Q2 2022 Osisko Gold Royalties Ltd Earnings Call
Good morning, ladies and gentlemen, and welcome to the Cisco Gold royalties Q2, 2022 results conference call. After the presentation, we will conduct a question and answer session and if he 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 Argus.
2022 at 10, a M eastern time.
Today on the call we have Mr. Sandeep Singh, President and Chief Executive Officer, and Michelle specific caravan, Chief Financial Officer, and Vice President Finance.
I would like to turn the meeting over to your host for today, Mr. Sandeep Singh Bhatia Ramadan Jimmi Sue if you have new NFL compounds, there because you tend to lose him.
Two meals under the hood of violence or if you're at all it's just co Ltd. I pulled up the thought that foundry, let's say the whole once they all see kestrel aerie pumps supervisory posing questions, where you got a piece of that question like two one so John you may.
But you ponder on us because it appears it's obviously always you'll drill a discipline to mill vendors absorb I hope it does.
Does that also let that Mr. Sandeep Singh to Saddam shut diligent axial immerse you fill that EXPAREL shut the logitech softly off yeah. It was really not.
Somebody might not set it up that one out this is sandeep Singh lots of political.
Thank you so much operator, and thanks to everyone listening in I Hope you can hear me okay.
Happy to be with you to update you on the quarter. It was an interesting quarter certainly from a market perspective are quite volatile.
Yeah, the swings were quite Swift notwithstanding the Astra my two cents for what it's worth I think the backdrop for gold.
It remains extremely strong even in the face of what's been a very strong U S dollar and rising rates.
Regardless, even in that that volatility and maybe as a result of that volatility we still had a record quarter.
Well a number of fronts as I update you on that I will be referring to the presentation. That's now on the website.
And I'll jump right into it after reminding people that I will be making forward looking statements as shown on slide two we could probably jump right to slide four entitled Q2, two highlights.
As I said.
And I won't read through all of the the bullets I'm sure. Most of you all of you read the beliefs.
And all of your comment that I have frankly, but put a record in a number of fronts.
First and foremost I always drives our business is the geo deliveries the ounces that were delivered to us by our partners.
Gapping up nicely from Q1 to Q2, a 22.2 thousand geos.
That makes the first half of the year just roughly 45000.
G O is delivered to us.
And I'll talk about our guidance on maybe the next slide 1995, but we do expect a significant uptick in the second half of the year.
Sequentially over the next couple of quarters for reasons that I'll go through a healthier or relatively obvious when I when I do.
So that bodes well a record in terms of Geos a record in terms of cash margins.
And a strong bottom line in the quarter and not better stronger second half for very obvious reasons in front of us.
I will point out perhaps maybe you just want to make one obvious point for most people that our financials are still a little messy, obviously, we consolidate with the Cisco development most of you know that.
And we have tried to provide additional information for that on a segment basis, we do still realize it's a work in progress, but I will say that we're close and we're closer than we ever have been but ultimately it's just the development is doing what they should be doing as a developer they're spending money advancing their assets.
And how are you doing what are what it does which is racking up cash.
Despite an inflationary market out there so putting the two together.
Slapping two together.
Can lead to some misleading statements to hopefully people were giving you the information that you need to differentiate.
And if you look at one of those bullets are six or seven from the list those adjusted earnings for the royalty business for our fiscal royalties are amounted to almost 26 million Canadian or 14th that's a share that's the bottom line. That's the money that we are we accumulated over the quarter.
And hope to continue to grow.
The year of the year has progressed.
We also worth pointing out on this page.
We paid our credit facility in full that credit facility is now completely undrawn and available for growth as we go forward hopefully growth into a market that is kind of leaning our way as they are.
Financier.
With the with some of the other tops in the market are closed or significantly reduced.
So I think that bodes well for us in terms of the types of opportunities that will come our way.
Otherwise a standard quarter. We are we also announced a binding letter a binding deal on the 10th extreme that we had already bought to you and commented on in Q1 are those i's and t's are getting done it across so that bodes well.
And over the course of July where the handful of days that we watch and blackouts with our G. O Prerelease and then our financials. We bought back 660000 shares almost for $8 $3 million and we're quite happy as we were last year to take opportunities where the market is.
And our views are.
No just just just not reflective of the value of the company still isn't that when it gets really really wonky, we're happy to step in there and disproportionately take our cash flow to buy back the best exposure of royalties that we think we can find out there.
That's just my quick preamble as we move through to slide five Youll see the breakdown by assets as we usually provide.
In terms of where the ounces came from our core assets continue to deliver a again I think that bodes well for the second half of the year that we had a record in Q2. Despite two are meaningful assets are second and third biggest asset not being at full stride and at the risk of a boring people audience understand what that means.
