OR Royalties Inc (OR) 2022 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q4 2022 Results Conference Call. (Operator Instructions) Please note that this call is being recorded today, February 24, 2023, at 10:00 a.m. Eastern Time.

Today on the call, we have Mr. Sandeep Singh, President and Chief Executive Officer; and Mr. Frederic Ruel, Chief Financial Officer and Vice President, Finance. I would now like to turn the meeting over to our host for today's call, Mr. Sandeep Singh.

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Thanks very much, Joel, and thanks to everyone on line with us this morning. I 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 a presentation that's on our website, if you haven't picked it up already, on the main page, just on the left-hand side, if you hit Q4 and 2022 results. It will take you to it. And I'll be referring to page numbers as I go along, obviously, making some forward-looking statements to go to review that disclaimer on Slide 2.

So looking at Slide 3, you start, as I said, 2022 was a very important, I'd say, likely pivotal year for us. We made significant strides on a number of fronts, many of them listed on this page. If we start with the simplification, the ongoing simplification of our business, 2022, in particular, the third quarter took a massive leap forward with the deconsolidation of our financials with Osisko Development Corp. The -- just an 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 and investing in the future of growth just didn't leave recognizable entity.

So happy to have that situation behind us. In terms of the portfolio of assets, our asset base continues to strengthen. We had 3 consecutive record quarters on most of the things that matter to us from a royalty company perspective. And we'll talk about what the outlook looks like for us as we move forward. We also reset the balance sheet in the spring of last year, I think we reset the balance sheet for our next wave of growth and delevered at the right time. We continue our consistent trend of returning capital to shareholders in aggregate, CAD 63 million return to shareholders last year really almost exactly 2/3 of that lie in dividends and 1/3 of it via our buyback program. And we'll show you a slide later on.

But over the last 5 years, we've consistently done that essentially returned 1/3 of revenues or 1/3 of every dollar have derived from announced, delivered to us back to shareholders through a combination of dividends and then we think that's -- that's in pretty select company. We continue to have a tremendous amount of free upside and optionality playing out in our portfolio.

Again, to the presentation, we'll touch on a few examples of that. We 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 impact of that work kind of all around us. With respect to our largest asset, our flagship asset at Malartic, the consolidation that uniquely is currently underway, very 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 I think even last week in terms of their release and some of the commentary that they're guiding towards in terms of what the synergies can be, with them now only 100% of Malartic, 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, have assets like Mantos 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 either material ramp-ups or expansions over the next few years, Island calls in that category, Lamaque falls in 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 to that, there's 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 4 larger transactions with a few smaller ones that sliced in, but we were very happy with the manner in which we were able to allocate capital in 2022.

Just finishing on that growth box, if you will. I think the growth for us is very multilayered, 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. That is optionality that I talked about of our portfolio, highlighting some pretty hidden gems and that is the external growth, all of which I think is working well for us. I won't spend some too much time on Slide 4. That's just the reset we love showing that slide would be every chance we get, because I think it's important, almost alone and kind of tells the story of Osisko in terms of commodity focus, obviously, geographic focus, partner quality, asset quality.

And then on the top right-hand side, we've taken the step of just highlighting again some of those assets -- core assets to us. Many of them are steady state and continue to do a good job and then an additional significant chunk. Some of the biggest ones are going through step change improvement. On Slide 5, again, these are names we talk about in terms of that recent acquisition story for us in 2022. I won't go through the specific names that we can certainly come back to in later. But I will remind everyone that all 4 of these, in fact the smaller ones that we did as well, were 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 outside in all. And I 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 follow through on things that we believe in.

Moving to Slide 6. Again, I think we have to spend a bit of time given the importance and given the kind of recent story that continues to strengthen. I said this before, I mean, it, literally a good time when your partner here at Eagle, the story is getting better. Obviously, it's an important asset, even if it was just what it was kind of put-on paper a couple of years ago, kind of transitioning to 500,000 to 600,000 ounces a year from the underground. That's the plan. That's how most people currently think about it, the 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. 2022 saw an important year in terms of infill drilling. And that's on the next slide. If you want to jump ahead, basically just over 6 million ounces moved into the -- in aggregate in the M&I category. So a pretty material lift of the insured M&I. The overall resource stayed the same, and I think are largely the same from the drilling in 2022, but happy to see the infill drilling, improved the M&I.

