Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q4 and year 2023 results conference call. After the presentation, we will conduct a question-and-answer session. If you would like to ask a question, please press star followed by the one on your telephone keypad. Please note that this call is being recorded today, February 21, 2024, at 10 A.M. Eastern Time. Today on the call, we have Mr. Jason Attew, President and Chief Executive Officer; Mr. Frédéric Ruel, Chief Financial Officer and Vice President of Finance; and Mr. Iain Farmer, Vice President, Corporate Development. I would now like to turn the meeting over to our host for today's call, Mr. Jason Attew. [ Foreign Language].
[ Foreign Language].
Thank you, operator. Good morning, everybody, and thanks for being on today's call. I'm Jason Attew, President and CEO of Osisko Gold Royalties. Having been around to witness the formation almost 10 years ago and subsequent growth of Osisko Gold Royalties, I'm very humbled to be taking the leadership reins of the leading royalty company in the sector and look forward to interacting with all our stakeholders in a positive, constructive manner in the near future. Procedurally, I'll run through the presentation, and then we will open up the line for questions. For those participating online, you can submit your questions in advance through our webpage. The presentation is available on the website as well as through the webcast. Please note there are forward-looking statements in this presentation, for which actual results may differ. Also, the basis of presentation is in Canadian dollars, unless otherwise noted.
I'm joined on the call this morning by Frédéric Ruel, the company's Vice President, Finance, and Chief Financial Officer, and Iain Farmer, Vice President, Corporate Development, amongst others, as highlighted on this slide. When looking at our overall performance for the full year, it is important to note that Osisko booked a record year in terms of GEOs 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 8, came just below the company's 95,000-105,000 GEO guidance released in early 2023. By this time, the challenges faced across our portfolio had been well documented but are worth a quick recap.
A sharp fall in the rough diamond prices, resulting in the shutdown of the Renard Diamond Mine, Canadian wildfires, which primarily affected deliveries from Éléonore, and ongoing ramp-up issues at the Mantos Blancos, where there 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. Osisko ended the year with $67.7 million in cash and net debt of just $130 million, after the company used the gross proceeds of the $132 million from the sale of the Osisko Mining shares to pay down a revolving credit facility.
Subsequent to this, and in 2024 year to date, the company has repaid an additional CAD 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 its quarterly dividend of CAD 0.06 per share in Q4, making its 37th consecutive dividend, with over CAD 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 its already strong portfolio.
In summary, Osisko Bermuda closed 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 Costa Fuego. Finally, in the fourth quarter, the company closed the acquisition of the 1% NSR on Namdini for $35 million. With other smaller transactions rounding out the full list, 2023 provided yet another demonstration of our team's ability to uncover and source accretive precious metals transactions. Turning now to the financial performance from 2023, increases in record annual revenues largely track both the commensurate increase of annual GEOs earned, as well as higher year-over-year commodity prices.
On a quarterly basis, strong commodity prices resulted in the new quarterly high-water mark achieved in the fourth quarter of CAD 65.2 million, which contributed to a revenue achievement of CAD 274.3 million for the full year 2023. One of the disciplines I brought to the team is to think in per share metrics, and it is encouraging to see that from a cash flow per share growth perspective, our annual cash flows from continuing operations in 2023 compared to 2022 increased by CAD 0.04 per share, despite being impacted by increased interest charges and higher G&A as a result of severance charges associated with the recent management changes. Without these severance charges, the increase in cash flow per share would have been CAD 0.06.
A net loss of $0.26 per basic common share for the 2023 year represented a marked decline versus the previous year. However, this delta largely reflects non-cash impairment charges on royalties, streams, and investments. The major contributors of this impairment were charges to the carrying value of the Renard Stream and loans, fair value accounting treatment of our investment in Osisko Development, and an impairment of the Trixie Stream at Tintic. On the latter, please refer to the Osisko Development press release put out this morning related to their 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 fifteenth 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 metals. With the recent shutdown of Renard, diamonds will no longer be a contributor to Osisko's GEOs earned 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 tons 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 Gold Eagle Mine in 2023 was an obvious improvement over 2022, despite a two-week wildfire evacuation during the third quarter. Victoria managed to achieve total production within its provided 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 Blancos operation, where milling rates continue to lag phase one expansion design levels. Worth noting is 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 2023.
