Q4 2020 Osisko Gold Royalties Ltd Earnings Call
Good morning, ladies and gentlemen, and welcome to the Cisco Gold royalties Q4 and year 2020 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.
This call is being recorded today February 25, 2021 at 10, a M. Eastern time today on the call. We have Mr. Sandeep Singh, President and Chief Executive Officer, and Mr. Fidel a true.
<unk>, 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 module made on semis.
If you add up day coffee at all day. He just does it get P&C net debt.
Oh, he saw a scolding me T. A pent up things like that so no per se at all and say all of the gifts toys are false.
You said it wasn't just the ERP so that to us it was eating a meal or that you ponder on not just at that then it's all of those three was on the Vince Thanks, chiefly Zions Batman.
The eldest does that also that that was all day and this is Sandeep Singh. Please do though is just the dendritic cell and Mr. Red Chested until they saw female share is this place is all females share limits I'll send you that thought I would vote Mr. Sandeep Singh.
Yeah.
Thank you operator, good morning, everyone, both royalty with a simple like Donald Coker off Telephonics and Matt. Thank you for taking the time for an update on our Q4 and 2020 full year results.
As you see Sandeep thing, Chris Sheffield I'd focus you on.
Just be echoed by need to Covid here for you as CFO.
Cause dogs can say, Sean Roosen, so Fred and I will walk you through the results.
This morning, and then Shawn will also be available.
During the Q&A.
The presentation on following is on our website.
Please if you haven't already you can pick it up there and I'll do my best to refer to 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.
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.
Chugging along.
At their full capacity we believe.
That led to record cash flow is obviously and revenue is 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 prices. 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 and cheap ounces, if you will.
And generated a significant amount of adjusted earnings over the course of the year at 27 a share.
They're on a 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 little bit on the consolidation 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.
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.
Did acquire buyback 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 in our peer group and something that's very important to us as we go forward.
You know with no disrespect to the accounting some on guys I think more importantly.
Than any of the noise in the financials is the fact that the business as the new Guy excellent shape as we as we enter 2020 as we start 2021, our producing assets are outperforming almost without exception our development assets are advancing steadily.
Our exploration or earlier 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.
Overstaying 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 on our direct spend on Barker Bill that was a finite period of time. It lasted between the north spirit transaction to the Cisco development.
Spin out a year.
And certainly created a lot of value in the process.
Skipping over to slide four to finish that thought.
<unk> was an important strategic year for us.
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 that.
The credit and value for.
Since that's been out.
Sean Cisco developments 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 on.
Obviously that asset needs to go through permitting in Mexico.
And the team is pushing that forward substantially at Cisco development, but.
We see there.
On our stream is the upside potential.
Cisco development has already acquired a crushing circuit that can produce that can that can run by 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 midterm.
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.
At the right time that mine continues to now benefit from significantly higher copper prices. So we're happy with our added exposure to Gibraltar. We also acquired an additional 15% of our royalty package that we already own.
Predominantly on the island gold and low back minds, so adding to our royalties on those two minds I think it's safe to say it was a good timing.
Both of those are now going through some pretty important.
Exploration and.
Net expansion phases.
We also announced the strategic partnership with Regulus whereby.
We 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.
On a pretty important copper price environment and also gain exposure to additional royalties up give me buybacks over time.
As you all know concluded the.
The financing with investment market back in April it was done at a premium during the worst of Covid. So a 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, yet to report, but almost across the spectrum, we're seeing good news.
Starting with obviously on our flagship asset Canadian Mark Dick Ware.
That mine has gone from.
Open pit.
Towards the end of this.
This decade to now talking about production in 2300, plus plus so we look forward to our flagship asset being our flagship asset for decades to come on.
And I'll pick up on some other positive.
Advancements on a little bit later in the document.
And then you see a.
Split.
All of our production for 2020 by commodity as well.
We are gold and silver dominated.
That's a core part of our of our portfolio and for any.
Anybody that has a a read at blog feel free to point out the the level of contribution that we add on.
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.
Yeah.
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 on the side until we can fully benefit from those cash flows so taking that into accounts.
