Osisko Gold Royalties Ltd (NYSE:OR) Q4 2023 Earnings Call Transcript

Osisko Gold Royalties Ltd (NYSE:OR) Q4 2023 Earnings Call Transcript February 21, 2024

Osisko Gold Royalties Ltd isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q4 End Year 2023 Results Conference Call. After the presentation, we will conduct the question-and-answer session. [Operator Instructions] Please note that this call is being recorded today February 21, 2024 at 10 AM Eastern Time. Today on the call we have Mr. Jason Attew, President and Chief Executive Officer; Mr. Frédéric Ruel, Chief Financial Officer and Vice President of Finance; and Mr. Iain Farmer, Vice President, Corporate Development. I would now like to turn the meeting over to our host for today’s call, Mr. Jason Attew. [Foreign Language]

Jason Attew: Thank you, operator. Good morning everybody, and thanks for being on today’s call. I’m Jason Attew, President and CEO of Osisko Gold Royalties. I have been around to witness the formation almost 10 years ago and subsequently subsequent growth of Osisko Gold Royalties, I’m very humbled to be taking the leadership reins of the leading royalty company in the sector, and look forward to interacting with all our stakeholders in a positive constructive manner in the near future. Procedurally, I’ll run through the presentation and then we will open up the line for questions. For those participating online, you can submit your questions in advance through our webpage. The presentation is available on the website, as well as through the webcast.

Please note there are forward looking statements in this presentation for, which actual results may differ. Also the basis of presentation is in Canadian dollars unless otherwise noted. I’m joined on the call this morning by Frédéric Ruel, the company’s Vice President Finance and Chief Financial Officer; and Iain Farmer, Vice President, Corporate Development amongst others as highlighted on the slide. When looking at our overall performance for the full year, it is important to note that the fiscal book a record year in terms of deals earned and was very busy from a transactional point of view 94,300 GEOs earned in 2023, representing a respectable 6% growth over the 89,400 GEOs earned in the full year 2022. This number we reported on January 8th, came just below the company’s 95,000 to 105,000 GEO guidance released in early 2023.

By this time, the challenges faced across our portfolio have been well-documented but worth a quick recap, a sharp fall in the rough diamond prices resulting in the shutdown of the Renard diamond mine, Canadian wildfires, which primarily affected deliveries from Éléonore, and ongoing ramp-up issues at the Mantos Blancos were there now appears to be some light at the end of the tunnel. Despite these headwinds, 2023 marked record annual revenues of CAD247.3 million and an annual cash margin of 93% with a record 94% being achieved in the company’s fourth quarter. Fiscal ended the year with CAD67.7 million in cash and net debt at just CAD130 million after the company used the gross proceeds of CAD132 million from the sale of the Osisko mining shares to pay down our revolving credit facility.

Subsequent to this and in 2024 year-to-date, the company has repaid an additional CAD30.2 million on the facility, reducing our overall debt thereby, increasing our financial flexibility to carry out accretive transactions. With respect to our ongoing commitment to return capital to our shareholders, the company declared and paid a quarterly dividend of CAD0.06 per share in Q4, making its 37th consecutive dividend with over CAD268 million returned to shareholders from these distributions. The company has had a stellar year as it relates to its disciplined deployment of capital into new transactions with some meaningful additions to an already strong portfolio. In summary, Osisko Bermuda close both the CSA silver and copper streams in June 2023 followed by execution on the Gibraltar stream amendments Silver Stream amendments by Osisko and then also the acquisition of gold and copper NSR royalties on cost of Fuego.

Finally, in the fourth quarter the company closed the acquisition of the 1% NSR on Namdini for US$35 million. With other smaller transactions rounding up the full list 2023 provided yet another demonstration of our team’s ability to uncover and source accretive precious metals transaction. Turning now to the financial performance from 2023. Increases in record annual revenues largely tracked both the commensurate increase of annual deals earned as well as higher year-over-year commodity prices. On a quarterly basis, strong commodity prices resulted in a new quarterly high watermark achieved in the fourth quarter of CAD 65.2 million which contributed to a revenue achievement of CAD 274.3 million for the full year 2023. One of the disciplines I brought to the team is to think in per share metrics.

And it is encouraging to see that from a cash flow per share growth perspective our annual cash flows from continuing operations in 2023 compared to 2022 increased by CAD 0.04 per share, despite being impacted by increased interest charges and higher G&A as a result of severance charges associated with the recent management changes. Without these severance charges the increase in cash flow per share would have been CAD 0.06. A net loss of CAD 0.26 per basic common share for the 2023 year represented a marked decline versus the previous year. However, this delta largely reflects non-cash impairment charges on royalties, streams and investments. The major contributors of this impairment were charges to the carrying value of the Renard stream in loans, fair value accounting treatment of our investment in Osisko development and an impairment of the Trixie stream at Fintech.