Osisko will continue to monitor Mantos Blancos' performance going into 2024, and for now is expecting relatively flat year-over-year performance from the asset for 2024. Capstone is pointing to a mid-2024 for resolution of the plant issues, following the delivery and installation of new pumping infrastructure related to fine tailings and water management, and after which it is expected that Mantos Blancos will consistently deliver nameplate phase one throughput rates of 20,000 tons 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 deliveries were also impacted. Newmont will be providing updated public disclosure on the asset as part of its annual outlook tomorrow morning.
Rounding things out with our newest material contributor, Metals Acquisition Limited, they had a solid quarter, with gold and silver production basically flat versus the previous three-month period. In 2024, Osisko will benefit from a full year of silver deliveries from CSA under the silver stream, and just over six months of deliveries under the copper stream from June fifteenth onward. The next major catalyst from our partner will come in the form of an updated mineral resource estimate on CSA, the first under Metals Acquisition Limited's ownership. After a very successful Australian IPO, the company's CDIs began trading yesterday on the ASX. As was highlighted last night in our MD&A, the number of currently producing assets in our portfolio 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 the list were significantly less material. These were Kwale, Matilda, and Tintic, which collectively only contribute 415 GEOs. A more positive note, however, I'll draw your attention to the top half of the list, where five of our top 10 contributors continue along their path of improvement in the form of ongoing expansions, mine life extensions, or throughput and production ramp-ups. By the end of 2024, we can also expect both Namdini and Tocantinzinho gold projects to be added to this list.
Along with Osisko's high precious metal exposure, especially diamonds no longer serving as a major geo contributor, our company continues to distinguish itself from 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 culture, is extremely important.
As stated in our press release last night, after joining the team and subsequently going through a full portfolio review, in addition to factoring events that have transpired over the past years since this company last published its 2023 guidance and previous five-year outlook, the company has updated these numbers to reflect what we believe to be achievable ranges. With respect to our 2024 guidance of 82,000-92,000 GEOs, it goes without saying that there is a significant void in terms of GEOs that has been left by the shutdown of Renard. Production improvements and new mine startups, plus the CSA copper stream coming online for us on June fifteenth, are expected to partially offset this reduction.
However, our cornerstone asset, Canadian Malartic, has guided to be flat to be modestly down year-over-year, in large part because of Agnico'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 tons per day in 2024, versus the nameplate capacity of 60,000 tons per day. Further to this, at Mantos Blancos, when combining our 2-month stream delivery lag with recent progress timelines provided by a 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 and 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 five-year outlook and as it relates to our growth trajectory, we believe 120,000-135,000 GEOs is a very realistic range for us over that time period. What this means is that Osisko's peer-leading growth profile very much remains intact. However, this growth will not occur in a straight line.
Notable assets that are no longer included in our five-year outlook that had previously been factored include Back Forty, San Antonio, and Pine Point. For reference, we also haven't been including either Amulsar or Horne 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 a 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 it 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 profile is 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 Osisko Mining and Gold Fields, together, the Windfall Mining Group, are expected to achieve some important milestones themselves at Windfall over the next 10-12 months, not the least of which being the finalization of an impact benefit agreement with local First Nations. Moving to slide 11, I would also like to highlight that on Friday last week, our partner, SolGold, announced the successful completion of an updated pre-feasibility study at Cascabel, effectively outlining a lower camp CapEx, longer life, lower risk development option. SolGold now expects to commence the technical work to further advance and de-risk 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 of my colleagues here at Osisko, and we'd be happy to assist.
Finally, we'll end the formal part of the presentation on slide 12, which outlines the current state of Osisko's balance sheet. At year-end, we had total debt of just over CAD 190 million, and net debt of only CAD 130 million. As we stated previously, the covenant performance is exceptionally strong, with cash margins expected in 2024 of 97%. This is important, and as noted previously on this call and noted in the subsequent event in our MD&A, we've now also repaid an additional CAD 30.2 million against our revolving credit facility, further strengthening our financial position.
This is important as Osisko doesn't expect to sit on its hands in 2024, and our much improved balance sheet provides the company with the financial capacity and flexibility to continue its strategic strategy of disciplined allocation in the pursuit of high quality, accretive, precious metals, streams, and royalties that will bolster the company's current and near-term deal deliveries and cash flow that should accrue to our shareholders' benefit. And if, for whatever reason, and clearly that isn't the company's base case, but 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 lineup for questions as well as questions posted on the webcast. If we don't get to all the questions on the line, we'll make sure to respond offline to those that we don't cover on this webcast. Thank you very much. Operator, over to you for questions.