Referring to Mentos and Eagle.
At <unk>.
Eagle I think most people know that the first half of the year is always a little bit more challenging in the second half of the three coldest months of the year for the time being Victoria doesn't process doesn't stack or a I think that's those issues in the cold weather months drifted into Q2, I think that that's obvious based on their numbers.
So they had a first half that was similar to their first half in 2021.
And you just you just look back at how the the.
The ounces came in the second half of the year for them last year I think it was a roughly a 50% increase Q1, Oh, sorry, H one to H two last year and that was as they are still ramping up so I do expect we will see a strong second half from Eagle.
That's one of the the absence, which I expect to but to continue to do better for us as they go and then Manto says the other.
We received deliveries that are kind of akin to their typical deliveries for us you'll you'll probably know that they're going through a very meaningful expansion from $4 3 million tonnes per annum to seven point to $7 3 million tonnes per annum is a big lift.
And we're still expecting to see the benefits of that I think we've already started to see the benefit of that close quarter, but if you follow our capstone proper there they've made good progress maybe a quarter behind but in Q3. They intend on are they expected to stabilize in terms of.
The throughput and optimize them and stabilized at the new Cooper level, the recovery levels as well so.
That's another story, that's only going to strengthen us.
Yeah.
Moving on to slide six and we've got a number of updates here on our our portfolio you'll touch on things as I go I do want to make sure. We leave sufficient time for questions I realize there's a lot of companies reporting today. So one most efficient use of your time, if we're glad its over.
That deserves more attention, we can certainly come back to it in the Q&A.
First and foremost on slide six with mill Arctic that story is phenomenal for us. It's our flagship royalty. It's I think the gold sector's flagship royalty and it continues to strengthen.
The underground is advancing.
Pace on schedule.
There'll be a trickle of underground ore.
Into the the mill in early 2023 that will increase obviously as the years progress. So ultimately overtake the the open pit component of it.
The story there is one of the infill and extension drilling this year.
As they do the methodical work towards the build and that infill and extension drill work is going extremely well circa 20 rigs on the property. The good news I think will likely intensify as they get more access from underground in the second half of the year the exploration budgets are.
Yeah, 30, plus 30 million U S for 150 160000 meters of infill drilling, but also a significant amount.
Excuse me of extension work and not only as we've talked about in the past is the ore body is seeming to grow.
Down the extension of our of East Goldie.
When you look at this this result.
As highlighted here in large font, one eight grams over 63 meters.
Western extension that'd be school D, which previous he does not have resources. So I think we couldnt be happier with what's going on at the underground alert to work that are equal and Ya man are you doing there.
In the fullness of time I think this asset is only going to continue to grow extend at the very least in terms of mine life we have.
Already know that we have a mine life out to 'twenty 39 based on half of the resources are more will get it filled into a mine plan more we'll get at it. It's just a question of where that where that takes us, but it's obviously a very good place.
On slide seven I think I've I've already kind of made the points I want to make with respect to to Mentos.
At least as I said, the focus is on optimization and sustaining throughput they've guided to kind of getting there in terms of in Q3.
And we're already starting to see the benefits of that.
On our side with respect to Eagle I mentioned, why we were excited about the second half of the year beyond that and obviously they have to kind of get to that.
They need to continue the methodical progress that they've been making and ultimately get to be.
The first target, but beyond that to work on projects to 50 continues that their aim of getting 250000 ounces.
In their words in 2022 'twenty three.
And they're also working on their project 2040, which is to the extent to extend the mine life out to 2040 with a with good upside sorry, good results, both at depth and along strike and some of the satellite projects. There. So that's that's all positive.
Eleonore continues to kind of tick along steady state Q2 was a little bit lower due to lower grade mill throughput. It is a remote sites and I think we've seen in the first half of the year.
The implications of that show, a COVID-19 and quarantining.
Like perspective, but overall it continues to tick along and do reasonably well hopefully they'll they'll start to get past some of those issues as well.
On slide eight.
Excuse me.
On slide eight with respect to Ireland Lomax CBE those are phenomenal Canadian stories for us run by three excellent companies, they're all core assets to them individually Alamos El Dorado and SSR that ordered on the page.
The phase III are three plus <unk>.
Expansion study that Alamos provided.
Weeks ago, which was fantastic for US you know it moved the expansion from 12 to 2000 2400 tons per day.
With a long mine life there.
They are still adding ounces theres still doing significant youll work as you notice our 58000 meters planned for this year.
And not only are the ounces going but our piece of the ounces are also growing.
