Osisko Gold Royalties Ltd (NYSE:OR) Q1 2025 Earnings Call Transcript

Osisko Gold Royalties Ltd (NYSE:OR) Q1 2025 Earnings Call Transcript May 8, 2025

Operator: Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q1 2025 Results Conference Call. After the presentation we will conduct a question-and-answer session. [Operator Instructions] Please note that this call is being recorded today, May 8, 2025 at 10:00 AM Eastern Time. I would now like to turn the meeting over to our host for today’s call, Mr. Jason Attew. [Foreign Language]

Jason Attew: [Foreign Language] Good day to everyone and thanks for your attention this morning. As we know it’s a busy reporting week. Procedurally I’ll run through the presentation and then we will open up the line for questions. For those participating online via the webcast you can submit your questions in advance through the webcast platform. Today’s presentation will also be available and downloadable online through our corporate website. Please note that there are forward-looking statements in this presentation from which actual results may differ and as a reminder as of Q4 2024 onwards, Osisko has made a key change to its presentation currency, which is now strictly in U.S. dollars unless we otherwise note. I am joined on the call today by Frédéric Ruel, the company’s Vice President-Finance and Chief Financial Officer; as well as Heather Taylor, our VP-Sustainability and Communications, as well as my other colleagues as indicated on Slide 3.

When looking at Osisko’s first quarter of 2025, we’ve had a solid start as it relates to gold equivalent ounces earned, cash margin, cash flows as well as overall debt reduction. Osisko earned 19,014 GEOs in the first quarter, which puts us on track to achieve our previously published full year 2025 GEO delivery guidance range of 80,000 to 88,000 gold equivalent ounces. Recall that we had been very explicit about the fact that due to sequencing in some of our major producing assets and including the Malartic and Mantos Blancos, the first quarter was always expected to be our weakest of the year with sequential quarter-over-quarter improvements in aggregate GEO deliveries expected for the rest of the year. Osisko’s operating cash flows for the period came in at an impressive $46.1 million at a cash margin of 97.1% during the period.

And while our corporate development team remains busier than ever and in some cases on some really sizable transactions, we didn’t announce anything major during the period. However, we did complete a handful of smaller transactions, which we believe over the course of time will be viewed as astute transactions with operating partners we know and trust. Osisko ended the first quarter with $63.1 million in cash and net debt has now been reduced to just over $10 million after the company continued to pay down its revolving credit facility during the period. With respect to our ongoing commitment to return capital to shareholders, the company declared and paid its quarterly dividend of C$0.065 per share in the first quarter, making its 42nd consecutive dividend with over C$328 million returned to shareholders to date from these historic distributions.

Subsequent to quarter end, Osisko’s Board of Directors approved a 20% increase to the base quarterly dividend to US$0.055 per common share payable on July 15, 2025 to shareholders of record as of the close of business on June 30, 2025. The change to U.S. dollar-based dividend is consistent with the company’s recent change in its presentation currency. The dividend increase itself is a testament of the confidence we have in the consistency, predictability and the anticipated growth of current and future cash flows underpinning our business. Finally, as some of you know, in mid April, Osisko published its fifth edition of its sustainability report Growing Responsibly, and I’d like to bring on Heather Taylor, our VP of Sustainability and Communications, to talk to some of the details associated with this key achievement in more detail.

Q&A Session

Heather?

Heather Taylor: Thanks, Jason. As Jason mentioned, following the end of the first quarter, Osisko released the fifth edition of our annual sustainability report Growing Responsibly. This latest edition reaffirms our focus on transparency and the ongoing evolution of our sustainability approach and efforts. It is informed by GRI, FASB and IFRS climate related disclosure standards. This year we made meaningful progress across all pillars of ESG, including some of the following key highlights. On the environmental front, we implemented our 2024 to 2027 climate strategy and completed our first CDP climate disclosure in the small, medium enterprise category. We also took action to offset emissions linked to our offices and employee travel by purchasing and retiring verified carbon credits.

