Q4 2022 Osisko Gold Royalties Ltd Earnings Call
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Good morning, ladies and gentlemen, and welcome to the Cisco Gold royalties Q4, 2022 results conference call. After the presentation. We will conduct a question and answer session. If you would like to ask a question. Please press star followed by the number one.
On your telephone keypad.
Please note that this call is being recorded today February 24th 2023 at 10, a M eastern time.
Today on the call we have Mr. Sandeep Singh, President and Chief Executive Officer, and Mr. <unk>, <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 Singh.
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Thanks, very much joelle and thanks to everyone on the line.
With us this morning.
Look forward to walking you through what was a very exciting quarter and a very exciting year for us.
In 2022 as I do I will be referring to your presentation Thats on our website. If you haven't picked it up already.
On the main page just on the left hand side, if you get Q4 and 2022 results it'll take you to it.
And I'll be referring to the page numbers as I go along obviously, making some forward looking statements. So urge you to review that.
That disclaimer on slide two.
So.
Looking at Slide three you start as I said 22 was a very important I'd say frankly pivotal year for US we made significant strides on a number of fronts.
Many of them listed on this on this page.
We start with the the simplification the ongoing simplification of our business.
2022, and particularly the third quarter took a massive leap forward with the deconsolidation of our financials with Cisco Development Corp.
The.
It's just that the accounting issue, but it wasn't a meaningful one of kind of combining a company that generates.
Cash flow all day long and one that is advancing its projects that are investing in the future. The growth just didn't leave a recognizable ICD.
So happy to have that that situation behind us.
In terms of the.
Portfolio of assets, our asset base continues to strengthen.
We had three consecutive record quarters on most of the things that matter to us from a royalty company perspective.
And we will talk about what the outlook looks for it looks like for US as we move forward. We also reset the balance sheet.
And.
In spring of last year, I think we've reset the balance sheet for our next wave of growth and Delever at the right time.
We continued our consistent trend of returning capital to shareholders, an aggregate $63 million Canadian returned to shareholders last year really almost exactly two thirds of that via dividends.
Third of it via our buyback program.
And we'll show you a slide later on but over the last five years, we've consistently done that essentially returned a third of revenues. Our third of every dollar of derived from announce delivered to us back to shareholders through a combination of dividends and then said we think thats.
Yes.
Pretty pretty select company.
We continue to have a tremendous amount.
Free upside and Optionality playing out in our portfolio again to the presentation will touch on a few examples of that.
Look forward to being able to tally the amount of work that our partners did in 2022 and share that with you.
But certainly we're seeing the impacts of that work kind of all around us.
With respect to our largest asset our flagship asset.
Malarchuk be consolidation that <unk> currently underway.
Close to completing in terms of buying the second half of that asset is a very important catalyst one that we'll spend some time on talking about today.
But.
But I think even last week in terms of their their release and some of the commentary that they're guiding towards in terms of what the synergies can be with them now owning 100% of but malarchuk, what they need for us is quite impressive.
And then as we've talked about a number of times.
2022, we didn't really see the benefit of.
Some pretty important step changes assets like Mentos and Eagle, we do expect that we'll start to see the benefit of that in 2023 those aren't the only assets that we have that are undergoing.
Yes.
Either material wrap ups or expansions over the next few years island called the category <unk> falls into that category. There's just an awful lot of good work being done on our producing asset base lengthening it and growing it.
Which underpins I think this company for a long time too that there is an exceptional amount of growth 2022 saw a 12% increase over our geos delivered to us over the year before we put out our guidance, which shows a meaningful uptick again this year and really a sustained level of growth for quite a long time.
With the existing asset portfolio and then in 2022, we did not just for for larger transactions or with a few smaller ones.
Like then, but we were very happy with the manner in which we were able to allocate capital in 2020.
Just finishing on that growth box. If you will I think the growth for us is very.
Multi layers I would say, it's again those existing producing assets that are getting stronger new assets that are coming into the mix for the rest of the decade is that optionality that I talked about <unk> of our portfolio.
Highlighting some some pretty hidden gems and then as the external growth all of which I think is working well for us.
I won't spend much time on slide four that's just the reset we love showing that slide we see that every chance we get because I think it's important.
Almost alone it kind of tells the story of a Cisco in terms of <unk>.
Commodity focus obviously geographic focus partner quality asset quality and.
And then on the top right hand side.
Taken the step up just highlighting again some of those assets core assets to us many of them are steady state and continuing to do a good job.
And then Nick additional significant chunk some of the biggest ones are going through step change improvement.
On slide five again these are names we've talked about in terms of that.
Recent acquisition story for Us in 2022, I won't go through the specific names, but we can certainly come back to them later.
But I will remind everyone that all four of these and frankly, the smaller ones that we did as well we're all bilateral underscore all.
Not a single process on that list.
I think they were all fair transactions for us and our partners.
Good jurisdictions, good operators partners big upside in all.
Frankly think significantly better than.
Better returns than we've seen in pockets of the sector for the last couple of years.
And frankly, that's what it takes for us to transact all of those all of the above.