Thank you, ladies and gentlemen. We will now begin the question- and- answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question is from Cosmos Chiu with CIBC. Please go ahead.
Hi. Thanks, Jason and team. Maybe my first question is on your equity holdings here. As you mentioned, you've divested all 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, Cosmo. Thank you for the question.
Hi, Jason.
Yes, we do obviously have some other equity holdings in the portfolio, the majority for which being the Osisko Development. We do hold a 40% interest in Osisko Development, as well as with Metals Acquisition Limited. And so those are the majority. The rest of the positions we have make up less than a 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, Cosmo, we're not in the business to be portfolio managers.
Mm-hmm.
and so we obviously make investments in equity that really pivots or as a part of a transaction that involves obviously a royalty, a stream, or an economic interest. And so what you witnessed or saw when we divested the Osisko Mining block is, first of all, we had a really good use of proceeds to pay down our debt, but secondly, we're not providing a lot of value to our partners by essentially being a passive equity holder. So, our philosophy is, again, we're not long-term holders of these equity positions. We will provide equity to our partners if it is around a catalyzing event, such as an acquisition, and or other milestone that advances and arguably preserves our interest as it relates to a royalty stream or economic interest within the company.
So, you can see we have a slide, obviously, on what our other equity interests are, so people can refer to that. But as I said, we are not in the business of being portfolio managers. We will look at the appropriate time to monetize these equity interests, but obviously working with our partners to ensure that we're doing it in a responsible way.
Perfect. Thanks, Jason. And, my other question is just trying to, you know, understand your thought process here. As you talk about your five-year projections in terms of growth, specifically, you pointed out that, compared to the last sort of target under the old management, Back Forty, 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, you know, what's the commonality between some of these three, for example, projects that, made you decide to take it out of your, out of your numbers? And to the extent that you can comment on it, what have you included, or where, you know, what have you-- what remains in, in that number?
Thank you, Cosmo. So with respect to our process, it's not different, I don't 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 that obviously opine on the disclosure of our partner companies. We very much rely on, again, the disclosure that we see from... As a reminder to everybody, we're not the operators here. They're - our partners are very much closer than we are. But mining is a tough business, as you and I both know. And so when we get together to look at, again, what our guidance should be, we take the appropriate contingencies that we see.
And so collectively, what you'll see, as I talked about, the assets that we pulled out of the five-year guidance, for the most part, is slippage in timelines, which we don't expect to come in within that five-year window. But we do, essentially, probability weight of the assets on the five-year timeline. And therefore, we have a lot of assets in that portfolio, Cosmo. So happy to walk you through our thoughts offline with respect to what would aggregate into that five-year contribution 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, Cosmo.
Your next question comes from Tanya Jakusconek with Scotiabank. Please go ahead.
Great. So, good morning, everyone. Thank you so much for taking my question. Jason, being new CEO at the helm, I would like to get a bit deeper thoughts on your strategy for transactions. So the 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, Tanya. Good morning. Thanks for joining. Look, from a strategic perspective, 2023 was a very good year for Osisko in terms of transactions. Five transactions were done, and they're all very accretive and will benefit shareholders go forward. I would see us going forward to have that frequency and cadence around you know, transactions. But there was obviously a big, big chunky one, and I'm thinking of the CSA transaction, which aggregated to over $190 million by the timing you included 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 focused.
We will support very good management teams, which we believe Mick and his crew is a very good management team, in jurisdictions that we consider tier one. And the reason why we did, as we've talked about, Tanya, why we did pay down our, our debt facility with the Osisko Mining sale, is now we have over CAD 550 million within our facility by the time you include the accordion as well, to go out and do accretive transactions. So look, obviously, it depends on the, the flow and the receptivity of, of our partners here. But you can think, you know, transactions, $200 million plus is not out of reach for, for the Osisko Group. But we will also continue to do transactions like in 2023, with $35 million in Ndimi, which gets us some very good GEO profile.
