank you very much that's all I had.
Thanks Trevor.
And the next question comes from the line of John Tumazos Tumazos. Your line is open.
Thank you very much.
Oh, there you see restructuring splendid and you did everything you said you were going to do.
Better than you said you were going to.
And you have all the progress outlined in some of your slides today, which are really very effective in communicating this.
New resources and projects on the come.
When our first started trading.
July 2014, the shares were almost U S 15.
And I guess the good news.
Is that since.
July August gold price peaks or has gone sideways.
And the other leading royalty streaming companies have gone down 30%, 40%.
So maybe OTC is effective in that regard.
But my sense is that the market just can't digest all of the progress you're making.
Do you think there's another simplification you could do.
Or a better way.
To help the market understand the.
20, or 30, moving parts that are all moving ahead.
Hi, John Thanks for your question.
I mean, there's a fair bit on unpack there. So I'll do my best to answer a part of your question we missed out we feel like.
No.
We lost ground, obviously in the fall of 2019 from a share price perspective, that's a given.
And then we missed out on the run up in the first half of 2020 as gold prices ran in gold equities ran.
Despite that in.
In 2020, we still ended up being I think the second best performing well.
Royalty company in the sector, whilst I wish that would've been by us.
Up it happened to be by US outperforming as you say in the second half by standing still.
And what was a downdraft.
Downdraft over the second second part of the year or part of it at least.
I think the transaction, we announced I would all bias aside agree with you did.
More than most people probably would have expected of us when we started communicating our intent at the start of 2020.
Sure.
A considerable amount of value.
Can't argue with given how much money, Sean has been able to raise on the Cisco development front to justify that value.
You know happened into a downdraft again, not saying downdraft that we announced that transaction I think it was october 2nd or third.
Closed at December 2nd or third.
Generally a downward momentum from a gold price perspective, and a gold equities perspective, but nonetheless, the value has been created.
We certainly don't think we've gotten the credit for that or what's happening within our royalty portfolio. We're working towards that eventually we will stay and do enough to get the benefit of it and.
And really.
At some point I think that that benefit will be undeniable I mean, the assets are just working beautifully.
They're making more money than they ever have for us.
And at some point that growth pipeline is going to kick in in a bigger way than it already has.
So those development asset that people are discounting pretty heavily become pretty tough to discount when they are actually hitting the bottom line so that that that's ongoing.
We will do what we can Jon to fast track it.
<unk> 2020, we did this the hardest part of the restructuring obviously, we hear a lot about.
The ownership and the Cisco development, there was 88% that's now 75% without us having sold a share.
But there's a lot of value that was created there.
We've said, we'll be smart about.
How we can tap into that value but.
Those other things that we can control the portfolio that we cant is doing really well. So eventually we do expect that to to prove out. This is a portfolio that matters in the sector. These are assets that matter our flagship asset was the best gold royalty in the business. It just got twice as good.
So we do think we will go back in.
Get better value for these assets from them.
Do you think it would help if you had a little real time XL model.
For your stock holdings, or yours, and OTC stock holdings.
Or do you think your attorneys would let you take some other things you put on your slides.
And have a model where someone says.
Downloads EXL and put their own gold and silver in diamond prices and.
Uh huh.
Quick to include animals are non MSR.
Yeah look with your the first part of your question look I mean, I think from Oh, Gee, our Cisco royalties perspective really the two biggest chunk of the value we have on the equity on the investment side, our Cisco development Cisco mining.
To a lesser extent, the Cisco metals that.
That's really yet so.
People can value those.
On a day like today that's.
$1 billion of value.
And a pretty paltry remainder for the royalty business, even you know even if you don't take.
Market.
Market values at a given you any kind of discount you want to apply on that the answer is still the same the royalty portfolio deserves to be trading better than it is.
The job, we have set out for ourselves to undo.
So your question is an interesting one.
We're looking to do whatever we can send their life the value of our portfolio.
It's an interesting spot where and you know if you think about.
The larger companies in our peer group. They generally tend to have 80 or 90 per cent of their value in the producing space.
Producing side of their portfolio, so they're getting credit for 85% 90% of their their asset value.
If you look at the smaller companies.
They have a handful of assets a half dozen assets whatever it may be everyone models every single one two the last dollar and they get full credit for that as well other.