And if we don't see that we'll be very patient.
Extremely patient and we'll continue to return capital to our shareholders, but if we do see it I think we've shown the conviction to.
Fall through on things that we believe it.
Moving to slide six.
Again, I think we got to spend a bit of time, given the importance and given the recent.
Story that continues to strengthen I've said this before I mean it.
Literally every time, we hear from our partner erratic Nico the story is getting better.
Obviously, it's an important asset even if it was just what it was kind of put on paper as a couple of years ago kind of transitioning to five to 600000 ounces a year from the underground that plan. That's how most people currently think about it I would wager that's how most people currently model it from an analyst perspective.
And that in itself is great.
That too I would remind you is only based on half of the current 15 million ounces that are available underground.
Two saw an important year in terms of infill drilling.
And that's on the next slide.
You want to jump ahead, basically just over 6 million ounces moved into the in aggregate in the M&A category, so pretty material lift of inferred MNI. The overall resource stayed the same and I think largely the same from the drilling in 2022 but happy to see the infill drilling improve the MNI.
Overall, if you look at this last bullet the extension drilling that we've done has been very productive.
With the boundaries of the deposit if you will growing in both directions to the east by 1.7 kilometers to be west Bye Bye.
<unk> 500 meters, so quite a big footprint that currently isn't in any kind of category in terms of resources and I think certainly my expectation our expectation is that after another another similar year of drilling kind of a third in a row under 64000 meters envisaged in 2023.
Not only will we see that continued trend of category improvement, but also hopefully that'll be the year, where we see an uptick.
With enough infill drilling or enough speed tight.
<unk> tightened up spacing in that footprint to add more ounces and I think that's if you read the release from technical last week, certainly seems to be what they are pointing to over the course of 2023.
So that is a phenomenal story if you look at the next slide slide seven.
Then you turn your attention to the spare 40000 tons.
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Per day of capacity in the mill that will be in place by 2028 are available by 2020.
So.
We're certainly looking forward I'm looking forward to sitting down with our friends at Agnico next week too to make sense of everything they said in their Thursday afternoon release.
Because frankly it was a it was a bit of head spinning, but overall all of it was extremely positive for us.
I'm sure you folks would I certainly would like to get some more details on that plan, but I think it's the upshot of it is.
The Canadian Arctic mail with 40000 tons roughly of spare capacity later in the decade is the center of gravity for the Abitibi and I think what's.
What the next leg of that.
But kind of given I would imagine most people have in their minds, but when you take into account the rail line that runs through through the mail basically through the property all through all of these assets that you see on the bottom of seven slide seven and the activity on the Ontario, and Quebec side.
You know that.
Significantly obviously based on the commentary increases the area of influence if you will or the catchment area.
Neil can benefit from.
Have a scenario where.
Our partner is talking about potentially 500000 ounces.
Annual regional gold coming into that mill is.
He is a huge benefit to us not just because of our 40 per ton milled royalty, but also because many of the names that they mentioned.
We also have 2% royalties on whether it's upper Beaver.
I think could go east.
As opposed to the west and the Cassa that that shows you the that that center of gravity that can email Arctic will become once it has spare capacity or whether it's talking about things like upper Canada. Obviously 8-K is already in the mix at Makassar, but essentially most things not all but most things that were discussed in that in that update.
<unk> significantly important implications for us and so we look forward to getting.
Not immediately but over the span of this year or some period of time more clarity on what that looks like it only could mean positives versus I think the way most of you on the line from the analyst community certainly.
Look at us and value us and I would imagine the same is true on the on the investor side.
And that was without really even talking a whole lot about.
Additional.
Mill feed from Kamal Arctic itself from the Odyssey project itself.
Again, 20 years give or take two decades of production based on half of the underground resources. Most of that is now in the MNI category I would imagine not in deferred anymore.
So not only will drill spacing I think add more mine life I think the extension drilling will add mine life. It's our assessment my belief that before too long you will also add throughput.
So that.
Obviously, it's preferential for us to see our partners, putting through up to 5% MSR material through that mail as opposed to even 2% or just benefiting from the mill royalty.
So that is tremendous news flow for us its recent.
Dates back Thursday, I think it was.
And so I think more visibility on that war understanding of all of that will only only strengthen the story.
On slide eight I'll speed up here, a little bit to get to the actual financials.
On slide eight I think we've talked about already.
Mentos, maybe maybe one layer deeper.
We do expect a significant uplift from rentals this year, though that deferral from 2022 into 2023.
Not a big deal, but we're certainly happy and looking forward to seeing those deals come through.
Q1 will still be a little bit volatile or at least we're assuming it will.
And thereafter, we expect to see deliveries.
Italy pick up so that's good news and then the commentary around the next expansion.
And the study that will come out in H two of this year.
Again, I think feels very very positive. So we'll wait for our partners a capstone to make that determination, but everything we're seeing and hearing I'm sure. The same is true for U bodes well.
With respect to Eagle.
We saw collectively with us and them a tougher 2022, we were all expecting them to take a step forward. It was turned into a step sideways and back a little bit if you will.