<unk>.
In 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 are.
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, especially at a time when new transactions in the sector on the royalty and streaming side have gone on its fair to say more expensive and as a result, a little bit riskier weed.
We look forward to this page four pipeline strength to deliver for us.
In the <unk>.
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 is frankly pretty de minimis.
So it doesn't bother me in the least that Mantas expansion has been pushed into 2022 as opposed to catching some of 2021 I think the important news is all of this is still in front of us on all of it is 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 on then I'll pick back up thereafter, so Fred.
Thank you Sandeep on a bunch of <unk>.
Good morning, everyone. Thank you for joining us today.
As you know busy year for sysco with Covid, whereas some operators shut down or reduce their operations, mostly last spring and of course, the completion of the <unk> transaction in November creating a Cisco development raised over $215 million in the last months.
We earned 18000 802009 Geo was in Q4.
<unk> Sandeep explain the Geos earned from day, one 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 per week.
Net 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 repaid in Q4 and to credit facility.
As presented under a 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 flows 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 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 them on upstream.
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 higher realized price on gold and silver.
Our average gold price per ounce.
Sold amounted to 2000 on front with $44 can easy on in Q4, 2020 and $2273 for the year a significant increase over 2019 gross profit for the fourth quarter increased to $22 8 million up from 23 point and $9 million in Q4.
For 2019 for the year, our gross profit was $104 million up from $83 million in 2019.
Our net cash flow was from operating activities reached $32 6 million in the fourth quarter of 2024, a record not dwelling on the $8 million.
For the whole year up 918% compared to the previous year.
Adjusted earnings in Q4 amounted to 12 million or sit on cents per share.
Reflecting a tax expense.
$5 8 million Kenyans 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 were shared between the Cisco gold royalties on our fiscal <unk>.
And but are all included in our consolidated 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 debt.
All year.
Cash margin on our royalties increased in Q4 to reach $34 3 million compared to $26 3 million the previous year for 2020, the cash margin on royalties reached 100 on elephant 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 higher than the previous year for 2020, our total cash margin.
Andre 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 outweighed on 5 million from our Cisco gold royalties and odd 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 our Cisco development value would add over 750 million for a total of $1 billion in value.
Our debt amounted to 400 million on December 31st we have repaid on amount of 15 million U S. In Q4 on.
Our revolving credit facility in Q1 of this year, we have also repaid.
Our $50 million debenture with <unk> on that cubic using our credit facility, therefore, reducing our interest payable by approximately one 5% on debt debt, including the accordion available our.
True.
Well about credit on the facility is over three underweight on $85 million as of today.
Back to you Sandeep.
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.
Open pit perspective based on guidance.
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 on the biggest catalyst in our in our in our portfolio. Obviously it would be on slide 13.
The underground construction decision by Nico 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% of the 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 are 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% than 3% ground on East <unk>.
I think with the.
A little bit of it.
Counting for that you can you can kind of approximate of four 5% MSR overall for us on the entire project. So.
I.
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 I'd say 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 again I think.
Delays measured in 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.
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.
They are into the coldest winter months are 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 on eleonore.
I'd say, a steady state or frankly slightly better than steady state that day.
<unk> guided towards which was 250000 ounces per annum guidance of $2 70 and.
Returning focus on exploration.
I read read through a fairly active.
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 of value 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 want to come back to any specific questions on asset importantly, I've said it before I'll say it 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.
An 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 on to our two and 3% royalty ground a significant portion of what we can see on that new inferred category, that's almost 15 grams per tonne.
On to our two and 3% royalty ground so that is a.
Significant asset getting getting better all the time and I believe there was a 25 circa $25 million budget plan for this year on the commentary from Malmo as 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.
On 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 catalysts.
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 of 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 the company to be on the larger projects.
At Caribou and San Antonio.
Importantly, as we said earlier.
Sean on 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.
<unk> updates.
<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.
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 until drilling that will increase that MNI, culminating in a feasibility study and advancement on 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 <unk>.
Our path forward.
For that mine.