Right now we're getting into this or that is a I think its 1.38% exactly and we expect that to be a blended rate of 2.25% over that new life of mine. So that's a great story unfolding, but so are law back in C. B.
Good levels of production.
A lot of work that's going into the assets La Mac contemplating a significant expansion C b.
Reducing extremely well in the first half of the year and continuing to guide towards mine life extensions at the very least a at that operation. So good news for us on those fronts.
If you look at slide nine.
We've got on the page are two long life base metal mines, where we get the silver at Gibraltar and SASSA, you know doing reasonably well and.
And we expect our we expect a strong second half from Gibraltar, they get access to some higher grade ore.
And the SaaS. The mine continues to do exceptionally well and then as you all know or most of you probably know Q2 was the first quarter, where we added Bernard back screen back into the fold, we had taken the conservative approach of not including it in our Geos and alike, whilst we werent rightly so while we weren't benefiting from the.
The cash flow.
The mine has been benefiting from higher diamond prices on average $124 a carrot in Q2, you might remember that prior to Covid. It was it was lucky to get up to 70.
So it's been a real step change in the diamond market and their cost structure has also come down.
You know or at least been managed even in an inflationary environment, So theyre, making money either paying the stream that paying the debt Oh, that's good news for us that Bernard it's very nice to get that asset back on track.
On slides 10, and 11, if you will.
We've talked to you about the the producing assets on 10.
The nice thing about our uptick in ounces from 2021 2021 to 2022 free of Mi is a lot of those ounces again are coming from existing operations, just being expanded or ramped up. So you know argue argue lower risk growth.
Never know risk growth. So we are seeing some delays and if they amount to a quarter here and there are a couple of months here and there in the Grand scheme of things that that matters a lot less for us, but that's our that's the best growth you can hope for and then beyond that.
Do you look at the next bar when you look at the Arrow.
In terms of Optionality past that and when you look at slide 11, a lot of a lot of good assets being moved in many of these cases into the late stages of feasibility study work that's true caribou, that's true of windfall.
Is true also of back 40, and they are in well funded businesses, where again moving forward in a difficult market for developers certainly, but moving in Florida and.
In a straight line as you can get in the mining sector.
Uh huh.
These are names I think most of you know well we can certainly talk about them in the Q&A for us upper Beaver I'd make K I would point out those are those are interesting assets that we're looking forward to getting.
Some news from <unk> in terms of how they fit into the new Kirkman Lake camp that they own them, but but I think all bodes well with AK, specifically either already drifting into it they're drilling to expand it and then upper Beaver is is the next one we're looking to it to hear some positive news flow on.
Yeah.
That's kind of the story in terms of.
Organic growth if you will when you flip the side.
To the next slide I mean or at least the near term growth story. When you flip to the next two pages. What we've done on slides 12, and 13 is just highlight a snapshot of it's not the full list, we could keep adding pages further optionality that people tend to forget when they when they think about us.
But there are a lot of good assets on these pages as I mentioned there are others. We could have added a run by some pretty good operators are undergoing some some pretty important catalyst when you yeah I'll touch on a couple, but but not all when you think about something like ACA SAB of west.
Nico recently by recently I, just you know a week or two ago approved the development of that it's essentially a lower body that that gets sent to the gold X mill.
And that will start producing in 2024.
A full year basis, that's an additional 750 or so ounces per year to us.
That I don't think most people had had accounted for something like that.
That's worth getting out of bed for I would argue are alt or again are we.
We have a 1% royalty there in.
San Juan Argentina that all the Braun runs.
Copper explore.
Happy to see sell 32 step in for about 10% of the company for a $10 million investment they've raised money subsequently they've put out some really exciting old they already had a pretty decent starter pack, but the last whole lifestyle with 700 meters of 0.5% copper equivalent so nice to see activity there clearly our casino, which is a big asset for us.
The work they've been doing the investment by Rio Tinto their involvement in some of the technical work has all been a good shot in the arm and we look forward to seeing the conclusion of that are there.
<unk> studies in their advancement Pan out.
I didn't say I said I wasn't talking about all of them and I I mean, it I'll talk about a few more but we are excited about the names on this page F. C is another really interesting one that maybe you haven't heard us talk about it in the James Bay region of Quebec.
It's a it's being advanced by a company called Patrick Patriot Battery metals, we have a significant enough SAR there and they are well funded to drill 20000 meters. Today. They continue to drill long runs are plus 1% lithium oxide.
So that's the story that definitely got legs, and a lot I'd say six to nine months.
When we look forward to seeing it continue to develop our hermosa.
