David Garofalo: Peter, do you want to answer?
Peter Behncke: Yeah. So from Canadian Malartic in 2023, our attributable production was primarily expected to come from Barnat Pit. Now that has been — we have seen less production from the Barnat Pit just to the sequencing at Canadian Malartic. We expect most of that to be caught up in 2024 and targeting closer to 30,000 ounces of total production reporting into our 3% NSR from the pit. We are awaiting on any specific guidance across the Odyssey South and internal zones, as I noted, they are still delineating that internal zones resource and our focus on incorporating that into the mine plan as soon as next year. But it’s really a key metric and something we can speak to certainly about. Where we see the most clarity is towards the end of the decade, with assets such as Odyssey North and East Malartic on a combined basis, reporting closer to 200,000 ounces of total production reporting into our 3% NSR by the end of the decade, and that really starts to ramp-up through ‘27 and ‘28.
Joanne Jobin: Okay. And how many assets do you think we’ll be producing by 2024, ‘25?
Peter Behncke: Yeah. So by the end of next year, we currently have our four producing assets, we’re excited to see Cote enter production and the potential for the Odyssey underground to also supplement that. So we’re looking at six royalties producing by the end of 2024. And then by the end of 2025, we have a handful of smaller royalties in Nevada that could supplement that number of producing royalties upwards of eight by the end of 2025.
Joanne Jobin: Okay. I have a couple of questions here that I’m going to try put into one, and it has to do really with royalty companies. And maybe David, you can answer this. What are your thoughts? Do you think there’s going to be more mergers among royalty companies next year? And — I know you touched on this a little bit, but why are they performing so badly in the markets or underperforming at this point?
David Garofalo: Yeah, there actually has been quite a bit of M&A activities since our IPO. So, we IPO-ed in March of 2021, there was no consolidation occurring. We instigated the consolidation by merging with three of our peer companies, Ely, Golden Valley and Abitibi over the course of 2021. And then we saw a lot of other M&A activity. In fact, six other royalty companies that disappeared. And you know some of the mavericks and nomad, ultra strategies, et cetera. There’s the number them that have disappeared over the course of last couple of years. So there has been meaningful consolidation with the objective of trying to achieve scale quickly, drive down cost of capital. That hasn’t been borne out, honestly. We’ve seen some consolidation, but what we haven’t seen is the rerate you would have expected from that consolidation, because there’s been a massive exodus to capital out of gold equities generally, not just in the royalty streaming universe.
And that, again, what’s driving that exodus to capital has been cost inflation. So among the producers, growing operating capital costs that has shrunk margins in a stable cost — stable low-price environment gold has been range bound between $1,800 and $2,000 an ounce over the last couple of years. So gold price hasn’t grown meaningfully, but the costs had. And I think that’s resulted along with shrinking reserves and production profiles and a significant cycle of M&A activity among the producers has seen capital kind of disappear from the space and unfortunately the royalty and streaming companies have been tarred with same brush in spite of the fact that we provide cost installation. There’s been a baby with a bathwater type of a reaction in the gold sector and that’s obviously disappointing to gold investors who are looking for leverage to, was an increase in gold price globally.
Again, gold has hit all-time highs in every other major currency, it has held and sold against the US dollar, but we haven’t seen the royalty and streaming companies perform. But they will, inevitably because they do provide that optimum leverage to the gold price and exploration, while protecting from inflation. And I think as we start to see general as money come back into the space inevitably, it will, as we see a rotation out of other general equity markets into natural resources and precious metals, in particular, you’re going to see those first dollars go into the royalty and streaming companies, because they provide a much less risky proposition, risky exposure and better leverage to the gold price than the producers and developers do.
Joanne Jobin: And, David, do you actually have a plan in place if someone were to approach you either on a hostile bid or a proposed merger? I guess, the question is, where do you see yourselves in three to five years from now?
David Garofalo: Look, I think consolidation among the other half a dozen to 10 other royalty and streaming companies is inevitable, because there is a significant void in the sector, there isn’t a meaningful mid-tier royalty and streaming company to compete for capital and opportunities with the big guys. And as I said earlier on, the big guys are getting multiples that imply that they have significant growth ahead of them and they don’t — they can’t. There’s no conceivable way for them to grow given how big they are. Their quality plays are very liquid. And so it’s a good place for many specialist funds in the precious metals sector kind of park their capital while they wait for the generalist to come out and play as well.