The guidance for 2023 is.
Positive again.
Yeah.
And the study that they put out and that trend to get to essentially 200000 ounces, which is.
What there.
New mine plan press release not report when you mine plant press release today.
Uh huh.
Highlights or depicts I think is still a very positive place to end up.
They need to do work to get there, but at first glance.
That study looks positive.
Higher costs for them, obviously, but we were pleased to see that the total ounces in fact, a little bit higher and the average production.
Still in that 200000 ounce range that you've talked about project 250, probably.
Discussion for another day at best but I think even ending up at 200 steady state is the is a win right now and it is a step change improvement for us. So we look forward to them, making progress on that.
And with respect to Eleonore.
Newmont again, just just last night I think it was overnight or yesterday morning.
Newmont came out with their numbers.
And we were we were quite pleased in terms of the the commentary around increased productivity increased flexibility 'twenty.
2022, sorry, 250000 ounces produced and to be pointing to $2 65 to 295.
For those reasons I think is good news so.
So we'll see how that flows into the year.
On slide.
But slide nine again, good things happening across the portfolio, whether it's the.
The ongoing.
Expansion work at island.
That will fully kick in by 2026 and in time will mean current production being between 120 to 130 under 35000 range I believe it was.
To more than doubling.
But also more of that currently none of that production comes from the 2% to 3% royalty ground in time more will so that not only the expansion, but their transition onto our better royalty ground will be a massive benefit to us in 2022, we saw a little bit of a dip from la Mac their guidance for 2023 shows the opposite a cigarette.
Improvement so good news happening for us on those assets as well.
Yes.
We're spending some time on 10 slide 10.
It says this morning until entering an important phase of growth I think we've entered it.
I think we've seen now.
A step change that hopefully should maintain and strengthen in terms of how many geos, we're getting on our quarterly and annual basis again, 12% growth last year.
Without our core assets kind of hitting their full stride guidance. This year of 95 to 105000 ounces.
And that includes growth from our existing asset base. It also includes the assumption that the CSA transaction will close here in the very near term at least the silver component, but the only component of that deal.
If you will.
And as of February 1st effective date, so 11 months of silver from CSA, we haven't factored in either into the guidance or the outlook the copper stream.
Stream potential because we don't know how much if any of that will come in but certainly we're optimistic that.
We'll be getting.
A fair chunk of it but until we know what that looks like we'll we'll keep it out of the out of the guidance.
And then an outlook five years from now in the calendar year 2027 up between 130 to 140000 ounces.
So again that that sustained level of growth on assets that we have.
There has been I think its obvious and it happens in a portfolio of some slippage for sure I'll point to permitting at San Antonio We had been talking about seeing permit San Antonio in 2023, sorry in maybe as early at the end of 2022, obviously very few people if any are getting permits out of Mexico right now.
So we still hope that that will be something that can move forward. This year, maybe it has to wait until an election in 2024, but we still have plenty and still see plenty of time for a catch up but that is a fairly simple or simpler project from a mining perspective, so caught up in that five year time horizon for sure is our expectation.
<unk> right now similarly back 40.
Probably a slippage of a year that one I think we saw coming into 2026, maybe it comes in 2027.
Flip it has to do with delays and feasibility study and then they'll have to get we permitted so so some slippage, but that's the beauty of our portfolio.
Deep as ours, because there are other things that are coming on.
And to point out as well that in that 2027 year.
We do see Renard based on the current plans Peter.
Petering out.
The Diamond stream there, although there are resources currently in place and a healthier entity that could potentially extend that.
That's to be determined for the time being we just assume that that's not the case to be cautious on that asset. Obviously, we always want to be cautious on that asset because history of it but but five years is a long time and on the current trajectory, but there's certainly an expectation that things can.
Potentially extend based on resources that currently exist.
And if it doesn't then that's coming out of that bar.
Can be replaced by a sliver of production I would emphasize a sliver.
Based on of some of the things that are in that Optionality category any small any combination or subset of initial production from her most our meramec or west Kenya.
Or even pine point do you take any couple of those and that can make up the difference so.
Really pleased with the way things are shaping up nothing in the mining sector is a straight line.
But very happy with the progress that our partners are making and again when I remind you about.
What this company looks like in terms of existing producing assets getting stronger with the one exception of a short life asset in regard.
Otherwise all of our core assets really have a long runway in front of them and they're getting bigger not smaller many of them.
And the new output as the new assets that are coming on strengthening us as each one comes off to the portfolio.
Very pleased with this group.
Growth trajectory that growth stays in rate jurisdictions.
And we will look to supplement it as.
Things are progressing there.
We'll point out.
It is on this.
Just because I was asked a couple of questions there wasn't going to do it otherwise but.
We're also doing good work, we're seeing good work progressed at the malls are in Armenia, We we try not to talk about it until there is an ultimate.
And game, there, but I think everyone realizes that we've been trying to reactivate that stream. It's a really important asset if it comes in.
North of 200000 ounces a year.
And it was about 70% complete two years ago.