Her most are obviously you know about that story Ah self 32 positive pre fees last year are working towards where I guess it was Q1 working towards the feasibility by middle of next year, that's a big ticket our big contribution for us once they finally make the go ahead decision.
And others on slide 13, I won't say that.
I just had a couple of times, so I won't talk about them, but if you'd look at the page. There are some some pretty exciting catalysts, there and we expect that to continue and intensify partly because of slide 14, we are seeing an immense amount of drilling and.
And activity done by our partners on our ground.
You've heard that from me before in 2020 114 million meters just over that Oh I'd argue the rate is higher now, but if you do it.
Factor $350 a meter that's half a billion dollars almost of work done on our properties that were not paying for our shoulders not paying for it and what's on the right hand side, what you see that lead to us not only a replacement of the ounces that came out of the ground last year 80000 ounces for us replaced by 114000 ounces in reserves.
If you factor all of the categories are our ounces are being are out there that are getting out of the ground are being replaced by orders of magnitude.
So that's that's you know we talked a little bit more on the previous pages about organic growth. This is really a depiction of in my mind of the sustainability of the business the longevity of the business and further upside or our Blue Sky. However, you want to describe it.
We've talked about the recent transactions that we've announced are mainly in Q1 on slide 15.
As I mentioned, we're really excited to have can take closed.
It says they are expected in Q3, but it's not imminent any day now as I said, just dotting is crossing Ts, but closed in the same matter, we announced that the deal between a Cisco development in the private sellers closed in late May I think was the last day of May.
So it was kind of a quiet period from a Cisco development in terms of talking about that asset for most of the first half of the year, but now that it's in the fold. We look for some positive news flow there and are in.
And the ramp has already started to make progress down to to get to a larger throughput operation.
The CSA as well we continue to advance those discussions with the stack our metals acquisition Corp.
Who are looking to consummate that transaction with Glencore, obviously, a lot has changed in the copper market.
That deal was announced.
It's a little funny that we've swung from a world that couldn't get enough copper and and now apparently that was a false alarm the world doesn't need any I think the truth is in between and what we see there is a very motivated buyer and seller.
And hopefully a pathway to getting a transaction done that we're still quite keen to participate in.
They're the right circumstances.
That's the the update that I want to provide I will pass it on now to Fred to just walk you through a few more of the particulars for the quarter and then happy to field, a comeback and field questions after which Fred.
What are you.
Thank you Sandeep.
A bunch of old message, which went into the new semi paint pool, and that's what kinds of tests, there isn't gods of imprimis the meals and good morning, everyone. Thank you for joining US today, let's start with page 17 of the presentation.
We recorded revenues of $51 5 million this quarter from royalties and streams compared to $50 7 million in Q1, and $49 9 million in Q2 of 'twenty 'twenty. One cash flows from operating activities were negative on a consolidated basis as a result of deconsolidation of <unk> activities.
It was Cisco different options.
But for the royalties and streams segment alone cash.
Cash flows from operations amount to amounted to $35 million compared to $37 3 million in Q2 of last year.
Decrease was mostly the result of timing of the payments from the operators.
Payments were received actually in early July .
On page 18, we present, the summary of our net earnings and adjusted earnings.
Consolidated net earnings to a Cisco shareholders was $17 2 million or nine cents per share compared to a net loss of $14 8 million or <unk> <unk> per share in Q2 of 2021 and 2021 impairment charges from our Cisco development at generates a dose at a time.
On a consolidated basis, the adjusted loss was $4 7 million or three cents per share, which is comprised of adjusted earnings of $25 7 million or 14 cents per share from the royalties and streams segment.
And an adjusted loss of $2 million from our Cisco, there's enough demand or <unk> 16 per share.
On page 19, we have a summary of our quarterly results with additional details for the royalties and stream segment include.
Including 22000 Geos in Q2 of this year compared to 20000 in Q2 of last year gross profit of $35 9 million in 2022 compared to $35 7 million in 2021.
And operating cash flows of.
35 million were generated in Q2 by the royalty and streaming business, mostly as a result of the record quarterly cash margin or 40 of $47 8 million.
If we move to page 21.
We present, a breakdown of our cash margin.
So the cash margins from our royalties reached $24 4 million and the cash margin from our streams amounted to $13 4 million for a quarterly record of $47 8 million or 90 and 93%.
On slide 21, we presented the progression of the dividends paid to our shareholders since the creation of a Cisco gold royalties in 2014.
The dividend yield the dividend yield is approximately one 7%.
As of this morning, and over 204 million have been returned to our shareholders at the end of Q2. In addition to 95 million that was used to repurchase a total of seven 4 million shares under our M. CIB program.