On the latter, please refer to the Osisko development press release put out this morning related to the impairment review at Trixie. More importantly, 2023 annual adjusted earnings of CAD 0.54 cents per basic common share represented an improvement over 2022. During the fourth quarter, the company had 23 producing assets including ongoing contributions from Osisko’s newest cornerstone asset the Silver Stream on the CSA mine located in New South Wales. Recall deliveries from the associated copper stream for CSA are not set to kick in for Osisko until June 15th of this year. Our GEOs earned come predominantly from Canada and we derived over 90% of our GEOs from precious metals, gold at 67% and silver at 25% with the remainder coming from diamonds and other mills.

With the recent shutdown of Renard diamonds will no longer be a contributor to Osisko’s deals earning — earned gold going forward putting the company in a position to be effectively 100% precious metals until some of the company’s base metal exposure begins to expand with the aforementioned CSA copper stream being the first such major contributor later this year. Some comments on specific mine performances before speaking about a couple of our assets in greater detail like a reliable workhorse, the Canadian market had yet another impressive year and remains the company’s most significant contributor to GEOs earned. In terms of the underground project progress at Odyssey during the period, Agnico Eagle’s planned mining rate of 3,500 tonnes per day was reached in October 2023 and sustained through the fourth quarter.

In addition, underground development was ahead of plan in the fourth quarter. Finally, the main ramp towards East Gouldie is ahead of schedule with Agnico Eagle expecting to reach the first level of the top of the East Gouldie deposit at a depth of 750 meters this quarter. Consequently, we’re excited to hear that our partner is now evaluating the potential to accelerate initial production from East Gouldie to 2026, a year earlier than previously expected. Performance from the Victoria Eagle — Victoria Gold Eagle mine in 2023 was an obvious improvement over 2022, despite a two week wildfire evacuations during the third quarter. Victoria managed to achieve total production within its providing guidance range. With the mine becoming more predictable going forward, and based on the new flying plan released earlier last year, Osisko looks forward to modest year-over-year growth as the company works towards achieving a near-term target of 200,000 gold ounces per year.

The strong performance from Malartic, Eagle and others helped offset the lower than budgeted silver stream deliveries from Capstone’s Mantos Blancos operation. Milling rates continue to lag Phase 1 expansion design levels. Worth noting is deliveries from the mine are on a two-month lag, meaning that Osisko’s 2023 results represent operations from the mine from November 2022 to the end of October 2023. Osisko will continue to monitor Mantos as performance going into 2024. And for now is expecting relatively flat year-over-year performance from the asset for 2024. Capstone is pointing to a mid-2024 for resolution of the plant issues following the delivery and installation of new pumping infrastructure related to fine tailings and water management, and after which it is expected that Mantos Blancos will consistently deliver nameplate Phase 1 throughput rates of 20,000 tonnes per day.

Newmont’s Éléonore was impacted as operations were temporarily suspended for approximately six weeks during the third quarter due to the proximity of forest fires, which impacted the mine’s 2023 production and Osisko’s annual GEOs deliveries were also impacted. Newmont will be providing updated public disclosure on the assets as part of his annual outlook tomorrow morning. Rounding things out with our newest material contributor, Metals Acquisition Limited, they had a solid quarter with gold and silver production basically flat versus the previous three-month period. In 2024, Osisko will benefit from a full year of silver deliveries from CSA under the silver stream and just over six months of deliveries under the copper stream from June 15 onward.

The next major catalyst from our partner will come in the form of an updated mineral resource estimate on CSA, the first under Metal Acquisition Corp.’s ownership. The very successful Australian IPO — after a very successful Australian IPO, the company’s CDIs began trading yesterday on the ASX. As was highlighted last night in our MD&A, the number of currently producing assets in our portfolio come down to 19 from the previous aforementioned 23. The most high profile of these assets no longer contributing GEOs earned is Renard. While the three other names that have come off, though it were significantly less material. These were Kwale, Matilda and Tintic, which collectively only contribute 415 GEOs. A more positive note, however, I’ll draw your attention to the top half of the list where five of our top 10 contributors continue along their path of improvement in the form of ongoing expansions, mine life extensions or throughput and production ramp-ups.

