OR Royalties Inc (OR) 2021 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q4 and Year 2021 Results Conference Call. (Operator Instructions) Please note that this call is being recorded today, February 25, 2022, at 10 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, operator. Hopefully, you can hear me okay. And thanks, everyone, for joining us this morning. I know it's a busy end for the week, a lot of people reporting, so thanks for taking the time. We'll try to go through the prepared materials reasonably quickly, leave enough time for questions. And please note if you don't already have it, the deck that I'll be walking through with Fred is on the website and we will be making forward-looking statements as we talk through it.

Jumping to Slide 3, just in terms of a very high-level recap. We had another exceptionally strong quarter. Our assets continue to perform well and provide significant catalysts that are playing out, which we'll touch on some of them as we go through the document. But in 2021, 80,000 GEOs earned, gold equivalent ounces, as you know, that was pre-released. That includes contributions from Renard, which again, we will talk about later as coming back online this year, resulting in record revenues of just shy of CAD 200 million. Record operating cash flows as well.

This year, we expect significantly more ounces. We'll still have a very high and frankly, peer-leading margin at around 93%. That coupled with still a strong gold price here today, certainly volatile, but higher than the $1,800 an ounce we average in 2021, should lead, we expect to continued records on a number of fronts.

There was a little bit of noise in the financials, mainly resulting -- stemming from a non-cash impairment in Osisko Development of the tune of $48 million in the quarter. But really, those were legacy assets in the James Bay Area, Coulon and in Guerrero. So exploration stage assets that the company is not focusing on and felt it's relevant to take that down given their focus is on their other 3 main assets.

Taking that aside, we earned adjusted earnings of $0.14 a quarter -- in the quarter, and $0.56 for the year. And Fred will walk you through some of the details of that later on as well.

As you know, we increased our dividend amid volatility in the middle of the year. We then followed that up with a pretty significant NCIB program, buying back over $30 million at $14.64 per share on average.

So we'll continue to look for those opportunities. The company is in great shape. Cash flow will grow this year and we'll continue to balance that between dividend growth, buybacks when there's volatility in the market that affords us cheap opportunities to buy stock and growth.

Subsequent to Q4, we did announce through Osisko Bermuda acquisition on the screen with a range of $20 million to $40 million, and on the high-end, 5%; on the low-end, 2.5% of the metals. From the authentic property that Osisko Development is in the process of acquiring. Sean Roosen, our Chairman is also on the line and in the Q&A if there are questions that drift over to the field that I cannot answer, he will be available to help with that. So that's just a quick snapshot.

On Slide 4, graphically depicting what I said earlier, which is an asset base that is outperforming our expectations and really we're just humming at this point. As I've mentioned, 80,000 GEOs for the year, ended the traditional split that you've gotten accustomed to seeing from us of about 75% gold; silver making them the most of the remainder. That's obviously when we exclude the diamond ounces from Renard. That was a 97% margin. It also was right in the middle of our guidance. That's not a typo, it is pretty much exactly 80,000 GEOs right in the middle of our guidance, previously reported.

And I think that's worth stopping on or pausing on a little bit. I think that frankly, it was a good result. Especially in Q4 where we saw not just our operators, but operators across the sector having continued issues with supply chain. We certainly felt with one of our mines in the Yukon.

Obviously, the Omicron positivity rates skyrocketing for mining companies as they have for the population, not large. So that has added complications with respect to quarantines and absenteeism. So it didn't feel like the foot was on the gas in Q4 in the mining sector, still having achieved the midpoint of our guidance, certainly felt like a win.

On Slide 5, we have come out with our 2022 guidance as well as a 5-year outlook for the first time in our history, which we hope will be helpful to people as they understand kind of growth embedded in this company. But on the guidance side, on Slide 5, first and foremost, we are guiding to 90,000 to 95,000 ounces of GEOs for the year at a 93% cash margin. We're adding some more streams to that mix than last year, again, with the restatement of Renard, that takes the margin down a little bit, but still quite high, which implies 12.5% to shy of 20% growth for the year, pretty material step change for us.

I would say we expect Q1 will hopefully be the last quarter where we hover around the 20,000 ounce range, where we've been for most of 2021, before that growth really kicks in. And the reasons for that are pretty obvious. We've got the expansion at Mantos that's underway. It's tying in as we speak. So clearly, they have to kind of go through that tie-in process. And then there's also, as you heard me say a number of times, delays of a couple of months there in terms of when they produce and when we receive. But once that flows through, then we're off and running.

You'd also remember that for Eagle, in the Yukon, Q1 is always a lighter quarter from a winter perspective. They're going to eventually get through that and have a bit more consistency, but we do expect that to be the case, especially given some pretty extreme weather this year on the West Coast.

We also have some smaller assets like Santana and Ermitano, which are ramping up. We have the San Antonio stockpile, which is producing and we'll start generating ounces of the heap leach this year, and then the biggest other contributor to that SKU, Q1 and the rest of the year, would be Renard, where we're not switching back, that being until May 1. So not giving ourselves credit for those ounces or those GEOs in Q1, primarily.

So again, hopefully, that's kind of a Q1 that's in line with what you saw from us last quarter, maybe a little bit higher, but we'll see. And then significant growth starting as early as Q2 and for the rest of the year, which should bode well.