So yesterday the folks that have picked it up I would have highlighted that we've noticed that the government of army had a trilateral trilateral agreement signed with the company as well as the region development bank for $150 million.
That piece to the assets, which goes a long way towards fully funding the rest of the construction still need the right entity to come in there and finish that for us.
But a great step in the government squarely behind the asset, making a lot of positive commentary around it and the need for it to move forward. So I would just call that progress I would call out.
Progress, but we're not factoring that into any of our numbers until it's a done deal and.
Really only mentioning it because I was asked.
From start to finish to pin it to that.
Once that actually moves forward, that's probably an 18 month to 24.
Rebuilder completion of build cycle. So hopefully that's something that is hitting this five year outlook.
The later.
Yes.
On the next few slides, we've taken a different approach it kind of highlighting some of the catalysts in our portfolio somewhat chronologically ordered somewhat not but all of the things that are happening in the next year plus 2023 'twenty four.
I talked about the first four so I won't talk about them again on this page but.
Underscore the fact that these are real assets emphasis on the real these are real catalysts, we're not stretching could come up with good news about our portfolio. Even if you took a few of these stock patterns alone they would be impactful to our company if you take them in aggregate.
The embarrassment of riches so.
If we're talking about the progress at windfall, obviously with the feasibility the power deal with the Cree.
This is an asset that has a ramp down somewhere well below 600 meters. It's got 15 rigs on it 13 plus kilometers of underground development that is a phenomenal story for us continuing to take shape.
Bullets on zinc I personally I'm bullish on zinc at least the right assets and I think we have two of them in her most so we look forward to the FID decision mid year, that's an important asset for us at Sysco metals, we were very pleased to see Appian private.
Private equity groups out of London step in and make a essentially $100 million investments into that project and.
<unk> company over the next four years to earn up to 60% of it $75 million of that will go into the asset.
<unk> expedited basis, Thats, a lot faster advancement.
He then the Cisco metals could have done on their own so.
Thats Supercharging was an important asset for us based on the old P. A.
To put into perspective that could be 9000, geos, depending on your commodity price assumptions 9000, Geos a year once in production so to have that starting to gain momentum is excellent.
Corvettes, another one I will talk about and I'll, probably skip the next two just to get to.
Get the Q&A faster, but.
Corvette in the 2% lithium royalty that we have on what looks like most of our potential Patriot battery metal deposit doesn't there's no resource yet, but it looks like covers 70% of what might be meaningful basically just missing a corner.
That's turned into over the span of a year of Microcap company to a $1 3 billion dollar entity long way from production, obviously, but some of the most important unimpressive drilled I've seen in the lithium space best.
Restaurant I remember is 25 meters of 5% lithium oxide.
Direct shipping.
Or basically so.
But that was that was in the back of our portfolio and we basically paid nothing for it.
We didn't pay anything for it and we have a 2% royalty on that entity that shows you again, the optionality of the royalty sector and then I think more specifically the optionality of our portfolio.
So good things happening.
Again, I'll jump through it but good things happening on these bolt on all three of these pages.
I'll throw back now to Fred for a rule to walk you through the specifics around the year and the Q4 and then I'll be back with you to just tighten things up.
Thank you Sandeep Boswell makes it a terrific new collapses on personal do nor was it does is it gets the emptiness at an exhaustive maintained good morning. Thank you for joining US today, let's start with some highlights on page 15 of the presentation.
So as discussed record 89267 G. O was in 2022, an increase of 12 person over 2020, one we add record revenues from royalties and streams of $218 million.
Paired to $200 million in 2021, which translated into record cash flows from operations of bond within $75 million compared 200 within the $53 million in 2021.
Is the 14% increase our cash margin was stable at 93% we have increased our accordion feature of the revolving credit facility. We have extended the maturity date is December 2026.
We have repaid our converts at the end of December using algorithms and $15 million from our cash balance and we drew the remaining out of it and $50 million from our credit facility. We've also repurchased one 7 million shares in 2022 at an average price of $13 Canadian.
On page 16, we present, our geos by asset and by commodity gold represented 69% of our G O as in 'twenty, 'twenty, two silver, 19% and diamonds and other commodities 12%.
On page 17, we present the growth in our revenues from royalties and streams and the growth in our operating cash flows compared to 2022 compared to 2021.
If we move to page 18.
Net earnings from our royalty and streaming business were $85 3 million or 40, 47 cents per share compared to $76 6 million or 46 cents per share in 2021 adjusted earnings amount two amounted to.
$111 million or 62 cents per share compared to $94 4 million or 56 cents per share in 2020. One of course 2022 was an annual record.
On page 19, we have a summary of our quarterly and annual results, including 25000 Geos for the fourth quarter for a total of over 80 980.
<unk> 9000 as previously mentioned.
Compared to 80000 Geos in 2021.
Gross profit amounted to $43 million in Q4 for a total Nevada and $50 million in 2022, compared with $239 million for the previous year.
Adjusted earnings in Q4 reached $34 9 million or <unk> 19 per share compared to $23 8 million or 14 cents per share in Q4 of 2021.