Slide 17, again I won't go through these individually, but just other large assets that are moving forward in her most we look forward for a look forward to a peak pre feasibility study from from sell 32, there which will.
Optimize across from Ts in terms of the understanding of that deposit and the path forward for it but it's the one of if not the best undimmed.
Undeveloped pulling the telecast in the world.
<unk> point as well moving to maybe some of the boring phases of mine development, but phases that matter.
We look forward to that continuing this year and then on Bernard on the malls are 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.
On a 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 a bounce back to $80 a carrier so far north of where they were pre shutdown I think the safe to say the Argyle shut down on the removal of 15% of damage supply globally is starting to play out and importantly, it's not.
Just for Bernard 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 your half more than half built but it's significantly more than half built.
Their feed the trick is is access on a path forward.
But.
The team on site has had on further unfettered access to the site for months. The government wants to 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 its getting significant that increasing amount of exploration dollars 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 back book.
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 surely there is 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.
1% on a Saar, but a two five per cent of SAR on that ground.
And look forward to increased exploration.
Exploration work.
Buy 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 advancements 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.
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 see what day.
Hey, Joe.
Can you just on interest it was.
So the telephonic.
I believe what's I guess Don.
So there's yes.
We've got plenty of cash.
Good day, letting the customer channel.
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.
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 is on the coldest months not stocking, but at the same time you know we didn't really get the full benefit out of Q4, given that there is 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 quarters and then higher in the later quarters, because you could you give us a bit more color sandy.
Sure I can try cosmos and good morning Luke.
Yeah.
That's a fair assessment, but I think overall.
We didn't get the benefit of that Q4 numbers. So that will drift into Q1, there's always I mean, it happens on all of our assets. There is 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.
<unk> 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 their optimization efforts.
So hopefully there isn't that kind of.
The 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 on our it's not in our control, but I do look forward to maybe maybe a little bit of variability on that one quarter over quarter, but generally I expect that variability that would be positive if that makes sense.
For sure and then Sandeep.
Sandeep can you remind us what's the usual lag here at Amigo 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.
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. So you know 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 you Cosmo, but do you have an answer in sort 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 <unk>.
End of November and December.
Sometimes there is this is this one to two month delay that can.
Create some volatility.
One month twin out one quarter of twin on it but.
But that's usually within one or two months.
That will receive on our.
Our delivery for the royalties royalties.
Great.
Maybe maybe switching gears a little bit here.
Sandy you mentioned one of the highlights many highlights I guess from one of them as the Alamos and their discovery or the increase in inferred ounces here at island gold. So my understanding is 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.
Yes, 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 yes.
We have our internal views as to what the.
On that.
Average is out to.
But at the end of the day you know what it is positive.
And then I understand that animals recently acquired Trillium mining, which is.
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 I think it's 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.
<unk> effort they put into it I keep reading results the $25 million roughly I believe.
Leave it exactly.
$25 million exploration budget this year that acquisition of other ground in the area just shows the importance of that asset within the portfolio. Its obviously been working out exceptionally well for them and we hope that continues.
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 or a mark here.
I think if I look at it you know some of the further of course, they're 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 into parallel zone I just wanted to get a better understanding in terms of your.
Youll ground for that royalty here and we know what it include everything Thats expansionary.
Or a Mac 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 on it 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 is the two 5% ground that we have on it but it has a little I think it misses a couple postage stamps, but on the <unk> 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 from <unk>.
And then Sandeep, maybe if I can one last question here you know as you mentioned on your opening remarks, you talked about looking forward to it will 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 on Cosmo I think.
Probably talk about it with with many of you on the phone.
Sure.
Look I think.
It's safe to say I said it earlier.
For new transactions.
That has gotten tougher I mean with equity markets open with debt available with new players on the smaller end private equity very active on the on the middle of the large red.
Operators buying back royalties in significant ways in 2020.
If you think about all most of the <unk> acquisition do you think about.
Newcrest on London Gold, So I think.
Anyone who tells you there isn't more competition in the sector is line.
Yes.
So I think that's fair.
It 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 on the team have been investing in growth building. This portfolio over the last seven years.
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 on line, but also the.