I think just on a couple of points, maybe Renard-related since that is a big addition to this guidance versus last year, and we're very pleased to be able to bring that back into the fold. We said it was a priority for us. I think now is the time where we can credibly do that and have the mine and the operator continue to be in a healthy position.

To point to that, we emphasized that in December, I believe it was late in the year, Stornoway paid back to half of the working cap facility to its partners, including us. Our piece of that was just shy of $4 million. We expect the rest of that working capital facility to also be paid back in the near term, but just done in a staged manner for prudence. And some of you may have picked up in our MD&A that the latest selling price was quite high. $170 per carat roughly.

We're not pricing that in -- for the restart, if you will, that was quite a bit higher than the reserve price, which is more in line with previous sales. But I think you're seeing quite a bit of demand increase, especially on the smaller scale diamonds, which helps us and frankly, perhaps probably some speculation or more than some speculation, which is more of a short-term phenomenon. But either way, very pleased with the health of that business right now, and it's the right time to turn things on.

We'll see if what sanctions, which I was just reading about at ALROSA which currently are more about providing equity and debt, but sanctions overall, mean for diamonds. Likely a boost there as well in the near term. But frankly, I think that's second and third order. It is -- I'll point out, it is quite sad seeing what's happening in the Ukraine, especially given the strong and proud Ukrainian population in Canada and Toronto. So hopefully, that doesn't end too poorly and it's again, not to go on too much with tangents. First time in my young kid's lifetime where they're old enough to ask questions about that war. So those are all pretty sad conversations. I'm sure you're having some of them as well.

On Slide 6, in terms of our outlook, it's more positive. This is our inaugural 5-year outlook and it's successful growth in our minds, a 10% to 12% CAGR for the 5 years starting from last year as a starting point is pretty massive for a company our size. Worth pointing out if it wasn't obvious that that is all organic growth. We're not including any potential acquisitions in there. All that would be external and additional.

Other things I would point out, and we tried to guide what assets we see coming into those. It's not exhaustive. I mean, for instance, in 2022, there is that San Antonio stockpile. It's just not in the bar. There's a couple of other things. Same for 2026. There are some other assets that are contributing there. But the chunkier contributors are shown.

And then beyond that, there's a significant amount of optionality left in the business. And I think, frankly, the back half of our decade is also spoken for.

The other thing I would say is when you look at the contributors we've included in this time frame, San Antonio and Cariboo, obviously, old ODEV, Windfall and OSK, Back Forty, those would be the biggest chunks there other than increases from our existing mining assets.

One of the lenses we use or the screens that we used was, certainly, there's permitting time lines that are embedded into those assets coming along. We've tried to be conservative. It's always a slippery slope, but we tried to be conservative in terms of delays there. But what we haven't done is overlay financing risk with permitting risk. And so there's other assets, other partners of ours who have guided towards being in production by that time line. But where we felt that permitting risk was compounded by a financing plan that wasn't yet crystallized and needed more time for clarity, we left those aside to let that play out. And we felt that was prudent.

So we certainly expect there's other things that will happen. 5 years is a long time. But we'll start to shift some of these assets around, hopefully, in our favor. Last year was the year where we saw a number of our assets end up with bigger counterparties. We expect that trend to continue given the quality of our asset base. So there can be movement. But either way, we thought this was a pretty impressive growth profile, one that we're quite proud of.

Other things I'd point out in that optionality bucket, and we can come back around in the Q&A later. I'm going to speak to that movement, if you will. Just yesterday, we were reading and haven't had a chance to follow up with them, but there's a lot of news in that Agnico press release to bite your teeth into. But one of the things that we took away as their guide -- not their guidance, but their view that in 2024, there could be another 100,000 ounces of additional production coming from things like amalgamated Kirkland, Akasaba West, which is obviously a Goldex satellite, and Odyssey internal zones. And those are all assets that we have in between a 2% and a 5% NSR. So that's not embedded into our thinking yet until we get more visibility on it.

As well, casino and other very chunky asset for us where the time line is a little bit unclear as of yet, but significant progress being made, including the government of Yukon committing to spending $30 million on road construction that benefits the mine over the next couple of years.

When you look at Hermosa, where the feasibility study fell late last year, finally after bit of a delay. They're guiding to a mid-2023 production decision and 2027 production. So it's just on the other side of that. That's another 5,000 GEOs that can come into focus even excluding the Clark deposit.

Pine Point, we expect the feasibility study this year and the time line there will come into focus. And then again, Upper Beaver, waiting for what synergies need between Agnico and Kirkland now that the merger is closed. But clearly, that was one of the emphasis of their press release yesterday.

So a lot of good news. Some other assets there that we haven't included, be it Hammond Reef, Altar, Oracle Ridge, where there's some pretty sexy drilling on the copper side in Arizona going on. So frankly, feel like we have an abundance of riches here that are going to take shape over the coming years.

On Slide 7, just again, this is not new to you, but worth pointing out that a lot of that growth -- most of that growth is still in the Americas, still in the right countries, if you will. And this is always important in mining and frankly, given what's happening this week and generally happening around us in the mining sector. I don't know if there's -- it's ever been more so. So certainly, we feel comfortable with where that growth is and who it's being unlocked by, frankly.