Overall, if you look at this last bullet, the attention 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 by 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 -- that was a similar year of drilling kind of 1/3 in a row, 164,000 meters envisaged in 2023. Not only will we see that continued trend of category improvement, but also, hopefully, that will be the year where we see an uptick with enough infill drilling or a tight enough spacing in that footprint to add more ounces. And I think that if you read the released from Indigo last week that certainly seems to be what they're pointing to over the course of 2023. So that is a phenomenal story.

If you look at the next slide, Slide 7, then you turn your attention to the spare 40,000 tonnes of per day of capacity in the mill that will be in place by 2028 -- or available by 2028. So we're certainly looking forward. I'm looking forward to sitting down with our friends Indigo next week to make sense of everything they said in their Thursday afternoon release, because, frankly, it was a bit of head spinning. But overall, although it was extremely positive for us. I'm sure you folks would, I assume that you would like to get some more details on that plan. But I think it's -- the upshot of it is the Canadian largest mill with 40,000 tonnes roughly a spare capacity later in the decade is the center of gravity for the Abitibi. And I think what's -- the next leg of that to that -- and that's kind of given, I would imagine most people had in their minds. But when you take into account the rail line that runs through the mill basically through the property, all through all of these assets that you see on the bottom of 7 -- Slide 7 in the Abitibi on the Ontario and Quebec side.

That significantly obviously, based on the commentary, increases the area of influence, if you will, or the catchment area that no can benefit from -- have a scenario where our partners talking about potentially 500,000 ounces of annual regional gold coming into that mill is a huge benefit to us, not just because of our CAD 0.40 a tonne mill royalty, but also because many of the names that they mentioned, we also have 2% royalties on, whether it's Upper Beaver, which I think could go east as opposed to West to Macassa, that shows you the -- that center of gravity that can (inaudible) will become one that has spare capacity or whether it's talking about things like Upper Canada, obviously, AK is already in the mix at Macassa, but essentially most things on all -- the most things that were discussed in that update have significantly important implications for us. And so we look forward to getting maybe not immediately but over the span of this year or some period of time, more clarity on what that looks like. It only could be positive versus, I think, the way most of the online from the analyst community certainly look at some value us, and I imagine the same is true on the investor side. And that was without really even talking a whole lot about additional mill feed from Canadian Malartic itself from the Odyssey project itself.

Again, 20 years, give or take, 2 decades of production based on half of the underground resources. Most of that is now in the M&I category. I would imagine not 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, I believe that prefer too long, you will also add throughput. So that Obviously, it's preferential for us to see our partners putting through up to 5% NSR material through that mill as opposed to even 2% or just benefiting from the mill royalty. So that is tremendous news flow for us. It's recent days back to Thursday, I think it was. And so I think more visibility on that, more understanding of all that will only strengthen the story.

On Slide 8 -- I'll speed up here a little bit to get to the actual financials. On Slide 8, I think we've talked about already Mantos, maybe 1 layer deeper. We do expect a significant uplift for Mantos this year that deferral from 2022 into 2023. Not a big deal, but we're certainly happy and looking forward to seeing those GEOs come through. I think Q1 will still be a little bit volatile or at least we're assuming it will. And thereafter, we expect to see deliveries steadily pick up. So that's good news. And then the commentary around the next expansion and the study that will come out in H2 of this year, again, I think it feels very, very positive. So we'll wait for our partners at Capstone to make that determination, but everything we're seeing during. I'm sure the same is true for you bodes well.

With respect to Eagle, we saw collectively with us and then 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, and the study that they put out and that trend to get to essentially 200,000-ounces, which is what their new mine plan press release -- not report for new mine plan press release today highlights or the picks, 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. A little bit higher cost 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 200,000-ounce range that we've talked about. Project 250 probably a discussion for another day at best, but I think even ending up at 200 steady state is a win right now and is a step-change improvement for us. So we look forward to them making progress on that.

And with respect to Eleonore at Newmont, again, just last night, I think it was overnight or yesterday morning, Newmont came out with their numbers. And we're quite pleased in terms of the commentary around increased productivity, increased flexibility, 2022 topped 250,000 ounces per use and to be pointing to 265,000 to 295,000 for those reasons, I think, is good news. So we'll see how that flows into the year.

