OR Royalties Inc (OR) 2023 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Osisko Gold royalties Q4 and year 2023 results conference call. (Operator Instructions) Please note that this call is being recorded today, February 21st, 2024 at 10 AM eastern time. Today on the call, we have Mr. Jason Attew, President and Chief Executive Officer, Mr. Frederick 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, (Speaking in foreign language)

Thank you, operator. Good morning, everybody, and thanks for being on today's call. I am Jason Attew, President and CEO of Osisco Gold Royalties. I have been around to witness the formation almost 10 years ago and subsequently subsequent growth of assessable royalties and 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 Frederic 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 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 elinol and ongoing ramp-up issues at the Mantos Blancos were now appears to be some light at the end of the tunnel.

Despite these headwinds, 2023 marked record annual revenues of $247.3 million and an annual cash margin of 93% with a record 94% being achieved in the company's fourth quarter. A fiscal ended the year with $67.7 million in cash and net debt of just $130 million after the company used the gross proceeds of $132 million from the sale of the Osisko mining shares to pay down our revolving credit facility. Subsequent to this in 2024, year-to-date, the company has repaid an additional $30.2 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 $0.06 per share in Q4, making its 37th consecutive dividend with over $268 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 as already strong portfolio.

In summary, Osisko (inaudible) sells 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 (inaudible) 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 $65.2 million which contributed to a revenue achievement of $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 $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 the severance charges, the increase in cash flow per share would have been $0.06. A net loss of $0.26 per basic common share for the 2023 year represented a mark decline versus the previous year.

However, this delta largely reflects noncash impairment charges on royalties, streams and investments. 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 a Osisko development, and an impairment of the Trixie stream at (inaudible). On the ladder, 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 $0.54 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 GEO's earning earn 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 Malartic 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 mine 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 Blanco's operations. (inaudible)rates continue to lag Phase one expansion design levels. Worth noting as deliveries from the mine are in a two month lag, meaning that Osisko's 2023 results represent operations from the mine from November 2022 to the end of October '23.

Osisko will continue to monitor metals is 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, a 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 were consistently deliver nameplate Phase one throughput rates of 20,000 tonnes per day. Newmont's Éléonore mine 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 GEO's deliveries are also impacted. Newmark will be providing updated public disclosure on the asset as part of this annual outlook tomorrow morning. Rounding things out with our newest material contributor, Metals acquisition Limited 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 Silverstream and just over six months of deliveries under the copper stream from June 15th 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.

Very successful Australian IPO, after a very successful Australian IPO, the company CDI's began trading yesterday on the ASX. As was highlighted last night in our MD&A, the number of currently producing assets in our portfolio has 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, those were significantly less material. These were (inaudible), which collectively only contributed 415 deals.

A more positive note, however, I'll draw your attention to the top half of the list with 5 of our top 10 contributors continue along the path of improvement in the form of ongoing expansions, mine life extensions for throughput and production ramp-ups. By the end of 2024, we can also expect both Namdini and (inaudible) gold projects to be added to this list.

Along with Osisko's high precious metal exposure, especially diamonds longer serving as a major GEO contributor, our company continues to distinguish itself from peer leading jurisdictional exposure as it relates to both production and NAV. To what Osisko defines as Tier one mining jurisdictions, which include Canada, United States and Australia.

Recent global events have only served to underpin our belief that maintaining a high exposure to both Tier one and very well-established mining jurisdictions, where mining has been a key industry or part of the overall cost 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 it's company last published its 2023 guidance and previous 5-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 GEO's that has been left by the shutdown ever 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 pre crushing, 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 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 Mantos Blancos, 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 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 in previously disclosed write-downs associated with Renard, Osisko is not expecting to be cash taxable in Canada for 2024. Looking further out with respect to our 5 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 5-year outlook that had previously been factored include (inaudible), San Antonio and Pine Point. For reference, we also haven't been including either. (inaudible) 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 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 has a 1% NSR at Taylor. Our partners at a Osisko mining and Gold Fields together, 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 an impact benefit agreement with Local First Nations.

Moving to slide slide 11, I would also like to highlight that on Friday, last week, our partner [sold gold] announced a successful completion of an updated pre-feasibility study at Cascabel, effectively outlining a lower count CapEx, longer-life, lower-risk development options.

Togo now expects to commence the technical work to further advance and derisk Cascabel. 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 mu 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 $190 million and net debt of only $130 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 $30.2 million against our revolving credit facility further strengthening our financial position. This is important as a Osisko doesn't expect to sit 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, if 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.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. (Operator Instructions)

Cosmos Chiu, CIBC.

Hi, thanks, Jason and team. Maybe my first question is on your equity holdings here. As you mentioned, you divested your 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?