Switching to some of our assets on the Canadian Malartic side, obviously, that story continues to get better. 2021 was a record from a production perspective -- sorry, it exceeded guidance, I should say. I have to go back and check for those records. But certainly, based on this GEO chart, pretty close, if it wasn't. So that's good news on the open pit side, and we've factored in, importantly, the guidance that we had already received from Yamana and updated yesterday from Agnico, where there's a slight dip over the next couple of years before things rev up again. So that is worth pointing out is in our guidance.

More importantly, on the Malartic side on Slide 9, the underground story continues to strengthen. From a pure progress perspective, the head frame is complete, the collar is complete. The shaft thinking is meant to be starting later in the year. It will then take 4 or 5 years to finish the shaft and to the underground development, obviously, there'll be production as early as 2023 from the ramp. But all of that is progressing well and on schedule.

There was a small increase in resources this February, about million ounces. Importantly, it was the first indicated ounces as well. But most of the work last year was on infill drilling and some extension work. So we weren't expecting a big increase.

What we would expect is with another kind of similar amount drilling at last year, another 137,000 meters this year, 15 rigs currently spinning. We would expect a lot of work to underpin resource growth in 2023, a year from now. And the operators, at least one of them are certainly guiding to the potential being likely for an updated and increased mine plan thereafter.

So further -- a lot of further good news expected on this asset. Our flagship is already good for until 2039, based on less than half of the current resources. So it's a story that continues to strengthen. And then when you think about the camp that our founders kind of restarted here between 2011 and 2021, there's been almost 7 million ounces produced. When you think about kind of the mid-1930s onwards, that's closer to 14 million, 15 million ounces. And today, there's 20 million ounces there almost, and it's growing and will grow and leave some balance.

So you're looking at a camp that's produced and currently sits at 34 million, 35 million ounces with a lot of growth, which is -- puts it in pretty rarefied air in terms of mining centers in the world.

On Slide 10, with respect to some of our other assets, and we'll try to go to the next slide quickly, because I did mention -- I'd try to be quick.

On Mantos, that's another really good story for us. You've heard me talk about it, the ramp-up there from 4.3 million tonnes to 7.3 million tonnes is being tied in as we speak. That will take our GEOs from about 9,000 to 10,000 ounces a year gold equivalent to 16%. This year, we're kind of expecting half of that, a bit less than half of that increase given the dynamics I mentioned earlier from a ramp-up perspective and then next year on it's off to the races.

You've also heard me say that the only thing that asset was lacking was visibility. And with the merger with Capstone announced in late November, meant to close, I think, in late March, that visibility is now on there, including a first technical report in modern times and a lot of positivity around that asset, including the combined group now talking about another expansion, the first one is not done or the current one is not done, and they're talking about another one to 10 million tonnes for a pretty de minimis amount of CapEx.

And we would expect and we wouldn't be surprised to see some of that commentary play out as soon as the deal is closed in March. That would take our ounces up significantly and turn this into another flagship behind the Malartic.

Talking about neo, which I touched on earlier, nice to see the ramp-up in H2 in the second half of last year. Expect that to get finished this year. They're already moving on to Project 250 to get to 250,000 ounces during calendar year 2023. And we look forward to them getting back to the exploration side of things in a more earnest way.

Yesterday, they announced the first amount of deeper drillings, since I think it was 2017, on the pit themselves, which were quite interesting. We've seen some intercepts to point out, 175 meters at 1.2 grams from 150 meters depth. 50 meters up 0.8 from 400 meters depth. Early days, but nice to see the grades increasing at depth. So we've always thought there's the potential to expand the pit deeper. That's on top of the satellite potential at properties like Raven, which we think are quite productive and prospective. Have been backlogs from an asset perspective, but we think Victoria is on the cusp of catching up with some of those backlogs and coming out with some pretty interesting drill results.

Eleonore, it was nice to see the reserves increase after kind of resetting the bar over the last couple of years. Nice to see them growing back with a 44% increase in reserves and CB likewise, net of depletion and 18% increase in reserves, feeling like, certainly based on their commentary that they're going to be getting ready to talk about growth at CB. There's mine life extension on top of that. So that asset looks like it's in good shape.

Although I'm past 11, but I think the story would be the same if you talk about islands, talking about LAMAQUE, talk about some of our other assets. But in the interest of time, I will move us to Slide 12 and comment on some of those growth assets underpinning that 5-year outlook, starting with the assets within Osisko Development Cariboo in San Antonio. Some of you have listened to Sean's call just ahead of ours.

It's a milestone rich year for us on the ODV side with Cariboo going through the feasibility study, permitting bulk sample that will be run through the ore sorter, all that tracking reasonably well with respect to time lines with the usual kind of to-ing and fro-ing.

The Tintic acquisition, we're all quite excited about. And certainly, the catalyst that was provided to help finance the entirety of the asset base is quite impressive with, I think, by the time of an over CAD 230 million, which will have been raised. That will dilute our ownership in Osisko Development, as we did not contribute from 75% to 45% pro forma when those deals closed. But importantly, it's dilution for the right reasons. We're quite happy to see that asset come in, the funding that followed to now look -- to now go after those assets in a meaningful way.