And finally on page 22, you will find a summary of our financial position. The consolidated cash balance was funded with a 49 million at the end of Q2.
Which include 313 million for Cisco gold royalties, and Andre and 36 million for Cisco development.
Cisco gold royalties ELD investments, having a value of Android and 95 million at the end of June in addition to our investment in our Cisco development, which is valued at approximately $200 million.
Our long term debt stood at 300 million at the end of June following the repayment in full of the credit facility. In April . We currently have 650 million available under our credit facility, including the accordion of $100 million. We have also acquired during the quarter a total of 247000 shares.
Yes.
Our in CIB program for $4 9 million and we've acquired 659000 shares in July for $8 3 million. So.
So we have continued to benefit from strong commodity prices in Q2, which allowed us to generate strong cash margins and a protein cash flows from our royalty and stream interests.
And we are very optimistic for the second half of the year I will now turn the call back to Sandeep for questions.
Thanks, Brett or just over to the operator please.
Thank you, ladies and gentlemen, if you would like to ask a question. Please slowly press star followed by one on your Touchtone phone you will hear a suite on prompt acknowledging your request and if you would like to withdraw from the question queue. Please press star followed by two and if he using a speaker phone. We do ask that you. Please lift the handset before pressing.
Please go ahead and press Star one now if you have a question.
And your first question will be from Ralph proceeding at eight capital. Please go ahead.
Yes.
Hi, good morning, Thanks for taking my questions Sandeep I have two of them if for me.
Firstly I'd like to get your thoughts on the drivers behind the.
20 million investments at <unk>.
As an option to go higher and just wondering you know was that a function of sort of economics or was there a strategic rationale to hitting the lower bound of that original range.
Sure, Hi, Hi, Ralph and I can answer that question first and then we'll allow you a second but but no more.
Look the the driver with was pretty simple we had provided.
Basically a.
L. A range of 20 to 40 million U S avail.
Available to assist co development when they announced the deal obviously when they announced the deal that didn't know how much equity that they'd be able to go raise off the back of it. They were very successful in doing that was a good outcome for them and for us in terms of having the back of that using that catalyst a great catalyst to go raise.
Funding and being able to raise funding also for for all the assets. So.
Excuse me.
So I think and I forget how much they raised exactly but circa $230 million or so Canadian number in my head. So I'm, just let them see the need a little bit less.
We would've been happy for them to take more we really like that asset we're really excited about it but but very happy also with the $20 million investment. So it was their choice.
And given the financing success, they had they need less from us.
I would have wished.
We've got the whole 40, but well we're suddenly settle for the 'twenty.
Got you understood.
Maybe as a follow up Sandeep, you know theres been a you know quite inactive transactional market.
Recently some competitors.
Of yours have announced sort of deals that I guess could be perceived as sort of more on the full valuation side are with respect to you know resources implied and sort of conversion rates.
And I'm just wondering is that something that you're seeing in your particular deal pipeline sort of a more competitive.
Streaming pipeline with respect to valuations themselves and are you still confident that we can get these IRR is in the high single digits and low double digits, given perhaps more competitive tension in the space.
Yeah look I mean, Ralph it's it's a it's a fair assessment I think I think people are doing with what they think is right for their businesses and I'm not in a position to say whether that is or isn't.
But it is competitive.
Has been honestly the entire time I've been in my seat I would say.
We have seen some deals that have been lofty, but but ultimately they made sense to both sides.
For US you know.
I've been clear that we don't need to stretch for growth, we have double digit CAGR growth for the next five years I hope beyond that based on the assets, we already own that we can be disciplined and frankly, we need to because we don't have the same multiple so for us the stretch and those types of prices would be dilutive to what we already have and we're only interested in adding.
If it's if it's accretive if its additive if it's if it's over the overall beneficial quantitatively and qualitatively so.
The idea of diluting our exposure to our assets for shareholders.
At 0.9, 0.8, or wherever we trade times that today based on street consensus basis is not a not something I'm interested in doing.
So it's a it's a competitive market. It stayed hot the truth is despite some of the things you've seen right now I mean, I think the pipeline is getting better I alluded to it earlier and in a market like this where equity is not available to everybody. We're certainly happy to be cashed up and we're seeing conversations where.
That had stalled you know six nine months ago getting re engaged our some of those bilateral to us. So I think that's a good sign and I think frankly the longer there's pain in the system. The more inflation there is the capex numbers get bigger.
Yeah, I think the more the the more need there'll be four for our capital and others in our sector. So I think the good news for US Yeah, you're right I think overall I think it's hard to argue with your assessment, but the good news for US is we have a lot of organic growth. We can pick our spots. We always have said, we world and even in Q I would say Q.