On the social side, we contributed over $360,000 to community initiatives, introduced a donation matching program for employees, and earned our certification as a great place to work. And in governance, we took a closer look at what matters most to our stakeholders by refreshing our materiality assessment and adopting a double materiality approach inspired by the evolving European CSRD framework. We embedded ESG-related considerations formally into advanced stage due diligence and maintained leading positions with ESG rating agencies. AA from MSCI, Prime from ISS and industry and regional top rated by Sustainalytics. As always, our aim is to ensure long-term value creation goes hand in hand with strong governance, community support and environmental stewardship.

I encourage you all to take a look through the report, which is available on our website. Please don’t hesitate to reach out if you would like to discuss any of the covered aspects in greater detail. And with that I’ll pass it back to Jason.

Jason Attew: Thanks so much, Heather. Now moving on to the company’s financial performance for quarter one. Quarterly revenues of $54.9 million tracked higher versus the same period last year, largely thanks to increased commodity complex or increased commodity prices. Earnings of $0.14 per basic common share for the period also marked a significant year-over-year improvement. Most importantly, Q1 2025 saw a year-over-year improvement in both cash flow per share at $0.25 versus $0.20 in Q1 last year, as well as quarterly adjusted earnings of $0.16 per basic common share again versus $0.12 in Q1 of 2024. During the first quarter of 2025, our GEOs earned came predominantly from Canada and we derived over 93% of our gold equivalent ounces from precious metals.

Gold at just under 67% and silver at just over 26%. The balance came from copper and almost entirely associated with Osisko’s copper stream at MAC Copper’s CSA mine. Some comments on specific mine performances during the quarter before speaking about a couple of more material assets in greater detail. Canadian Malartic had a very good quarter, especially when considering the asset outperformed versus our own internal forecast given the work on site associated with in-pit tailings disposal was completed faster than anticipated. That said, Canadian Malartic’s [ph] first quarter is still expected to be the weakest quarter of the year as telegraphed previously by operating partner Agnico Eagle. At Capstone Copper’s Mantos Blancos operation Q1 production was slightly lower year-over-year, largely due to lower silver grades at the front of the year.

As we previously flagged on our previous conference call in mid February. We are once again pleased to report that the throughput levels remained at nameplate capacity of 20,000 tons per day and that the anticipation is now that the silver grades trend back upwards for the remainder of the year. Finally, the handover at Newmont to Dhilmar at Éléonore has been quite seamless, at least as it relates to Osisko’s gold equivalent ounces earned in Q1 2025, which actually saw a bump over the same period last year. Congratulations to Dhilmar on his acquisition and we very much look forward to working along with them as a partner in the James Bay [ph] region and at Éléonore for many more years to come. Moving to Slide 8, and as I mentioned earlier, the number of currently producing assets in our portfolio stands at 22.

Diving a little bit deeper into that number, we are happy to announce that subsequent to quarter end, Osisko received its first royalty payment from Talisker Resources, with mining now having commenced at Bralorne, over which Osisko has a 1.7% NSR royalty. Further to this and touching briefly on Nandimi [ph], the asset is currently in what the controlling parent Shandong Gold defines as trial production ahead of the ramp up to steady state later this year. As we previously noted and based on the current trajectory of the asset, Osisko still expects to start receiving its first meaningful royalty payments from the asset in the second half of this year. Moving to Slide 9, our company continues to distinguish itself from the rest of its relevant peers in two key areas.