On San Antonio, I mentioned earlier that the stockpile is now under leach or starting to be under leach, so that will start to trickle some benefit to us and to ODEV out. The work there that's gone on over the course of 2021, and that's continuing now and the news flow that will stem from there kind of underlines and underscores what the group thought we would see there in terms of potential, both oxide and sulfide. So we look forward to that story playing out over the coming months. But all that bodes well. And the next key milestone there will obviously be the permit on the bigger Sapuchi project, which will drive time lines from there. And hopefully, that is something that can happen in the second half of this year.

Windfall, within Osisko Mining is a pretty stellar asset. It's -- the size and grade combination there with 32.2 million ounces of M&I at 10.5 million, almost 7 million ounces of total still growing, still new discoveries being had, like Golden Bear, which they started to poke into. That's a pretty special asset in the right location. So we're looking forward to the feasibility study, adding more meat on the bone again this year.

The endorsement from Northern Star on that convertible financing was obviously a shot in the arm. The joint venture itself obviously has been terminated, but I think what you see there is the market that's slightly changed, the scarcity value of an asset like Windfall, and I don't know what other assets are like in fall is pretty special. And so we look forward to seeing that story continue to grow and evolve and take shape over the course of this year.

With Upper Beaver and AK where the Kirkland Camp, which was within previous Agnico, will now be benefiting from the new Agnico infrastructure that came over from the Kirkland side. There's a lot of good things happening there. Again, as I mentioned earlier, we look forward to seeing the Upper Beaver synergy time line, so that we can factor into where it fits in. Is it in the next 5 years? Is it just on the cusp on the other side of it. That's what we're waiting to see there.

They've talked about in their presentation yesterday, I think they've described it well. I think it's on the stage, the 150,000 to 200,000 ounce per annum type assets or 3,000 to 4,000 GEOs for us. They also talked about AK, potentially being in production as early as 2024. So just drifting over from Macassa at the 40,000 ounce per year rate. That's another 800 GEOs for us we haven't factored in anywhere. And as I mentioned, just a lot of good news there as they get their feet under them as a new Agnico emerged, Agnico Kirkland. So we look forward to that story unfolding for us.

And then on Back Forty, which is a significant contributor to us on the kind of closer to the back end of that 5-year outlook, expecting a feasibility in 2022. We agree with the plan that Gold Resource is following, the smaller open pit, bigger underground, less of environmental footprint. So we look forward to seeing them go through those steps. And as I mentioned to you earlier, we think we've embedded enough potential delay to still be on the right side.

I'll jump ahead just to get things over to spread a little bit. You've seen these transactions from us on Slide 13. We think they're all really good contributors. Spring Valley, we've now seen Waterton sell one of their assets in Nevada for $200 million. This is bigger, and I think they've unlocked a lot of value on this asset. So we look forward to some more clarity, maybe even as early as this year.

TZ, we're very happy to have gotten in on that asset and have G Mining advancing it with the construction decision this year. And the West Canyon royalty that we picked up on kind of north of 1 million ounces of very high-grade. Looking forward to an exploration update there in the very near term as well.

Last slide that I will talk through on 14 is that synthetic acquisition, I think you've heard from both Sean and I on it quite a bit. So if there are more questions, we can deal with it in the Q&A, but quite happy to have that asset within the ODEV portfolio here in the near term, happy as well to have structured a stream on it. We gave a range. And then obviously, the equity financing thereafter was upsized quite a bit. So we'll see where we fall within that range. But either way, 2.5% to 5% of the metal stream there, which we think will be a significant contributor. Obviously, the disclosure needs to catch up. It was held in private hands. They didn't need [43-101s]. They just were mining it. But the new high-grade, ultra high-grade discovery there in the T2, T4 zone is quite special. We look forward to seeing it kind of evolve. But when you think about 2,300 samples collected over 200-plus strike length, meter strike length, returning nice gold, plus a lot of silver. So that all bodes well.

So adding some capital, adding some modern mining techniques, the technical team behind ODEV, I think is going to take this asset, this mine to the next level, and we look forward to seeing the news flow and the picture we painted in. And frankly, not just the tricky portion of it. It does sit on 17,000 acres, 14,000 of which are patented in a very productive mining industry. So a lot of head frames. And this T2 Zone was, I think, something like 44, 45 feet away from Canaccord's mining in the mid-90s and they never stumbled upon it. So there's a lot of head scratching to do and a lot of revisiting of that land package, both from this mine's perspective, from a high-grade perspective, base metal, polymetallic potential as well as copper porphyry, which is what Ivanhoe Electric is chasing on the boundaries.

So that's a -- turned out I talked longer than I expected to, which is kind of normal. But with that, I'll pass it on to Fred on Slide 15 to walk you through a couple of more details on the financial side, and then we'll conclude with Q&A. Thank you.

Thank you, Sandeep. (foreign language) Good morning, everyone. Thank you for joining us today. As discussed by Sandeep, 2021 was a very good year for us in line with our expectations. We have met our guidance with strong deliveries from our partners, despite some challenges with COVID for some operators. And our results have led again to record revenues, cash margins and operating cash flows from our royalties and streams business.