By the end of 2024, we can also expect both Namdini and Tocantinzinho gold projects to be added to this list. Along with Osisko’s high precious metal exposure, especially diamonds no longer serving as a major GEO contributor, our company continues to distinguish itself from pure leading jurisdictional exposure as it relates to both production and NAV to what Osisko defines as Tier 1 mining jurisdictions, which include Canada, the United States and Australia. Recent global events have only served to underpin our belief that maintaining a high exposure to both Tier 1 and very well-established mining jurisdictions where mining has been a key industry or part of the overall culture is extremely important. As stated in our press release last night, after joining the team and subsequently going through a full portfolio review, in addition to factoring events that have transpired over the past years since this company last published it’s 2023 guidance and previous five-year outlook, the company has updated these numbers to reflect what we believe to be achievable ranges.

With respect to our 2024 guidance of 82,000 to 92,000 GEOs, it goes without saying that there is a significant void in terms of GEOs that has been left by the shutdown of or not. Production improvements and new mine startups, plus the CSA copper stream coming online for us on June 15th are expected to partially offset this reduction. However, cornerstone asset, Canadian Malartic is guided to be flat to maybe modestly down year over year in large part, because of Ignyta’s decision to defer the reintroduction of progression lower grade ore to increase mill throughput, which is now not expected to happen until 2025 In 2024, Mill throughput is expected to be sourced primarily from the Barnat pit, as well as the Odyssey underground and to a lesser extent, with total throughput estimated to be 52,000 tonnes per day in 2024 versus a nameplate capacity of 60,000 tonnes per day.

Further to this, at mental Glencore’s, when combining our two months stream delivery lag with recent progress and time lines provided by our partner Capstone, we are basically expecting flat year over year GEO deliveries compared to 2023, with a material positive step change expecting expected from 2025 onwards. As noted in our press release, we are also expecting a 97% cash margin in 2024. This, I believe is the highest amongst our peer group. And finally, it should be worth noting that due to recent and previously disclosed close write-downs associated with Renard, Osisko is not expecting to be cash taxable in Canada for 2024. Looking further out with respect to our year outlook and as it relates to our growth trajectory, we believe 120,000 to 135,000 GEOs is a very realistic range for us over that time period.

What this means is that Osisko’s peer-leading growth profile very much remains intact. However, this growth will not occur in a straight line. Notable assets that are no longer included in our five-year outlook that had previously been factored include Back Forty, San Antonio and Pine Point. For reference, we also haven’t been including either Amulsar or Horne 5 in any of our published numbers for some time. In summary, on slide 9, the company is now looking at its near term guidance and longer-term outlook through more conservative lens. After barely missing the low end of its guidance range for the past two years, Osisko has now set targets that the company is confident they can deliver on, helping us further reestablish credibility by meeting expectations set in order to complement our asset base, which we believe remaining remains second to none.

Underpinning this updated growth profiles, a long list of near-term catalysts that we provided on slides 10 and 11. We’ve already touched on some of these earlier in the presentation, so I’m not going to go through this list line-by-line. However, there are a few names and opportunities that will benefit our shareholders that I’d like to highlight. As everyone may have seen last week, our partner South32 announced the final investment approval of the Taylor deposit at Hermosa, along with project economics as part of its final feasibility study. Based on the timelines provided, the project remains on track for first production in the first half of calendar year 2027. Congratulations to South32 for achieving these important milestones. And as a reminder, Osisko had a 1% NSR at Taylor.

Our partners at Osisko Mining and Gold Fields together with the windfall Mining Group are expected to achieve some important milestones themselves at Windfall over the next 10 to 12 months, not the least of which being the finalization have an impact benefit agreement with local First Nations. Moving to slide 11. I would also like to highlight that on Friday last week, our partner SolgGold announced a successful completion of an updated pre-feasibility study and Cascabel, effectively outlining a lower count CapEx longer-life, lower-risk development options. SolgGold now expects to commence the technical work to further advance and derisk cash development. If you’d like to discuss further in any more detail any of the remaining items highlighted in these two pages, I encourage you to reach out to any my colleagues here at Osisko and we’ll be happy to assist.

Finally, we’ll end the formal part of the presentation on slide 12, which outlines the current state of the Osisko’s balance sheet. At year end, we had total debt of just over CAD190 million and net debt of only CAD130 million. As we stated previously, the covenant performance is exceptionally strong with cash margins expected in 2024 of 97%. This is important – and sorry, as noted previously on this call and noted in the subsequent event in our MD&A, we’ve now also repaid an additional CAD30.2 million against our revolving credit facility, further strengthening our financial position. This is important, as Osisko doesn’t expect to sit – sit on its hands in 2024 and our much improved balance sheet provides the Company with the financial capacity and flexibility to continue its strategic strategy of disciplined allocation in the pursuit of high-quality, accretive precious metals, streams and royalties that will bolster the Company’s current and near-term deal deliveries and cash flow that should accrue to our shareholders benefit.