First as it relates to jurisdictional exposure; and second, Osisko’s peer leading cash margin. Starting with the former, just a friendly reminder that Osisko is the leader when it comes to both NAV and GEOs earned from what we define as Tier 1 mining jurisdictions, which include Canada, the United States and Australia. Moving to the latter, Osisko shareholders can remain confident that the company’s exposure to current high precious metal prices provides them with both transparent leverage as well as potential downside protection. Switching gears to Slide 10 and focusing on our cornerstone asset, the Canadian Malartic Complex was a key source of news in Agnico Eagle’s Q1 2025 results, announced a couple weeks ago. As it relates to operations during the period, gold production was solid with higher grade sourced from the Barnat Pit were partially offset by a lower volume of tons milled.

As previously noted in pit tailings, deposition resumed in March of 2025and is expected to ramp up in its design capacity to its design capacity in the second quarter this year. As such, this work is no longer expected to serve as any kind of impediment to production for the remainder of 2025. On the development front, in the first quarter of 2025 ramp development reached the bottom of the first mining horizon at East Gouldie. Evacuation of the mid shaft loading station between levels 102 and 114 commenced and the temporary service hoist was commissioned. Both the ramp and the shaft remain on schedule. Exploration drilling continued to extend the East Gouldie deposit to the east and extend the newly discovered subparall Eclipse zone. Agnico also completed the acquisition of O3 Mining in the first quarter, additional funding of $5.5 million has been allocated for a first phase of exploration in 2025 that will include 24,000 meters of drilling at the Marvin deposit, over which Osisko has a patchwork of NSR Royalties and which is located immediately northeast of the Canadian Malartic property.

Moving to Slide 11, it’s worth reminding everybody that in recent public forums, Agnico continues to be vocal about the potential for a future second shaft at Odyssey underground, which would serve as the key component to being able to drive eventual annual production from the complex to 1 million ounces. At the same time, it is our understanding that as exploration and engineering work remains ongoing and to eventually achieve these goals, it is likely that the next major update on these two fronts will come in the second half of 2026. In the meantime, we’ll all continue to watch in amazement as the underground, and notably East Gouldie continues to expand in size. Onto Slide 12, which touches on Dalgaranga, a high-grade underground gold asset for which Osisko acquired a 1.8% gross revenue royalty towards the end of last year.

On March 17, Spartan Resources, along with Ramelius Resources, a mid-tier Australian listed Western Australian gold producer, announced that the two companies had entered into a binding Transaction Implementation Deed under which it was proposed that Ramelius will acquire all of the issued ordinary shares of Spartan and that it did not already own. As you can see on the slide, this is a smart combination of complementary and proximate assets with significant work already undertaken to optimize the synergies between Ramelius, Mount Magnet mine and its operating Checkers Mill and Spartan’s Dalgaranga and Yalgoo projects. The scheme of arrangement is expected to close in July of this year. For Osisko and its shareholders, what’s really exciting about the situation is that both management teams have pointed to the fact that the underground development at Dalgaranga is already underway and that the high-grade resource at the Never Never deposit could be processed through Ramelius Checkers Mills prior to the end of 2025.

And for context, this is a full year ahead of what we had originally anticipated. Moving to Osisko development Cariboo project in Northern British Columbia on Slide 13, half a world away from Dalgaranga. Our partner released the results of its optimized feasibility study just over a week ago. This feasibility study included an average annual production of approximately 190,000 ounces of gold over a 10-year life of mine, 202,000 ounces in the first five years with the potential for first gold in the second half of 2027 assuming construction commences in Q3 of 2025. Recall that this project is fully permitted and effectively shovel ready, meaning that the required hurdles to move forward now revolve almost entirely around Osisko Development’s ability to move forward with project financing.

Our congratulations to the Osisko Development team on this key milestone for this sizable Canadian gold project. As a reminder, once in steady state production, Cariboo would have the ability to deliver 9,000 to 10,000 gold equivalent ounces to Osisko, thanks to our 5% NSR royalty on the project. Finally of note is that Cariboo is not currently included in Osisko’s five-year outlook. As we wait more clarity on project financing and this provides a good segue to Slide 14. After a good start to the year, Osisko is in a good position to meet its 2025 gold equivalent ounce delivery guidance of 80,000 to 88,000 GEOs. We’ve also now included Bralorne as a paying contributor to this range for 2025. Touching briefly on the two blue bars to the right and as just noted, Cariboo is currently not included in our 2029 outlook, but clearly could have the ability to move to the left as the Osisko Development’s financing initiatives continue to progress.