On slide -- number to Slide 9, again, good things happening across the portfolio whether it's the ongoing expansion work at Island that will fully kick in by 2026. And then in time, will mean current production being between 120,000 to 130,000, 135,000 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 and time, more will. So that's not only the expansion, but the transition on to our better royalty grounds will be a massive benefit to us.

In 2022, we saw a little bit of a dip from Lamaque. Their guidance for 2023 shows the opposite a significant improvement. So good news happening for us on those assets as well. We're spending some time on 10 -- Slide 10. It says -- I noticed this, this morning, it says entering in 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 a quarterly and annual basis, again, 12% growth last year, without our core assets kind of hitting our full stride guidance this year of 95,000 to 105,000 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. That's the only component of that deal that's certain, if you will, and has a February 1 effective date. So 11 months of silver from CSA.

We haven't factored in either into the guidance or the outlook, the copper 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 keep it out of the guidance. And then an outlook 5 years from now in the calendar year 2027 of between 130,000 and 140,000 ounces.

So again, that sustained level of growth on assets that we have. There has been, I think it's obvious, and it happens in our portfolio, some slippage for sure. I'll point to permitting at San Antonio. We had been talking about seeing permit San Antonio on 2023 -- sorry, and 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 I can move forward this year, maybe you have to wait until an election in 2024, but we still have plenty -- still see plenty of time for a catch-up that is a fairly simple or simpler project from a mining perspective. So caught in that 5-year time horizon, for sure, is our expectation right now.

Similarly, probably a slippage of a year that what I think we saw coming in, in 2026, maybe it comes in 2027, but the slippage had to do with delays in feasibility study and then still has to get re-permitted. So some slippage, but that's the beauty of the portfolio as deep as ours because there are other things that are coming on. Important to point out as well that in that 2027 year, we do see Renard based on the current plan 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 it's not the case to be cautious on that asset. Obviously, we always want to be cautious on that asset because of the history of it, but 5 years is a long time and on the current trajectory, there's certainly an expectation that things can potentially expand based on resources that currently exist.

And if it doesn't, then that 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 Hermosa or Marimaca or West Kenya or even Marimaca, 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 Renard. Otherwise, all 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 houses, the new assets that are coming on, strengthening as each one comes on to the portfolio. Very pleased with this growth trajectory that growth stays in great jurisdictions, and we'll look to supplement it as things progress.

I will point out, it is on this -- just because I was asked a couple of questions, I was going to do it otherwise. But we're also doing good work. We're seeing good work progressed at Amulsar in our Armenia. We try not to talk about it until there's an ultimate end game there, but I think everyone realizes that we've been trying to reactivate that stream. It's a really important asset that comes in north of 200,000 ounces a year and it was about 70% complete 2 years ago. So yesterday, the folks that have picked it up would have highlighted that we have noticed that the government of Armenia had a trilateral agreement signed with the company as well as the Asian Development Bank for a $150 million debt piece into the asset, 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 and 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 call out progress, I would call that significant 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 once that actually moves forward, that's probably an 18-month to '24 at most rebuild or completion of build cycle. So hopefully, that's something that is hitting this 5-year outlook sooner than later.

On the next few slides, we've taken a different approach at kind of highlighting some of the catalysts in our portfolio, somewhat chronologically ordered, somewhat not. But all of the things are happening in the next year plus, 2023, 2024. I talked about the first 4, 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 to come up with good news about our portfolio. Even if you took a few of these back patterns alone, they would be impactful to our company if you take them in aggregate, it's an 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 that continues to take shape. We're bullish on zinc, and personally I am bullish on zinc at least the right assets. And I think we have 2 of them in Hermosa, we look forward to the FID decision midyear. That's an important asset for us.

At Osisko Metals, we were very pleased to see Appian, private equity group out of London step in and make a essentially CAD 100 million investment into that project and company over the next 4 years to earn up to 60% of it. CAD 75 million of that will go into the asset on a somewhat expedited basis, it's a lot faster advancement to FID than Osisko Metals could have done on their own. So that's supercharging as an important asset for us based on the old PEA. To put it into perspective, that could be 9,000 GEOs depending on your commodity price assumptions, 9,000 GEOs a year once in production. So to have that starting to gain momentum is excellent.