So, if you were to basically bracket, I think from the corporate development engine and the corporate development perspective, and Iain's here, and he can comment on it as well, you know, $50-$250 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 know, you mentioned tier one, so you flagged Australia, Canada, U.S. as, as great areas to operate. Would you be willing to move out of those jurisdictions and, for example, do more in Africa? I saw that you did something in Ghana, but how do you see that in terms of the diversification of your portfolio?
... An excellent question, Tanya. Thank you very much. So we do have the ability to take on more jurisdictional risk, geopolitical risk, as I 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 that, our deal flow would probably be more limited. So we do have to look outside of those jurisdictions. The way I'd answer that question is yes, we'd be irresponsible not to assess opportunities, for example, in Africa, 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 Guy and Ian and Michael and Fred and others, is we're effectively just risk managers on behalf of our shareholders' capital. 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 in any sort of transaction. That's a must for us.
So there's, there's a lot of factors that obviously go into our calculus as we think about putting bids and, and term sheets in, in front of companies that are not necessarily in the tier one that we talk about. But to be clear, we, we have to make a spread, more so than a spread in, in some of these other jurisdictions, more so in the spread that we, we'd make in an investment in Canada, for, for, for example.
Fine in Africa, the higher risk profile, just they would be smaller in size than, let's say, a $200 million deal?
Sorry, Tanya, I think we missed the first part of your question.
I said that, would you be looking then for, you know, the risk being size-wise in Africa, you would see go to smaller portions of transactions?
Yeah, yeah. Look, again, we wouldn't—we certainly wouldn't bet the farm and use our whole facility to do, for example, a $500 million transaction in a jurisdiction in Africa. That's, I don't think, what our shareholders would want us to do. So you're, you're absolutely right. It's got to be balanced in terms of 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 turns to capital allocation. Jason, maybe you can go through, for us, your priority for capital allocation, with respect to, you know, debt versus dividend versus share buyback.
Thanks. Thank you, Tanya. So again, it follows our typical capital allocation decision tree. So obviously, we've got a forecast now, and I'll just 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 on our facility. If, for whatever reason, we can't find accretive deals to do, our first priority would be pay down our debt and just really have an increase in our financial flexibility to go out and do transactions, if it's not in 2024, into 2025 and beyond.
And so beyond that, then 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 capital markets aspect. We do know what our fundamental value of the business is. And so if 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 that 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, and it's quite straightforward and simple. We obviously want to grow the business. We want to grow it responsibly. We're focusing more on per share metrics, as I talked about in my presentation. We will be disciplined with our shareholders' capital.
Okay. My last question is just what's the minimum cash balance you keep on the balance sheet to run your business?
Thank you. That's a great question. 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, we like to keep CAD 15 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, Tanya.
Your next question comes from John Tumazos with John Tumazos, Very Independent Research. Please go ahead.
Congratulations, Jason. Quite great to have you on board.
Thank you, John.
... I could ask a very detailed question. Concerning Trixie, is your charge related to the cash put in for the future stream and excludes your equity in the impairment process that's delaying their earnings report to the end of March?
Yeah, good, good question, John. I'm gonna pass that over to Fred, our CFO, as well, to answer.
Yeah, these impairments, they must be looked at. There's first the investment. So, IFRS requires that we look at investments, and if there's a potential impairment or indicators of impairment, which we believe was the case this time. So, the value of the investment 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've booked a CAD 23 million impairment on the stream itself.
$23.5 million, to be exact, John.
Yes.
So, this doesn't count the equity income effect for whatever OGC calculates?
It's not going to be directly related to the impairment that they might book in their books.
You likely saw, John, that Osisko Development put out a press release as well, putting a range of the impairment at Trixie between CAD 80 million and CAD 120 million on their books.
Of course. I'll ask a big quick question, Jason. How big picture would you like to change the structure or orientation of Osisko Gold Royalties? There's the 20 wonderful near-term catalysts you posted. It seems as though the stock market has a hard time understanding or digesting everything. There's so much progress, and the market is confused because most of the years you report a loss because of non-cash charges. Wheaton or Royal Gold or Osisko or Triple Flag usually report a profit every quarter. For example, would it be a good reorientation to dividend your Osisko Development 40% to your shareholders directly, so, that we get a positive value for it, rather than having a penalty because they take it right off most quarters?