And if for whatever reason, and clearly that isn’t the company’s base case, for the Company were unsuccessful in cementing new transactions in 2024, then we’ll end the year in a net cash position based on current projections, which is not the worst outcome. And with that, I’d like to thank everyone for listening today. We know it’s a very, very busy day for earnings with respect to our peers and other mining companies. But we will open the line up for questions as well as questions posted on the webcast. And if we don’t get to all the questions on the line, we will make sure to respond offline to those that we don’t cover on this webcast. Thank you very much and operator over to you for questions.

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Q&A Session

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question is from Cosmos Chiu with CIBC. Please go ahead.

Cosmos Chiu: Hi, thanks, Jason and team. Maybe my first question is on your equity holdings here. As you mentioned, you divested Osisko mining shares. Could you comment on your other equity positions? And to the extent that you can share with us, your intentions of those equity positions.

Jason Attew: Thank you. Good morning, Cosmos. Thank you for the question.

Cosmos Chiu: Hi, Jason.

Jason Attew: And so – yes, we do obviously have some other equity holdings in the portfolio. The majority for which being the Osisko Development, we do hold a 40% interest in a specific development as well as with metals acquisitions limited. And so those are the majority. The rest of the positions we have make up less than very small amount anyway. And so with respect to – I’ll just talk about our philosophy around our equity holdings. As I’ve stated, we had the conversation before customers. We’re not in the business to be portfolio managers. And so we obviously make investments in equity that really pivots or as a part of a transaction that involves obviously, a royalty, stream or an economic interest. And so what you witnessed or saw when we divested the Osisko mining block is first of all, we had a really good use of proceeds to pay down our debt.

But secondly, we’re not providing a lot of value to our partners by essentially being a passive equity holder. So our philosophy is again, we’re not long-term holders of these equity positions. We will provide equity to our partners, if is around a catalyzing event, such as an acquisition and or other milestone that advances and arguably preserves our interest as it relates to a royalty stream or economic interests within the Company. So you can see, we have a slide obviously on what our other equity interests are. So people can refer to that. But as I said, we are not in the business of being portfolio managers. We will look at the appropriate time to monetize these equity interests, but obviously working with our partners to ensure that we’re doing it in a responsible way.

Cosmos Chiu: Perfect. Thanks, Jason. And my other question is just trying to understand your thought process here, as you talk about your five-year projections in terms of growth and specifically, you pointed out that compared to the last sort of target under the old management by 40, San Antonio pain points are no longer included in your the number. I’m just trying to figure out you know, how you went through that process. What what’s the commonality between some of these three for example, projects done made you decide to take it out of your numbers and to the extent that you can comment on it, what have you included? I already know, what have you what remains in that number?

Jason Attew: Thank you, Cosmos. So with respect to our process, it’s not different. I don’t think to any other oil companies when they put out their guidance. We get together as a group. We’ve got technical evaluations and technical folks that obviously, applying on the disclosure of our partner companies. We very much rely on again the disclosure that we see from corporate, as I remind everybody we’re not the operators here, there – our partners are very much closer than we are. But mining is a tough business as you and I both know. And so when we get together to look at again what our guidance should be, we take the appropriate contingencies that we see. And so collectively, what you’ll see as I talked about the assets that we pulled out of the five year guidance for the most part a slippage in time lines, of which we don’t expect to come in within that five year window.

But we do it essentially, probability wait some of the assets on a five year time line. And therefore, we have a lot of assets in that portfolio at Cosmo. So happy to walk you through our thoughts off-line, with respect to what would aggregate into that five year contribution from a geo perspective. But then again, we do take the appropriate contingencies as we see them as a partner and obviously, a royalty or a stream holder with respect to these assets.

Q – Cosmos Chiu: Great. Thanks, Jason. That perfectly answers my question. So, thanks again.

Jason Attew: Thanks, Cosmos

Operator: Your next question comes from Tanya Jakusconek with Scotiabank. Please go ahead.

Q – Tanya Jakusconek: Great. Good morning, everyone. Thank you so much for taking my questions. Jason, being new CEO at the helm. I would like to get a bit deeper thoughts on your strategy or transactions. So first question I have, now that you’ve improved the balance sheet, what size of the deal would you be comfortable to attacking at this point? So, that’s my first question.