Thank you, Good morning, Cosmos, and thank you for the question. And so yes, we do obviously have some other equity holdings in the portfolio majority for which being the Osisko Development, we do hold a 40% interest in Osisko development, as well as with Metals Acquisitions Limited. And so those are the majority of the rest of the positions we have make up less, 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. 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 witness doors or solve 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 other milestone that advances and arguably preserves our interest as it relates to a royalty stream or economic interests within thecCompany.

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.

Perfect, thanks, Jason. And my other question is just trying to understand your thought process here as you talk about your 5-year projections in terms of growth specifically, you pointed out that compared to the last sort of target under the old management [back 40], San Antonio, Pine Point are no longer included in your the number.

I'm just trying to figure out, you know how you went through that process. 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? What have you, what remains in that number?

Thank you, Cosmos. So, with respect to our process is not different(inaudible) think to any other royalty companies when they put out their guidance. We get together as a group. We've got technical evaluations and technical folks, 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. They are 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, which we don't expect to come in within that five year window. But we do it essentially probability weight of the assets on a five year time line and therefore, we have a lot of assets in that portfolio, Cosmos.

So, happy to walk you through our stocks offline with respect to what would aggregate into that five year contribution from it from a GEO perspective. But 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.

Great, thanks, Jason, that perfectly answers my question. So thanks again.

Thanks, Cosmos.

[Tim Kucinich], Scotiabank.

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 your thoughts on your strategy, what 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? That's my first question.

Thank you(inaudible) and good morning. Thanks for joining. Look from a strategic perspective, 2023 with 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 about frequency and cadence around transactions, but there was obviously a big, big chunky one and I'm thinking of the CSA transaction, which aggregated to over $190 million US by the timing, including the private placement into it. And so that's obviously very meaningful for us. So, you can think, again, we will as an organization strategically, we obviously want to stay precious metal focus.

We will support very good management teams, which we believe making this crew is a very good management team and jurisdictions that we consider Tier one. And the reason why we did as we talked about and the way we did pay down our debt facility with the Osisko mining sale is now we have over $550 million within our facility when timing include the according, 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, $200 million US plus is not out of reach for the Osisko group, but we will also continue to do transactions like in 2023 with $35 million US and then an [AMI], which gives us some very good yield profile.

So, if you were to basically bracket, I think from a corporate development engine and corporate development perspective and Ian's here and you can comment on it. So, you know, USD50 to USD250 million, I think would be our sweet spot for the next couple of years.

Okay. And then thank you for that, Jason. And then just on the jurisdiction, you mentioned Tier one. So, you flagged Australia, Canada, US as great areas to operate. Would you be willing to move out of those jurisdictions? And for example, Gilmore in Africa saw that you did something in Ghana. How do you see that in terms of the diversification of your portfolio?

It's an excellent question(inaudible) 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 one jurisdictions. We recognize if we did better deal flow and probably 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 and out and 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, 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 one, 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 one we talk about, but to be clear, we have to make a spread more so than a spread in some of these other jurisdictions, more so in the spread that we make an investment in Canada, for example.

Find in Africa that fit your risk profile, just say would be smaller in size and say $200 million deal?

Sorry, Tony, I think we missed the first part of your question.

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

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 $500 million transaction in a jurisdiction in Africa that I don't think what our shareholders would want us to be. 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 one.

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,

Thank you (inaudible)So, again, it follows our typical capital allocation decision tree. So, obviously, we've had a forecast now 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. First priority would we 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 '24, '25 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 businesses. And so what 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 shares 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 responsibly. We're focusing more on per share metrics, as I talked about in my presentations. We will be disciplined with our shareholders' capital.

Okay. And my last question is just what's the minimum cash balance on the balance sheet to run your business?

Thank you. That's a great question and I'll actually pass it off to Fred, our CFO, he can answer the question much better than I can.

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

That's helpful, thank you so much. I'll leave it to someone else.

You're welcome.

Thanks, (inaudible)

John Tumazos, John Tumazos Very Independent Research.

Congratulations, Jason, great to hvae you onboard.

Thank you. John,

If I can ask a very detailed question. Concerning Trixie, is your charge related to the cash put it in for the future strain and excludes your equity in the impairment process that's delaying their earnings report to the end of March?

Yes, good question, John. I'm going to pass it over to Frerder, our CFO as well to answer,

Yes, I think these impairments, they must be looked at, there is first investment, 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.

$23.5 million to be exact, John

So, this doesn't count the equity income offset for whatever OGC calculates?

It's not going to be directly related to the impairment that they might book in their books.

And you likely saw, John, Osisko development put our press release as well, putting a range of the impairment that tricks the between $80 and $120 million put on their books.

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 are 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 Royal Gold Osisko triple [FLYi], usually 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 having a penalty because they take a write off last quarters?

John, do you appreciate the comments? And firstly, why I will like to stress the fact that our earnings and what you see and 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. 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 my 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% 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 a capital gain for our shareholders or 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 Osisko developments 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.

Thank you.