Three is better than Q1 was from a comp there should be at least in terms of a deal flow perspective based on how the equity markets have completely closed but even in Q1, we were able to do some pretty smart things and good returns off the beaten path and our focus will continue to be on.
Getting value for our existing portfolio as well as adding to it smartly when we can.
Okay got it I appreciate those answers thank sandeep.
My pleasure off.
Thank you next question will be from Trevor Turnbull at Scotia Bank. Please go ahead.
Oh yeah.
For us.
About taxes going forward, you had a pretty sizable tax bill this quarter and just wondering how we should think about that going into subsequent periods.
Sure I could I could do my my best My Best tax first nation, but Fred why don't you start and then I can I can pick up maybe.
Sure. So most of the taxes are for 2022 our deferred taxes enough cash taxes, we pay some cash taxes.
Informing Georges.
Restrictions for example, in the U S or Mexico.
We're expecting to start paying cash taxes by the end of 2023, and and and more more significantly in 'twenty 'twenty four.
But the impact for this quarter was mostly related to deferred taxes, which which which maybe.
As a result, usually of a different noncash or non taxable and non deductible transactions that we may have which are mostly accounting.
Driven.
Yeah, and even that investment sorry, I would say look.
That's right some of that will depend on commodity prices commodity prices are softening again, so perhaps are.
Our our cash taxes will will get pushed out again and as we add to the portfolio. We continue to create new tax attributes, which will hopefully continue to shelter us so.
That's just the only caveat I would add too to that Trevor it sounded like you had a follow on.
Yeah, and maybe I can I can talk.
Talking a bit more about it offline.
And I apologize I've been kind of juggling a couple of different calls I I don't know if you mentioned it but with respect to consolidation with <unk> is that something that now that you've got to reduce holding you see being able to stop doing or is that something we're going to probably live with her a bit longer.
Well I think it's certainly something we're focused on.
Getting out of I don't think it helps either either company to have that that kind of noise in accounting.
And yeah. It does I think lead to some some flawed conclusions.
Both companies are doing exactly what they should be doing slap them together I don't think it's the right interpretation. So but it is it is an issue we're working towards with the the drop in ownership recently, it's happened at the end of May from 75.
Low seventies, 244% were very close to Trevor I would say.
And we're having those discussions with our auditors as we speak so our hope is.
Soon we will be able to unconsolidated I think that will provide a lot clearer picture.
For for investors and analysts anybody that follows us.
So yes. The answer is we're we're close and I think we got ways to get there so hopefully a.
Well last few guys, but bear with us a little bit longer, but hopefully its not not very much longer.
Okay.
And then my final question is just with respect to San Antonio I saw that you you had a lot of updates with a lot of different projects, but San Antonio and still having a hard time getting my head around exactly when we should think about production starting down there.
Yes look and apologies for that if we didn't have a proper update oh, there's a lot of assets to talk about.
Usual basis, but Ah the update there is there should start to be.
There has been a trickle of about just starting to come out of the stockpile, which is the start of a project. If you will assist this reprocessing existing stockpile, obviously those sitting at surface. So that's under Leach now yeah, so a little bit of delays, but that those ounces are coming out now and we'll hopefully continue.
To grow over the course of the second half of the year, but again, that's not the price the price there is the new heap Leach.
Jack at Pucci.
And the gating item there I would say the first gating item is permanent so they've been working on that that they'd be able to Cisco development and our understanding is.
Things are going well still Mexico with the permitting side.
Till they have if they don't have it but our hope is that we'll come together.
Also in the second half of this year and then Bennett.
But it's a question of are hitting the go button on the larger oxide project. So short answer a trickle of coming out of the stockpile and then subject to permitting and getting the construction done hopefully more meaningful production from the Super Che oxide coming to us or in the nearest the medium term.
Okay.
I appreciate all that thank you sandy.
No problem. Thank you.
Thank you next question will be from John Tumazos, John Tumazos Independent Research LLC. Please go ahead.
Thank you Sandeep.
Sandeep I'm kind of.
Patient in.
Maybe I invest with a 10 or 20 year time horizon.
Don't have too many pressures keep my cost we try to be laid back.
Some of the institutional money managers have a shorter time horizon.
And if they don't perform their clients for them.
We're getting up to almost two years since he OTC restructuring.
The benefits are not as obvious as they should be.
I'm thinking back in history.
<unk> sold their white paper.
Tom Tar and took back stock and they sold their home builder to Tri Pointe homes and took back stock.