Jason Attew: Thank you, Tanya and good morning. Thanks for joining. Look from a strategic perspective in 2023 was a very good year for Osisko in terms of transactions, five transactions were done and they’re all very accretive and will benefit shareholders go forward. I would see us going forward you have to think — frequency and cadence around your transactions but there was obviously a big, big chunky one and I’m thinking of the CSA transaction, which aggregated to over US$190 million by the timing including the private placement into it. And so that’s obviously, very meaningful for us, to us. So you can think, again, we will as an organization strategically, we obviously want to stay precious metal focused. We will support very good management teams, which we believe making history because it’s is a very good management team and jurisdictions that we consider Tier 1.

And the reason why we did that — we talked about Tanya, we did pay down our debt facility, with the Osisko mining sale, because now we have over CAD 550 million within our facility when timing include the accordion as well to go out and do accretive transactions. So look, obviously, it depends on the flow and the receptivity of our partners here. But you can think transactions US$200 million is not out of reach for the previous fiscal group, but we will also continue to do transactions like in 2023 with US$35 million and then MAC [ph] which gives us some very good deal profile. So if you were to basically bracket, I think from a corporate development engine and corporate development perspective, Iain’s here and you can comment as well. So you know US$50 million to US$250 million I think would be our sweet spot for us for the next couple of years.

Q – Tanya Jakusconek: Okay. And then, thank you for that, Jason. And then just on the jurisdiction, you mentioned Tier 1, so you flagged Australia, Canada, the U.S. as great areas to operate. Would you be willing to move out of those jurisdictions? And — for example do more in Africa, saw that you did something in Ghana. How do you see that in terms of the diversification of your portfolio?

Jason Attew: It’s an excellent question. Thank you very much. So, we do have the ability to take on more jurisdictional risk, geopolitical risk as I’ve talked about in the presentation. However, again, we’d obviously prefer to stay in what we call our Tier 1 jurisdictions. We recognize if we did that, our deal flow would probably be more limited. So, we do have to look outside of those jurisdictions. The way I’d answer that question is yes, we’d be irresponsible not to assess opportunities for example in Africa. There’s a lot of different places in Africa. We have our own risk ratings associated with it. But at the end of the day what we do as management and sitting in the room here with me and Ian and Michael, Fred and others, is we’re effectively just risk managers on behalf of our shareholders’ capital.

And so for us to go into a jurisdiction that is not what we consider Tier 1, we need a commensurate return to essentially deal with that risk. The other aspect too, as you’re very well aware, it really also depends on the contractual nature of the royalty or the streaming interest. We absolutely need survivability and any sort of transaction that’s a must for us. So, there’s a lot of factors that obviously go into our calculus as we think about putting bids in term sheets in front of companies that are not necessarily in the Tier 1 as we talk about, but to be clear, we have to make a spread more so than a spread — and in some of these other jurisdictions, more so in the spread that we make an investment in Canada for example.

Tanya Jakusconek: –find in Africa that fit your risk profile just say it would be smaller in size and say CAD200 million deal?

Jason Attew: Sorry, Tanya I think we missed the first part of your question.

Tanya Jakusconek: I said that would you be looking then for the risk being size-wise in Africa, you see those two smaller push of transaction?

Jason Attew: Yes, yes. Look, — I think again we wouldn’t — we certainly wouldn’t bet the farm and use their whole facility to do for example a CAD500 million transaction in a jurisdiction in Africa, that I don’t think what our shareholders would want us to do. So, you’re absolutely right. It’s got to be balanced in terms of the size of the trends and the size of the transaction that we’d be looking at outside of the jurisdictions that we consider Tier 1.

Tanya Jakusconek: Okay. And then just my final question in terms of the capital allocation, Jason, maybe you can so through for us your priority for capital allocation and with respect to debt versus dividend versus share buyback?

Jason Attew: Thank you, Tanya. So, again it follows our typical capital allocation decision tree. So, obviously, we’ve had a forecast now and analysts to speak to 2024, that’s going to generate some significant operating cash flow. Dividend is very important to us and we will continue to obviously pay our dividend. A lot of that is obviously dependent on the commodity prices underpinning our business. So, as I said from a capital allocation perspective, we still do have debt out of our facility. If for whatever reason we can’t find accretive deals to do it, our first priority would be pay down our debt and just really, really have an increase in our financial flexibility to go out and do transactions if it’s not in 2024, 2025, and beyond.