Adrian Day, Adrian Day management.

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 and how broadly would you diversify?

Really good question, Adrian right, myself and my team and our Board to actually have lots of conversations around diversification around precedent. First statement that I make is we absolutely want to stay precious focus for the near medium and long term. That said, as you just pointed out, a 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 Mimosa and Copper Stream and CSA will adjust some degree again, a concentration of precious. Really think it does depend on the opportunity set that we're looking at. Clearly, you know, if we can invest in large, either expansion or a new development of a poly metallic asset, for instance, that gives us both precious and copper as we see copper as an example.

And we certainly will entertain that, that 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 of whatever is going to create value for our shareholders, we endeavor to look at. 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 up. Would we go into more (inaudible) commodities that's, don't necessarily, you can't necessarily quote them on a metals exchange.

I'm thinking commodities like lithium or there's 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.

Okay. But you don't have a particular sort of hard line in the sand, where you wouldn't go over?

We do not, Adrian, but it's something certainly we evaluate as our portfolio shifts. So, 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.

Okay, super. And then my second question, if I may in answer to Cosmos choose very first question, I got the sense that there is no particular urgency or is not a high priority to sell down more of your equity. Is that correct?

That's correct, Adrian. We've got as I said, the two major ones in the portfolio are Osisko development in Metals acquisition Limited. And both of those companies and Metals acquisition Limited, for example, they just did a big raise in Australia as you're certainly aware. And with respect to Osisko development, they've got a bunch of catalysts, not the least of which the construction permits 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 are arguably it's not, counterproductive for us to suggest that we monetize it. You can think of, you know, the assist or mining situation is a good analog. We're not providing really any value to our partner companies after the Gold Fields' joint venture. We essentially just became a passive shareholder, that's when we'd be looking to monetize or divest our interests. And we obviously felt directly with the Osisko mining when we did do that and thought it was the right thing to do at the time.

Okay, great. Thank you. Thank you, that helps.

Thanks, Adrian

Ralph Profiti, Eight Capital.

Thanks, operator. Jason, most of my questions have been answered. You know how much time are you spending sort of planning or on origination? And is there a market appetite for origination for new deals? And has there really hasn't 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?

Morning, Ralph, thank you for your question. So yes, certainly, the answer is that I wouldn't say and again for people online that don't know my history of background, I spent 16 years in investment banking. So, we do have some deep relationships. The team has some deep relationships and importance, certainly some deeper relationships across the sector.

And so what I would say is, there are certainly opportunities for us. And so the first phase of et becoming coming on as a CEO is that it was very critically important that 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 strategy going forward. The second phase obviously is around our deal flow and our lease 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 dramatically is really around what I talked about before, Ralph around. There are a lot of management teams and 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 a very entrepreneurial management teams out there that are looking to acquire assets from the big seniors. So, yes, there's that 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. And so it certainly well will continue it's not something that you know, the company hasn't done in the past, but we obviously do need to stay current as to trends, cost of capital for all 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 5 to 20 years.

Appreciate the answer. Thanks, Jason.

(Operator Instructions)

Brian MacArthur, Raymond James

Good morning, Adrian 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 a 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 metal. Just with those two comments to you now focusing on lithium, what's your view on [carbon]?

Well, thank you, Brian. I appreciate the question, good morning. (inaudible) 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 and 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 lithium or any of what are the assets that we have, they are not very specific either base or precious, of course, we would consider that we will certainly do and as I said in my presentations, done a kind of portfolio review. If we can actually create value for shareholders and, for example, you know, 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 conceptually then around the real execution around these transactions because, there was a lot of things, obviously, in hall I have got tax, you've got new considerations around investments investments. So, but in broad answer to your question of we absolutely will consider looking at our portfolio and it does it makes sense and in another party's portfolio in. And then the second question is can we actually realize good value for them either by trading it or monetizing.

Thanks very much, very clear, Jason.

Thanks, Brian.

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

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 for a Q&A period. So, thank you.

Next question from Kerry Smith, 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 essentially move of 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.

Question from Eric(inaudible). Congrats on the nomination and to the whole team. What has been the total ounces produced at LEM Morrisons started production? And around [2 million] ounces of what I'm getting from the team or is 2.2 on gold ballpark for and is there an expectation to reach 3.5% NSR royalty eventually.

I'll turn that question to Ian since the 3.5% also, I believe commodity length or commodity price based. But to answer the question, yes, about [2 million] ounces has been produced at Eleonore and I'll ask him to comment on the 3.5% NSR.

Yes, about [2 million] ounces is been produced. We are at the top end of the variable royalty rate range for that royalty. 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.

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 Q4 and the year end, Osisko Gold Royalties results presentation. I know as I said, very, very busy day, especially for the analysts that covers. 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.

Ladies and gentlemen. This concludes your conference call for today. We thank you for participating and asking you to please disconnect your line.