More open equity markets can push those assets faster than they've been pushed in the past several years I think.
It doesn't make it more more competitive yes.
At the same time, the pie grow when new assets are advanced and your assets are constructed it does so I think.
Generally speaking, there's probably been a lack of equity dollars.
To fund many of these projects on 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 we do.
Great. Thanks, Sandeep and those are all the questions that have been looking forward to the remainder of 2021.
Thanks, so much Carla.
And the next question comes from the line of Jackie <unk> 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 so I just wanted some clarification on your North Spirit vision now that you restructured.
D V is north spirit still something that's active and separate for for yourself are you still pursuing.
That avenue with private equity or is that.
<unk> 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.
Guess win win when it's true.
<unk> announced in the fall of 2019.
North spirit in our mind was renamed the Cisco Development Corp, 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 cause.
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.
Avenues to deploy five or $10 million to turn them into 50 50 is on hundreds and kicked 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 non interest.
Its availability of assets that we actually like so.
On the bigger and to your point, we 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 it had value for us that value I think is undeniable in terms of how it's gotten created.
And we were happy being back in our in our lanes so to speak as a royalty company.
Yeah, 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 caused covered all my other questions. So I will leave it there and I'll talk to your net.
Thanks, very much Andy 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.
Either one of them.
Good morning, Ralph.
Yeah, I can hear you it sounds like you're on a tunnel or something but I can't hear you can you speak up.
Yeah, I'll do that I want to come back specifically to the 2021 guidance.
And maybe we can exclude renard 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 thrilled, but morbid versus guidance because there seems to be a.
Fair amount of conservatism baked into.
The 2021 guidance.
Is it.
From Mentos, where you could see some contribution where there is none.
Sure happy to do that relative to the extent they can obviously look I think.
Conservatism is probably a better word and it was intentional I think.
Mad dose we per our guidance perspective, we've kicked that into next year.
It didn't feel it was worthwhile trying to quibble about a month here or there.
Initially.
It happened in phases, but initially that debt that expansion was due to get completed mid year.
And then as soon as Covid hit.
Normal.
Normal.
Concerning buzzing distracting, but normal construction delays plus thank you so much plus.
Covid related delays.
Push that to the end of the year I think.
You know, 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.
We like everybody else budgeted more and didn't 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 stockpiled 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 or debt.
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 on guidance. So we've tried to take a conservative approach to everything hopefully.
When that asset 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 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 'twenty and 'twenty one 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 on.
That much but Sean maybe if you're.
If you're on you can pick up on on kind of the general plan per cent Antonio.
Yes sure.
Yeah. So I mean, there we expect a little bit of production that 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 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 free.
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.
On the big the Big Kahuna here will be to get approaching itself under leach.
Which we hope to be able to build next year and we've already secured a 15000 ton a day.
Crushing and screening circuit from the Britannica mine.
That purpose on 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 is not dependent on on getting that permit or or kind of getting delayed by COVID-19.
No it's already mined that stuff the big thing about the stockpile as we just have to restock it.
On a on a purpose built leach pad.
It's basically load all 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 Cindy Paul's 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.
However, I think that the transaction itself was free.
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 from you can you can contradict me.
But going forward you know we do.
Do see a clearer lines from that we try to incorporate as much of that as we could in Q4.
And yes there'll be continued.
Ongoing nor.
Annoys with respect to the royalty business and.
The mining business, we've done in these set of financials on the MD&A, our best first effort on trying to separate that for you.
On the 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 costs related to the RTL to these one time items were accounted for in 2020, and we are not expecting.
Any additional costs related to the transaction in 2021.
And in <unk> I know you commented on this earlier, but specifically with respect to Q4.
What was the tax impact you said from a San Antonio kind of on the earnings in Q4.
Yeah that was a 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 direct subsidiary of a Cisco gold royalties. It's not what you will see there we have a Cisco development, it's still being consolidated.
But the project was within SAP, which she and when a Cisco Bermuda.
They're a 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 on receiving to deposit in Mexico was different than in Canada in Canada.
Taxes on debt 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.