On page 20.
We present, a breakdown of our cash margin so the cash margin from royalties.
Reached 40.8 million in Q4, and already 43 million for the whole year, the cash margin from our streams amounted to $17 4 million in Q4 and slack.
Slightly below 15 9 million for the year for a record 201 point 5.7 million squarely in 2022 compared to $287 million in 2020 one.
On page 21, we present the value of shares buyback and dividends paid in function of the average gold price on an annual basis. During the last five years, we have return in dividends and share buybacks approximately one third of our Geos and finally on page 20.
Two you will find a summary of our financial position at the end of last year, our cash balance was $95 million, we held investments having a value of just slightly below 400 million our debt stood at 150 million following the repayment of the converts.
We currently have $600 million available under our credit facility, including the accordion of $200 million.
So in summary, another great quarter led by strong deliveries and strong gold price.
<unk> 2022 saw record quarterly and annual cash margins and operating cash flows. We've completed the re alignment with Cisco as a pure royalty and streaming company and we look forward to continue to grow in 2023 and in the coming years I will now turn the call back to Sandeep before.
We open the lines for questions.
Yes, Thanks, Brad.
And maybe just the last thing that I would I would point out.
On those last two slides that Fred alluded to 'twenty two.
Worth, noting that we still have to fund the CSA transaction Hasnt closed yet so that will come off our credit facility.
Depending on how much of that deal, we take certainly the silver, but depending on the copper, but nonetheless, our balance sheet remains exceptionally strong.
Have a lot of firepower at the right time on the credit facility still through our cash flow, which was meaningful last year.
Pending on the gold price should grow this year quite substantially and then the equity book as well, which is less liquid, but we certainly want to make some inroads on this year and we think that's very much achievable.
So when you look at slide 23.
We think we have the right mix we've got.
Meaningfully or.
Credibly senior scale assets.
We focused and we will continue to focus on high asset quality.
We're going to maintain the level of consistency you've seen from us level of simplicity and we're gonna letter assets work and that organic growth that we talked about and let it load it unfold.
That said when we see things we like.
Although we've sourced ourselves we will.
We will have the conviction to pull through with them and as I said, we have the balance sheet to do it and if we don't we'll remain completely discipline, it's a pretty simple formula for us, but one that I think unlocks a significant amount of value. If you look at the bottom of this slide.
And I think if we stay focused on what I. Just described to you the bottom of the slide frankly takes care of itself.
Because this is a portfolio that there's two important we're doing the right things with it and if you look at how the sector as a whole I think is fair to say is challenged for growth in the struggling for growth I think we've got the right.
The right formula to succeed within it and that's what we hopefully have shown you in 2022 and prior and that's what we think will unlock a lot of value in 2023 and beyond.
Thanks for listening to Fred and I on that piece and certainly open to any questions operator.
When you're ready.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone, you'll hear three Tom prompt acknowledging you're requesting your questions will be pulled in the order. They are received should you wish to decline from the polling process. Please press the star followed by the two if you are using.
A speaker phone please lift the handset before pressing any keys one moment. Please for your first question.
Your first question comes from Cosmos choose.
With CIBC. Please go ahead.
Great. Thanks, Sandeep and team and congrats on a very strong Q4 and sandeep. Good talking to you again, it's been a while.
Maybe my first question is on <unk>.
Your battery metals here, the Patriot battery metals.
As you mentioned our Sandeep.
It all it's a pretty long term and it kind of speaks to the Optionality of your model here.
But how do you evaluate you know at this point in time.
Given that Theres only a few drill holes, but also given the fact that it is now over $1 billion market cap company. So how do you internally evaluate how should we look at it and then from that perspective.
What are you going to do with it are you just going to keep in the portfolio of Optionality or is there at all alternatives in terms of potentially monetizing it longer shorter term.
Yeah sure those are good questions and Oh.
It's funny away you started your question Youre comment Cosmos, because I did see you at the airport yesterday.
Yeah.
As you walk past me to board of life.
No look I think on the battery metals side.
It's something we've said our focus is going to remain gold and silver maybe to start with the back out in your question. Our focus is going to remain growing our precious metals cash flow and NAV per share in.
In the other category, which we just had more flexibility than I think anybody.
I think what we've shown you and said and then showing you in 2022 is a preference for copper in that space, especially if we get better deals.
And access a longer life assets in the process, but that's.
In moderation without changing when I said to you about the focus.
Fact that we can pull.
Something like a 2% MSR on most of corvette out of our back pocket I think it's just.
As an exceptional.
For example, and maybe a Big example, but it's an example of.
The Optionality of this portfolio. The fact that we do have such a large development waiting we have a large exploration waiting that people don't even get to because you don't need to get to it if you're trying to value us and get to one times Nab you don't need to focus within that what's in that other category, but it matters.
And those are the types of things that have driven.
The incumbents the larger peers in our group for for a long time, we just haven't had the benefit of it as a relatively rare.
A newcomer so.
So as to have those types of.
When the potential wins in the portfolio I think is special in that scenario that specific scenario again.