Issues, Dom Char and Tri Pointe stock to Weyerhaeuser shareholders to retire Weyerhaeuser shares.
That's for example, a mechanic where you could issue and now obviously O D C shares to retire.
Retire who our shares to help force the market to recognize value.
Okay.
But for these institutional managers, you know that good fire, sometimes after folder firm when they have withdrawals.
You do something to help to make the market recognizes the great underlying values, a little faster so an asset buyback even more stock.
Do you know how some people's clients are not as easy Goin' assured me Sandeep.
No no worries John I appreciate the question, it's fair and Sadly I think most people.
It would have a sort of time horizon than the one that you described which is fair to and frankly sort of weak in terms of seeing the the value uplift that we're expecting and we certainly intend on on getting too so.
I'd say.
No it's.
The spin out I think has been the right move for everybody, including for the assets that they've gotten a lot more spending they would've with Cisco royalties that spending is out or is it still royalties have cleaned up the company the consolidation kind of one last one more step that we're working towards the reduction in the ownership all that kind of.
In progress I describe it as being half done, but frankly, John I think we did the art happened and we have the easier have to do.
The last two years I guess, it's been 18 months since that's been out have been essentially a downdraft in the market we've outperformed.
Obviously, not a satisfying to outperform your peers are in a down market, but we have the reason the multiples. The multiple in particular has not bridge. The gap frankly, though is the underlying assets I've gotten a stronger as strong frankly.
In the interim and that's by virtue of things like the melodic underground and other things a massive expansion et cetera et cetera.
So all that bodes well the fact that we still trade where.
Where we do a where we're most of the way through the clean up that we have to do.
And we still have all of that value to unlock I think that's good news and frankly, when I look and talk to our institutional shareholders. The same people you mentioned they see that same value.
And thankfully they are there they are somewhere in between in terms of patients level that you described.
And happy to see US continue to do the blocking and tackling that it takes to get to the point is the asset value is or the the portfolio is too valuable.
For it to continue to trade the way it does we're going to continue to do all the right things that we can.
More right than wrong things until we unlock that value, but when you see back to the point I guess it was Ralph was making earlier when you see the prices that are being paid for certain assets. Some of them very good assets some of them exceptional assets, but when you see the prices that are being paid.
And you look back at our portfolio.
The replacement value of what we have is tremendous.
And we'll just keep doing the right things to improve the company a little by little it doesn't require any overhauls, we just have to do everything a little bit better.
There's a much better outcome for us and our shareholders. So.
I appreciate the patience I understand the point then.
Got it.
I own office I've had 19 funds that used to pay me 700000 U S. Collectively shut their doors, not just fire, maybe like closed down and liquidate.
It's the customer of my customer that isn't really back and anything you can do to make the market recognize value faster.
Doing good it's good work.
Yeah, no it's totally understand John that as they are.
A tough market out there for everybody not just us.
We're coming into our own and I would say this I mean back to.
Points, we touched on I do think maybe the first point I mean, I do think the backdrop for gold is exceptional I think when money comes back to the gold sector, which it's gone completely the other way right now.
But when it does which I think it will I think most people on this call I think it will I think the royalty sector will disproportionately benefit for all the reasons that always does especially in this inflationary environment and when people do look for that exposure I think we're going to see value in us that is significant so that's what we're focused on.
And we don't need it we don't need a better gold price you don't need a better market to continue to have a strong company.
You know issuing records upon records.
But it certainly wouldn't hurt but understood the point, John and we'll keep working Trust me, we're working hard and we're whereas in patient as they are.
Thank you.
No problem. Thank you next question will be from Kerry Macquarie of Canaccord Genuity. Please go ahead.
Hey, good morning, Sandeep, maybe with them.
We're now back into next year could you give us a.
What should we what should we be expecting for my long mine life perspective, I think the last mine plan I saw goes out to 2029 2030, but its pretty dated at this point.
Yeah, no. It's a good question and that is that it is a bit dated.
You know I think what you should expect from Renard, it's a bit early to say, but you should certainly expect kind of the carrots in the G. O is obviously commodity prices the pending.
We continue to be a kin to what they are now so I think I think that's kind of the steady state that they're at.
You know what we see there is a shorter mine life good ounces that bridge us to some of our growth projects in the are in the middle of the decade. There also exploration opportunities are not exploration and development opportunities to see them invest in the next leg of the underground.
And push outs mine life to the types of data that you mentioned, so I think that's still a possibility a.
We'll have to wait and see right now it's just good to see the ounces back onto cards back on and the more time they spend on it the more cash they accumulate which they are accumulating than some of those development scenarios make more and more sense, but I would I would reserve judgment on that really just re initiated in Q2. So we'll let it run for a little bit and and see what our what the future looks like.