<unk> payments and taxes and cash tax that will be paid in Q1, but of course, it will reduce the taxes payable by <unk>.
She one day will start their production. So it's like a prepayment of taxes. If we want if we compare it 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.
The 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.
<unk> 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 look thanks for your question.
I mean, theres a fair bit on unpack there. So I'll do my best I mean.
To answer a part of your question, we missed out we feel like.
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 2020, we still ended up being I think the second best performing.
Royalty company in the sector, whilst I wish that would've been by Us a.
Going up it happened to be by US outperforming as you say in the second half by standing still.
What was a.
A downdraft over the second second part of the year or part of it at least.
I think the transaction, we announced I would I'll I'll 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.
On.
Unlock a considerable amount of value.
You can't argue with given how much money Shawn has been able to raise on the Cisco development front to justify that value.
You know happened into a downdraft again that same downdraft that we announced that transaction I think it was October 2nd or third we closed it December 2nd or third.
Generally a downward momentum from a gold price perspective on the 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 on do enough to get the benefit of it.
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 assets that people are discounting pretty heavily become pretty tough to discount when theyre actually hitting the bottom line so that that that's ongoing.
We will do what we can Jon to fast track. It I think 2020, we did this the hardest part of the restructuring obviously, we hear a lot about.
The ownership and Cisco development. It was 88% that's now 75% without us having sold a share.
But there's a lot of value that was created there and as we've said we'll be smart about.
How we can tap into that value but.
Those are the things that we can control the portfolio that we cant is doing really well. So eventually we do expect that 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 on the business. It just got twice as good.
So we do think we will go back in.
Get better value for the restaurant.
Do you think it would help if you had a little real time XL model.
For your stock holdings or yours on OTC stock Holdings.
Or do you think your attorneys would let you take some of the 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.
Or.
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.
To a lesser extent, the Cisco metals, that's really yet so.
People can value those on a day like today that's one.
$1 billion of value.
And a pretty paltry remainder for the the royalty business, even you know even if you don't take.
Market values.
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 that's.
That's 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 to daylight the value of our portfolio.
It's an interesting spot where and you know if you think about the.
The larger companies on our peer group they generally tend to have 80 or 90% of their value in the producing space.
On the producing side of their portfolio. So they're getting credit for you know 80, 590% of their their asset value. If you look at the smaller companies.
You know they have a handful of assets a half dozen assets whatever it may be everyone models every single one two the the last dollar and they get full credit for that as well.
Hudson between we have what is a pretty deep meaningful set of assets.
Pretty deep portfolio.
And and 50% of it give or take is if 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 costs to you today.
On these pages wherever they are $16 17 at the back of our deck or sorry 2019. These are the types of things people are paying.
50, plus $9 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'll make sure we do a better job of Daylighting into people.
Different ideas on how to do that John are welcome and we will definitely give that some thought.
Thank you good luck.
Thank you John.
And your next question comes from the line of Adrian Day from Adrian Day asset management. Your line is open.
Yeah. Good morning listen you just on some of my my question.
About selling down the balance on shows but if you can just answer that thank you.
No problem major and good morning to you Andrew.
Thank you.
Thank you and your next line comes from the line of true net same 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 royalty free 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 plaza at Eleonore House capacity over 7000 tonnes per day in years. Prior I think it was goldcorp plan to eventually.
We build to that today newmont, so operating well under that do you think newmont buildup 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.
Expectations being set in on and then not met.
And when you think about a new a new owner picking up on asset I mean wouldn't that be the right thing to do so on.
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.
Glenn fishing of reserves.
You know is positive we're not seeing that happening across the board frankly based on what I've seen so far in other peoples disclosure that day.
Did that at.
I believe it was 12 or maybe it was $12 50 gold for the reserves.
Bill 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 of the 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 of the regional targets. They have and there's just more activity in that area overall so.
No.
Premature and probably unfair for me to comment, but overall I'd say, we'll take steady state until things improve its.
A marked improvement over the last couple of years.
Okay, So I need 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.
Hi, good morning on 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 on some of the consolidation because he had 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 is that the.