If we go to Page 15 of the presentation, we recorded record revenues of $199.6 million in 2021 compared to $156.6 million in 2020. Cash flows from operating activities were $106 million on a consolidated basis for the royalties and stream segment alone. Cash flows from operations have reached a record $153 million compared to $114 million in 2021.

On Page 16, we present a summary of our net loss and adjusted earnings. The consolidated net loss of Osisko shareholders was $23.6 million or $0.14 per share compared to net earnings of $16.9 million or $0.10 per share in 2020. The consolidated net loss was due to noncash impairment charges and mining operating expenses incurred by Osisko development in 2021.

On a consolidated basis, adjusted earnings were $59 million or $0.35 per share, comprised of adjusted earnings of $94 million or $0.56 per share for the royalties in stream segment and an adjusted loss of $35 million from Osisko Development or $0.21 per share.

On Page 17, we have a summary of our quarterly results with additional details for the royalties and streams segment, including 19,830 GEOs in Q4 for a total of 80,000 GEOs in 2021. We generated gross profit of $35 million in Q4 to end the year at $139 million compared to $104 million in 2020.

Operating cash flows of $35.1 million were generated in Q4 by our royalty and streaming business for a total of $153 million in 2021. On Page 18, we have a breakdown of our cash margin for Q4 and the years 2021 and 2020. In Q4 of this year, the cash margin on our royalties reached $34 million, and the cash margin on our streams amounted to $12.7 million for a total of $47 million in Q4, which brings the total cash margin for the year to a record $187 million.

On Page 19, we present the progression of the dividends paid to our shareholders since the creation of Osisko Gold Royalties. Over $184 million have been returned at the end of December, in addition to $85 million used to repurchase a total of 6.7 million shares under our NCIB programs.

And finally, on Page 20, you will find a summary of our financial position. Our consolidated cash balance was $116 million at the end of 2021, including $82 million for Osisko Royalties and $33 million for Osisko Development.

Osisko Royalties held investments having a value of $255 million at the end of December in addition to our investment in Osisko Development, valued at over $400 million. Our debt was stable during the year with over $0.5 billion available under our credit facility, which was increased in last July and extended until 2025.

We've also acquired a total of 2.1 million shares under our NCIB program for $21 million in 2021. We've also acquired an additional 250,000 shares in 2022 for $4.9 million.

So in summary, 2021 was a year where our main assets have continued to perform strongly, and we have seen several of our partners announcing great exploration results and expansion programs for the production.

I will now turn the call back to Sandeep for closing remarks and questions.

Thanks a lot, Fred. And I think we can forgo the closing remarks, and operator, open it up for any Q&A, please.

(Operator Instructions) And we do have a question from Mike Jalonen from Bank of America.

Sandeep, I was just wondering, with Windfall, with Northern Star not participating the joint venture partner. And John Burzynski was on Bloomberg saying that he's going to build it himself. Does this have potential for a streaming deal to finance -- help financial projects for Osisko Gold Royalties?

Yes. Look, certainly, even before and certainly after that announcement, the team there out of Osisko Mining can build this mine themselves. They're certainly capable of it. In terms of -- and then they get finances and wealth in different ways. I think there's -- John has always been quite productive from a funding perspective. He has a lot of equity, a lot of cash in the balance sheet. The number, obviously, will come into focus with the feasibility study later this year. But he has a lot of opportunities in which he can go.

Short answer to your question is, I certainly hope so. But I'm not going to hold my breath either. I think there's a lot of potential for John to fund that through the equity he has, more equity debt, et cetera. If stream comes into focus there, certainly will be eager. It's a pretty exceptional asset. And certainly, we trust the team that's currently pushing it forward. So too early to tell, I guess, Mike, but no shortage of options for them as they move forward.

Okay. I guess second question on the Canadian Malartic. On the Yamana call, they said the potential for a second shaft on a project, possibly, I guess, to the East, as you know, you can see it on your slide mineralization plunging to the East. And I was just wondering what you think of that? That should be positive for your royalty, more production?

I like it. No, this might be the only conversation, I guess I missed it. My bad. But I usually do mention that. I mean, look, we -- what I was trying to guide to is just that. This year we expect the ounces to grow significantly over the course of this year. Last year, the focus was infill drilling. There wasn't enough extension drilling closely enough to add to those ounces. We think they'll complete that exercise.

When you think about the infill drilling, it's going to unlock more of the resources that currently are in the mine plan. And remember that only half of the current resources are in the mine plan, less than half now. And then -- so that will add at the very least mine life. Then when you add in those extensions, that extension work, especially from these [goldie], that will add ounces, we think, in bunches of millions given the continuity there.

So I think, yes, every time -- we heard at least one of the operators talked about it, there's a comment that at some point, you're going to stop just adding decades to mine life and think another shaft conceptually and put more through the mill that will only be a 1/3 full.

So yes, that's something we certainly look forward to. If I had to guess, I'd say this year is a resource growth year, next year that gets put into a revised mine plan. Either way, there's success coming there. It's either coming in the form of material additions to mine life, but more likely than not it's coming in the form of additional ounces. And when you think back, was 1.5 years now, maybe not, maybe a bit more, the story was uncertainty as to whether the partnership will build the underground. Then it was, is there a gap here or more between the underground. That's now gone. It's turned into a little bit of a dip. I think if you fast forward a year, again, that dip will turn into at least flat production where the mine continues to produce at its current types of levels. So yes, short answer is I like it.