Corvette is another one I'll talk about, and I'll probably skip the next 2 just to get to the Q&A faster, but Corvette and the 2% lithium royalty that we have on what looks like most of the potential Patriot Battery Metal deposit doesn't -- there's no resource yet, but it looks like it covers 70%, 80% 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 CAD 1.3 billion entity long way from production, obviously, but some of the most important and impressive jewels I've seen in the lithium space. I think the best run I remember is 25 meters at 5% lithium oxide, that's direct shipping ore basically.

So that was in the back of our portfolio. 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 all 3 of these pages.

I'll throw back now to Fred Ruel to walk you through the specifics around the year and the Q4 and then I'll be back with you to just tie the things up.

Thank you, Sandeep.

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Good morning. Thank you for joining us today. Let's start with some highlights on Page 15 of the presentation. So as discussed, record 89,267 GEOs in 2022, an increase of 12% over 2021. We had record revenues from royalties and streams of CAD 218 million compared to CAD 200 million in 2021, which translated into record cash flows from operations of CAD 175 million compared to CAD 153 million in 2021, which is a 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 as well to September 2026. We have repaid our converts at the end of December, using CAD 150 million from our cash balance, and we drew the remaining other CAD 150 million from our credit facility. We've also repurchased 1.7 million shares in 2022 at an average price of CAD 13.

On Page 16, we present our GEOs by asset and by commodity. Gold represented 69% of our GEOs in 2022; 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 -- so 2022 compared to 2021.

If we move to Page 18. Net earnings from our royalty and streaming business were CAD 85.3 million or CAD 0.47 per share compared to CAD 76.6 million or CAD 0.46 per share in 2021. Adjusted earnings amounted to CAD 111 million or CAD 0.62 per share compared to CAD 94.4 million or CAD 0.56 per share in 2021. Of course, 2022 was an annual record.

On Page 19, we have a summary of our quarterly and annual results, including 25,000 GEOs for the fourth quarter for a total of over 89,000 as previously mentioned, compared to 80,000 GOs in 2021. Gross profit amounted to CAD 43 million in Q4 for a total of CAD 150 million in 2022 compared to CAD 139 million for the previous year. Adjusted earnings in Q4 reached CAD 34.9 million or CAD 0.19 per share compared to CAD 23.8 million or CAD 0.14 per share in Q4 of 2021.

On Page 20, we present a breakdown of our cash margin. So the cash margin from royalties reached CAD 40.8 million in Q4 and CAD 143 million for the whole year. The cash margin from our streams amounted to CAD 17.4 million in Q4 and slightly below CAD 59 million for the year for a record CAD 201.7 million in 2022 compared to CAD 187 million in 2021.

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 5 years, we have returned in dividends and share buybacks, approximately 1/3 of our GEOs.

And finally, on Page 22, you'll find a summary of our financial position at the end of last year. Our cash balance was up CAD 90.5 million. We held investments having a value of just slightly below CAD 400 million. Our debt stood at CAD 150 million following the repayment of the converts. We currently have CAD 600 million available under our credit facility, including the accordion of CAD 200 million.

So in summary, another great quarter, led by strong deliveries and a strong gold price, the year 2022 saw record quarterly and annual cash margins and operating cash flows. We've completed the realignment of Osisko 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, Fred. And maybe just the last thing I would point out on those last 2 slides that Fred alluded to on '22. Worth noting that we still have to fund -- the CSA transaction hasn't 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 to fill to our cash flow, which was meaningful last year depending 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 incredibly senior scale assets. We've 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, the level of simplicity, and we're going to let our assets work and that organic growth that we talked about and let it unfold. That said, when we see things we like that we sourced ourselves, we will have the conviction to fall through with them. And as I said, we have the balance sheet to do it. And if we don't, we'll remain completely disciplined. 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 the slide. And I think if we stay focused on what I just described to you at the bottom of the slide, frankly, takes care of itself because this is a portfolio that is too important. We're doing the right things with it. And if you look at how the sector as a whole, I think it's fair to say, is a challenge for growth and struggling for growth. I think we've got 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.

So thanks for listening to Fred and I on that piece and certainly open to any questions, operator, when you're ready.

(Operator Instructions) Your first question comes from Cosmos Chiu with CIBC.