Falko convertible or is there another.
Back to 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.
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 behind that but we do still have a small investments in AR and stable resources.
And palace gear for instance.
And that will kind of be.
Brent round out the rest if you will.
So.
Both of those earlier stage still on nature still we thought a lot of value to lock 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% on 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 on when you get it working 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 it getting repaid.
So it's essentially a alone into the business and.
We're happy with where we are I have to say.
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.
And then many of us thought so.
Getting $10 a carat higher than we were prior to Covid I think is a good step on the right direction. The fact that with the read the reinvestment by not just us, but all 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 investment so.
Fred I don't know if there's any more detail you can think of as warranted.
How to think of it Brian is not being evaporated, we certainly are keeping on running tally of it as our.
<unk> and hope that with a bit more joy from on 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 are absolutely focused on getting value for that.
So trust me, it's 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.
Is fair, but in terms of option value assets that can be turned back on I mean, there's $1 billion of infrastructure a good infrastructure, that's gone into that Diamond mine.
On balance sheet and diamond prices just went wrong.
At the same time.
But that diamond mine should be profitable before any other diamond mine is built anywhere on the world.
And frankly, we're not seeing any found.
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 a.
On the diamond prices.
Price perspective, so far.
I want to keep that as a positive surprise hopefully as opposed to sticking on an ex out too far and then having to justify it.
Great. Thanks for that color is very helpful. On maybe just one quick question maybe for Fred.
I wanted to confirm I heard this right when it goes to your financing some try and deconsolidation. 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 said odb's paying that's right. So again, it's not cash youre going to owe.
No you're correct, it's well, it's a cash tax payable by us as co development in Q1, 'twenty 'twenty, one not by Cisco Gold.
Thank you very much.
Okay.
Thanks, Brian.
And your next question comes from the line of Craig Barnes from TD Securities. Your line is open.
Thank you. So on day, one just wanted to follow up on Bryans line of questioning on the knot is it a question of diamond prices, there or is there more work to be done on that.
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.
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 on 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 low and behold you find more so you know I think I think the groups on 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. You know 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 on such a tax expense side again.
Is there any kind of time frame that you couldnt lay out on.
On what could happen there.
I mean, maybe I could but I won't share.
Yeah.
Thank you know it 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 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 14 on or dollar gold it's.
A company maker at 18.
And it's it's you know 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 it a tough spot before.
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.
On the.
The unfortunate aspects there or just the.
The push backs where really.
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.
As far as as far as advanced as it is.
You know, 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 on life from Canaccord Genuity. Your line is on that.
Hi, good morning, everyone.
You guys have answered most of my questions. So far thanks.
Just one quick one left on.
On on G&A.
So you guys had indicated with the OTC spinout debt 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.
Looking about those but a little more detail would be appreciated.
Yeah, Jeremy it's a good question and.
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, you know 11 plus months out of the year. So.
We kept it a little bit simpler, but going forward, we will do or.
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 a consolidation.
You do that when you dilute to under 50%.
And secondly, if you if you still are under a kind of a consolidation of counting 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.
Again started out in December at 88% were down 75.
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.
There's other determinants that go into it so below that level, obviously, we will stop consolidating I think that's obviously a noise.
Noise that everyone would prefer to not have them.
And the second part of your question. The answer is yes, whilst we are still consolidating and 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 sell I'll say accounting is important it's not what drives decisions value matters, and we'll do our best to Uncomplicate things.
The debt.
Heading is value.
From your side of that but hopefully that answers your questions on.
No that's good news going on I think.
Part of part of your on.
Undervaluation is a little bit of confusion, so anything we do.
Can make too.
Is it more simple probably helps helps them loans and.
And that's completely fair and it's not lost on any of US Trust me, we're reminded that way.
Thanks Sandeep.
No problem zone.
Operator.
You are serious when you said that was the last question cash.
So this time the Q&A session I would like to turn it over to you Mr. Thanks for conclusion remarks.
Okay well. Thank you for the time on the interest everybody I think useful to get that.
That output on 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.
So for Covid.
I'm Johnny.
Okay.
[music].