John, do appreciate the comments. Firstly, you know, I will like to stress the fact that our earnings and what you see, and with respect to these, these are all non-cash charges. So, that's why we direct our investors to our adjusted earnings number. I do take your comment, 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 go forward. We will never be buying a mining asset go forward, I can promise you that. We are gonna be a pure play royalty company that effectively invests in royalty streams, economic interests in good jurisdictions with good management.
With respect to the question on the 40% or on our 40% interest in Osisko Development, as if we could do a dividend, the challenge as we see it with that is 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 a distribution or a dividend of the Osisko Development would be well received, given they'll all receive a tax bill associated with a distribution. But open to have conversation with yourself, John, and others on options as it relates to, again, ensuring that we create value on that investment.
Thank you.
Your next question comes from Adrian Day with Adrian Day Asset Management. Please go ahead.
Yeah, good morning, thank you. I had two questions, if I may. The first one, can you just talk a little bit about, obviously, you, you mentioned that you're pretty pure precious metals now, but you also mentioned you've got lots of base metals coming on. What is your general thinking, general strategy on diversifying into other commodities, and, and how broadly would you diversify?
A really good question, Adrian, and myself and my team and our board do actually have lots of conversations around diversification, around precious. First statement that I'll make is we absolutely want to stay precious focused, for the near, medium, and long term. That said, as you just pointed out, our concentration around precious is one of the highest in the group. So we do have the ability to take other commodities, and we have taken other commodities, I mean, mostly as we talked about, copper coming from Hermosa and the copper stream at CSA, will adjust to some degree, again, our concentration on precious. I really think it does depend on the opportunity set that we're looking at.
Clearly, you, you know, if we can invest in a large, either expansion or, or a new development of a polymetallic asset, for, for instance, that gives us both precious and, and copper. I'll just use copper as an example. We, we certainly would, entertain that. But the fact is, now that, again, our team is very much focused on per share metrics, we will be very much focused on, on, on value over volume. So whatever is gonna create value for our shareholders, we, we'd endeavor to look at. So we would look at base metals, we would look like copper. We, we have a very positive, constructive view on, on, on the copper environment go forward around the energy transition and, and the decarbonization themes that you're very, very well aware of, we're well aware of.
Would we go into more esoteric commodities that don't necessarily, you know, you can't necessarily quote them on a metals exchange? I'm thinking, you know, commodities like lithium or others. No, we don't think that makes sense for our portfolio right now, given the opportunity that we're set, that we're seeing. But certainly on the base metal side, we do have exposure within the 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, 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-
Mm-hmm
... go over X?
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 gonna drop below, let's pick the number 80%, we wouldn't go out and do the investment. We always look at value first and then look at the other factors, so such as you're suggesting, around commodity mix.
Okay, super. And then my second question, if I may, in answer to Cosmos Chiu 's very first question, I got the sense that there's no particular urgency or it's not a high priority to sell down more of your equity. Is that correct?
That, that's correct, Adrian. We've got, as I said, the two major ones in the portfolio are Osisko Development and Metals Acquisition Limited. And, and both of those companies, Metals Acquisition Limited, for example, they just did a big raise in Australia, as you're certainly aware of.
Right.
And with respect to Osisko Development, they've got a bunch of catalysts, not the least of which a construction permit this year, not the least of which they're gonna need to raise capital for their larger builds. So, it doesn't make sense, and arguably it's not; it'd be counterproductive for us to suggest that we demonetize it. You can think of you know the Osisko Mining situation as a good analog. When 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 their interests, and we obviously dealt directly with 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.
Your next question comes from Ralph Profiti with Eight Capital . Please go ahead.
Thanks, operator. You know, Jason, most of my questions have been answered. You know, how much time are you spending sort of planning or, or on, on origination? And is there a market appetite for origination for, for new deals? And has there really been anything kind of new and unique that you've seen on the playing field since you've started and sort of going around, you know, fostering these relationships?
Morning, Ralph. Thank you for your question. So yes, it is certainly the answer that I would say. And again, for people on the line that don't know my history background, I spent 16 years in investment banking, so I do have some deep relationships. The team has some deep relationships, and our board has certainly some deep relationships across the sector. And so what I would say is, there are certainly opportunities for us. And so the first phase of me becoming and coming on as a CEO is thought it was very critically important that I meet all our owners and shareholders. And so for the last little while, Grant and myself have been on the road, meeting with all our owners, getting feedback, talking about the strategy going forward.