We'll certainly come back to you and describe that when we understand it.
Okay, it's a little bit more color soon.
Yeah, that's great and maybe also a bit too soon but.
Notwithstanding some prices have improved a lot have you had any discussions with your partners on you know what.
The strategic future plan.
Well, we have we've always and I think that the Genesis of that first and foremost was the just the re initiation of the stream, but it required a a R.
Our partners on the lending side too.
Come up with a plan that works for everybody I think it does so that was that was a we work that led to the really issue re initiation of the stream.
And those conversations continue obviously and that was step one you got to walk before you run.
But the those conversations continue carry in terms of what.
Now what is the long term future of about that.
<unk>.
Where does it reside.
What kind of capital infusions could benefit from from external sources. So that was really the point that safe guarding that asset getting it turned back on is very positive and ultimately if we can if we can find a better one for all the partners are very much aligned.
In doing that.
Great. Thanks Sandeep.
No problem.
Thank you, ladies and gentlemen, as a reminder, if you would like to ask a question. Please slowly press star followed by one on your Touchtone phone.
And your next question is from Adrian day.
<unk> asset management. Please go ahead.
Yes, good morning, Sandeep I had two quick questions. If I may on your investments are a tad under 400 million.
I guess O D. D is about well a little less than 250. So how do you how much do you have in all the various Cisco spin offs and whereas the bulk of the rest of that.
Sure. Good morning, good morning, Adrian and you're right.
It's about right we own post consolidation, we own 33, 33.3, I guess it is a million shares of Cisco development. So that's the lion's share. We also own 50 million shares of our sysco mining costs.
That's pretty much exactly so that would be the other big component I think it's 14% of the Cisco mining shares outstanding.
And then there's a small position in Cisco metals, a small position in some of the earlier stage accelerator companies like stable and Telus group, but that that really rounds out the rest of it pretty quickly.
Oh, Okay, Okay, and if you look ahead, you know maybe to the end of the decade of the next five or six years or whatever is that based on existing plans is there a particular area when you're expecting just yet.
Year to year gross.
Yeah, Yeah, that's a that's a tougher one.
Look I would say the fact that we are going from 80000 ounces last year to a projection that sees us growing by yeah.
Double double.
Double digit CAGR growth all the way to 130 to 140000 ounces and 26 those are big leap, even getting to the low end of our guidance. This year is a 12 and up 13% increase.
Those are big leaves for a company our size and then when you look back I'm looking at page 10 now.
And you look at the things that arent included in there, obviously, you or external growth anything we buy it's not included in there, but when you look at that Arrow and you see things sticking out at you like casino like Hammond reef, which which are like Nikos put reserves on for the first time and was working on studies her most spring valley up.
Or Beaver are those are those are big contributors casino itself can be as big as melodic once built I'm talking about multiple assets in that list that could contribute five to six to 7000 ounces a year.
So in terms of when they come along.
That's the.
That's the Crystal ball kind of question I would say a lot of them are important importance of their operators are being advanced and and you know what the year's day. They pile up on I think ill reserve judgment, but I certainly think there's a lot of those assets that are going to matter in this decade.
And matter in very significant ways and so I'd.
I'd say, we're in good stead, what year, we have the best growth or what period, we have the best growth I don't know exactly but I believe when youre looking at this page we have the ability to sustain which is more important than one kind of big blip to me at least in any given year, but the ability to sustain this level of production growth.
For a company our size for such an extended period of time I don't know of anybody else that can that can replicate it.
Especially without especially without especially without any investment.
Right. Okay. Thank you so much.
My pleasure agent.
And at this time Mr. <unk>, we have no further questions. Please proceed with closing remarks.
Okay. Thank you operator, and thank you everybody.
I think I won't really say anything else about the company because I think we've covered a lot of ground.
It might not be my place, but I can't help myself I will quickly say something about that good men, who unfortunately passed away as most of you probably know on the weekend.
A giant in the mining business and Canadian business.
Very integral in to the Cisco story his backing of Sean.
Cisco one minute well Arctic and.
Helped build that company I don't think that story plays out the exact same way without.
Ned and his support.
And he played a very important part of my my career with the.
The move to to his shop, having edge altered the trajectory of my career, so sad and our our condolences as a group to.
To the to the Goodman family is quite sad to lose people like like net and Lucas in such a short period of time, but anyway. That's my two cents on a on a sad events I'm sure touched a lot of people on this call as well. So thanks for your time and for bearing with me and and all the best.
Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines and enjoy the rest of your day.
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