Sandeep and team, congrats on a very strong Q4. And Sandeep, good talking to you again, it's been a while. Maybe my first question is on your battery metals here, the Patriot Battery Metals. As you mentioned, Sandeep, it's pretty long term and it kind of speaks to the optionality of your model here. But how do you value it, at this point in time, given that there's only a few drill holes, but also given the fact that it is now over a $1 billion market cap company. So how do you internally value it? 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 for optionality? Or is there alternatives in terms of potentially monetizing it long -- shorter term? .

Yes, sure. Those are good questions. And thought it was funny the way you started your question, your comment, Cosmos. I did see you at the airport yesterday as you walk past me to board a flight.

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 end of your question. Our focus is going to remain growing our precious metals, cash flow and NAV per share. In the other category, which we just had more flexibility and I think anybody -- I think what we've shown you and said and then shown you in 2022 is a preference for copper in that space, especially if we get better deals and access the longer-life assets in the process. But that's in moderation without changing when I said to you about the focus. The fact that we can pull something like a 2% NSR on most of Corvette out of our back pocket. I think it's just -- is an exceptional 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 weighting. We have a large exploration weighting 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 1x NAV. You don't need to focus with what's the net other category, but it matters.

And those are the types of things that have driven the incumbents, the larger peers in our group for a long time. We just haven't had the benefit of it as a relatively -- the relative newcomer. So to have those types of wins and potential wins in the portfolio, I think, is special in that scenario -- that specific scenario. Again, we paid nothing from it -- for it. The ground that we had from the Virginia acquisition that eventually ended up in Patriot Battery Metals. And yes, I don't -- I mean, obviously, we value 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 the tabs on everything we have. At the end of the day, it doesn't matter. It's worth a heck of a lot more today than it was -- were 6 months ago, and I think the market is telling that with the way they're 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 Osisko 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 venture pieces of that to different companies. And so hopefully, there's other folks 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 give value out of nothing. I think that's good news.

In terms of the coreness, if you will, of that asset to us, I've often said when asked, would we sell 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 and where at least it should. And this is one where, like you said, it's long dated. If it matters more to somebody else, when he does ask, we'll listen. And that's true of a lot of -- it should be true of everything, but I think in this case, given the commodity and (inaudible) and the time horizon to it, I think that's true of this one than anything else. So great to have it. If you had asked me about Corvette or specifically the FCI claims a year ago, I would have had a dumb look up my safe and making something else because we didn't know we had it essentially when you had it, we did know it mattered, the few drill holes on the mining sector can change a lot.

Of course. Maybe switching gears a little bit, go to Victoria Gold. You kind of touched on it, Sandeep, earlier in the presentation. But Eagle mine had an updated mine plan earlier today, as we saw lower annual production, but longer mine life, and it seems like higher CapEx. I'm sure, as you said, you keep internal models on all your assets. Like how does that compare in terms of your internal expectations? Were you expecting sort of longer mine life, lower annual production. I think you mentioned that it was a good new story earlier during the presentation. But could you maybe walk us through? Did it meet your expectations?

Yes. Look, I'd say, yes. In terms of the mine plan, we 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 I still need to -- we, as a team, so need to pour through 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 full -- in the life of mine, there's a trickle higher production, to be honest, that obviously spread out over 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 those next 8 years or over a year period of about that 200,000 ounce mark. So that's kind of where we're -- we've been expecting them to go.

Obviously, for the time being or maybe for the foreseeable maybe forever, Project 250 is not on the cards, but even so, I think just getting up to that 200,000 study-state level, I think, is good news. It's coming at a cost. I think the truth of the mining sector. And I think if you -- following as -- I'm sure as all of you have, the guidance number is 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 cost more, right? So I think that's a thematic across the entire sector. That's not specific to Victoria, but just a function of where we are from an inflation perspective for the next little while, if it's sticky in the world, it's even stickier in the mining sector.

So we're comfortable with what that is. I mean -- and again, that's a little bit of a dichotomy of operating company versus a 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 to 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 single-asset developer to producer, that's one that's crippled with a lot of companies. I think they've actually dealt with it well, especially during a COVID period, inflationary period. we're sort of pleased with our partner, but we're, a bunch of market participants, are looking forward to a better 2023.

Your next question comes from John Tumazos.