The second phase, obviously, is around our deal flow and our deal origination, which again, our team continues to do, and I will pick that up as well. I would say that just, from what we're seeing thematically, is really around what I talked about before, Ralph, around there are a lot of management teams and/or companies that are looking to grow their business. And growing their business, around the energy transition theme that I talked about, is something that we think will continue to be a theme for some time.... So looking at, you know, companies that obviously want more copper or have a project that's just a few kilometers away from their headframe or their processing facilities, that they'll accelerate their studies for.
Or you have 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 5 transactions in 2023, record allocation in terms of capital deployment. I think the deployment was very, very smart, and they're gonna benefit all our owners going forward. So it certainly 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 gonna see unfold over the next 5-20 years.
Appreciate the answer. Thanks, Jason.
Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the 1. Your next question comes from Brian MacArthur with Raymond James. Please go ahead.
Good morning. Adrian asked 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, the whole philosophy here is you tend to get higher multiples for precious metals versus base metals. Just with those two comments of you not focusing on lithium, what's your view on Corvette?
Well, thank you, Brian. Appreciate the question. Good morning. Corvette is a very good asset in our portfolio, and so we are very fortunate to be a benefactor of holding the 2% of the NSR there. We also have NSRs on any other metals that are found in that region as well. What I 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 when we want and are focused on precious metals opportunities, as I talked about before. We really need to stay in that focus.
So looking at new lithium projects or new projects in that commodity, it would depend if it's a really good management team that we've got a history for. Of course, we potentially look at it, but I don't think it's something we would consider, first of all, our core competency or something that we would consider doing outside of one-off exceptions. With respect to potentially trading, you know, lithium or any of the assets that we have that are not very specific, either base or precious, of course, we would consider that. What we'll certainly do, and as I said in my presentation, done a portfolio review, if we can actually create value for shareholders.
For example, you know, the other commodities that we have in our portfolio, if we see something and there's other assets, maybe precious focus in other portfolios that we could come to a deal within swapping, yes, that will absolutely make sense for us. It's I would say it's a lot easier to suggest around thematically than conceptually than around the real execution around these transactions, because there's a lot of things obviously involved. You've got tax, you've got considerations around investments, investors. So, but broad answer to your question, Ralph, we absolutely will consider looking at our portfolio, and it doesn't make sense in another party's portfolio.
Can then the second question is, can we actually realize good value for it, either by trading it or monetizing?
Great. Thanks very much. Very clear, Jason.
Thanks, Ralph. For Brian-
I'll now turn the conference back over to Jason for questions on the webcast.
Thank you, operator. So, the first question we have is, expand on the rationale behind the recent balance sheet actions and comment on your capital allocation going forward. I believe that we've answered that question through our Q&A period, so thank you. Next question from Kerry Smith at Haywood: Jason, do you plan to retire any more debt in 2024? Again, I think we've also addressed that. We, as you saw in Q1 to date, year-to-date, we've retired and paid down another CAD 30 million on our revolver facility. We will continue to do that unless and until we see transactions that we want to do that will essentially move our, again, it's a revolving credit facility, so we always want to have some capacity and flexibility around that.
If we don't do transactions, yes, we will continue to retire or pay down our facility. Kerry, thank you for that question. Question from Eric Lemieux: Congrats on the nomination and to the whole team. What has been the total ounces produced at Éléonore since start of production? And around 2 million ounces is what I'm getting from the team. It is 2.2, gold ballpark, or, and is there expectation to reach the 3.5% NSR royalty eventually? I'll turn that question to Iain, because the 3.5% also, I believe, commodity linked or the commodity price based. But to answer the question, yes, about 2 million ounces has been produced at Éléonore, and I'll ask him to comment on the 3.5% NSR.
Yeah, about 2 million ounces have been produced. We're 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, that's probably a little bit too far in the future to say that that's gonna happen at this time.
Thank you. Great question, Eric. That's all the questions, operator, we have from the webcast. So thank you very much, everybody, for attending the Q4 and the year-end Osisko Gold Royalties results presentation. I know, as I said, it's a very, very busy day, especially for the analysts that cover, so very much appreciate your attention and the thoughtful questions this morning. And so have a very good week, and we're always available. Our team and myself is always 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 ask that you please disconnect your line.