Again, we paid nothing from it for it the ground that we had from the.
Virginia acquisition.
Eventually ended up in Patriot battery metals.
And yeah I don't.
Obviously, we revalue it it's early days.
How right can meet our valuations when there isn't a resource is a question mark, but obviously, we try to keep tabs on everything we have at the end of the day it doesn't matter.
Worth.
Heck of a lot more today than it was six months ago and I think the market is telling that with the way they are evaluating.
The company, obviously lithium will ebb and flow and we'll see where it shakes out but.
All it is is a good news story.
We also I should point out.
Through with Cisco development. They took the rest of that ground that was in.
James Bay, they've already joint ventured out pieces of it because it's not going to they're not going to get around to it themselves, but they retain.
Upside, but joint ventured pieces of that two different companies and so.
Hopefully, there's other folks doing doing drilling there we have a 3% royalty on all of it.
Hard to say that we'll get another example, like this one but if there's something that kind of continues to get value out of nothing.
I think that's good news in terms of the core cornice, if you will.
Of that asset to us.
I've often said when asked.
Would we.
Cell royalties I've often answered no. These things are very hard to assemble and you don't want to give them up.
If you don't have to but I think.
The truth is everything always has a value or at least it should and this is one where like you said, it's long dated if it matters more to somebody else than it does us will listen and that is true.
It should be true of everything, but I think in this case, given the commodity and the launch now and the time horizon to it I think that's true of this one than anything else so great to have it.
If you'd asked me about corvette or specifically the STI claims a year ago I would've.
Out of them look on my face and making something up.
Because we didn't know we add it essentially or when you add it we didn't know it mattered a few drill holes in the mining sector can change a lot.
Oh of course.
Maybe switching gears, a little bit I'm glad Victoria gold.
Can you kind of touched on it sandy earlier in the presentation, but our ego. The Eagle mine had an updated mine plan earlier today.
As we saw lower annual production, but longer mine life and you know it seems like higher capex.
I'm sure as you said you keep internal models on all your assets.
Assets like how does that compare in terms of your internal expectations were you expecting sort of a longer mine life lower annual production.
I think you mentioned that it was a good news story earlier during the presentation.
But could you maybe walk us through you know did it did it meet your expectations.
Yeah look I'd say, yes.
In terms of the mine plan.
Obviously have conversations with our partners.
At all times.
They can share a little bit more with us and then.
Now we're dealing with the same information that everybody has but I will caveat my comment with the fact that I still need we as a team. So we'll need to pour through that that press release. So I just skimmed. It. This morning, and we had a brief discussion about it but overall I think what I saw and again with that caveat, maybe I missed something I think in the poll and the life of mine there is a trickle.
Your production to be honest, I, obviously spread out over a longer so the back end is a little bit different but over the next few years I think we're seeing kind of what we expect to see.
And I think on average over the next eight years or over an eight year period of about that 200000 ounce Mark. So that's kind of where we're we've been expecting them to go obviously the for the <unk>.
I'm being or maybe for the foreseeable maybe for forever. The project to 50 is not in the cards, but even even so I think just getting up to that 200000 steady state level. I think is good news, it's coming at a cost I think the truth of the the mining sector and I think if you've been following us I'm sure all of you out.
<unk>.
The guidance numbers coming out for 2023, so far I think we've seen generally speaking a little tougher to get the ounces out of the ground and costs.
Cost more right so I.
I think that's a.
Thematic across the entire sector, that's not specific to Victoria.
But.
But just as a function of where we are from the inflation perspective for the next little while if it sticky in the world. It's even stickier in the mining sector. So we're we're we're comfortable with what that is I mean, and again, that's a little bit of a dichotomy of operating company versus royalty company, but I think we're pretty pleased with what they've put out we look forward to.
As I said spending more time going through it and then obviously getting the technical report within the next 45 days.
Further look into it but overall I think for US we're happy with what we're seeing I think the transition for them.
From a single asset developer to producer that's one that's crippled a lot of companies I think they've actually dealt with it well.
Especially during a COVID-19 period, an inflationary period.
We're certainly pleased with our partner, but where we are.
Bunch of market participants are looking forward to a better time to may three.
Perfect. Thanks, Sandeep again for your very good answers and I'm sure I'll keep bumping into you at airports yes.
Try not to forget talking to me today.
Yeah.
Yeah.
Your next question comes from John Tumazos. Please go ahead.
Thank you.
Just looking at the stock prices of your operators as lead indicators.
Sandeep.
Island Gold.
Our most appears to be doing well.
<unk> appears to be doing well.
Some of these faraway companies I'm not as familiar with.
What are some of your other operators.
Share price is a good lead indicator.
And then after you give me the good news I will ask you some questions about the other ones.
Yeah look I mean, that's a.
On the final rate slides I think too I mean look I think that's a good point I mean generally speaking.
Share prices will.
We will do what they do I think our partners overall had a very strong 2022, and I think they are poised to have a.
Strong 23, whether you look at obviously it was a tough tough day last week for Agnico for instance, but I think that story is still exceptionally strong.