And so beyond that and we’re really just looking at how rich and how much cash we are having on our balance sheet. And so if we do get to a point where our balance sheet is very, very healthy and we’ve got a lot of cash on the balance sheet, we would look to do things like special dividends for sure. In terms of buying back shares that’s really dependent on more so our trading price and the capital markets aspect if we do know our fundamental value of the business is. And so with we’ve got cash on our balance sheet. We do see that we think there’s a disconnect with respect to what we think fundamental value is and what the market is quoting us. Yes, we also use it as a tool to go back and buy back share, that again, should accrue over the medium to long-term to our shareholders.

So, you can think of the decision tree is quite straightforward and simple. We obviously want to grow the business. We want to grow it responsibly. We’re focusing more on per share metrics as I talked about in my presentations, and we will be disciplined with our shareholders’ capital.

Tanya Jakusconek: Okay. And my last question is just, what’s the minimum cash balance you people on the balance sheet to run your business?

Jason Attew: Thank you. That’s a great question, and I’ll actually pass it off to Frédéric, our CFO, so he can answer the question much better than I can.

Frédéric Ruel: Well, thank you. In terms of cash balance, we will execute the $16 million approximately in the cash balance and use the remaining balance to pay down the debt or do acquisitions.

Tanya Jakusconek: Helpful. Thank you so much. I’ll leave it to someone else.

Frédéric Ruel: You’re welcome.

Jason Attew:

Operator: Your next question comes from John Tumazos with John Tumazos Very Independent Research. Please go ahead.

John Tumazos: Congratulations Jason, my — great to have you on board.

Jason Attew: Thank you, John.

John Tumazos: If I can ask a very detailed question, concerning Trixie, is your charge related to the cash put in for the future stream and excludes your equity in the impairment process that’s delaying their earnings report through the end of March?

Jason Attew: Yes. Good question, John. I’m going to pass it over to Frédéric, our CFO as well to answer.

Frédéric Ruel: Yes. I think these impairments, they must be looked at — they’re first the investment, so IFRS requires that we look at investments instead of potential impairment are two indicators of impairment, which we believe was the case this time. So, the value of investments was reduced to the fair value at the end of the year. And then for the stream, it’s always based on financial models, internal financial models. And in this case, we booked a $23 million impairment on the stream itself

Jason Attew: $23.5 million to be exact, John.

John Tumazos: So this closure count the equity income offset for whatever OGC calculates?

Frédéric Ruel: It’s not going to be directly related to the impairment that they might book in their books.

Jason Attew: And you likely saw John that Osisko development put our press release as well putting a range of the impairment at Trixie between $80 and $120 million book on their books

John Tumazos: Of course. I guess a big quick question, Jason, how big picture would you like to change the structure orientation of the Osisko Gold Royalties? There’s the 20 wonderful near-term catalysts you’ve posted. It seems as though the stock market has a hard time understanding or digesting everything. There’s so much progress. And the market is confused, because most of the years you reported a loss, because of non-cash charges. We narrowed Royal Gold Osisko, Triple Flag usually reported profit every quarter. For example, would it be a good reorientation to dividend your Osisko development 40% to your shareholders directly, so that we get a positive value for it. We’re having a penalty because they take a write off last quarters.

Jason Attew: John, do appreciate the comments. And firstly, why I will like to stress the fact that our earnings and what you see with respect to these unmet needs, these are all non-cash charges. So that’s why we direct our investors to our adjusted earnings number. And I do take your comments that confusion does have costs here associated and we have made a number of changes both on the governance side and as well with respect to our strategy going forward, we will never be buying mining asset go forward. I can promise you that. We are going to be a pure-play royalty company that’s effectively invest in royalties streams, economic interests in good jurisdictions with good management. With respect to the question on the 40% — or 40% interest in a Osisko Development, as if we could do a dividend, the challenge as we see it with that because that will actually create them at a capital gain for our shareholders or at a cost for our shareholders to do that.

And so we don’t think, although, it’s something we are certainly considering and we’ll talk to our shareholders about that. But we don’t think by doing distribution or dividend of the emphasis Osisko Development would be well received given they’ll all receive a tax bill associated with a distribution. But open to have conversation with yourself, John and others on options as it relates to again ensuring that we create value on that investment.

John Tumazos : Thank you.

Operator: Your next question comes from Adrian Day with Adrian Day Management. Please go ahead.

Adrian Day : Yes. Good morning, and thank you. I had two questions if I may. First one, can you just talk a little bit about? Obviously, you mentioned that you’re pretty pure precious metals now, but you also mentioned you’ve got a lot of base metals coming on. What is your general thinking, general strategy on diversifying into other commodities? How broadly would you diversify?