Okay. And just lastly, if I can put Sean to work. I was in on the ODV conference call. It's happened already. I don't know. Just wondering, Sean, what do you envision for production from Cariboo and San Antonio?

Sure, Mike. I'll jump in. The profile right now is that BL2 on the Cariboo project is in production. We expect 20,000-plus ounces this year. The QR mill is up and running. We have a bulk sample plan to go underground here in -- started hearing in Q2. And then the transition, we're looking for the EA approval and early works permits to come out probably by the end of 2022 for the larger Cariboo project, and we would start to portal and hopefully get underground at Cow Mountain and have some transitional material going to the QR and continuing to optimize our ore sorter, but we'd be looking to have the full concentrator built out as well by the 2024 and set the table for at least a PA production of 180,000 ounces a year coming out of that. And as you know, we increased that mill production from 4,000 to 4,750 tonnes a day for this.

So we are setting the table for a larger project there, Mike, and we continue to see that evolving and certainly the work that we did in 2021 has encouraged us. There's 152,000 meters drilled in there. And this project continues to strengthen San Antonio. We're in production right now with the stockpile. We have 16,000 ounces and 1 million tonne stockpile. We want to recover in the short term. And the full permit for the Sapuchi open pit is underway, and we hope to have that permit available to us by the end of Q4 of this year. And we have a 15,000-ton-a-day plant that we purchased earlier that's on site. So we'll be looking to ramp that opportunity, $10 million to $25 million investment depending on how aggressive we get in the early days.

So 2 small-scale productions on the go there plus the Tintic asset, hopefully will close that up in this quarter -- sorry, in Q2. And they're in production, as we speak. So we would have 3 small-scale producers by the end of 2022, transitioning to much larger production through 2023 and 2024. So I think we've set the table pretty good for that one, Mike.

Our next question comes from Puneet Singh from iA Capital Markets.

Just that Renard is going to contribute again. I see last year, they sold about 1.8 million carats. Is that the run rate for production on an annual basis we should look forward to? And also, if I'm recalling correct, most of the production was coming from those higher grade R2, R3 areas and then it would go lower grade later. Is that still the plan there? Or what's the latest update now that asset is doing better?

Yes. Look, I think I would say some variability as is normal, but I think that run rate that we're looking at for 2021, probably about right, at least for the next few years. They're down, I think it's around the 600 foot level. You're right as well, as they get lower there, the grade will drop a little bit. I don't have the numbers off the top of my head right now. But I think for the next several years, we've got kind of a mine plan that will be pretty steady. Thereafter, I believe we will see what the gold price looks -- sorry, the diamond price looks like and decide where to take the development from there. And there's also still some exploration upside there, frankly.

So I think for the first part of your question, yes, probably relatively steady. And the biggest change will frankly be the biggest variability and will be how we turn those carats into GEOs, if you will. But we try to be conservative. And then thereafter, our primary focus is turning the stream back on, which is job one. And then with the cash they're building up right now, they can start to look forward to the future. It's been obviously tough for them kind of living hand them out for a little while for the last 2 years. So it will be nice for that team to have some more flexibility.

Okay. And do you think they'll do more larger scale exploration probably in the next couple of years? Run for a little bit, get more cash and then go from there?

Yes. Look, I think the idea is yes, walk before you run, but I can tell you that even with the diamond prices that they were benefiting from before, there has been -- there currently is some exploration work going on. So when you take -- when you zoom out a little bit, they pay back half the working cap facility end of last year. They'll probably pay back the rest of it this quarter in process. We've also been doing some not major, but some exploration work in particular into those lower zones TO firm up those grades and hopefully tighten up some of those grades. So yes, they're doing a lot of good things. And certainly, the mine is 9 day from where it was when prefilled it when diamond prices hit a low. We're averaging like $70 a carat. Hit some lows in the mid-60s. So a little difference a couple of years maybe.

Our next question comes from Josh Wolfson from RBC Capital Markets.

I had a question on the guidance for 2022. The numbers, at least relative to our forecast, were a bit better. Part of that's Renard and the diamond pricing. And I was wondering what the remainder components would be. Mantos presumably is a portion of that. I'm just wondering if you could maybe reference what contribution year-over-year you would expect from Mantos given it is a ramp-up year? And then if there are other key assets, that would be helpful for us.

Sure, Josh. Yes, look, I think there's a few things going on in 2022 versus 2021 One, to just take a step back, to take a step lower before we talk higher. As I said earlier, we've taken into account the guidance from Agnico and Yamana on Malartic. It's actually a touch below. So based on their numbers, we expect about 3,000, 3,500 less GEOs in 2022 versus 2021, just the normal variability and mine sequencing of that mine.