Along the same lines, another project to keep an eye on is Solidus Resources Spring Valley Gold project in Nevada on which Osisko holds a 2% to 3.5% NSR royalty over the core of the deposit. The most recent update there is that the U.S. Bureau of Land Management or BLM has announced an expected release for a final environmental impact statement by July 11 [ph]. In addition, the BLM is guided for a record of decision by August 11. Theoretically this would we expected to allow for project construction to commence as early as Q3 of 2025. Similar to the Cariboo asset. On Slide 15, you’ll see that our investee companies continue to make great strides in de-risking their assets that will accrue to our shareholders. Highlights of some of these efforts are provided on Slide 15.

Of particular note on this slide is Goldfield’s most recently updated timeline for windfall where final permitting along with other key project milestones including an updated feasibility study are expected in the second half of this year. With a final investment decision and the start of an 18 month to 24 month construction process in the first quarter of 2026. Also, worth touching on is the fact that our partners at Marimaca copper now expect to release a feasibility study for their MOD project in very short order, and this should then be followed by the receipt of final permits for the project in the fourth quarter of this year. Finally, we’ll end the formal part of the presentation on Slide 16, which outlines the current state of Osisko’s balance sheet.

At quarter end, we had total debt of just over $70 million and net debt of only $10 million. Long story short, the balance sheet is looking strong and has got even stronger subsequent to quarter end with Osisko getting close to a net cash position. Our improved financial position is key to Osisko’s corporate development team as they continue to be extremely active across multiple potential transactions, some of which are significant in size and scale, with the hope of getting more deals across the line over the next few months. Our balance sheet provides the company with the financial capacity as well as flexibility to continue its strategy of disciplined allocation in the pursuit of high quality accretive precious metal streams and royalties that will bolster the company’s current and near-term gold equivalent ounce deliveries.

As well as cash flows, all of which should accrue to our shareholders benefit. And finally, we’ll deviate a little from the usual formal program to highlight that this is our last conference call as a Osisko Gold Royalties. Shortly after this call we will be hosting our AGM at which we expect to pass a resolution allowing the company to change its name. It’s important to note that June marks our company’s 11th anniversary and today we’re stronger than ever. Commodity prices are elevated, our assets are performing well, the balance sheet is strong, and we’re just getting started on our peer leading growth trajectory. The long story short is we’re excited about where we are today and where we’re headed tomorrow. So why the name change? Simply put, we’ve evolved.

We’re now a fully independent organization with a refreshed management team and board. And as part of that evolution, Osisko Gold Royalties is becoming OR Royalties, a name that honors our history, our precious metals focus and our Quebec roots. What’s not changing is our NYSE and TSX ticker. It will still remain OR and our commitment to future growth via disciplined capital allocation and a high-quality precious metal focused portfolio of royalties and streams. We’re extremely excited about you joining us on this next stage in our company’s evolution and once the votes are tabulated later today, we’ll be proud to be moving forward together as OR royalties. And with that, I’d like to thank everyone for your time today. We’ll now open the line for questions, including those from the webcast and note, if we don’t get to all the questions on the line, we’ll make sure we respond offline to those that are not covered on the webcast.

Joelle?

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] There are no questions at this time. I will now turn the call over to Jason for closing remarks.

Jason Attew: Thank you, operator. As always, if anyone on the call or listening to the replay has additional questions, insights or observations on our business and our business strategy, please do not hesitate to reach out to Grant or Heather or myself, as we’d be more than pleased to provide more information about the bright future for our company and its shareholders. Thank you for your time today.

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

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