In between we have what is a pretty deep meaningful set of assets.
The portfolio.
And and 50% of it give or take is that the development category. So we're not getting the benefit of that in cash flow today, but it matters and if you look to duplicate that portfolio I don't know what it cost you today I mean on these pages wherever they are $16 17 at the back of our deck or sorry 2019.
Other types of things people are paying for.
50 plus million dollars four.
In our market and we have in our portfolio and we don't talk nearly enough about them, which is also something that we're looking to to rectify. So the good news is the values there.
And we will make sure we do a better job.
Daylighting it to people.
And ideas on how to do that genre are welcome and we will definitely give that some thought.
Thank you good luck.
My pleasure. Thank you John.
And your next question comes from the line of Adrian Day from Adrian Day asset management. Your line is open.
Good morning listen you just answer my my question.
About the selling down of the developer says, but if you can just answer that thank you.
No problem major and good morning to you.
Andrew.
Thank you and your next line comes from the line of true net sales from Industrial Alliance. Your line is open.
Hi, Good morning, just a quick one on asset upside question for Eleanor because it's been a key royalties for you over the years I guess newmont still working through their assets that they got from Goldcorp, but I just wanted to see if you can provide some color on this that plants at Eleonore house capacity over 7000 tonnes per day in years. Prior I think it was Goldcorp plan two event.
We build to that today newmont, so operating well under that do you think newmont builds up to that in the years ahead or where do you think they will eventually take the throughput on that asset.
Look I mean, it's hard for me to say I think you know.
Rightly so the first thing they did when they picked up that asset as kind of.
Reset the bar in my mind, a little low after a couple of years or however, many years.
Of of expectations being set in and then not net.
And when you think about a new a new owner picking up an asset I mean wouldn't that be the right thing to do so.
That's what we experienced first we've dealt with that last year.
So the steady state year now you're right, it's frankly, a little bit better than steady state is positive.
Dishing of reserves.
You know it was positive we're not seeing that happening across the board frankly based on what I've seen so far in other peoples disclosure that did that add.
I believe it was 12 or maybe it was $12 50 gold for the reserves.
So still amongst the lowest in the sector and frankly their reserve categories are maybe the most stringent in the sector. So I feel comfortable about the baseline.
Thereafter, how they work to improve that.
Time will tell I seem to recall kind of a circa $10 million exploration budget for 2021.
Targeting some other deeper.
The deeper material, but also looking laterally closer to surface. So we look forward to getting.
Getting some updates there I know they were positive about some other regional targets they have and there's just more activity in that area overall so.
Yeah.
Premature and probably unfair for me to comment, but overall I'd say, we'll take steady state until things improve.
It's a marked improvement over the last couple of years.
Okay fair enough. Thanks.
My pleasure.
Thank you and the next question comes from the line of Brian Macarthur from Raymond James Your line is open.
Hey, good morning, many of my questions have been answered, but just a couple of things I wanted to follow up on.
And I. Thank you for breaking out some of the consolidation because he said it does take some time, but you mentioned investments of 215 million X D. O D V and again, obviously that metals and mining.
But if I sort of looked at market value. There's some other stuff in there that the falko convertible or is there another <unk>.
Jackie's question about cleaning up the investments I mean, it looks like there's another $20 million or something in there is that right or can you comment on that at all no happy to Brian.
And I was maybe a little.
Flip it in that remark I was trying to get to the the bulk of that value and the bulk of that value is obviously Cisco development, the lion's share of Cisco mining and metals.
Hi, Matt, but we do still have a small investments in and save all resources.
<unk> for instance.
And that would kind of bring.
Round out the rest if you will.
So.
Both of those earlier stage still in nature still we thought a lot of value to unlock in those names.
Both doing positive things.
Not to go on too much of a tangent, but stable having entered into a joint venture with South 32, where we have a 2% and I saw on that ground in Argentina, So look forward to them being more active so yeah.
Yeah, I was a bit short in terms of the list, but the list is not much much longer than that.
Great. Thanks, and then the second thing.
So youre, excluding Renard and I'm, just trying to figure out how to I assume that comes into the financials, but you're putting the cash back into the company right now.
Do you ever get that back like you obviously have security at the end of the day or how does this actually works. So we just think about the 8000 G. O. This year, we kind of just.