Just looking at the stock prices of your operators as lead indicators, Sandeep, Island Gold, Alamos appears to be doing well. Capstone appears to be doing well. Some of these faraway companies, I'm not as familiar with. But what are some of your other operators where the share price is a good lead indicator? And then after you give me the good news, I'll ask you some questions about the other ones. .

Yes. Look, I mean that's -- let me find the right slide, I think. Look, I think that's a good point. I mean, generally speaking, share prices will do what they do. I think our partners overall had a very strong 2022. And I think they're poised to have a strong 2023, whether you look at -- obviously, it was a tough day last week for Agnico, for instance, but I think that story is still exceptionally strong. You mentioned Capstone, you mentioned Alamos. I think if you look at our partners as a whole, you throw a Newmont in there with Eleonore, you throw in SSR Eldorado, I think our partners are on the upswing. I do think there's a -- as I touched on it with Cosmos question, I do think there's a difference a little bit in that -- on the operating side, we are seeing cost pressures. We're 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 is the cash -- the cost side of the equation doesn't factor us as much.

As long as our partners are pushing forward with the initiatives that we need to 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 we're generally talking about assets that are top 1 or 2 to our partners. They're spending a lot of energy on them, and they're important to their business, they're low-cost mines for the most part. So I think we'll continue to see a lot of positivity from our partners on our assets.

So talking about the ones where the stocks didn't go up, what do you think is a good time frame to expect Agnico to have East Gouldie as a proven and probable reserve? Or do you think it's going to be like Odyssey where they just produce the gold and don't bother to document reserves.

Yes, look, I mean, I think we had the first trickle of reserves this year in the entire Odyssey deposit. I think the M&I is -- M&I for Nikol's probably reserves for most people. I think that's the way -- they'll probably position it. So to have north of 6 million ounces in the M&I category, a big lift, almost 3x versus what was in there last year, good news. They're drilling from surface, largely some underground drilling now in 2022, I think. And I hope that, that definition drilling will just intensify has to have more access on the ground, still hitting it really hard from a drill perspective in 2023. I think it's still the same 13 rigs doing basically the same amount of drilling as the last 2 years.

If we move to Odyssey, that's down almost 80% from when you first announced the formation of the company. What are the things that attracted you to the Barkerville acquisition? And would you never like make a property acquisition again or not in a narrow vein structure, what are the outlooks for those?

Yes. Look, I mean, I think we can go back and play our business history. Certainly, there was a logic at the time to protect an asset that mattered and put it back into the right vehicle that are funded better back in and that not an essent, 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 ever revisit. I still think that -- and you're absolutely right, the share price of Osisko Development was tough in the last 2 years. It wasn't a lot better for most development companies, but it certainly was tough on the Osisko Development side. My hope and expectation is that, that can bottom out and start to have an upward trend again in 2023. I think it will be driven largely off the enthusiasm that the market has for Tintic and that high-grade story in Utah. That initial resource, I think, on a post stamp was really good. The fact that, that post stamp of 7% to 10% of the potential mineralized envelope, really good, the fact that I have a whole electric and Robert Friedland drilling on their immediate boundary for deep copper proper profit potential that if they find the whole world we'll hear about, and we'll -- will transition over the boundary.

So I think all that will be the good news story. Otherwise, you get paid to wait from a Cariboo perspective with the feasibility in and the permitting is still expected for this year. I don't take that in the stock. So hopefully, between those 2 kind of flagship assets and some permitting good use from a San Antonio perspective. Hopefully, it can be a turnaround year. We're happy to see them take in some more money and have the funds to go after their assets -- continue to go after their assets aggressively. So yes, tough one. Absolutely, we all take it on the chin from that perspective, but hopefully that turns around.

That Osisko Mining has very good technical reports and they're in permitting, but their stock lags, do you just write that off to the BATS stock market for gold stocks?

Yes. I don't think you could do anything else. I mean the asset is tremendous. The catalyst they've had are real. I touched on them earlier. So I think it's unfortunate that the market still doesn't give development companies enough credit. I think the investment dollars have, especially in 2022 gone towards producing names. And hopefully, we'll see a market that's a little bit better for the development names. That matters to us on the share price. It matters to a small perspective. We want to see that company succeed in every way. We've got the royalty on the royalty side. We think the value of our assets has grown on the share side, it hasn't. But I don't lose any sleep over Osisko Mining. It's just too special of an asset, and it fits on one hand, very easily in terms of the things you could compare it to in the market. So I think that will have at the moment in the future.