So we got to get those ounces back first before we get to the growth. So it's pretty impressive that we can have this guidance in front of you. So yes, look, Renard, even from May onwards is a chunky contributor to that growth, which is great to have back. Mantos, you plan out is we kind of -- we haven't given an exact -- it's not exact science. We haven't given an exact number, but we're kind of guided to halfway between that current run rate and the 16,000 ounces post-expansion of GEOs. So that will fall in between. There's also the additions of San Antonio -- sorry, first Santana and Ermitano, which are small, but hopefully, will work their way towards their 1,000 ounces per year steady-state contributions. The stockpile from San Antonio will contribute the Eagle ramp-up, we think will conclude. So there's a number of things, many of which are kind of on existing assets, but then some new assets that are starting to contribute as well as some BL2 ounces in there. So that's generally the makeup of that difference, and we feel pretty excited about it.

Okay. And maybe specifically on San Antonio. Is there any way you can kind of quantify what would be reflected within the guidance for that asset?

Well, I think -- not to put words in his mouth. I mean I think the stockpile is kind of currently starting to percolate, talked about first gold pour, Sean, in Q1, early Q2. So we'll see what the ounces are there. It's not going to be a major contributor to us, but it will certainly be nice to get from that stockpile. Sean, I don't know if you -- obviously, on -- what was the number? I think it was kind of…

Yes, the 16,000 ounces recoverable in that stockpile at present. Hopefully, we'll be able to get that done. And then if we can get some really contribution from Sapuchi, the main pit, we've got an option to maybe put a little more on the pad. But that's where we are right now until we have a permit on Sapuchi.

So it's a nice contribution, just stockpile alone and obviously the bigger milestone there is the permit and that will drive -- the timing of that will drive when the Sapuchi ounces can start to contribute, which are obviously once you get there.

And then on the Trixie acquisition or stream funding, there was a range that was provided, which I'm assuming was contingent with the funding ODEV would raise. With ODEV's funding, having better visibility now. Is there any sort of perspective you have on what OR's contribution would be towards that stream?

Well, look, I won't put Sean on the spot. I think from our perspective, we're quite happy with as much as we can get. But even on the lower bound, I think it's a great result for us that ODEV was able to go out there and raise as much as they did. We thought the asset once people started to understand it would resonate. It certainly happened a little bit quicker than I think any of us expected.

So regardless of where it is, obviously, you're right, it is more equity raise. So wouldn't be shocked to be on the lower end of that. But regardless of where it is, we're very happy to have that contribution to us, which we think will contribute for a lot of years once the picture gets built in. And then obviously, the bigger impact for us is on our equity ownership, ODEV, which we're also quite pleased about.

So that will come into focus as the transaction gets closer to close, but you're kind of thinking along the right mind, I would suspect, Josh.

Just from my side, I think any royalty on this property is going to be important.

Our next question comes from Don Blyth from Paradigm Capital Markets.

Apologies if I ask something you've covered. I joined a few minutes late. But with the consolidation of ODV in your results, currently, obviously drags down the performance of the royalty business. Now that this financing has diluted you under 50%, will you be reviewing whether or not to unconsolidate ODV in your financials?

Don, no, we didn't in fact cover that. So it's new ground. Look, I think we'll -- first things first, we're not dilutive today. It'll happen. But just to point out, we still own 75%. The transactions are kind of closing or leaning towards closing in late March, maybe drifting into April, that order of magnitude. And thereafter, it will be down, as you point out to the 45% level. So this is kind of what we had always said is we were going to let the market finance. ODV, obviously quite happy to get a screen on a new acquisition. That's our business model. But overall, let the market finance ODV and Sean's been very prolific at that in his history and certainly with ODEV.

So with that, we are miles kind of -- we will be miles ahead of where we were, if you will. At 75%, it was tough to talk about that, although we talked about it internally. At 45%, I think we're a lot closer. I've been clear, I think with everybody as well that there's no bright line at 50% -- there's no bright line at 50%, nor is there a bright line anywhere. So it's a combination of things we talk about with our auditors and amongst ourselves, but a lot closer. So I think that's something that we'll continue to talk about internally. And when the right time is, we'll come back and tell you. But certainly, we know that that's a hiccup to say the least. It does provide a bit of noise. At the end of the day, we've done our best to segment that information but I fully realize, Don, that until we can cut that other from a financials perspective, it's going to be an issue, and certainly, you can expect that all of us on the OR and ODEV side are cognizant and motivated about it.

Okay. Excellent. But you have definitely been doing what you said you're going to do in terms of letting ODEV finance itself to become a separate entity. And so definitely good to see that and heading in the right direction.

Maybe just a couple of pieces of color on that one, guys, with the financings that are underway closed, plus the cash on the equity book, ODV should be sitting at about $320 million plus between the proceeds of the financing cash on hand and the equity book. And my goal, Don, will be to turn ODV into a dividend-paying company. So hopefully, we can turn that viewpoint around over the short term to near term.

Excellent. No, the equity could be a important component for sure.

Our next question comes from Trevor Turnbull from Scotiabank.

Yes. Sorry about that. I wanted to ask about one of the projects that's in the 5-year guidance and one that isn't. I guess the first is Back Forty. I could probably dig into it, but I haven't had a chance to see what Gold Resource Corp has been saying. But are they pretty confident, I guess, that they will be up and running within that 5-year window? Or maybe just give us some color, Sandeep, on why you're putting it in the 5-year window? Why you feel confident in that project.