It's gone and when you get to work and next year. We start to include it again or is there a catch up in the future or how should we actually think about that.
He said from a pure cash flow basis going forward that's available or.
Yeah. So it's not money, that's being evaporated Bryan it's money, that's being reinvested into the business with the expectation of getting repaid.
So it's essentially a alone into the business and.
We're happy with where we are I have to say.
Youre going through Covid I did not expect luxury goods the rebound as quickly as they have so that's promising.
I guess, maybe the whole world has rebounded quicker than.
Then many of us thought so.
Getting $10 a carat higher than we were prior to Covid I think is a good step in the right direction. The fact that with the read the reinvestment by not just us, but all of the streamers of the stream back in they're not having to draw on the working cap facility, they're there, they're making a little bit of money. That's all good news I think it's fair.
To say that we still require another step change up.
Before we can start getting paid on our stream and getting back some of those historical reinvestment. So.
Fred I don't know if there's any more detail you think is warranted, but that's how to think of it Brian is not being evaporated. We certainly are keeping a running tally of it as our partners.
And hope that with a bit more joy from diamond price perspective that can come back into the black.
Great. So maybe evaporated they might term I was just it is a deal flow.
Oh at the end of the day. So that's what I'm just curious when you start getting back to get the cash back out yeah look at it it's it's certainly chunky and we.
We are absolutely focused on getting value for that.
So trust me if not it's not a forgotten asset we think it's it's not in our value in.
Any way shape or form right now, which.
Which is fair, but in terms of option value assets that can be turned back on I mean, there was $1 billion of infrastructure of good infrastructure, that's gone into that Diamond mine.
<unk> balance sheet and diamond prices just went wrong at the at.
At the same time.
But that diamond mine should be profitable before any other diamond mine is built anywhere in the world.
And frankly, we're not seeing any found that.
That could be built so.
We look forward to it we're still not out of the woods from a COVID-19 perspective, we're happy it's back restarted we're happy we're up.
On the diamond prices.
Price perspective, so far.
But want to keep that as a positive surprise hopefully as opposed to sticking our necks out too far and then having to justify it.
Great. Thanks for that color is very helpful and maybe just one quick question maybe for Fred I just wanted to confirm I heard this right. When it goes to your financing some trying to consolidate the O D V stuff, there's that income taxes payable of $6 million, which I guess is Canadian that's that $4 3 million you talked about to true up the San Antonio deal, which you set odb's.
Paying that's right. So again, it's not cash youre going to owe.
No you're correct. It's it's it's a cash tax payable by Cisco development in Q1, 'twenty 'twenty, one not by Cisco Gold.
Thank you very much.
Youre welcome.
Thanks, Brian.
And your next question comes from the line of Craig Barnes from TD Securities. Your line is open.
Thank you David just wanted to follow up on Bryans line of questioning on or not is it a question of diamond prices there or is there more work to be done on.
The cost structure, what is it that we'll get that into a performing asset for you.
Looking ahead I think it's it's obviously always both.
Greg So.
Not saying, it's only reliance on Simon.
Diamond prices I think the good news for US is we saw the team sharpened their pencils, especially during the Covid the extended Covid shutdown I would call. It two to make sure that the cost can be reduced.
It's always one of those things.
As a.
As a group of owners you asked for.
People to sharpen their pencils and cut as much cost as possible until it's absolutely necessary on the answers as always we're as lean as we can be and then Lo and Behold you find more so you know I think I think the groups are doing a great job from that perspective, I think theres continued possibilities to optimize that.
But I think it's fair to say that the biggest chunk of our game there can come off the back of diamond prices for sure.
And then that's you know that's always true with any mine in any commodity cycle, but the commodity price can do a lot more good for you than than the Opex. Obviously, we want the team to be focused on the opex because that's the only thing they can control.
But we've already seen a good move.
After years of waiting for it we saw Argyle.
Finally, you throw the towel in.
And that's significant because that not only the 15% of diamond annual supply. It's also in the same.
Very similar I guess.
Quality and size fraction as renard so.
Yeah.
We look forward to continued uptick on that side I think it's certainly possible and and you know.
Obviously necessary.
And just on the <unk>, sorry, you mentioned that they have unfettered access to the site again.
Is there any kind of timeframe that you couldnt lay out.
What could happen there.