Jason Attew: Really good question Adrian, right, myself and my team and our Board do actually have lots of conversations around diversification. The first statement that I make is, we absolutely want to stay precious focused for the near, medium and long-term. That said, as you just pointed out, our concentration around precious is one of the highest in the group. So we do have the ability to take other commodities and we have taken other commodities. I mean, mostly as we talked about copper coming from Hermosa and the copper stream at CSA will adjust to some degree, again, our concentration of precious. I really think it does depend on the opportunity set that we’re looking at. Clearly, if we can invest in a large either expansion or a new development of a polymetallic asset, for instance, that gives us both precious and copper.

I’ll just use copper as an example. And we certainly would entertain that. But the fact is, now that, again, our team is very much focused on per share metrics. We will be very much focused on value over volumes. So whatever is going to create value for our shareholders, we’d endeavor to look at. So we would look at base metals. We would look like copper. We have a very positive constructive view on the copper environment go forward around the energy transition and decarbonization themes that you’re very, very well aware of. Would we go into more esoteric commodities that don’t necessarily, you can’t necessarily quote them on a metals exchange. I’m thinking commodities like lithium or others, no, we don’t think that makes sense for our portfolio right now, given the opportunity that we’re except that we’re seeing.

But certainly on the base metal side, we do have exposure within 180 assets that we do have in the portfolio. But we also do think that there’s opportunities to essentially get some of those royalties and streams with some of the base metal assets as well and specifically around expansions or new developments that we see being very important to the energy transition sector.

Adrian Day : Okay. But you don’t have a particular sort of hard line in the sand where you wouldn’t go over x?

Jason Attew: We do not, Adrian, but it’s something certainly we evaluate as our portfolio shifts over time, but we do not have a specific target saying if we’re going to drop below, let’s pick the number 80%, we wouldn’t go and do the investment. We always look at value first and then look at the other factors such as you’re suggesting around commodity mix.

Adrian Day: Okay. Super. And then my second question, if I may, in answer to Cosmos Chiu’s very first question, I got the sense that there’s no particular urgency or it’s not a high priority to sell down more of your equity. Is that correct?

Jason Attew: That’s correct, Adrian. We’ve got, as I said, the two major ones in the portfolio are Cisco Development and Metals Acquisition Limited, and both of those companies, Metals Acquisition Limited, for example, they just did a big raise in Australia, as you’re certainly aware of. And with respect to Cisco Development, they’ve got a bunch of catalysts, not the least of which a construction permit this year, not the least of which they’re going to need to raise capital for their larger builds. So it doesn’t make sense. And arguably, it’d be counterproductive for us to suggest that we monetize it. You can think of the Cisco mining situation as a good analog. When we’re not providing really any value to our partner companies, after the Goldfields joint venture, we essentially just became a passive shareholder.

That’s when we’d be looking to monetize or divest our interest, and we obviously dealt directly with the Cisco mining when we did do that and thought it was the right thing to do at the time.

Adrian Day: Okay. Great. Thank you. Thank you. That helps.

Jason Attew: Thanks, Adrian.

Operator: Your next question comes from Ralph Profiti with Eight Capital. Please go ahead.

Ralph Profiti: Thanks, operator. Jason, most of my questions have been answered. How much time are you spending sort of planning on origination, and is there a market appetite for origination for new teals, and has there really been anything kind of new and unique that you’ve seen on the playing field since you started and sort of going around fostering these relationships?

Jason Attew: Morning, Ralph. Thank you for your question. So, yes, is certainly the answer that I would say. And again, for people on the line that don’t know my history or background, I spent 16 years in investment banking, so I do have some deep relationships. The team has some deep relationships, and our board has certainly some deep relationships across the sector. And so what I would say is there are certainly opportunities for us. And so the first phase of me coming on as a CEO is I thought it was very critically important that we meet all our owners and shareholders. And so for the last little while, Grant and myself have been on the road meeting with all our owners, getting feedback, talking about the strategy before.

The second phase, obviously, is around our deal flow and our deal origination, which, again, our team continues to do, and I will pick that up as well. I would say that just from what we’re seeing thematically is really around what I talked about before, Ralph, around there are a lot of management teams and or companies that are looking to grow their business. And growing their business around the energy transition theme that I talked about is something that we think will continue to be a theme for some time. So looking at companies that, obviously, want more copper, or have a project that’s just a few kilometers away from their headframe or the processing facilities that they’ll accelerate their studies for. We have our very entrepreneurial management teams out there that are looking to acquire assets and from the seniors.