You mentioned Capstone you mentioned.
<unk> I think if you look at our partners as a whole.
So a new matson, there with eleonore throw in SSR El Dorado I think our partners are on the upswing.
I do think there's a.
You touched on it with Cosmos question's I do think there's a difference a little bit in that on.
On the operating side, we are seeing cost pressures were still seeing capex pressures. So I think if you've seen some weakness in share price. It has to do with that side of the equation and then the beauty for us as we repositioned ourselves as the cash.
Cash cost side of the equation doesn't factor as much as long as our partners are pushing forward with the initiatives that we need those push forward with as long as our assets continue to matter to our operators and our partners and from that perspective, I would tell you that they absolutely do.
Because where we're where we're generally talking about assets that are top one or two.
Two are.
To our partners they are spending a lot of energy on them.
And they are important to their business. They are low cost mines for the most part. So I think we'll continue to see a lot of a lot of positivity from our partners on our assets.
So talking about the ones where the.
Stocks didn't go up where do you think is a good timeframe.
To expect <unk> to have.
<unk> is a proven and probable reserve.
Do you think it's going to be like.
Honestly, where they just produce the golden don't bother to document reserves.
Yeah look I mean, I think we had the the first trickle of reserves this year in the entire Odyssey.
Deposit I think Gemini as MNI for Nicos, probably reserves for most people I think that's the way they're they'll probably.
Physician it.
<unk> north of 6 million ounces in the <unk> category, a big lift almost three X versus what was in there last year good news.
There.
Drilling from surface, largely some underground drilling now and in.
In 2022, I think and I hope that that definition drilling will just intensify as they have more access underground.
Still hitting it really hard from a job perspective in <unk> and.
In 2023 I think it's still the same 13 rigs doing it basically the same amount of drilling.
Has the last two years, if we move to OTC.
That's down almost 80% from where you first announced the formation of the company.
What are the.
Things that attracted you to the Barker Bill acquisition.
And would you never make a property acquisition again or.
Not in a narrow vein structure.
What are the outlooks for those.
Yeah look I mean, I think we can go back and playwear business history, certainly there was a.
Logic at the time to protect an asset that mattered.
And put it back into the REIT vehicle better funded better back then and that not messaging, but that's exactly what ended up happening.
Unfortunately, with a lot of pain in between.
From a market perspective, so no that's not something we're looking to to ever revisit.
Still think that you're absolutely right the share price or is it still development was tough in the last two years there wasn't a lot better for most development companies, but it certainly was tough on the Cisco development side.
My hope and expectation is that that can bottom out and start to have a.
An upward trend again in 2023, I think it'll be driven largely off the enthusiasm that the market has been <unk> and not a high grade story in Utah.
That's that that initial resource I think on a postage stamp was really good. The fact that that postage stamp was 7% to 10% of the potential mineralized envelope really good.
Not that I have an all electric and.
And Robert Friedland, our drilling on the immediate boundary for deep copper porphyry potential that if they find the whole world, we'll hear about and we will we will.
And all you know well.
<unk> will transition over the boundaries so I.
I think all that will be the good new story, otherwise you get paid to wait from a caribou perspective with the feasibility and the permitting still expected for this year I don't think that's in the stock. So hopefully between all between those two kind of flagship assets and some permanent good use from a center perspective, hopefully it can be a turnaround year, we're happy to see them taken some more money in it.
Have the funds to go after their assets.
Continue to go out after their assets aggressively so yes tough one absolutely. So you know we all took it on the Chin map that's true.
But hopefully that turns around call reports.
And.
Sir and permitting but their stock legs do you just write that off to the batch stock market for gold stocks.
Yes, I don't think you can do anything else I mean, the assets tremendous.
The catalysts they've had are real.
I touched on them earlier so.
It's unfortunate that the market's still doesn't give the development companies enough.
Enough credit I think the you know.
Investment dollars have especially in 'twenty to 2022 gone towards producing names.
Hopefully, we'll see a market that's a little bit better for the development names.
Matters to us on the share price of matters through a small perspectives, we want to see that companies succeed in every way we've got the royalty on the royalty side, we think our the value of our assets has grown on the share side, it hasn't but I I don't lose any sleep over Cisco minding.
It's just too special of an asset and you know it.
It fits on.
On one hand very easily in terms of the things you could compare it to the market. So I think that will have its moments on Fisher.
<unk> won a timetable to proceed.
One where the shares sort of.
Pretty dormant.
Yeah look I if it does I mean, I think it's tough to point to it right now.
It's not one where we have to kind of committed dollars until their success going forward. So we hope that there is but were not kind of advocating today in Palo Alto table that there will be any kind of timeline, but we can point to.
Again, I hope that there is because I think it's an important 10 million ounces.
That's valuable I mean, it was a Mac work for instance could be railed.
Railed to mill Arctic then those ounces.
Should matter too, but not in that in that area.
But until Glencore kind of figures out what it's doing with the government in terms of their emissions until they can figure out how to be.
How to fit in the town of Wainwright.