Is Falco one that has a timetable to proceed. That's one where the share is sort of pretty dormant.

Yes. Look, if it does, I mean, I think it's tough to point to it right now. That's not one where we have to kind of commit dollars until their success going forward. So we hope that there is, but we're not kind of advocating today in (inaudible) table that there will be in any kind of time line that 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 if Wasamac or, for instance, can be railed to Malartic than those ounces should matter too in that area. But until Glencore kind of figures out what it's doing with the government in terms of their emissions until they kind of figure out how to be -- how to fit in the town of Glencore Canada from a long-term perspective, I think it's tough to say that the underground ounces below the Horne 5 are going to get a lot of attention. So 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 time line for you, John.

So if I could follow up on the earlier question from Cosmos. There's a number of emerging battery metals royalty companies. That's a good promotional theme, I guess they need assets. The lithium prices come off, the EVs aren't selling well this month, but the stock market has an appetite. Two of the worst proposals I ever got that I refuse to have to speak in my conference were with lithium companies, either on the basis of metallurgy or one of them had 3.4 million tons of resource per assay, like no data. So why not sell Corvette into the lithium bubble to somebody that might be able to promote it better as a pure play on lithium?

No reason other than we're not in the business of giving away value 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, does it need all of them, time will tell. But this -- even though it's an early stage one, I think it's one of the better ones out there that we can see.

So we like what we see here. It's early days. We're very happy with the progress they're making. We look forward to seeing more both on the exploration, ultimately the resource on the metallurgy side, but it all bodes well. The level of importance that the Quebec government is placing on battery metals, lithium, in particular. I think you've seen it and the other things that are involved in is high. The government wants Quebec to be a major player on the world scale from that perspective. So 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 we'll either let that unfold if someone wants to -- that's in the other category where I think analysts prescribe $100 million of NAV too, if you believe in the rule of thumb that says every point of royalty is worth 4 or 5 of the assets and the market cap will imply that this asset alone is worth 9 figures. It sits in another NAV basket that has 9 figures to it in totality, we had a lot of good things in there. So it's a good place to be. We'll take us for the time being and watch it. But if ever it matters more to somebody else than it does to us then so be it.

(Operator Instructions) Your next question comes from Ralph Profiti with Eight Capital.

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 CSA transaction. Just wondering, is that -- should we be thinking about that as a place holder? It's been a while since we've heard from the Metals Acquisition Corp. guys on the progress of this complicated transaction. So just wondering what you're thinking about the timing of that -- and is the silver and potential goal -- sorry, copper stream would we possibly see those enter into the guidance when the deal closes, meaning that silver and that copper would come in immediately upon deal closing?

Yes. Look, good question, Ralph. And you're right, as that transaction has been very long in the tooth. I don't advocate for destacking transactions, if you want to keep your life simple. But I think the team there has done a phenomenal job out lasting, a pretty nasty drop in the copper price last year, recutting a deal with Glencore that makes more sense, recutting a deal with us that makes more sense for us and now coming to the very tail end of that transaction. So just before Christmas -- the odd timing, but just before Christmas -- or sorry, between Christmas and New Years, I can't exactly recall -- they launched their F-4 statement with the SEC, their prospectus essentially 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 SPAC shareholder vote, if not late March, let's probably call it April. So that one is coming to a head. We have factored in the silver into that guidance number for 2023 with an effective date of February 1. So we factored in 11 months of silver if that doesn't come in, then the guidance -- the range that I would point you to is more middle of that range than on top of that range. But that's what we've done because we're pretty confident about it after and that hasn't always been true. I was describing it as a coin flip 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 1-year hiatus on the copper. So it starts -- it would start in 2024 anyways. So that would be in the guidance number for next year. 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 of any of copper has taken. But yes, after -- yes, after a long lull, trust me, we felt it, it's nice to be seeing daylight there.

There are no further questions at this time. Please proceed.

Okay. Great. Thank you, operator. 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 2023. 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 after it, and hopefully, we'll have good things to come back to you with. Our partners are certainly doing that. 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.

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