I mean, maybe I could but I won't.
I think it would be reckless of me to do that I think we are I certainly am positive more positive than I thought it'd be a year in it sounds it seemed like a pretty desperate situation a year ago Christmas time, a bit longer than a year ago.
The truth is that was a good to very good asset at 1400 dollar gold, it's a company maker at 18.
And it's arguably 70 or 80% built depending on you know the minor step back you have to take to get going again so.
I think it's an asset that matters Armenia was in a tough spot.
Before Covid and before a war with Azerbaijan. So.
I think you know this is always an asset that really the even the community wanted and enlarge enlarge swaps. The government certainly wanted it's approved.
You know the the unfortunate aspects there or just the.
The push backs where really are.
Yeah.
You know largely artificial in nature or it's the wrong terminology, but I think you know what I mean, so with that kind of out of the way. We look forward to some positive developments, but until they happen I think it's tough for us to Bang on the table and talk about it but I think if you look at the sector as a whole.
Certainly a ton of examples where.
If the assets are good enough in the SaaS. It is clearly good enough.
There are people that decide to take another run at it and then this one frankly being a.
As far as as far as advanced as it is.
It's one of the few mines that can hit the cycle pretty quickly.
Okay, great. Thank you.
No problem, Greg Thank you.
Your next question comes from the line of Jeremy <unk> from Canaccord Genuity. Your line is all day.
Hi, good morning, everyone.
You guys have answered most of my questions. So far thanks.
Just one quick one left on.
On G&A.
Previously you guys had indicated with the ODT spin out at it it would drop per or with significant chunk of the management team going over to <unk>.
Going forward can we expect to see the G&A expenses for.
For OTC split out or will it be consolidated.
I know we touched on this earlier talks.
Talking about those but a little more detail would be appreciated.
Yeah, Jeremy it's a good question and I.
I think that's a fair way to think about it going forward in terms of that division I think you'll see a bit more segment information going forward. It didn't we didn't try to overdo. It this time around because we kind of owned we did on the yes. It's all within a war for the vast majority of the year and 11 plus months out of the year. So.
We kept it a little bit simpler, but going forward, we will do or will.
We will do our best job of being able to show you exactly what's happening on each side of the business because it's important to obviously each set of shareholders.
Great. Thank you very much.
No problem.
And your final question comes from the line of Don Bleach from paradigm capital. Your line is open.
Further on that.
The consolidation of counting.
Presumably at some point.
When you allow your ownership to be diluted down you will remove that consolidate.
Consolidation.
Would you do that when you dilute to under 50%.
And secondly, if you if you still are under a kind of a consolidation accounting when when O. D. B is into production would you have to report both Odb's Goldman your share of O D V gold production and Youre attributable royalty production in your results.
Yeah, Good morning, Don.
Look the answer to your first question is yes. So obviously at some point, we will not be consolidating.
<unk> started out in December at 88% were down 75.
That's just based on dilution.
Eventually when we're below it is not exactly a bright line of 50, but you can you can think of it as such I think reasonably closely.
Theres other determinants that go into it so below that level, obviously, we will stop consolidating I think that's obviously.
Noise that everyone would prefer to not have.
And the second part of your question. The answer is yes, whilst we are still consolidating and then obviously we will have to deal with that I think what as I said, we took a good crack at it this quarter in terms of separating things for people. We will continue to do that and frankly, probably get better at it.
But.
Well all I'll say accounting is important it's not what drives decisions value matters, and we'll do our best to Uncomplicate things.
But the the heading is value.
Not to lose sight of that but hopefully that answers your question Doug.
No that's good to know.
Again, I think a.
Part of part of your.
Undervaluation is a little bit of confusion. So anything that you can make to get it more simple probably helps helps them long term.
And that and that's completely fair and it's not lost on any of US. So Trust me, we're reminded that way.
Thanks Sandeep.
No problem zone.
Operator.
Are you a serious when you said that was the last question.
So this time the Q&A session I would like to turn it over to you is just thanks for the conclusion remarks.
Okay, well. Thank you for the time and the interest everybody I think useful to get that.
That output and that back and forth with you. So thanks for your questions and your time and and.
And have a good rest of your day.
This concludes today's conference call you May now disconnect People's looked at special for Covid.
I'm Johnny.
Yeah.
Okay.
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Okay.