From a long term perspective, I think it's tough to say.
The underground ounces.
Below the Horne five are going to get a lot of attention. So that's that's kind of option value I think I would point at this point.
I hope it does come good but I don't have a timeline for you John if I could.
Follow up on.
The earlier questions from Cosmos.
There's a number of.
Emerging battery metals royalty companies.
Yes, it's a good promotional theme.
So you need assets.
The lithium prices come off these arent selling well this month.
But the stock market has an appetite.
Two of the worst proposals I forgot that I refused to have sufficient my conference where lithium companies.
These are on the basis of metallurgy or.
One of them had $3 4 million tonnes of resource per assay like no data.
So why not sell corvette.
And does the lithium bubble to somebody that might be able to promote it better as a pure play on lithium.
Sure.
No reason other than we.
We were not in the business of giving away value for for less than what we think it's worth so I think that that logic holds.
I don't know what happens to the lithium sector in the medium term long term I do know that the world needs more lithium assets doesn't need all of them are.
Time will tell but that's even though it's an early stage. One I think is one of the better ones out there that we can see so so we like what we see here. It's early days, we're very happy with the progress, they're making and we look forward to seeing more both on the exploration and ultimately the resource on the metallurgy side, but it all bodes well the level of importance with the Quebec government is.
Placing on battery metals lithium in particular, I think you've seen it in the other things are involved in is high.
The government will want Quebec could be.
A major player on the world scale not perspective, so there's a lot of good things, even though it's very early there's a lot of good things pointing in the direction of that and.
And we'll either let that unfold.
If someone wants to.
That's in the other category, where I think analysts subscribe.
$3 million of now too if you believe in the rule of thumb that says every point of royalties worth four or five of the assets and the market cap would imply that this asset alone is worth nine figures in our it sits in other now basket that that has that has.
Nine figures to it in totality with a lot of good things in there. So it's a good a good place to be will you know will take us the time being and watch it but if ever it mattered more to somebody else than it does to us.
And then so be it.
Thank you Sandeep.
My pleasure.
Ladies and gentlemen, as a reminder, should you have a question. Please press star followed by the one.
Your next question comes from Ralph <unk>.
<unk> with eight capital. Please go ahead.
Hey, Thanks, Sandy, but just one quick question for me if I may.
The first half of 2023, that's what you have in your presentation with respect to the CRC transaction. Just wondering is that should we be thinking about that as a placeholder. It's been a while since we've heard from the metals acquisition Corp, guys on the progress of this complicated transaction. So I'm just wondering what youre thinking about the timing of that.
And is the silver and potential <unk> copper stream.
Would we possibly see those entered into the guidance.
When the deal closes, meaning that that silver and copper would come in immediately upon deal closing.
Yes, good questions, Ralph and good morning, and you're right. It has that transaction has been very long in the tooth.
I don't.
Advocate for for Destocking transactions, you want to keep your life simple, but I think the team there has done a phenomenal job.
Out.
I'm not sure, but without the lapping a pretty nasty drop in the copper price last year re cutting a deal with Glencore that makes more sense are we cutting a deal with us that makes more sense for us and now kind of coming to the the very tail end of that transaction. So just before Christmas.
Timing, but just before Christmas or sorry between Christmas and new year's account exactly recall.
They launched their fr statement with the SEC their prospectus, essentially it's been going back and forth now.
And that was one gating item.
So our hope is that that gets done in the very near term, they're putting a pin in their pipe financing and getting to a spec shareholder vote.
If not late March was probably call. It April so that one is coming to a head we have factored in the silver until that guidance number for 2023 with an effective date of February 1st. So we factored in 11 months of silver if that doesn't come in then you know the guidance the range that I would point you to is more more middle.
Of that range than the top of that range, but.
But that's what we've done because we're pretty confident about it after that.
That hasn't always been true.
Describing it as a quaint left in the middle of 2022.
And now I see very good visibility to the end result.
In terms of the copper.
It doesn't really matter because there's a even though the copper it's all producing today obviously.
I'd remind you that in the deal we gave them essentially a one year hiatus on the copper.
So it starts it would start until annual type thing for any ways. So that would that would be in the guidance number for next year. It. So it's not in the 2023 number nor is it in the 2027 number.
We'd have an opportunity to revisit that next year, depending on how much you're thinking of the copper gets taken.
Yes.
Okay, Gotcha, but yes. After after yeah. After a long lull Trust me.
We felt that it's nice to be seeing.
Daylight there.
Understood Thanks very much.
No problem. Thank you.
There are no further questions at this time. Please proceed.
Okay, great. Thank you operator, and thanks, everyone for bearing with us for almost exactly an hour and really happy with the way. We ended the year really happy with how we're set up to unlock value in 'twenty. Three we do think we've done a lot of the heavy lifting.
And the story is resonating right now so we intend to kind of keep the.
Keep after it and hopefully we'll have good things to come back to you with our partners are certainly doing that.
And and hopefully we'll continue to see a good pipeline of opportunities for us. So thanks for your time and we'll talk soon thank you.
Yes.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
Okay.
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