So yes there’s whole origination piece. This group has been doing it for the last 10 years very, very well, and again as evidenced by the five transactions in 2023, record allocation in terms of capital deployment. I think the deployment was very, very smart and going to benefit all our owners go forward. So it certainly will continue, it’s not something that the company hasn’t done in the past, but we obviously do need to stay current as to trends, cost of capital for all of these parties and their aspirations around growing their portfolios to become as I said leaders in this energy transition piece that we’re going to see unfold over the next five to 20 years.

Ralph Profiti: Appreciate the answer. Thanks, Jason.

Operator: [Operator Instructions] Your next question comes from Brian MacArthur with Raymond James. Please go ahead.

Brian MacArthur: Good morning. Adrian’s — I’ll ask my main question, but maybe to just follow-up on the non-precious metal transactions. You mentioned lithium was something you weren’t interested in, but you got pretty interesting lithium royalty. Does it ever make sense to sell a royalty going forward? I mean, our philosophy here is you tend to get higher multiples for precious metals versus base metals, just with those two comments of you not focusing on lithium, what’s your view on Corvette?

Frédéric Ruel: Well, thank you Brian. I appreciate the question, good morning. Corvette is a very good asset in our portfolio. And so we are very, very fortunate to be a benefactor of holding the 2% of the NSR there. We also have NSRs and any other metals that are found in that region as well. Whether it was conveying to Adrian is I think we have to be very focused as a corporate development team and origination team on what we’re good at what we know. And so we know and we want and are focused on precious metals opportunities. As I talked about before, we really need to stay in that focus. So looking at new lithium projects or new projects in that commodity it would depend if it’s a really good management team that we’ve got a history for, of course, we potentially look at it, but I don’t think it’s something we consider first of all our core competency or something that we would consider doing outside of one-off exceptions.

With respect to potentially trading in a lithium, or any of the assets that we have there are not very specific either base or precious, of course, we would consider that what we will certainly do and as I said in my presentations done a portfolio review, if we can actually create value for shareholders, and for example the other commodities that we have in our portfolio, if we see something in other assets, may be precious focused in other portfolios that we did come to a deal with SIM swapping. Yes, that would absolutely make sense for us. It’s I would say, it’s a lot easier to, to suggest around dramatically than them and conceptually then around the real execution around these transactions, because there was a lot of things obviously involved.

You’ve got tax. You’ve got new considerations around investments. But the broad answer to your question we absolutely will consider, looking at our portfolio and it does it makes sense and another party’s portfolio in Canada. And then, the second question is can we actually realize good value for them, either by trading or monetizing.

Brian McArthur: Great. Thanks very much for your clarification.

Jason Attew: Thanks Ralph. Sorry Brian.

Operator: I will now turn the conference back over to Jason for questions on the webcast.

Jason Attew: Thank you, Operator. So that’s the first question we have is expand on the rationale behind the recent balance sheet actions and comments on your capital allocation going forward? I believe that we’ve answered that question through the Q&A period. So thank you. Next question from Kerry Smith at Haywood. Jason, do you plan to retire any more debt in 2024? Again, I think we’ve also addressed that. We as you saw in Q1 or sorry Q1 to-date year-to-date we have retired and paid down another $30 million on our revolver facility. We will continue to do that, unless and until we see transactions that we want to do that and essentially move of the against the revolving credit facility. So we always want to have some capacity and flexibility around that.

So but so if we don’t do transactions, yes, we will continue to retire and/or pay down our facility, Kerry, thank you for that question. And question from Eric [indiscernible]. Congrats on the nomination and to the whole team, what has been the total ounces produced at Eleanor since started production and around two million ounces of what I’m getting from the team, is 2.2 on Gold bsallpark and is there an expectation to reach 3.5% NSR royalty eventually? I’ll turn that question to Iain, since the 3.5% also I believe and commodity length or commodity price based. But to answer the question yes about two million ounces has been produced at Eleanor. And so I’ll ask him to comment on the 3.5% NSR.

Iain Farmer: Yes. The two million ounces in produce were at the top end of the variable royalty rate range for that royalty. And in terms of getting the next bump up on the total production rate is probably a little bit too far in the future to say that that’s going to happen at this time.

Jason Attew: Thank you for your question, Eric. That’s all the questions, operator we have from the webcast. So thank you very much everybody for attending kind of the meeting for the year end Osisko Gold Royalties results presentation. As I said, it’s very, very busy day, especially for the analysts that cover. So very much appreciate your attention and the thoughtful questions this morning. And so have a very good week. And we’re always available. Our team and myself, are all available, if you’d like to have a conversation on any of our business and our strategy go forward. So thank you very much for attending this morning.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating. And ask that you please disconnect your line.