Yes. Happy to, Trevor. I'd say, look, that is obviously one that is going to be a bit trickier, but we think we've built in enough conservatism there on the permitting, and that's the major item there.

Gold Resource and ourselves see the asset in the same way. We're very happy to see them come in as our partner, as our new partner last year. They've got a very similar asset in Mexico that they're currently mining. They want us to be their growth assets for a longer life kind of view as what they're currently mining with the market cap, cash, access to capital to build it. So that's why we feel comfortable that they are the right group to do this with. Clearly, the permit is the hurdle.

There's a feasibility study that's on track for this year, and that will form the basis to go through that permitting exchange again. Obviously, there were set back in 2021, frankly, with a plan that we always disagree with, but ultimately, it has to be run the ground with a larger open pit and a smaller underground. I think the view was that we're too far down the track to change that's why pencils have racers.

So we're happy with the new track, smaller open pit, less on the ground, no need for a wetland permit, which is where they got bogged down last month. And with that in place, we think we've added enough buffer that they can certainly build it within that time frame. So that will be one that you can continue to test us on as the permit picture unfolds over the course of next year. But we felt it was -- especially given that it's earmarked, it's not like we didn't highlight it. And all of us, I think, will be tracking that progress over the coming year, 18 months.

Yes. It certainly helps that they're site stepping the wet land issue, if they can. My other question was really with Falco and Horne 5. That's potentially a very material project when it does come to fruition. And just wondered if you could maybe talk a little -- or maybe Sean can talk a little bit about some of the kind of next steps and what we're really watching for to feel better about when that clearing a pin on the time line on that?

Yes. No, Trevor, I think it's a good point. And I think, frankly, both Horne 5 and Pine Point, which are assets that we quite like in our group of family -- in our group of companies. We put them out for the time being. With respect to Horne 5, specifically. And this is kind of what I said earlier is, including in our family of companies and others, when there was permitting risk, we tried to account for and obviously, all these assets in the development space have permitting time lines and we try to factor those in. But what we didn't want to do is overlay permitting risk with financing risk.

So that's kind of what I was getting to, whether it's back 40 or certainly, whether it's Osisko Development, LSK. As those chunky assets move forward, we see the line of sight to how financing comes together. When there's companies that have a financing hurdle that's the multiple of their market cap, we didn't think it was reasonable for us to tackle them in until that includes more clarity. So we do have in that optionality category companies that are guiding production within the next 5 years. And certainly, we hope they will. But we wanted to wait until we have that visibility before paying out inaugural guidance or not guidance, but outlook on a 5-year basis.

So that would fall into that category. Pine Point would be another. There's several, frankly. So as there's more clarity, we're happy. We'll be very happy to ship gold ounces forward, but we just thought we should wait.

Specifically with your question on progress. Look, I think, they're making meaningful progress, certainly, on 1 of their 2 issues, which is the governing relationship with them and Glencore will have the smelter on surface. They're working through what they call OLIA, just Operating License -- forgot the I -- but Agreement. And there was made progress on that, but it's a pretty intensive document. So it's gone from term sheet to final documentation, taking a little bit longer, but that's one key hurdle. And I think everyone is driving towards the same goal there.

So eventually, that will get cleared and then we'll move forward to looking to track the financing that. But frankly, 9 million ounces of gold equivalent is important in Quebec. It's important. It's even more important. And you're right, it's a chunk of contributor to us, again, perhaps such a chunky contributor, whether it's them or casino who are 25,000 ounces of our contributors, assets that I believe deserve to be built. It's just a question of when. So when you have those types of things in your back pocket, needing only one of them to work, and we have a list of them. That's a pretty position to be in...

No. I can appreciate that. And I guess you kind of touched on what I was getting at with Horne, and that is you still -- Falco is at the table trying to kind of hammer out the final arrangements with Glencore. I know it's always hard to talk for other companies. But do you have a sense of -- is this something that Glencore seems focused on? Or do you feel like this process is at all back partnered by them? Or how would you characterize their intentions to support Horne at this point?

I think it is the former. Like this is important to the health and future of what is a very important asset for them at the one smelter, which is what leads to delays and long time lines, but it also, I think, leads to an ultimate positive result. And even in my limited interaction there. I would tell you that I do believe they are focused on it, and it's important to them. Same token is a very large organization, and they have a lot of other things to do, many and most of them take precedent. But I would say despite that, I've been very pleasantly surprised at how much effort goes into the file. And I would assure you that it is important for them and for us.

Well, good. Yes, it's better to get it right than to be rushed on it.

No problem. It's a pretty complicated piece of business, and you're right. You want to do it right the first time.

We have no further questions in queue. I'd like to turn the call back over to the presenters for any closing remarks.

Well, thank you, operator, and thanks for taking an hour with us. Again, it was a pretty busy day, but a great kind of day for us, a great kind of phase for us, one where there's an important amount of growth in the company and some of the best development assets in the business. So whether it's a growth on our core existing mines or growth from the development pipeline, I think the cash flow generation and the diversification that will come with it to this company is going to be pretty special over the course of this decade and every year in between. So thanks for your time, and be well. Thank you, operator.

This concludes today's conference call. You may now disconnect.